AVU-G-25-01

Key events and submissions in this proceeding include:

- Avista prepared and submitted a two-year rate plan covering September 1, 2025, through August 31, 2027. The application includes exhibits showing actual operating results for the twelve months ended June 30, 2024, as well as pro forma and proposed operating results and rate base for Idaho for rate years 1 (September 1, 2025 – August 31, 2026) and 2 (September 1, 2026 – August 31, 2027). These submissions also detail proposed revenue requirements and rate relief requests for both electric and natural gas services 1, 1.

- Pro forma capital additions for the period July 1, 2024, through August 31, 2027, have been incorporated into the filing as key drivers for the rate relief request 1.

- Public notice of proposed rates and charges is scheduled to be given to customers by bill stuffer during February and March 2025 and via a news release 2.

- The company is requesting the commission to suspend its filing with proposed effective dates of September 1, 2025 (year 1), and September 1, 2026 (year 2) 2.

- Various capital projects and programs described in the proceeding are scheduled to commence and transfer to plant as work is completed, with ongoing monthly or quarterly oversight, depending on the project type 3, 3, 3.

This docket addresses Avista Corporation's capital investment and asset management plans, focusing on facility improvements, safety, and regulatory compliance across its service territory. Major topics include:

- The deteriorating condition of the Sandpoint Service Center, which faces significant safety, space, and compliance issues. Immediate repairs totaling $1.5 million are proposed as a short-term fix, while a long-term solution would involve constructing a new facility at an estimated $18 million. The current building has an asset condition backlog exceeding $740,000, with the backlog growing faster than available funding, creating risks for safety, operational efficiency, and regulatory compliance 1, 1.
- The overall facilities capital maintenance program, responsible for managing over 75 buildings, has a $15.8 million backlog identified by asset condition assessments. The 2025 funding request is $5.25 million, divided among asset condition projects, manager-requested projects, and unexpected needs. Underfunding this program risks increasing the backlog and safety issues companywide 1.
- The docket also discusses Avista’s ongoing compliance with state and federal requirements for pipeline safety and integrity management, particularly regarding the replacement of Aldyl-A pipe due to its elevated failure risk. The company is required to submit ongoing safety project plans and pipe replacement plans to regulatory agencies in Oregon and Washington, while Idaho reviews annual goals and progress 1.
- Other capital programs covered include fleet vehicle management, customer transactional systems upgrades, and investments in technology infrastructure for automation and energy trade management. These initiatives are justified by operational efficiency, risk reduction, and compliance with evolving regulatory standards 1, 2, 2, 2.
- The docket highlights the importance of maintaining a balanced capital structure for Avista to access debt and equity markets under reasonable terms and sustain investment in critical infrastructure 3.

In summary, the docket seeks approval for targeted investments to address safety, compliance, operational efficiency, and asset longevity across Avista’s facilities and infrastructure, with particular urgency for the Sandpoint Service Center.

The docket identifies several areas of growth, each with specific considerations:

1. Geographic Load Growth and Capacity Needs:
- North Spokane, Sandpoint, Colville, West Plains, Post Falls, and Coeur d’Alene are expected to experience higher load growth rates. Summer load is forecast to grow by 20–25 MW per year, and winter load by 35–45 MW per year, with winter growth outpacing past decades due to reduced reliance on natural gas heating. This growth stresses the existing distribution system, resulting in capacity issues and the need for new or modified substations and feeder upgrades. Some areas already show inadequate capacity and performance issues, as indicated by equipment exceeding 80% of their ratings, and deferral of mitigation projects exacerbates these constraints 1.

2. East Side of Lake Coeur d’Alene:
- Population and load demand growth have fully utilized the capacity of the two distribution feeders serving this area (from Blue Creek and O’Gara substations). The infrastructure is constrained by protection coordination issues, overloaded equipment, voltage drops, and cold load pickup challenges. Planned and ongoing large developments (e.g., Gozzer Ranch, Powderhorn Ranch) will further increase demand. Key considerations include the risk of equipment damage, service disruptions, inability to support new development until infrastructure is upgraded, and the need for new substations and reinforcements to ensure reliability and compliance with voltage standards 1.

3. Sandpoint Service Center:
- The Sandpoint area is preparing for 50 years of future service, with a plan for a new service center to accommodate growth, modernize facilities, and address safety and environmental compliance. Key considerations include the backlog of deferred maintenance, inadequate space, safety, and environmental risks at the current facility, and the need for modern infrastructure to support operational efficiency for current and future employees 1, 1.

4. Technology and Application Modernization:
- There is a significant focus on modernizing energy resource management technology to support business growth and operational efficiency. This includes application refreshes to address software obsolescence, performance and capacity improvements, asset condition management, automation to reduce manual labor and errors, and enhanced data management. Key considerations are maintaining reliability, compliance (with FERC/NERC/FCC rules), security, and supporting customer needs through improved analytics and operational efficiencies 2, 2, 2.

5. Transmission System Reinforcement:
- Projects like the East Lake Coeur d’Alene System Reinforcement aim to unlock growth potential by providing additional system capacity for new and existing customers. Considerations include reliability, the ability to meet demand growth, alignment with Avista’s strategic objectives, and minimizing outage risks for customers in expanding service territories 1.

In summary, the docket highlights growth in customer load and geographic expansion, the need for upgraded substations and feeders, modernization of technology systems, facility improvements to support operations, and transmission system reinforcements. Each area’s key considerations revolve around maintaining reliability, meeting future demand, operational efficiency, safety, compliance, and supporting both internal and external customer needs.

The provided excerpts identify several stakeholders involved in various Avista Utilities infrastructure and investment programs, but do not explicitly list all stakeholders for the overall docket or indicate which parties are for or against specific proposals. Some stakeholders mentioned in connection with particular business cases or programs include:

- Avista management and employees
- Avista customers (residential, commercial, and industrial)
- Program and project steering committees consisting of management personnel
- Public utility commissions: Idaho Public Utilities Commission (IPUC), Washington Utilities and Transportation Commission (WUTC), Public Utility Commission of Oregon (OPUC)
- Third-party contractors and equipment dealers
- External partners for specific projects (e.g., Puget Sound Energy and Williams-NWP for the Jackson Prairie Natural Gas Storage Facility)
- Local communities affected by infrastructure changes or at risk from pipe failures or outages

The excerpts also reference internal stakeholders such as directors of various departments (energy supply, gas supply, gas engineering, operations, maintenance) and business case owners, as well as external stakeholders such as joint use requesters for transmission poles and other utility partners.

No excerpts indicate which stakeholders are specifically for or against particular proposals within the docket. Instead, the materials focus on the internal processes for review, prioritization, and oversight of projects, as well as regulatory compliance and risk management requirements 1, 2.

The docket discusses several financial and timeline risks and concerns for Avista:

Financial Risks:
- Avista faces increased operating, resource, and material costs due to inflation, which, combined with regulatory lag, has negatively impacted financial performance and strained its credit metrics 1.
- S&P has placed Avista on negative credit outlook, citing weakening financial measures from inflation, rising interest rates, and regulatory lag. There is a risk of further downgrade if financial metrics do not improve. A downgrade below investment grade would raise borrowing costs and make accessing capital more difficult 1.
- If Avista's credit ratings fall below investment grade, the company could face higher risk perception in debt markets, substantially increased borrowing costs, and requests from wholesale energy counterparties to post collateral 1.
- Failure to comply with state and federal regulations (e.g., meter testing, pipeline safety) could result in violations, fines, and erosion of public trust. State fines are discretionary and federal fines have daily and maximum values per violation, but actual penalties depend on agency discretion and company compliance history 2.

Timeline Risks:
- Delays in infrastructure projects (such as utility pole replacements or transmission structure change-outs) could risk regulatory or civil action, financial loss, and penalties if mandated timelines are not met due to lack of funding 2.
- Large transmission projects are scheduled mainly in the fall, with plant transfer in November. Delays can occur due to difficulties in obtaining transmission system outages or construction resources 2.
- Technology investments are needed to avoid unplanned outages and system failures; delays or lack of funding for these can impact productivity and customer service. If technology maintenance is not funded, system reliability will decrease and recovery from outages will take longer 3.
- For required programs (e.g., meter testing), annual execution is essential to remain in compliance. Deferral or failure to complete these programs can lead to regulatory violations and customer dissatisfaction 2.
- In pipeline replacement programs, not meeting critical safety timelines or project goals (such as for Aldyl-A pipe replacement) could pose unacceptable risks of catastrophic failure, prompting regulatory intervention and increased costs 2.