Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Regulatory Assets and Liabilities

The following table presents the Company’s regulatory assets and liabilities as of December 31, 2021 (dollars in thousands):


				Receiving Regulatory Treatment						2021				2020
	Remaining Amortization Period			(1) Earning A Return		Not Earning A Return		(2) Expected Recovery or Refund		Current		Non- current		Current		Non- current
Regulatory Assets:
Deferred income tax		(3	)	$	244,154	$	—	$	—	$	—	$	244,154	$	—	$	108,517
Pensions and other postretirement benefit plans		(4	)		—		165,696		—		—		165,696		—		198,746
Energy commodity derivatives		(5	)		—		15,385		—		12,447		2,938		2,073		5,722
Unamortized debt repurchase costs		(6	)		6,768		—		—		—		6,768		—		7,512
Settlement with Coeur d’Alene Tribe	2059				38,926		—		—		—		38,926		—		40,043
Demand side management programs		(3	)		—		3,974		—		—		3,974		—		3,814
Decoupling surcharge	2023				24,532		—		—		9,907		14,625		7,123		17,123
Utility plant to be abandoned		(7	)		26,771		—		—		—		26,771		—		28,916
Interest rate swaps		(8	)		158,082		—		41,672		—		199,754		—		214,851
Deferred power costs		(3	)		10,835		—		—		7,334		3,501		1,775		1,562
Deferred natural gas costs		(3	)		21,027		—		—		14,095		6,932		2,308		—
AFUDC above FERC allowed rate		(11	)		48,455		—		—		—		48,455		—		47,393
COVID-19 deferrals		(12	)		—		—		13,591		—		13,591		—		8,166
Advanced meter infrastructure		(13	)		36,008		—		—		—		36,008		—		26,379
Other regulatory assets		(3	)		37,045		8,563		2,925		—		48,533		394		41,699
Total regulatory assets				$	652,603	$	193,618	$	58,188	$	43,783	$	860,626	$	13,673	$	750,443
Regulatory Liabilities:
Deferred natural gas costs		(3	)	$	—	$	—	$	—	$	—	$	—	$	874	$	—
Deferred power costs		(3	)		11,891		—		—		6,457		5,434		20,299		17,570
Utility plant retirement costs		(9	)		350,190		—		—		—		350,190		—		325,832
Income tax related liabilities	(3) (10)				346,847		24,411		143,862		56,331		458,789		14,952		399,677
Interest rate swaps		(8	)		13,589		—		1,473		—		15,062		—		15,046
Decoupling rebate	2022				9,308		—		—		3,049		6,259		1,447		1,519
COVID-19 deferrals		(12	)		—		—		12,500		—		12,500		—		10,949
Other regulatory liabilities		(3	)		6,905		17,688		—		11,312		13,281		8,863		14,227
Total regulatory liabilities				$	738,730	$	42,099	$	157,835	$	77,149	$	861,515	$	46,435	$	784,820

(1)

Earning a return includes either interest on the regulatory asset/liability or a return on the investment as a component of rate base at the allowed rate of return.

(2)

Expected recovery is pending regulatory treatment including regulatory assets and liabilities with prior regulatory precedence.

(3)

Remaining amortization period varies depending on timing of underlying transactions.

(4)

As the Company has historically recovered and currently recovers its pension and other postretirement benefit costs related to its regulated operations in retail rates, the Company records a regulatory asset for that portion of its pension and other postretirement benefit funding deficiency.

(5)

The WUTC and the IPUC issued accounting orders authorizing Avista Corp. to offset energy commodity derivative assets or liabilities with a regulatory asset or liability. This accounting treatment is intended to defer the recognition of mark-to-market gains and losses on energy commodity transactions until the period of delivery. Realized benefits and losses result in adjustments to retail rates through PGAs, the ERM in Washington, the PCA mechanism in Idaho and periodic general rates cases. The resulting regulatory assets associated with energy commodity derivative instruments have been concluded to be probable of recovery through future rates.

(6)

Premiums paid or discounts received to repurchase debt are amortized over the remaining life of the original debt that was repurchased or, if new debt is issued in connection with the repurchase, these costs are amortized over the life of the new debt. These costs are recovered through retail rates as a component of interest expense.

(7)

The WUTC approved recovery of AMI project costs through the 2020 general rate case settlements, including amortization of retired meters replaced through the project through 2033. There are additional smaller projects included in the balance that the Company expects to fully recover, which have not yet been through the regulatory process.

(8)

For interest rate swap derivatives, Avista Corp. records all mark-to-market gains and losses in each accounting period as assets and liabilities, as well as offsetting regulatory assets and liabilities, such that there is no income statement impact. The interest rate swap derivatives are risk management tools similar to energy commodity derivatives. Upon settlement of interest rate swap derivatives, the regulatory asset or liability is amortized as a component of interest expense over the term of the associated debt. The Company records an offset of interest rate swap derivative assets and liabilities with regulatory assets and liabilities, based on the prior practice of the commissions to provide recovery through the ratemaking process. Settled interest rate swap derivatives which have been through a general rate case proceeding are classified as earning a return in the table above, whereas all unsettled interest rate swap derivatives and settled interest rate swap derivatives which have not been included in a general rate case are classified as expected recovery.

(9)

This amount is dependent upon the cost of removal of underlying utility plant assets and the life of utility plant.

(10)

The majority of this balance represents amounts due back to customers and resulted from the Tax Cuts and Jobs Act signed into law in December 2017, which changed the federal income tax rate from 35 percent to 21 percent. The Company revalued all deferred income taxes as of December 31, 2017. The Company expects the amounts for utility plant items for Avista Utilities to be returned to customers over a period of approximately 32 years. The Company expects the AEL&P amounts to be returned to customers over a period of approximately 40 years. A significant portion of the regulatory liability attributable to non-plant excess deferred taxes was used to offset a portion of the costs associated with accelerating the depreciation of Colstrip based on settlements in Washington and Idaho.

(11)

This amount is being amortized based on the underlying utility plant assets and the life of utility plant.

(12)

The WUTC, IPUC and OPUC issued accounting orders allowing the Company to defer certain costs, net of any benefits, related to the COVID-19 pandemic. The Company has recorded all benefits on a gross basis as a regulatory liability to customers and all additional allowed costs are a regulatory asset. The ratemaking treatment will be determined in future general rate cases in each jurisdiction.

(13)

This amount represents the deferral of the depreciation expense of the Company’s AMI project in Washington state. Recovery of these amounts was approved by WUTC in the 2021 general rate case order.

Schedule of Decoupling and Earnings Sharing Mechanisms

As of December 31, 2021 and December 31, 2020, the Company had the following cumulative balances outstanding related to decoupling and earnings sharing mechanisms in its various jurisdictions (dollars in thousands):


	December 31,			December 31,
	2021			2020
Washington
Decoupling surcharge	$	13,522		$	21,340
Idaho
Decoupling (rebate) surcharge	$	(1,450	)	$	1,202
Provision for earnings sharing rebate		(686	)		(686	)
Oregon
Decoupling surcharge (rebate)	$	3,152		$	(1,262	)