20250320Staff Comments.pdf

RECEIVED
March 20, 2025
CHRIS BURDIN IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9810
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION'S APPLICATION TO ) CASE NO. AVU-E-25-02
UPDATE AND ESTABLISH ITS CAPACITY )
DEFICIENCY PERIOD TO BE USED FOR )
AVOIDED COST CALCULATIONS ) COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Chris Burdin, Deputy Attorney General,
submits the following comments.
BACKGROUND
On January 29, 2025,pursuant to Order Nos. 32697, 32802, and 35810, Avista
Corporation d/b/a Avista Utilities ("Company") applied to the Commission for approval of the
Company's capacity deficiency period used for calculating Public Utility Regulatory Policies
Act of 1978 avoided costs. The Company identified its first deficit period starting January 1,
2030.
STAFF COMMENTS 1 MARCH 20, 2025

STAFF ANALYSIS
Staff s review focused on capacity positions for 2025 and 2026, the exit date of Colstrip
Generating Plant("Colstrip") Units 3 and 4, the exit date of the Northeast Power Plant
("Northeast"), and compliance with Order No. 36056.
Based on its review, Staff recommends that the Company file an updated Load and
Resource Balance ("L&R") to incorporate the following: 1
1. Include capacity positions for 2025 using the same method that was used in the
proposed L&R, which considers planned maintenance; and
2. Use an exit date of 2032 for Northeast.
Capacity Positions for 2025
The Company's proposed L&R did not provide capacity positions for 2025 and only
provided them starting in 2026. Subsequently, the Company provided capacity positions for
2025 during the discovery process, which showed no deficits occurring until 2026. However, the
capacity positions in 2025 were calculated without considering any planned maintenance,
whereas the proposed L&R starting in 2026 includes a forecast of routine maintenance.
Responses to Staff Production Request Nos. 1 and 11. Staff recommends that the Company
update the L&R by including capacity positions for 2025 using the same method that was used in
the proposed L&R, which considers planned maintenance.
Capacity Positions for 2026
According to the proposed L&R, the first deficit year is 2026 with a deficit of 40
megawatts ("MW") in the winter, and a deficit of 22 MW in the summer. However, the
Company stated that"the 2026 deficit will be addressed by market purchases during the power
procurement hedging strategy." Application at 3. Similarly, there are small deficits that occur
between 2026 and 2029, and the Company stated that these deficits "will also be addressed by
the same strategy." Id. Therefore, the Company proposes a first deficit year of 2030. However,
'If the Company updates the L&R through Reply Comments,Staff will have an opportunity to incorporate the
updated capacity positions in the upcoming annual natural gas update case for the Surrogate Avoided Resource
model to maintain rate stability and to avoid unnecessary administrative burdens.
STAFF COMMENTS 2 MARCH 20, 2025

Staff believes that the first deficit date should be determined when the first deficit date occurs as
reflected by the L&R, which occurs in January of 2026.
The Commission has always used L&Rs solely to determine the first deficit date for the
purpose of determining avoided cost of capacity for qualifying facilities. See Order No. 35834.
If the Company believes that the deficits that occur can be filled with short-term market
purchases, then it should reflect the availability of these amounts in the assumption included in
the L&R.
Staff believes it is generally reasonable for the Company to obtain additional short-term
market purchases given the Company's access to the Mid-Columbia market,but the Company
has already reflected market purchases with a cap of 330 MW within the L&R through its
Planning Reserve Margin ("PRM"). If the Company has within its control the ability to identify
additional market purchases on a short-term basis beyond 330 MW, the Company should update
its assumption of market purchases within the L&R. The Company clarified that the short-term
market purchases are part of the 330 MW, not beyond the 330 MW, and the Company"does not
want to depend on market power exceeding 330 MW for resource adequacy." Response to Staff
Production Request No. 8. Thus, Staff believes that the first deficit period should be whenever
the first deficit occurs in the L&R.
Exit Date of Colstrip 3 and 4
The Company proposed Colstrip 3 and 4 exit dates at the end of 2025 in the L&R
because the Company will transfer ownership of Colstrip to NorthWestern Energy on January 1,
2026. The parties signed a contract regarding the ownership transfer on January 16, 2023.
Response to Staff Production Request No. 2.
Staff believes the exit date is reasonable because the exit has a high level of regulatory
certainty. The Commission has stated that utilities shall update L&Rs to only include approved
contracts where pre-approval is necessary or executed contracts where pre-approval is
unnecessary. Order Nos. 36070 and 35834. Because the contract between the Company and
NorthWestern Energy has been executed, Staff believes that it is reasonable to reflect the exit
date in the L&R.
STAFF COMMENTS 3 MARCH 20, 2025

Exit Date of Northeast Plant
The Company assumed that its Northeast plant will retire in 2029. Because the Company
owns the entire plant, the Company can make exit decisions unilaterally. Response to Staff
Production Request No. 2. The Company assumed the exit year is 2029, because it coincides
with the end of the air permit test schedule, even though the current air permit expires in 2032.
Id. Staff believes the actual expiration date of the current air permit has a higher regulatory
certainty than a test schedule. Therefore, Staff recommends that the Company update the L&R
based on an exit date of 2032 for Northeast.
Compliance with Order No. 36056
The Commission required the Company:
to show that the method used to derive the Company's QCC ["Qualifying Capacity
Contribution"] values reflect the generation capacity of the Company's resources
relative to the peak loads within the Company's system before the next capacity
deficiency update case. The Commission also orders the Company to develop its
PRM driven by the Company's reliability target and appropriately developed
capacity contribution factor system before the next capacity deficiency update.
Order No. 36056 at 7.
Staff confirmed that the winter PRM is driven by the Company's reliability target. As for
QCC values, although they do not reflect the generation capacity of the Company's resources
relative to the Company's peak load, Staff believes the Company's methodology is reasonable
for determining capacity deficiency periods in this case.
Traditionally, the relationship between PRMs and capacity positions is that PRMs above
expected monthly peak load minus resource capacity will determine the Company's capacity
positions (i.e. when the Company should acquire new capacity and how much new capacity is
needed to achieve the Company's reliability target). Therefore, how resource capacity is
determined will affect the final capacity positions. The Company's method used to determine
capacity positions varies from the traditional method in several ways, but Staff believes that the
method is reasonable for the purpose of this case. The following sections explain the Company's
methods in more detail for determining the Company's 16% summer PRM and 24%winter
PRM.
STAFF COMMENTS 4 MARCH 20, 2025

How Summer PRM Was Determined
The Company's Resource Adequacy Study identified that major capacity deficits occur in
the winter and that only small capacity deficits occur in the summer. Response to Staff
Production Request No. 12. Because of the different sizes of the deficits, the Company used a
different method for determining the summer PRM than the method used to determine the winter
PRM. For summer, the Company used the single largest contingency method to determine the
PRM. It quantifies the amount of potential lost generation of Coyote Springs 2, the single largest
facility in the Company's system. Id. Coyote Springs 2 generates approximately 288 MW
during a summer peak, and the peak summer load is approximately 1,837 MW. The 16%
summer PRM is calculated by the capacity of Coyote Springs 2 divided by the peak summer
load. If the Company loses the generation of Coyote Springs 2 in the summer, the 16% summer
PRM will ensure the Company has adequate capacity. Therefore, Staff believes the 16%
summer PRM, determined based on the size of the single largest contingency resource, is
reasonable.
How Winter PRM Was Determined
To comply with Order No. 36056, the Company determined a 24%winter PRM based on
the Company's reliability target of a 5% Loss of Load Probability("LOLP"). Staff believes the
method the Company used reflects a reasonable winter PRM. Subsequently, the Company
applied the 24%winter PRM across all years of the Integrated Resource Plan("IRP")planning
horizon.
To determine the PRM, the Company first conducted a Resource Adequacy Study based
on a 2030 Test Year, a year when the Company believes a capacity deficit is first likely to
happen. The Company ran 1,000 simulations of different loads, thermal generation capability,
water conditions, renewable generation, and forced outages to determine how much additional
capacity is needed so that the load can be met by the Company's system in at least 950 of the
1,000 simulations.
The Company then calculated the PRM based on the amount of additional resources
needed to achieve the 5% LOLP, the system's existing resource capacity, and the Company's
winter peak load in Test Year 2030. The capacity of existing resources was determined based on
STAFF COMMENTS 5 MARCH 20, 2025

QCC values derived from the WRAP and an E3 study. 2 The results of the Resource Adequacy
Study showed that the Company will need 50 MW of capacity to achieve the 5% LOLP target in
Test Year 2030.
Finally, the Company tested Year 2045 to see if the winter 24%PRM achieves the
Company's reliability target for a year at the end of the IRP planning horizon. The Company
determined that the new resources added to meet the 24%PRM in year 2045 can still achieve the
5%LOLP reliability target. Because of the positive results of the test for a year fifteen years
beyond the original 2030 Test Year, the Company assumed a 24%winter PRM across all years
of the IRP planning horizon.
Table No. 1: Calculations of PRM under Old and New Methods for Test Year 2030
Old Method New Method
Resource Capacity(MW) 1,230 1,190 (QCCs)
Capacity Need determined by 50 50
Resource Adequacy Study (MW)
Total(MW) 1,280 15240
Avista's Peak Load (MW) 1,000 1,000
PRM (MW) 280 240
PRM (%) 28% 24%
Table No. 1 illustrates the PRM when calculated under the Company's old method versus
the new method. As can be seen from the table,by using different assumptions to determine
resource capacity, the PRM changes accordingly. However, load and the capacity need will not
change,because they are constant in the calculation. Under both methods, the capacity need is
determined in the Resource Adequacy Study and is the same, regardless of the PRM. In other
words, regardless of using the old method or the new method for determining the PRM, the
capacity position shown is the same.
2 WRAP's QCCs are only available for the next several years,so the Company developed QCCs for the entire
planning horizon based on WRAP and an E3 study. Application at 6.
STAFF COMMENTS 6 MARCH 20, 2025

STAFF RECOMMENDATION
Staff recommends the Commission direct the Company to submit an updated L&R and
an updated first capacity deficiency date that includes the following:
1. Capacity positions for 2025 using the same method that was used in the proposed
L&R, which considers planned maintenance; and
2. Use an exit date of 2032 for the Northeast plant.
Respectfully submitted this 20th day of March 2025.
�A
Chris Burdin
Deputy Attorney General
Technical Staff. Yao Yin
I:\Utility\UMISC\COMMENTS\AVU-E-25-02 Comments.docx
STAFF COMMENTS 7 MARCH 20, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 20th DAY OF MARCH 2O25,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. AVU-E-25-02, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
DAVID J MEYER SHAWN BONFIELD
VP & CHIEF COUNSEL SR MGR REGULATORY POLICY
AVISTA CORPORATION AVISTA CORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail: david.meer(&avistacorp.com E-mail: shawn.bonfield(kavistacorp.com
avistadocketskavistacorp.com
PATRICIA JORDAN, ECRETARY
CERTIFICATE OF SERVICE