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HomeMy WebLinkAbout20240930Annual Colstrip Report.pdf ' 11 D 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. Page 2 of 4 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 Page 3 of 4 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 Page 4 of 4