20160823AVU to Staff 109.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 08/15/2016
CASE NO: AVU-E-16-03 WITNESS: Bryan Cox
REQUESTER: IPUC RESPONDER: Jeff Schlect
TYPE: Production Request DEPARTMENT: Transmission Services
REQUEST NO.: Staff - 109 TELEPHONE: [phone]

REQUEST:

Please explain cost savings achieved by the Company via the implementation of joint ownership and operation agreements. Please explain whether any of joint operation/ownership agreements assist the Company in meeting existing reliability contingency requirements. Please provide a list of potential joint operation/ownership agreements the Company could pursue that could either increase reliability or increase transmission system operation efficiencies.

RESPONSE:

The Company’s participation in the Colstrip Transmission Agreement, its only true transmission joint ownership and operation agreement, enables the Company to integrate its Colstrip generation resource to its retail load centers as reliably and cost-effectively as possible. Absent the joint construction, operation and maintenance of the Colstrip 500kV transmission system, the Company would have had to independently develop duplicative, stand-alone transmission facilities across an exceedingly long distance – approximately 450 miles – to interconnect with the Bonneville Power Administration (“Bonneville”) system to the west. Without revisiting decisions made with respect to the development of the Colstrip transmission system in the early 1980’s, it is apparent that the Colstrip participants benefit from the cost sharing associated with joint ownership and operation of these significant transmission assets.

While the Company is continually looking for opportunities to enhance transmission system reliability and operational efficiencies, the Company is currently not pursuing any other joint ownership/operational arrangements. Past efforts that could have provided for joint operation of the Company’s transmission assets include the Company’s involvement in attempts to develop a regional transmission organization (i.e., RTO West and Grid West). Joint transmission planning efforts continue with the Company’s participation in ColumbiaGrid and the Northern Tier Transmission Group.

With respect to transmission system development and operations, the various agreements provided in response to DR Staff-108 represent efforts to cost-effectively enhance reliable transmission service to the Company’s retail customers as well as the reliable operation of the broader regional transmission system. Transmission interconnections provide for mutual transmission system support during forced outage contingencies and, in many cases, provision for emergency breakdown relief for power supply. While these and other agreements may not technically be joint ownership and operating agreements, they do provide for collaborative transmission arrangements to support reliable and cost-effective operations of mutual benefit.

For example, the West-of-Hatwai Letter Agreement between Avista and Bonneville provides for the open operation of the Company’s 115kV transmission system in the Big Bend area. This open operation facilitates increased east-to-west regional transmission capacity across the West-of-Hatwai cutplane (across which the Company retains rights to schedule up to 600MW) and prevents the Company’s transmission system from being overloaded during certain operating conditions. Operating the Company’s 115kV system open in the Big Bend area, however, precludes the Company’s ability to directly access the interconnected systems of Chelan County PUD and Grant County PUD. The related BPATPUD Scheduling Letter Agreement clarifies that the Company can not only schedule power directly to and from Chelan PUD and Grant PUD, but can also schedule power to and from Bonneville at its MIDCRemote scheduling point, something the Company would not be able to do absent the overall West-of-Hatwai arrangement. Accordingly, reliability is enhanced for both the regional grid and portions of the Company’s local transmission system, and the Company gains additional commercial transmission capabilities. The current West-of-Hatwai Letter Agreement expires December 31, 2016 and the Company is currently negotiating a follow-on agreement with Bonneville.

A recent example of a collaborative arrangement to increase transmission operational efficiencies is the Idaho Power and Avista Coordination Agreement for Avista Southern System 230kV Outages, dated August 5, 2015. Avista’s standard operating procedures called for a reduction in export transmission capacity to Idaho Power under specified outage situations on either the Avista or BPA transmission systems. The agreement acknowledges that, as the Idaho-to-Northwest transmission path operator, Idaho Power can monitor the overall reliability of the broader Idaho-to-Northwest path and, in lieu of Avista proactively instituting capacity restrictions, institute transmission capacity in real time if necessary. This mitigates Avista’s need to proactively implement capacity restraints on exports to the south from its transmission system. The Company benefits from this arrangement by keeping its export transmission path available for sale and prospective transmission customers benefit from the opportunity to purchase such available capacity to facilitate economic power transactions.

In addition to a follow-on West-of-Hatwai agreement the Company is beginning to assess whether it might seek to collaborate with a neighboring transmission provider to implement a combined, discounted transmission path to facilitate incremental transmission service revenue that might not otherwise arise due to prohibitive pancaked transmission rate expenses across both transmission systems. The Company is continually looking at such opportunities and assessing the reliability and efficiency benefits that may accrue from them.

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