Revenue Revenue (Tables)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

REVENUE

ASC 606 defines the core principle of the revenue recognition model is that an entity should identify the various performance obligations in a contract, allocate the transaction price among the performance obligations and recognize revenue when (or as) the entity satisfies each performance obligation.

Utility Revenues

Revenue from Contracts with Customers

General

The majority of Avista Corp.’s revenue is from rate-regulated sales of electricity and natural gas to retail customers, which has two performance obligations, (1) having service available for a specified period (typically a month at a time) and (2) the delivery of energy to customers. The total energy price generally has a fixed component (basic charge) related to having service available and a usage-based component, related to the delivery and consumption of energy. The commodity is sold and/or delivered to and consumed by the customer simultaneously, and the provisions of the relevant utility commission authorization determine the charges the Company may bill the customer. Given that all revenue recognition criteria are met upon the delivery of energy to customers, revenue is recognized immediately at that time.

Revenues from contracts with customers are presented in the Condensed Consolidated Statements of Income in the line item "Utility revenues, exclusive of alternative revenue programs."

Non-Derivative Wholesale Contracts

The Company has certain wholesale contracts which are not accounted for as derivatives and, accordingly, are within the scope of ASC 606 and considered revenue from contracts with customers. Revenue is recognized as energy is delivered to the customer or the service is available for a specified period of time, consistent with the discussion of rate-regulated sales above.

Alternative Revenue Programs (Decoupling)

ASC 606 retained existing GAAP associated with alternative revenue programs, which specified that alternative revenue programs are contracts between an entity and a regulator of utilities, not a contract between an entity and a customer. GAAP requires that an entity present revenue arising from alternative revenue programs separately from revenues arising from contracts with customers on the face of the Condensed Consolidated Statements of Income. The Company's decoupling mechanisms (also known as a FCA in Idaho) qualify as alternative revenue programs. Decoupling revenue deferrals are recognized in the Condensed Consolidated Statements of Income during the period they occur (i.e. during the period of revenue shortfall or excess due to fluctuations in customer usage), subject to certain limitations, and a regulatory asset or liability is established that will be surcharged or rebated to customers in future periods. GAAP requires that for any alternative revenue program, like decoupling, the revenue must be expected to be collected from customers within 24 months of the deferral to qualify for recognition in the current period Condensed Consolidated Statement of Income. Any amounts included in the Company's decoupling program that are not expected to be collected from customers within 24 months are not recorded in the financial statements until the period in which revenue recognition criteria are met. The amounts expected to be collected from customers within 24 months represents an estimate that must be made by the Company on an ongoing basis due to it being based on the volumes of electric and natural gas sold to customers on a go-forward basis.

Derivative Revenue

Most wholesale electric and natural gas transactions (including both physical and financial transactions), and the sale of fuel are considered derivatives, which are specifically scoped out of ASC 606. As such, these revenues are disclosed separately from revenue from contracts with customers. Revenue is recognized for these items upon the settlement/expiration of the derivative contract. Derivative revenue includes those transactions that are entered into and settled within the same month.

Other Utility Revenue

Other utility revenue includes rent, revenues from the lineman training school, sales of materials, late fees and other charges that do not represent contracts with customers. Other utility revenue also includes the provision for earnings sharing and the deferral and amortization of refunds to customers associated with the TCJA. This revenue is scoped out of ASC 606, as this revenue does not represent items where a customer is a party that has contracted with the Company to obtain goods or services that are an output of the Company’s ordinary activities in exchange for consideration. As such, these revenues are presented separately from revenue from contracts with customers.

Other Considerations for Utility Revenues

Gross Versus Net Presentation

Revenues and resource costs from Avista Utilities’ settled energy contracts that are “booked out” (not physically delivered) are reported on a net basis as part of derivative revenues.

Utility-related taxes collected from customers (primarily state excise taxes and city utility taxes) are taxes that are imposed on Avista Utilities as opposed to being imposed on its customers; therefore, Avista Utilities is the taxpayer and records these transactions on a gross basis in revenue from contracts with customers and operating expense (taxes other than income taxes). The utility-related taxes collected from customers at AEL&P are imposed on the customers rather than AEL&P; therefore, the customers are the taxpayers and AEL&P is acting as their agent. As such, these transactions at AEL&P are presented on a net basis within revenue from contracts with customers.

Utility-related taxes that were included in revenue from contracts with customers were as follows for the three months ended March 31 (dollars in thousands):

	2020		2019
Utility-related taxes	$	18,700	$	19,089

Non-Utility Revenues

Revenue from Contracts with Customers

Non-utility revenue from contracts with customers is derived from contracts with one performance obligation. Prior to its sale in April 2019 (See Note 18 for further discussion on the sale of METALfx), METALfx had one performance obligation, the delivery of a product, and revenues were recognized when the risk of loss transferred to the customer, which occurred when products were shipped. The Steam Plant Brew Pub serves food and beverages to customers, its one performance obligation, and recognizes revenues at the time of service to the customer.

Significant Judgments and Unsatisfied Performance Obligations

The only significant judgments involving revenue recognition are estimates surrounding unbilled revenue and receivables from contracts with customers and estimates surrounding the amount of decoupling revenues that will be collected from customers within 24 months (discussed above).

The Company has certain capacity arrangements, where the Company has a contractual obligation to provide either electric or natural gas capacity to its customers for a fixed fee. Most of these arrangements are paid for in arrears by the customers and do not result in deferred revenue and only result in receivables from the customers. The Company does have one capacity agreement where the customer makes payments throughout the year and depending on the timing of the customer payments, it can result in an immaterial amount of deferred revenue or a receivable from the customer. As of March 31, 2020, the Company estimates it had unsatisfied capacity performance obligations of $4.7 million, which will be recognized as revenue in future periods as the capacity is provided to the customers. These performance obligations are not reflected in the financial statements, as the Company has not received payment for these services.

Disaggregation of Total Operating Revenue

The following table disaggregates total operating revenue by segment and source for the three months ended March 31 (dollars in thousands):

	2020			2019
Avista Utilities
Revenue from contracts with customers	$	351,628		$	354,301
Derivative revenues	31,075			24,127
Alternative revenue programs	(4,413		)	(4,658		)
Deferrals and amortizations for rate refunds to customers	(2,606		)	2,135
Other utility revenues	1,521			1,797
Total Avista Utilities	377,205			377,702
AEL&P
Revenue from contracts with customers	12,126			10,736
Deferrals and amortizations for rate refunds to customers	(48		)	(48		)
Other utility revenues	124			193
Total AEL&P	12,202			10,881
Other
Revenue from contracts with customers	514			7,647
Other revenues	309			251
Total other	823			7,898
Total operating revenues	$	390,230		$	396,481

Utility Revenue from Contracts with Customers by Type and Service

The following table disaggregates revenue from contracts with customers associated with the Company's electric operations for the three months ended March 31 (dollars in thousands):

	2020						2019
	Avista Utilities		AEL&P		Total Utility		Avista Utilities		AEL&P		Total Utility
ELECTRIC OPERATIONS
Revenue from contracts with customers
Residential	$	107,977	$	5,866	$	113,843	$	115,392	$	5,852	$	121,244
Commercial and governmental	78,849		6,199		85,048		79,245		4,821		84,066
Industrial	24,711		—		24,711		25,248		—		25,248
Public street and highway lighting	1,783		61		1,844		1,903		63		1,966
Total retail revenue	213,320		12,126		225,446		221,788		10,736		232,524
Transmission	3,774		—		3,774		5,152		—		5,152
Other revenue from contracts with customers	5,289		—		5,289		8,194		—		8,194
Total revenue from contracts with customers	$	222,383	$	12,126	$	234,509	$	235,134	$	10,736	$	245,870

The following table disaggregates revenue from contracts with customers associated with the Company's natural gas operations for the three months ended March 31 (dollars in thousands):

	2020		2019
	Avista Utilities		Avista Utilities
NATURAL GAS OPERATIONS
Revenue from contracts with customers
Residential	$	84,173	$	77,336
Commercial	39,401		36,595
Industrial and interruptible	2,194		1,627
Total retail revenue	125,768		115,558
Transportation	2,352		2,484
Other revenue from contracts with customers	1,125		1,125
Total revenue from contracts with customers	$	129,245	$	119,167

Disaggregation of Revenue [Table Text Block]

Disaggregation of Total Operating Revenue

The following table disaggregates total operating revenue by segment and source for the three months ended March 31 (dollars in thousands):

	2020			2019
Avista Utilities
Revenue from contracts with customers	$	351,628		$	354,301
Derivative revenues	31,075			24,127
Alternative revenue programs	(4,413		)	(4,658		)
Deferrals and amortizations for rate refunds to customers	(2,606		)	2,135
Other utility revenues	1,521			1,797
Total Avista Utilities	377,205			377,702
AEL&P
Revenue from contracts with customers	12,126			10,736
Deferrals and amortizations for rate refunds to customers	(48		)	(48		)
Other utility revenues	124			193
Total AEL&P	12,202			10,881
Other
Revenue from contracts with customers	514			7,647
Other revenues	309			251
Total other	823			7,898
Total operating revenues	$	390,230		$	396,481

Utility Revenue from Contracts with Customers by Type and Service

The following table disaggregates revenue from contracts with customers associated with the Company's electric operations for the three months ended March 31 (dollars in thousands):

	2020						2019
	Avista Utilities		AEL&P		Total Utility		Avista Utilities		AEL&P		Total Utility
ELECTRIC OPERATIONS
Revenue from contracts with customers
Residential	$	107,977	$	5,866	$	113,843	$	115,392	$	5,852	$	121,244
Commercial and governmental	78,849		6,199		85,048		79,245		4,821		84,066
Industrial	24,711		—		24,711		25,248		—		25,248
Public street and highway lighting	1,783		61		1,844		1,903		63		1,966
Total retail revenue	213,320		12,126		225,446		221,788		10,736		232,524
Transmission	3,774		—		3,774		5,152		—		5,152
Other revenue from contracts with customers	5,289		—		5,289		8,194		—		8,194
Total revenue from contracts with customers	$	222,383	$	12,126	$	234,509	$	235,134	$	10,736	$	245,870

Schedule Of Utilities Operating Revenue Expense Taxes [Table Text Block]

Utility-related taxes that were included in revenue from contracts with customers were as follows for the three months ended March 31 (dollars in thousands):

	2020		2019
Utility-related taxes	$	18,700	$	19,089