20150812AVU to Staff 57.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/30/2015
CASE NO.: AVU-E-15-05/AVU-G-15-01 WITNESS: Scott Kinney
REQUESTER: IPUC RESPONDER: Scott Kinney
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff - 057 TELEPHONE: [phone]

REQUEST:

Please explain how the Company evaluates the possibility, potential benefits, and risks associated with participating in an Independent System Organization (ISO, See Kinney DI, pg. 7, line 21). Please provide specific calculations and assumptions if a cost benefit analysis has been developed.

RESPONSE:

Avista has not evaluated joining an Independent System Organization (ISO). The only opportunity for Avista to join an ISO in the west is the CAISO. Avista does not have direct transmission interconnections with the CAISO so the Company would have to purchase long term firm transmission rights from another regional transmission provider such as the Bonneville Power Administration in order to participate in the CAISO. The additional transmission costs are a significant economic hurdle for Avista to join the CAISO. Avista also does not support the current CAISO governance model. The CAISO is managed by a Board of directors that is selected by the state of California. Avista would not have any influence on the selection of the CAISO board or its governance. Until the governance changes and Avista has a direct transmission interconnection with the CAISO, the Company will not consider joining the CAISO as a full member. If an alternate ISO were to be developed in the region, Avista would evaluate the benefits of joining this organization.

Avista has been monitoring the CAISO EIM implementation with Pacificorp and other western utilities. However Avista doesn’t have southern intertie transmission capacity that could be used for EIM transactions with CAISO. Avista does have limited transmission capacity to transact with Pacificorp but most of this capacity is already utilized for direct load service. The current CAISO EIM is not governed by an independent Board. This is an issue for Avista. The CAISO EIM is evaluating different governance models but currently none of the options include complete independence. If the NWPP EIM initiative is not successful in implementing an EIM or equivalent market initiatives and additional Northwest utilities decide to join the CAISO EIM in the future, then Avista will reevaluate joining the CAISO EIM at that time.

Page 1 of 1