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Revenue Revenue (Notes) | 9 Months Ended
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Sep. 30, 2018
Revenue from Contract with Customer [Abstract] |
Revenue from Contract with Customer [Text Block] | REVENUE ASC 606, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded previous revenue recognition guidance, including industry-specific guidance, became effective on January 1, 2018. The core principle of the revenue 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. In addition, the sale of electricity and natural gas is governed by the various state utility commissions, which set rates, charges, terms and conditions of service, and prices. Collectively, these rates, charges, terms and conditions are included in a “tariff,” which governs all aspects of the provision of regulated services. Tariffs are only permitted to be changed through a rate-setting process involving an independent, third-party regulator empowered by statute to establish rates that bind customers. Thus, all regulated sales by the Company are conducted subject to the regulator-approved tariff. Tariff sales involve the current provision of commodity service (electricity and/or natural gas) to customers for a price that generally has a basic charge and a usage-based component. Tariff rates also include certain pass-through costs to customers such as natural gas costs, retail revenue credits and other miscellaneous regulatory items that do not impact net income, but can cause total revenue to fluctuate significantly up or down compared to previous periods. The commodity is sold and/or delivered to and consumed by the customer simultaneously, and the provisions of the relevant tariff determine the charges the Company may bill the customer, payment due date, and other pertinent rights and obligations of both parties. Generally, tariff sales do not involve a written contract. 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." Unbilled Revenue from Contracts with Customers The determination of the volume of energy sales to individual customers is based on the reading of their meters, which occurs on a systematic basis throughout the month (once per month for each individual customer). At the end of each calendar month, the amount of energy delivered to customers since the date of the last meter reading is estimated and the corresponding unbilled revenue is estimated and recorded. The Company's estimate of unbilled revenue is based on:
• | the number of customers,
• | current rates,
• | meter reading dates,
• | actual native load for electricity,
• | actual throughput for natural gas, and
• | electric line losses and natural gas system losses.
Any difference between actual and estimated revenue is automatically corrected in the following month when the actual meter reading and customer billing occurs. Accounts receivable includes unbilled energy revenues of the following amounts as of September 30, 2018 and December 31, 2017 (dollars in thousands):
| September 30, |  | December 31,
| 2018 |  | 2017
Unbilled accounts receivable | $ | 38,991 |  |  | $ | 68,641 |
Non-Derivative Wholesale Contracts The Company has certain wholesale contracts which do not meet the criteria for classification as derivatives. Since they do not meet the definition of a derivative, they are within the scope of ASC 606 and are considered revenue from contracts with customers. Revenue is recognized as energy is delivered to the customer or the service is available for specified period of time, consistent with the discussion of tariff 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 which 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 which 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. Two acceptable methods of presenting decoupling revenue have evolved within the utility industry and a policy election is required by the Company. The two options relate to how the collection/refund of previously recognized decoupling revenue is presented within total revenue. The first option is the gross method, which is to amortize the decoupling regulatory asset/liability to the alternative revenue program line item on the Condensed Consolidated Statement of Income as it is collected from or refunded to customers. The cash passing between the Company and the customers is presented in revenue from contracts with customers since it is a portion of the overall tariff paid by customers. This method results in a gross-up to both revenue from contracts with customers and revenue from alternative revenue programs, but has a net zero impact on total revenue. The second option is the net method, which requires the amortization of the decoupling regulatory asset/liability to be presented within revenue from contracts with customers such that, when netted against the cash passing between the Company and the customers within the same line item, there is a net zero impact to revenue from contracts with customers and total revenue. The Company has elected the gross method for the presentation of alternative revenue program revenue, consistent with historical practice. Depending on whether the previous deferral balance being amortized was a regulatory asset or regulatory liability, and depending on the size and direction of the current year deferral of surcharges and/or rebates to customers, it could result in negative alternative revenue program revenue during the year. 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 which 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, enacted in December 2017. 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 Contracts with Multiple Performance Obligations In addition to the tariff sales described above, which are stand-alone energy sales, the Company has bundled arrangements which contain multiple performance obligations including some combination of energy, capacity, energy reserves and RECs. Under these arrangements, the total contract price is allocated to the various performance obligations and revenue is recognized as the obligations are satisfied. Depending on the source of the revenue, it could either be included in revenue from contracts with customers or derivative revenue. 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, effective January 1, 2018, these transactions at AEL&P are presented on a net basis within revenue from contracts with customers. Prior to the adoption of ASU No. 2014-09, the Company presented utility-related taxes at AEL&P on a gross basis, consistent with the presentation for Avista Utilities. In prior years, there were approximately $2.0 million annually in utility-related taxes collected from customers included in revenue for AEL&P. Utility-related taxes that were included in revenue from contracts with customers were as follows for the three and nine months ended September 30 (dollars in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Utility-related taxes | $ | 12,294 |  |  | $ | 12,663 |  |  | $ | 44,447 |  |  | $ | 47,799 |
Non-Utility Revenues Revenue from Contracts with Customers Non-utility revenues from contracts with customers are primarily derived from the operations of METALfx. The contracts associated with METALfx have one performance obligation, the delivery of a product, and revenues are recognized when the risk of loss transfers to the customer, which occurs when products are shipped. Other Revenue Other non-utility revenue primarily relates to rent revenue, which is scoped out of ASC 606; therefore, this revenue is presented separately from revenue from contracts with customers. Significant Judgments and Unsatisfied Performance Obligations The vast majority of the Company's revenues are derived from the rate-regulated sale of electricity and natural gas that have two performance obligations that are satisfied throughout the period and as energy is delivered to customers. In addition, the customers do not pay for energy in advance of receiving it. As such, the Company does not have any significant unsatisfied performance obligations or deferred revenues as of period-end associated with these revenues. Also, the only significant judgments involving revenue recognition are estimates surrounding unbilled revenue and receivables from contracts with customers (discussed in detail above) and estimates surrounding the amount of decoupling revenues which will be collected from customers within 24 months. 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 September 30, 2018, the Company estimates it had unsatisfied capacity performance obligations of $11.4 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 and nine months ended September 30 (dollars in thousands):
| Three months ended |  | Nine months ended
| September 30, 2018 |  | September 30, 2018
Avista Utilities |  |  |
Revenue from contracts with customers | $ | 242,098 |  |  | $ | 835,373 |
Derivative revenues | 32,718 |  |  | 147,467 |
Alternative revenue programs | 606 |  |  | (1,763 | )
Deferrals and amortizations for rate refunds to customers | 1,940 |  |  | (16,900 | )
Other utility revenues | 2,187 |  |  | 6,348 |
Total Avista Utilities | 279,549 |  |  | 970,525 |
AEL&P |  |  |
Revenue from contracts with customers | 9,599 |  |  | 35,008 |
Deferrals and amortizations for rate refunds to customers | (156 | ) |  | (1,705 | )
Other utility revenues | 127 |  |  | 412 |
Total AEL&P | 9,570 |  |  | 33,715 |
Other |  |  |
Revenue from contracts with customers | 6,580 |  |  | 19,633 |
Other revenues | 314 |  |  | 799 |
Total other | 6,894 |  |  | 20,432 |
Total operating revenues | $ | 296,013 |  |  | $ | 1,024,672 |
Utility Revenue from Contracts with Customers by Type and Service The following table disaggregates revenue from contracts with customers associated with the Company's utility operations for the three and nine months ended September 30 (dollars in thousands):
| Three months ended September 30, 2018 |  | Nine months ended September 30, 2018
| Avista Utilities |  | AEL&P |  | Total Utility |  | Avista Utilities |  | AEL&P |  | Total Utility
ELECTRIC OPERATIONS |  |  |  |  |  |  |  |  |  |  |
Revenue from contracts with customers |  |  |  |  |  |  |  |  |  |  |
Residential | $ | 82,470 |  |  | $ | 2,987 |  |  | $ | 85,457 |  |  | $ | 272,041 |  |  | $ | 13,680 |  |  | $ | 285,721 |
Commercial and governmental | 80,744 |  |  | 6,546 |  |  | 87,290 |  |  | 236,115 |  |  | 21,131 |  |  | 257,246 |
Industrial | 30,806 |  |  | — |  |  | 30,806 |  |  | 83,910 |  |  | — |  |  | 83,910 |
Public street and highway lighting | 1,860 |  |  | 66 |  |  | 1,926 |  |  | 5,618 |  |  | 197 |  |  | 5,815 |
Total retail revenue | 195,880 |  |  | 9,599 |  |  | 205,479 |  |  | 597,684 |  |  | 35,008 |  |  | 632,692 |
Transmission | 4,832 |  |  | — |  |  | 4,832 |  |  | 12,833 |  |  | — |  |  | 12,833 |
Other revenue from contracts with customers | 8,564 |  |  | — |  |  | 8,564 |  |  | 18,774 |  |  | — |  |  | 18,774 |
Total revenue from contracts with customers | $ | 209,276 |  |  | $ | 9,599 |  |  | $ | 218,875 |  |  | $ | 629,291 |  |  | $ | 35,008 |  |  | $ | 664,299 |
| Three months ended September 30, 2018 |  | Nine months ended September 30, 2018
| Avista Utilities |  | AEL&P |  | Total Utility |  | Avista Utilities |  | AEL&P |  | Total Utility
NATURAL GAS OPERATIONS |  |  |  |  |  |  |  |  |  |  |
Revenue from contracts with customers |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential | $ | 19,247 |  |  | $ | — |  |  | $ | 19,247 |  |  | $ | 130,668 |  |  | $ | — |  |  | $ | 130,668 |
Commercial | 9,437 |  |  | — |  |  | 9,437 |  |  | 61,477 |  |  | — |  |  | 61,477 |
Industrial and interruptible | 1,006 |  |  | — |  |  | 1,006 |  |  | 3,767 |  |  | — |  |  | 3,767 |
Total retail revenue | 29,690 |  |  | — |  |  | 29,690 |  |  | 195,912 |  |  | — |  |  | 195,912 |
Transportation | 2,007 |  |  | — |  |  | 2,007 |  |  | 6,795 |  |  | — |  |  | 6,795 |
Other revenue from contracts with customers | 1,125 |  |  | — |  |  | 1,125 |  |  | 3,375 |  |  | — |  |  | 3,375 |
Total revenue from contracts with customers | $ | 32,822 |  |  | $ | — |  |  | $ | 32,822 |  |  | $ | 206,082 |  |  | $ | — |  |  | $ | 206,082 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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