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Regulatory Matters (Tables) | 12 Months Ended
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Dec. 31, 2020
Regulated Operations [Abstract] |
Schedule of Regulatory Assets and Liabilities | The following table presents the Company’s regulatory assets and liabilities as of December 31, 2020 (dollars in thousands):
|  |  |  |  |  | Receiving Regulatory Treatment |  |  |  |  |  |  | 2020 |  |  | 2019 |
|  | 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 | ) |  | $ | 108,517 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 108,517 |  |  | $ | — |  |  | $ | 95,752 |
Pensions and other postretirement benefit plans |  |  | (4 | ) |  |  | — |  |  |  | 198,746 |  |  |  | — |  |  |  | — |  |  |  | 198,746 |  |  |  | — |  |  |  | 208,754 |
Energy commodity derivatives |  |  | (5 | ) |  |  | — |  |  |  | 7,795 |  |  |  | — |  |  |  | 2,073 |  |  |  | 5,722 |  |  |  | 6,310 |  |  |  | 264 |
Unamortized debt repurchase costs |  |  | (6 | ) |  |  | 7,512 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,512 |  |  |  | — |  |  |  | 8,884 |
Settlement with Coeur d’Alene Tribe |  | 2059 |  |  |  | 40,043 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 40,043 |  |  |  | — |  |  |  | 41,332 |
Demand side management programs |  |  | (3 | ) |  |  | — |  |  |  | 3,814 |  |  |  | — |  |  |  | — |  |  |  | 3,814 |  |  |  | — |  |  |  | 12,170 |
Decoupling surcharge |  | 2022 |  |  |  | 24,246 |  |  |  | — |  |  |  | — |  |  |  | 7,123 |  |  |  | 17,123 |  |  |  | 12,098 |  |  |  | 14,806 |
Utility plant to be abandoned |  |  | (7 | ) |  |  | 28,916 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 28,916 |  |  |  | — |  |  |  | 31,291 |
Interest rate swaps |  |  | (8 | ) |  |  | 130,538 |  |  |  | — |  |  |  | 84,313 |  |  |  | — |  |  |  | 214,851 |  |  |  | — |  |  |  | 168,594 |
Deferred power costs |  |  | (3 | ) |  |  | 3,337 |  |  |  | — |  |  |  | — |  |  |  | 1,775 |  |  |  | 1,562 |  |  |  | — |  |  |  | — |
AFUDC above FERC allowed rate |  |  | (11 | ) |  |  | 47,393 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 47,393 |  |  |  | — |  |  |  | 40,749 |
COVID-19 deferrals |  |  | (12 | ) |  |  | — |  |  |  | — |  |  |  | 8,166 |  |  |  | — |  |  |  | 8,166 |  |  |  | — |  |  |  | — |
Advanced meter infrastructure |  |  | (13 | ) |  |  | 26,379 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 26,379 |  |  |  | — |  |  |  | 13,395 |
Other regulatory assets |  |  | (3 | ) |  |  | 31,831 |  |  |  | 9,635 |  |  |  | 2,935 |  |  |  | 2,702 |  |  |  | 41,699 |  |  |  | 3,443 |  |  |  | 34,811 |
Total regulatory assets |  |  |  |  |  | $ | 448,712 |  |  | $ | 219,990 |  |  | $ | 95,414 |  |  | $ | 13,673 |  |  | $ | 750,443 |  |  | $ | 21,851 |  |  | $ | 670,802 |
Regulatory Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred natural gas costs |  |  | (3 | ) |  | $ | 874 |  |  | $ | — |  |  | $ | — |  |  | $ | 874 |  |  | $ | — |  |  | $ | 3,189 |  |  | $ | — |
Deferred power costs |  |  | (3 | ) |  |  | 37,869 |  |  |  | — |  |  |  | — |  |  |  | 20,299 |  |  |  | 17,570 |  |  |  | 14,155 |  |  |  | 23,544 |
Utility plant retirement costs |  |  | (9 | ) |  |  | 325,832 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 325,832 |  |  |  | — |  |  |  | 312,403 |
Income tax related liabilities |  | (3) (10) |  |  |  | 390,056 |  |  |  | 24,573 |  |  |  | — |  |  |  | 14,952 |  |  |  | 399,677 |  |  |  | 23,803 |  |  |  | 407,549 |
Interest rate swaps |  |  | (8 | ) |  |  | 15,046 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15,046 |  |  |  | — |  |  |  | 17,088 |
Decoupling rebate |  | 2022 |  |  |  | 2,966 |  |  |  | — |  |  |  | — |  |  |  | 1,447 |  |  |  | 1,519 |  |  |  | 255 |  |  |  | 2,398 |
COVID-19 deferrals |  |  | (12 | ) |  |  | — |  |  |  | — |  |  |  | 10,949 |  |  |  | — |  |  |  | 10,949 |  |  |  | — |  |  |  | — |
Other regulatory liabilities |  |  | (3 | ) |  |  | 12,445 |  |  |  | 10,645 |  |  |  | — |  |  |  | 8,863 |  |  |  | 14,227 |  |  |  | 10,313 |  |  |  | 12,454 |
Total regulatory liabilities |  |  |  |  |  | $ | 785,088 |  |  | $ | 35,218 |  |  | $ | 10,949 |  |  | $ | 46,435 |  |  | $ | 784,820 |  |  | $ | 51,715 |  |  | $ | 775,436 |
(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) | In March 2016, the WUTC granted the Company's Petition for an Accounting Order to defer and include in a regulatory asset the undepreciated value of its existing Washington electric meters for the opportunity for later recovery. This accounting treatment is related to the Company's replacement of approximately 253,000 of its existing electric meters with new two-way digital meters and the related software and support services through its AMI project in Washington State. In September 2017, the WUTC also approved the Company's request to defer the undepreciated net book value of existing natural gas ERTs (consistent with the accounting treatment for the electric meters) that will be retired as part of the AMI project. Replacement of the meters and natural gas ERTs will be completed in 2021. The other piece of abandoned plant, relates to the Company's decision to replace a three-phase transformer at one of its generating facilities with three separate single-phase transformers. The Company expects to receive full recovery of the cost of the three-phase transformer; therefore, it has recorded the remaining net book value as a regulatory asset.
(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 TCJA, 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 36 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 Units 3 & 4 based on settlements in Washington and Idaho. The amount attributable to Washington was utilized in 2020 and was $10.9 million ($8.4 million when tax-effected) and the amount attributable to Idaho was utilized in 2019 and was $6.4 million ($5.1 million when tax-effected).
(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 will be determined in future rate case proceedings. The Company included these amounts in its rate case filings in Washington in the fourth quarter of 2020.
Schedule of Decoupling and Earnings Sharing Mechanisms | As of December 31, 2020 and December 31, 2019, 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, |
|  | 2020 |  |  | 2019 |
Washington |  |  |  |  |  |  |  |
Decoupling surcharge |  | $ | 21,340 |  |  | $ | 22,440 |
Idaho |  |  |  |  |  |  |  |
Decoupling surcharge |  | $ | 1,202 |  |  | $ | 2,549 |
Provision for earnings sharing rebate |  |  | (686 | ) |  |  | (686 | )
Oregon |  |  |  |  |  |  |  |
Decoupling rebate |  | $ | (1,262 | ) |  | $ | (739 | )

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