HomeMy WebLinkAbout20240930Annual Colstrip Report.pdf ' 11
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Monday, September 30, 2024
Avista Corp. IDAHO PUBLIC
1411 East Mission P.O. Box 3727 UTILITIES COMMISSION
Spokane, Washington 99220-0500
Telephone 509-489-0500
Toll Free 800-727-9170
September 30, 2024
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd.
Bldg. 8, Suite 201-A
Boise, Idaho 83714
Re: Case No. AVU-E-19-01 -Avista Corporation 2024 Annual Colstrip Report per Order
No. 34814
Commission Secretary:
Avista Corporation, dba Avista Utilities (Avista or the Company) provides this report on
the status of its Colstrip ownership interest to the Idaho Public Utilities Commission(Commission)
as required by Order No. 34818 in Case No.AVU-E-19-01,relating to the matter of Avista's 2020
Electric Integrated Resource Plan(IRP).
I. BACKGROUND
On February 28, 2020, Avista filed its 2020 IRP, which was later acknowledged by the
Commission via Order No. 34818 issued on October 15, 2020. During the review of the IRP by
Commission Staff(Staff), Staff stated concerns about the Company's Colstrip analysis included
in the 2020 IRP, noting the concerns dated back to the Company's 2017 IRP. Concerns noted by
Staff included insufficient and unclear information related to Colstrip, treatment of Colstrip
retirement between Washington and Idaho, decommissioning costs, and potential retirement dates
modeled. As a result of the concerns raised:
Staff recommended the Commission require Avista to file an annual report on
Colstrip with updated economic analysis, estimated retirement dates, closure plans,
a progress report on closing plans and activities, and an annual accounting for
decommissioning and remediation. Id. Staff further recommended the Commission
require Avista to notify the Commission within 30 days of partner decisions and
plant issues that could materially affect Idaho customers."1
In the Company's Reply Comments filed on September 2, 2020, the Company noted it supported
Staff s recommendation. In the final Commission order acknowledging the 2020 IRP the
Commission ordered Avista to "file an annual update on its Colstrip ownership interest, as noted
above, by October 1 of each year. Avista also shall notify the Commission within 30 days of
Colstrip partner decisions and plant issues that may materially affect Idaho customers."2
II. 2023 COLSTRIP TRANSACTION
As discussed in the 2023 Colstrip report,on February 13,2023,in the same case referenced
above, Avista provided an update to the Commission regarding ownership of Colstrip Units 3 and
4.In the update,Avista provided notice to the Commission that on January 16,2023,the Company
entered into an agreement with NorthWestern Corporation (NorthWestern) under which the
Company would abandon its 15 percent ownership in Colstrip Units 3 and 4, and NorthWestern
would acquire ownership. There is no monetary exchange included in the transaction. The
transaction is scheduled to close on December 31, 2025, or such other date as the parties mutually
agree upon.
Under the agreement, the Company will remain obligated through the close of the
transaction to pay its share of(i) operating expenses, (ii) capital expenditures,but not in excess of
the portion allocable pro rata to the portion of useful life expired through the close of the
' Order No.34818 at page 9.
2 Order No.34818 at page 14.
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transaction and (iii) except for certain costs relating to post-closing activities, site remediation
expenses. In addition, the Company would enter into a vote sharing agreement under which it
would retain its voting rights with respect to decisions relating to remediation. The Company will
retain its Colstrip transmission system assets,which are excluded from the transaction. At the time
of filing this report, the transaction is still on course to close at the end of 2025.
III. UPDATED COLSTRIP ECONOMIC ANALYSIS
As discussed in the 2023 Colstrip report,Avista filed its 2023 Electric IRP on June 1,2023,
which did not include Colstrip generation in any scenario within the plan beyond December 31,
2025. The Company has not performed any updated economic analysis on keeping Colstrip in its
portfolio because of the agreement to transfer Colstrip to NorthWestern discussed above.
IV. COLSTRIP CLOSURE PLANS AND ACTIVITIES
Avista is not aware of any specific closure plans. As discussed above, Avista will transfer
its ownership interest to Northwestern on December 31, 2025. Any future closure plans or
activities will be up to owners of Colstrip at that time.
V. COLSTRIP DECOMMISSIONING AND REMEDIATION
The Company's Plant Accounting group estimates future decommissioning costs for
Colstrip and records a liability at the present value of those future payments. Asset Retirement
Obligation (ARO) accounting is used to increase this liability in order to have the full amount
recorded when the liabilities come due. The Company's Plant Accounting and Generation
department works with the operator (Talen) to get the most current estimates of these costs. This
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review is done annually and an adjustment to the ARO accounting balances is recorded, if deemed
material.
In each Idaho general rate case, the Company builds the ARO accounting into our request
for recovery and includes the most current estimates of future decommissioning/ARO costs for
Colstrip. This review in each general rate case will continue throughout the 30+years as necessary,
which is the time frame that Avista is recovering these costs from customers. The Company pays
for these costs as the work is performed, which reduces the liability. Idaho's share of the future
liability was increased to $11.1 million as of the end of 2023. Please note that this will change in
future general rate cases.
VI. CONCLUSION
Avista will continue to provide an updated report on Colstrip as required, with a final report no
later than October 1, 2025. For questions about this report please contact me at 509-495-2782
(shawn.bonfield(a)avistacorp.com).
Sincerely,
1,115" F"J�C&
Shawn Bonfield
Sr. Manager of Regulatory Policy& Strategy
Avista Utilities
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