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Summary Of Significant Accounting Policies | 6 Months Ended
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Jun. 30, 2018
Accounting Policies [Abstract] |
Summary Of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Avista Corp. is primarily an electric and natural gas utility with certain other business ventures. Avista Utilities is an operating division of Avista Corp., comprising the regulated utility operations in the Pacific Northwest. Avista Utilities provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho. Avista Utilities also provides natural gas distribution service in parts of northeastern and southwestern Oregon. Avista Utilities has electric generating facilities in Washington, Idaho, Oregon and Montana. Avista Utilities also supplies electricity to a small number of customers in Montana, most of whom are employees who operate Avista Utilities' Noxon Rapids generating facility. AERC is a wholly-owned subsidiary of Avista Corp. The primary subsidiary of AERC is AEL&P, which comprises Avista Corp.'s regulated utility operations in Alaska. Avista Capital, a wholly owned non-regulated subsidiary of Avista Corp., is the parent company of all of the subsidiary companies in the non-utility businesses, with the exception of AJT Mining Properties, Inc., which is a subsidiary of AERC. See Note 14 for business segment information. On July 19, 2017, Avista Corp. entered into an Agreement and Plan of Merger (Merger Agreement) to become a wholly-owned subsidiary of Hydro One Limited (Hydro One). Consummation of the pending acquisition is subject to a number of approvals and the satisfaction or waiver of other specified conditions. The transaction is expected to close in the second half of 2018. See Note 15 for additional information. Basis of Reporting The condensed consolidated financial statements include the assets, liabilities, revenues and expenses of the Company and its subsidiaries and other majority owned subsidiaries and variable interest entities for which the Company or its subsidiaries are the primary beneficiaries. Intercompany balances were eliminated in consolidation. The accompanying condensed consolidated financial statements include the Company’s proportionate share of utility plant and related operations resulting from its interests in jointly owned plants. Certain line items are presented in a more condensed form on the Condensed Consolidated Balance Sheets as of June 30, 2018 than in prior periods. The prior year amounts were reclassified to conform to the current year presentation. The primary classification changes were related to classifying all current regulatory assets, current regulatory liabilities, non-current regulatory assets and non-current regulatory liabilities into their own line items. Previously, these items were either on many separate line items or embedded in other line items such as "Other property and investments-net and other non-current assets" or "Other non-current liabilities, regulatory liabilities and deferred credits." See Note 2 for a summary of the items contained in certain balance sheet accounts. Derivative Assets and Liabilities Derivatives are recorded as either assets or liabilities on the Condensed Consolidated Balance Sheets measured at estimated fair value. 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 costs result in adjustments to retail rates through purchased gas cost adjustments, the ERM in Washington, the PCA mechanism in Idaho, and periodic general rate cases. The resulting regulatory assets have been concluded to be probable of recovery through future rates. Substantially all forward contracts to purchase or sell power and natural gas are recorded as derivative assets or liabilities at estimated fair value with an offsetting regulatory asset or liability. Contracts that are not considered derivatives are accounted for on the accrual basis until they are settled or realized unless there is a decline in the fair value of the contract that is determined to be other-than-temporary. 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. The Company has multiple master netting agreements with a variety of entities that allow for cross-commodity netting of derivative agreements with the same counterparty (i.e. power derivatives can be netted with natural gas derivatives). In addition, some master netting agreements allow for the netting of commodity derivatives and interest rate swap derivatives for the same counterparty. The Company does not have any agreements which allow for cross-affiliate netting among multiple affiliated legal entities. The Company nets all derivative instruments when allowed by the agreement for presentation in the Condensed Consolidated Balance Sheets. Fair Value Measurements Fair value represents the price that would be received when selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Energy commodity derivative assets and liabilities, deferred compensation assets, as well as derivatives related to interest rate swaps and foreign currency exchange contracts, are reported at estimated fair value on the Condensed Consolidated Balance Sheets. See Note 10 for the Company’s fair value disclosures. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, net of tax, consisted of the following as of June 30, 2018 and December 31, 2017 (dollars in thousands):
| June 30, |  | December 31,
| 2018 |  | 2017
Unfunded benefit obligation for pensions and other postretirement benefit plans - net of taxes of $2,505 and $4,356, respectively (a) | $ | 9,424 |  |  | $ | 8,090 |
(a) | Effective January 1, 2018, the Company adopted ASU No. 2018-02. As a result of the adoption of this new standard, $1.7 million in excess tax benefits was reclassified from accumulated other comprehensive loss to retained earnings. See Note 3 for additional discussion of the adoption of this standard.
The following table details the reclassifications out of accumulated other comprehensive loss to net income by component for the three and six months ended June 30 (dollars in thousands).
|  | Amounts Reclassified from Accumulated Other Comprehensive Loss |  |
|  | Three months ended June 30, |  | Six months ended June 30, |  |
Details about Accumulated Other Comprehensive Loss Components |  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | Affected Line Item in Statement of Income
Amortization of defined benefit pension items |  |  |  |  |  |  |  |
Amortization of net prior service cost |  | $ | (228 | ) |  | $ | (299 | ) |  | $ | (456 | ) |  | $ | (598 | ) |  | (a)
Amortization of net loss |  | 2,995 |  |  | 3,638 |  |  | $ | 5,990 |  |  | $ | 7,276 |  |  | (a)
Adjustment due to effects of regulation |  | (2,509 | ) |  | (3,057 | ) |  | (5,017 | ) |  | (6,115 | ) |  | (a)
|  | 258 |  |  | 282 |  |  | 517 |  |  | 563 |  |  | Total before tax
|  | (54 | ) |  | (99 | ) |  | (109 | ) |  | (197 | ) |  | Tax expense
|  | $ | 204 |  |  | $ | 183 |  |  | $ | 408 |  |  | $ | 366 |  |  | Net of tax
(a) | These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 6 for additional details).
Effective Income Tax Rate For the three months ended June 30, 2018 and 2017, the Company's effective tax rate was 16.9 percent and 37.5 percent, respectively. For the six months ended June 30, 2018 and 2017, the Company's effective tax rate was 16.5 percent and 35.6 percent, respectively. The effective tax rate decreased during 2018 due to federal income tax law changes which were enacted during the fourth quarter of 2017, which lowered the federal income tax rate from 35 percent to 21 percent. In addition, the amortization of plant excess deferred income taxes under the Average Rate Assumption Method (ARAM), decreased the effective tax rate by 6.4 percent for the second quarter and 3.1 percent for the year-to-date, and excess tax benefits from the settlement of equity awards during the first quarter of 2018 decreased the effective tax rate by 1.0 percent for the year-to-date. Contingencies The Company has unresolved regulatory, legal and tax issues which have inherently uncertain outcomes. The Company accrues a loss contingency if it is probable that a liability has been incurred and the amount of the loss or impairment can be reasonably estimated. The Company also discloses loss contingencies that do not meet these conditions for accrual if there is a reasonable possibility that a material loss may be incurred. As of June 30, 2018, the Company has not recorded any significant amounts related to unresolved contingencies. See Note 13 for further discussion of the Company's commitments and contingencies.

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