20250819Staff Comments.pdf

RECEIVED
August 19, 2025
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11560
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 2025 NATURAL GAS ) CASE NO. AVU-G-25-03
INTEGRATED RESOURCE PLAN (IRP) )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Erika K. Melanson, Deputy Attorney
General, submits the following comments.
BACKGROUND
On March 31, 2025, Avista Corporation, d/b/a/Avista Utilities ("Company") filed its
2025 Natural Gas Integrated Resource Plan("IRP") with the Commission.
The Company files a natural gas IRP every two years to describe its plans to meet its
customers' future natural gas needs. The IRP must discuss the subjects required by Commission
Order Nos. 25342, 27024 and 27098, and Section 303(b)(3) of the Public Utility Regulatory
Policies Act("PURPA"), 15 USC§ 3202.
STAFF COMMENTS 1 AUGUST 19, 2025

STAFF ANALYSIS
Staff recommends acknowledgement of the Company's IRP as timely filed and in
compliance with previous orders. Staff reviewed the Company's IRP to affirm that it complies
with requirements as specified by Commission orders and contains the required information.
Staff examined the Company's new resource modeling software, natural gas demand forecasts,
supply-side resources, Demand Side Resources ("DSR"), resource and distribution planning, and
action plans with each of these subjects addressed in greater depth in the sections below.
New Resource Modeling Software
In this IRP, the Company uses a new modeling software called CROME to perform its
natural gas planning. The Company represents the updated software provides "flexibility to
properly model unique physical and periodic constraints necessitated by new resources and
environmental compliance regulations" at a lower cost than the previous software. IRP at 28.
Additionally, the Company uses features in CROME to analyze weather, supply, and price
uncertainty. Staff evaluated the Company's process for validating the new modeling results
compared to the previous software and believes the new software is appropriate to use, but the
Company should continue to validate model results as it continues to implement the software in
the future.
Natural Gas Demand Forecast
Staff reviewed the Company's demand forecast assumptions, along with projections for
demand growth rates. Staff confirmed the Company's demand forecast is based on reasonable
assumptions and provides a range of demand projections to test the sensitivity of future resource
investments. The demand forecast used in development of the 2025 IRP incorporates end-use
modeling techniques instead of the time series models used in the 2023 IRP.
One of the Company's primary considerations for moving toward an end-use model is the
Washington building code in place requiring a heat pump for space and water heating for new
customers. Response to Production Request No. 2. Using a time series model, similar to what
was used in previous IRPs, can make it difficult to understand the effect of changes to building
codes. An end-use model can also provide a better indication of future demand and efficiency
STAFF COMMENTS 2 AUGUST 19, 2025

gains across the Company's service territory. Id. Staff believes the move to an end-use model is
reasonable and will provide more accurate forecasts.
Along with the demand forecast, the Company also developed demand scenarios and
sensitivities that represent different expectations for the future and a range of possible outcomes
based on current policies, codes, and customer demand. This scenario analysis is important due
to the changing policies in Oregon and Washington which will impact the Company's overall
resource planning and has the potential to directly impact Idaho. The Company asserts that
scenario analysis of demand is becoming more difficult to forecast due to the policy updates in
both Oregon and Washington and building code updates in Washington. IRP at 85. Changes in
total demand can drastically change both the timing and resources selected, making it necessary
to look at different future expectations based on demand, costs, and resource availability. The
Company's Table 3.8 shows the demand scenarios developed for this IRP. Id. at 86.
Table 3.8: Demand Scenarios and Sensitivities
Preferred Resource Strategy Scenario — Our High Customer Scenario — A high demanq
expected case based on assumptions and costs case to measure risk of additional customer
with a least risk and least cost resource selection and meeting our emissions and energy
obligations
High Electrification Scenario—Scenario to show Average Case Sensitivity — Non climate
the risk involved with energy delivered through the change projected 20-year history of average
natural gas infrastructure moving to the electric daily weather and excludes peak day
system
Hybrid Heating Scenario — Natural Gas used for Low Natural Gas Use Scenario — A lower
space heat below 38' F while transferring all other than expected use case using RCP 8.5
usage to electricity. weather futures along with high costs for
compliance
RCP 8.5 Weather Sensitivity — Expected case RCP 6.5 Weather Sensitivity - expected
scenario assumptions with RCP 8.5 weather case scenario assumptions with RCP 6.5
futures. weather futures.
Initiative 2066 Sensitivity — Expected case No Growth—no new customers in OR&WA
assumptions with a pause of Washington State after line allowances expire in 2026 and 2025,
commercial customers loads building codes. respectively.
Staff believes the demand scenarios included in this IRP are reasonable because they are
based on the most up-to-date information. Due to the policy changes occurring in Washington
and Oregon, Staff expects these scenarios to be updated and/or expanded, if necessary, in the
next IRP to reflect potential demand scenarios that could impact the Company's system.
STAFF COMMENTS 3 AUGUST 19, 2025

Natural Gas Supply Resources and Options
Staff reviewed the Company's natural gas supply resources and price forecasts. The IRP
describes both existing and potential natural gas supply resources. The Company's portfolio of
gas supply resources includes contracts to purchase gas, store gas, and reserve firm pipeline
capacity rights. Staff believes the Company's natural gas procurement and storage practices are
sufficient to achieve required volumes of natural gas at economic prices to support its customers'
needs.
The Company's Preferred Resource Strategy for Idaho includes using the least cost
natural gas basin and storage, combined with energy efficiency(`BE") to meet energy demand.
The Company states the Alberta Energy Company("AECO")basin is Idaho's primarily
available hub because of its geographic proximity to Idaho and it provides the Company with its
largest amount of pipeline capacity. Id. at 47. Potential tariffs on Canadian sourced natural gas
were still in development during the 2025 IRP process and the Company plans to analyze the
impact of tariffs in the 2027 IRP when more information becomes available.
Current natural gas price forecasts show a long-term regional price advantage for
Western Canada and Rockies natural gas basins as the need for this gas diminishes. Historically
in the Northwest, high Canadian production combines with limited options for flowing natural
gas into demand areas resulting in discounted commodity prices as compared to the Henry Hub.
Attractive commodity prices and abundant supplies of natural gas has resulted in the construction
of multiple LNG plants which are creating significant demand on the North American supply of
natural gas and upward pressure on commodity prices. Id. at 115.
The Company asserts that it closely monitors supply and pricing factors, but it cannot
precisely predict future prices across the 20-year IRP time horizon. The Company obtained price
forecasts from several industry experts, which were used to develop price forecasts it considered.
Id. at 119. The Company's Figure 5.2 depicts the annual average prices of combined forecasts in
nominal dollars. The expected price was developed by blending prices from the different
sources. Staff believes the Company's forecasts are reasonable and recognizes that there has
been a great deal of recent volatility in the price of natural gas. The Company provides semi-
annual reviews to the Commission which include a review of price forecasts as well as actuals.
STAFF COMMENTS 4 AUGUST 19, 2025

Figure 5.2: Henry Hub Forecasted Price Study Forecasts (Nominal $/Dekatherm)
$10
-Actuals -Nymex EIA/AEO
$9 —Consultant 1 —Consultant2 - Expected Case
$8 /
$7
L $6
$5
Q $4
$3
$2
$1
$0
00 O CN I* CD 00 O N 1411 CD 00 O N NT CD O O CN
O V_ T_ T_ T_ T_ N N N N N M M M M M �t � �
O O O O Co O O O O O Co O O O O O O O O
N N N N N N fV fV N M N N N N N N N N N
Demand Side Resources
In Chapter 4 of the IRP, the Company discusses DSR including EE programs to
"residential, low income, commercial and industrial customer segments"when feasible and cost-
effective. Id. at 89. AEG conducted a Conservation Potential Assessment study to evaluate EE
programs for the Company's service territory to estimate potential EE savings. Id. at 90.
For Idaho, the Company identifies its EE resource selections with home heating, home
improvements, appliances and new construction. Appendix at 152. These selections were made
using the Utility Cost Test("UCT") achievable economic potential which considers costs and
benefits from the perspective of the Company. AEG estimates 26,257 Decatherms ("Dth") of
savings in 2026, and 600,730 Dth of savings by 2045. Id. at 145. The Company's estimated
conservation targets totaled 86,439 Dth for Idaho for 2026-2027. IRP at 97.
Staff noted the significant change in the 2045 Achievable Economic UCT Potential
cumulative saving from the Companies projected 1,278,511 Dth in the 2023 IRP to 600,730 Dth
in the 2025 IRP,just under 47% of the previous projection. On October 10, 2024, the Company
made Staff aware of anticipated issues with the cost-effectiveness of its natural gas EE programs.
The Company explained that low-participation, low realizations rates for its midstream offering,
STAFF COMMENTS 5 AUGUST 19, 2025

and decreasing avoided costs have significantly reduced the cost-effectiveness of its natural gas
EE offerings. Additionally, through continued discussions, Staff discovered a potential issue
with the savings assumptions for the residential gas furnace measure. This measure captures the
majority of savings for the residential sector. Therefore, changes to its savings assumptions can
have a pronounced effect on the cost-effectiveness of the residential sector. As of the June 2025
Energy Efficiency Advisory Group meeting, the Company continues to evaluate its natural gas
portfolio and the viability of its 2026-2027 programs. Staff will continue to work with the
Company and with other stakeholders regarding the Company's natural gas EE programs.
Avoided Cost
In determining avoided costs for Idaho, AEG and the Company's EE team includes
commodity costs, costs associated with interstate pipeline contracts, and local distribution costs
in its calculations. Appendix at 592. The Company notes that all storage costs from Jackson
Prairie are excluded, and interruptible customers from all classes are removed from local
distribution costs. Id. at 597. CROME was used to calculate marginal cost data by day, month,
and year for each demand area. IRP at 90. The avoided costs produced by the IRP are an
essential input for the planning and evaluation of the Company's EE programs. In the
discussions with Staff mentioned above, the Company explained that the 2025 IRP avoided cost
forecast are significantly lower than the 2023 forecasts. Staff believes that the avoided cost
forecasts are reasonable.
Resource Evaluation
Staff reviewed the Company's gas supply, transportation capacity, and distribution
planning and believes each is sufficient to meet demand. The Company evaluates its ability to
obtain adequate natural gas supply and ensure sufficient pipeline transportation capacity to its
city gates. In addition, the Company evaluates and monitors its distribution system to ensure it is
sufficient to meet demand and projected load growth requirements.
Gas Supply and Transportation Capacity
The Company's management of natural gas procurement is done on a system-wide basis
using regional supply options to serve customers. The Company's supply options include
STAFF COMMENTS 6 AUGUST 19, 2025

storage, firm and non-firm supplies, and firm and interruptible transportation interstate pipelines.
The Company manages these resources depending on demand and operating conditions in its
service territories in a reliable and economic manner, including the capability to respond to and
fulfill peak day requirements. When the Company considers a transportation option to meet
demand, it uses CROME to pair it to natural gas supply and transportation to model prices. The
Company continues to enhance its demand and procurement modeling through the use of
CROME. Staff looks forward to the Company's continued enhancement of its modeling tools
and techniques and updates on the evolution during semi-annual reviews with the Commission.
Distribution Planning
When the Company conducts distribution planning, it primarily focuses on capacity
requirements and system integrity assessments. In addition, the Company evaluates
enhancements to its distribution system including pipelines, regulators, and compressors, along
with targeted conservation resources that may"reduce or delay"the need for these
enhancements. Id. at 253. The Company states, "Securing adequate natural gas supply and
ensuring sufficient pipeline transportation capacity to Avista's city gates becomes a secondary
issue if distribution system growth behind the city gates increases faster than expected and the
system becomes severely constrained." Id. at 245.
The Company's Idaho distribution system contains approximately 3,700 miles of service
and main pipelines. Transportation-only customers are excluded from long-term capacity
planning exercises but are included in distribution planning because they use the Company's
distribution system. The Company uses a modeling tool to assess distribution system growth and
needs.1 The tool provides a graphic representation of the Company's system, which behaves
very similar to the actual system, allowing the Company to simulate and model alternatives.
Staff reviewed the different types of resource alternatives the Company considers the solution is
least cost and least risk to the Company's rate payers.
In this IRP, there is one estimated distribution system enhancement identified for Idaho.
Recent growth at the Schweitzer Resort Community in Schweitzer, ID is resulting in the
distribution system approaching maximum capacity. After evaluating several alternatives,
' GL Noble Denton Synergi modeling tools.
STAFF COMMENTS 7 AUGUST 19, 2025

preliminary studies recommend extending the existing high-pressure line closer to the
Schweitzer growth area. Id. at 254.
Staff believes that the Company's frequent assessments of the need for enhancement
projects are necessary to achieve sufficient capacity to meet demand. Staff recommends that the
Company continue including these types of details in the IRP and providing the most current
information.
Action Plans and Progress
The IRP contains an Action Plan section that describes status of Action Items from the
Company's 2023 IRP and 2025-26 actions for the Company to "provide the best cost/risk
resource portfolio to support and improve IRP planning." Id. at 257.
The Company's 2023 IRP Action Items included items for each jurisdiction(Oregon,
Washington, and Idaho). The 2023 IRP Action Plan Items related to Idaho include the
following:
• Explore using end-use modeling techniques for forecasting customer demand. The
Company utilized an end use forecast as developed by AEG in all analysis included
within the 2025 IRP, as discussed in detail in Chapter 3 of the IRP.
Staff believes the Company reasonably accomplished its Idaho specific action items.
The Company's 2025-26 IRP Action Items include items for each jurisdiction
(Oregon, Washington, and Idaho). The 2025-26 IRP Action Plan Items related to Idaho include
the following:
• Acquire all estimated potential EE savings for Idaho and Washington.
• Investigate adding liquified natural gas storage to improve resiliency in the North
Idaho/Eastern Spokane region.
Public Participation
Several Staff members participated in the ten Technical Analysis Committee ("TAC")
meetings conducted by the Company from February 2024 to January 2025. During these
meetings, the Company provided details on the mechanics of its planning strategies, tools, and
results. Meetings were conducted in an interactive manner to include feedback and input from
TAC team members as well as stakeholders.
STAFF COMMENTS 8 AUGUST 19, 2025

In addition to TAC meetings, the Company conducted a public meeting on March 5,
2025, where the Company reviewed its selection of preferred resources to meet energy demand
and energy policy compliance in Oregon and Washington. These meetings allowed participants
to interact directly with the Company's subject matter experts, as well as providing the methods
for providing feedback and comments to the Company in addition to each State Commission.
Staff appreciates the Company's level of public engagement and participation in the
development of its IRPs.
STAFF RECOMMENDATION
Staff reviewed the Company's 2025 Natural Gas IRP and believes that the 2025 IRP
contains the required information to comply with Commission Order Nos. 25342, 27024, 27098,
and 36567, and Section 303(b)(3) of the PURPA, 15 USC§ 3202.
Staff recommends the Commission:
• Acknowledge the Company's 2025 Natural Gas IRP as timely filed and compliant
with previous orders.
Respectfully submitted this 19th day of August 2025.
Erika K. Melanson
Deputy Attorney General
Technical Staff: Vicki Stephens
Michael Eldred
C\Utility\UMISC\COMMENTS\AVU-G-25-03 Comments.docx
STAFF COMMENTS 9 AUGUST 19, 2025

CERTIFICATE OF SERVICE
+xv
I HEREBY CERTIFY THAT I HAVE THIS DAY OF AUGUST 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-G-25-03, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
DAVID J MEYER SHAWN BONFIELD
VP & CHIEF COUNSEL SR. MGR. OF REGULATORY STRATEGY
AVISTA CORPORATION & POLICY
PO BOX 3727 AVISTA CORPORATION
SPOKANE WA 99220-3727 PO BOX 3727
E-mail: david.meyergavistacorp.com SPOKANE WA 99220-3727
avistadockets&avistacorp.com E-mail: shawn.bonfield&avistacorp.com
2
PATRICIA JORDA , S TARY
CERTIFICATE OF SERVICE