20250422Final_Order_No_36565.pdf

Office of the Secretary
Service Date
April 22,2025
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA ) CASE NO. AVU-E-25-02
CORPORATION'S APPLICATION TO )
UPDATE AND ESTABLISH ITS CAPACITY ) ORDER NO. 36565
DEFICIENCY PERIOD TO BE USED FOR )
AVOIDED COST CALCULATIONS )
On January 29,2025,Avista Corporation d/b/a Avista Utilities("Company")applied to the
Idaho Public Utilities Commission ("Commission") for approval of the Company's capacity
deficiency period used for its avoided cost calculations. The Company outlined its methodology
and projected its first deficit to occur on January 1, 2030.
BACKGROUND
Under the Public Utility Regulatory Policies Act of 1978 ("PURPA"),the Commission has
established a surrogate avoided resource("SAR")method and an Integrated Resource Plan("IRP")
method to calculate avoided cost rates for qualifying facilities ("QFs"). Under both methods, a QF
receives capacity payments only after the utility reaches the applicable capacity deficit date. Order
No. 32697.
A capacity deficiency case is used to determine when new QFs begin avoiding capacity
costs for a utility and are therefore eligible to start receiving capacity payments. See Order No.
32697. On June 8, 2023, the Commission issued Order No. 35810 requiring Idaho Power
Company, Rocky Mountain Power, and the Company to file a capacity deficiency case within 30
days of their respective IRPs being filed.
APPLICATION
The Company stated that its 2025 IRP identified January 1, 2030, as its first long term
deficit date. Application at 2. The Company stated that this was earlier than the January 1, 2034,
capacity deficiency date that was projected in its 2023 IRP.Id.
The Company summarized major changes in its generation and stated that these changes
were the reason for projecting an earlier capacity deficiency date. Id. These changes included a
new wind Power Purchase Agreement, closure of a qualifying facility, increased industrial
demand, the addition of hydroelectric projects, and a portion of Chelan PUD's capacity. The
Company also indicated that several thermal plants were also scheduled for retirement. Id. at 2-4.
ORDER NO. 36565 1

The Company's forecast reflected January 2024's record peak load. The Company cited its
IRP and stated that, although temporary capacity shortfalls appeared in 2026, these would be
addressed through market purchases. Id. The Company proposed using 2030 as the capacity
deficiency date since earlier deficiencies were minimal and manageable through procurement
strategies. Id. at 3.
The Company outlined its methodology and stated that it determined its 2030 capacity
shortage by comparing peak load plus planning reserve margin against expected resource capacity.
Id. at 4-7. The Company stated that this metric, the 5% Loss of Load Probability standard, aimed
to meet extreme conditions in 95% of scenarios. Id. The Company conducted hourly simulations
with 1,000 different future varying weather and outages to establish a 24%winter planning reserve
margin. Id. The Company further stated that instead of developing its own resource capacity
values, it adopted Western Resource Adequacy Program metrics for efficiency and consistency.
Id. However, the Company adjusted these figures for long-term planning by incorporating
expected declines in variable energy resource capabilities. The Company validated these
projections through reliability studies for both 2030 and 2045.Id.
The Company stated that it incorporated Commission Staff s ("Staff') previous
recommendation and based its reliability metrics on the Company's own studies rather than
regional requirements. Id. at 6. The Company stated that this approach yielded similar results to
previously approved methods since both identified the same resource deficits, differing only in
how existing resource capacities were accounted for. Id. at 6-7.
STAFF COMMENTS
Staffs 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. Staff Comments at 2. Based on its review,
Staff recommended that the first deficit date should be determined when the first deficit date occurs
as reflected by the Load and Resource Balance ("L&R"), which occurs in January of 2026. Id. at
3. Staff also recommended that the Company file an updated L&R that included capacity positions
for 2025 using the same method that was used in the proposed L&R, which considers planned
maintenance; and also used an exit date of 2032 for Northeast. Id.
ORDER NO. 36565 2

COMPANY REPLY COMMENTS
The Company agreed with Staff s comments to adopt the capacity deficiency date of the
first deficit period in January 2026. Company Reply Comments at 1. The Company filed an
updated L&R incorporating the updates recommended by Staff of(1) including capacity positions
for 2025 using the same method that was used in the proposed L&R, which considers planned
maintenance; and (2) using a retirement date of 2032 for Northeast for purposes of this capacity
deficiency filing, with the actual retirement date of Northeast determined in the future. Id.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, 61-502,
and 61-503. The Commission is vested with the power to "supervise and regulate every public
utility in the state and to do all things necessary to carry out the spirit and intent of the [Public
Utilities Law]."Idaho Code§ 61-501.The Commission is empowered to investigate rates,charges,
rules,regulations,practices,and contracts of public utilities and to determine whether they are just,
reasonable,preferential,discriminatory,or in violation of any provision of law,and to fix the same
by order. Idaho Code §§ 61-502 and 61-503.
The Commission has authority under PURPA and Federal Energy Regulatory Commission
("FERC")regulations to set avoided costs,to order electric utilities to enter fixed-term obligations
for the purchase of energy and capacity from QFs, and to implement FERC rules. The Commission
may enter any final order consistent with its authority under Title 61 and PURPA.
Having reviewed the Application and all submitted materials,the Commission finds it fair,
just, and reasonable to approve the capacity deficiency date and the first deficit period in January
2026 as informed by the Company's Application, Staff comments, and including the updated L&R
filed in the Company's reply comments.
ORDER
IT IS HEREBY ORDERED that the Commission approve the capacity deficiency date and
the first deficit period in January 2026.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. Idaho Code §§ 61-626.
ORDER NO. 36565 3

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 22°d day of
April 2025.
EDWARD LODGE,PkESIDENT
?HN R. HAMMOND JR., COMMISSIONER
DAYN H RDIE, COMMISSIONER
ATTEST:
i a o - a chez
Commission Secretary
I ALega1\ELECTRIC\AVU-E-25-02_CDP\orders\AV UE2502_FO_cb.docx
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