20230703AVU to Staff 11-15.pdf

AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/03/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-010 TELEPHONE: [phone]
REQUEST: Please respond to the following regarding Tab "CCA Allowance Inventory New" of the excel file
"Staff PR_003C Confidential Attachment A" provided in Response to Staff Production Request
No. 3:
a. Please explain why the Company has not retired any allowances yet;
b. Please explain how the Company plans to retire allowances given the requirement that a minimum of 30% of allowances to be retired in the year that emissions occur with any balance due at the end of 2023-2026 Compliance. Specifically, when, how often, and how many allowance will the Company plan to retire at any given time and each year? and c. Column N shows "Allowance EOM Market Price". Please explain what EOM stands for, define the term, and explain how the values are determined.
RESPONSE:
a. Retirement of the minimum 30% of allowances to cover 2022 emissions is not required until November 1, 2024. Because Avista has not been required to retire or turn in the
allowances for compliance, it has not done so yet.

b. The Company has not made a final determination as to its strategy for retiring allowances
each year, other than to meet the minimum requirements per the law.

c. EOM stands for “end of month”. The end of month CCA allowance price is obtained from our Power Supply Department which through May was obtained from trading brokers who were showing actual bid/offers in the market as well as actual trade prices from the last day of the month. Starting in June, the CCA allowance price will be published from Intercontinental Exchange, Inc. (ICE) an on-line trading platform used to transact these
products. The ICE platform will give more transparency into the actual market prices.
RECEIVED
2023 JULY 3, 2023 3:56PM
IDAHO PUBLIC
UTILITIES COMMISSION
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/03/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-011 TELEPHONE: [phone]
REQUEST: Please respond to the following regarding Tab "CCA Liability New Method" of the excel file
"Staff_PR_003C Confidential Attachment A" provided in Response to Staff Production Request
No. 3:
a. Please provide workpapers that calculate the values in Column I "Calculated Allowances Needed YTD" with all formula intact; b. Please explain why the value for May 2023 in Column I dropped significantly compared to the previous month; c. Column Q "Total Liability Accrued" includes "Value of Allowances Purchased" and "Value of Allowances To Be Purchased". Does the Company plan to include "Total Liability Accrued" amounts for recovery in the Power Cost Adjustment ("PCA")? If not,
what values will be passed to the PCA through FERC Account 509?
d. Please explain why allowances are needed for Avista's electricity ratepayers in
Washington. Why aren't they covered by free allowances?
e. Please provide workpapers that calculate the values in Column AB "Calculated Allowances Needed YTD" with all formula intact; and f. Please explain why the value for May 2023 in Column AB does not drop compared to the previous month, unlike the value for May 2023 in Column I. RESPONSE:
a. Please refer to Staff_PR_005 for the requested calculation

b. In May, the Department of Ecology approved the “lesser than methodology” which allowed
Avista to offset its carbon obligation resulting from sales at Mid-C with generation located
at the Mid-C, in-state generation, or out of state clean generation. The Company reversed previous obligation accruals and re-booked May to date results using this newly approved methodology which substantially reduced the carbon obligation allocated to Idaho customers.

c. The Company plans to include the “Total Liability Accrued” as the amount for recovery in the PCA. Please refer to journal entries supplied in Staff_PR_015.

d. The Department of Ecology has indicated it will only provide no-cost allowances to cover Avista’s emissions associated with its Washington retail electric load, rather than its
emissions associated with its Washington-share of its total generation portfolio. This means that the Washington-share of emissions from any sales at the Mid-C not offset by the “Lesser Of” Methodology will require an allowance to cover the associated emissions. e. Please refer to Staff_PR_005.
f. Up until May when the Company received indications from the Department of Ecology on the number of no-cost allowances it would receive in Washington, the Company did not
accrue a liability or expense for Washington electric as it believed free allowances would
cover the full liability. Based on information received from the Department of Ecology, the Company started accruing for costs in Washington electric and a cumulative true-up entry was made in May.
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/03/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-012 TELEPHONE: [phone]
REQUEST: Response to Staff Production Request No. 3 states that the second allowance auction was held on
May 31, 2023, with a settlement price of $56.01 and that the results from the second auction will
be factored in going forward. Please respond to the following:
a. Did Avista purchase any allowances from the second auction?
b. If so, how many allowances did Avista purchase? and
c. Please explain how the results from the second auction will be used going forward. RESPONSE: Please see Avista's response Staff_PR_012C, which contains TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and exempt from public view and is
separately filed under IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
a. Yes. b. Avista purchased XXXX allowances. c. When the Company said that the auction price from the second auction will be factored in
going forward, it meant that the weighted average cost of allowances held in inventory
would be updated based on these results. The weighted average cost of allowances is used to value inventory held and will be used to value inventory when retired.

AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/03/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-013 TELEPHONE: [phone]
REQUEST: Please explain the strategies the Company will use during dispatch to minimize the impact of the
CCA and total net power cost (inclusive of the cost of allowances) to Idaho ratepayers. Please
provide examples illustrating these strategies.
RESPONSE:
The Company is still working to gain a full understanding of the operational aspects of implementing the Climate Commitment Act. The Department of Ecology is working towards providing clarification on several components of the rule, including announcing a rulemaking concerning EIM and data needs for reporting. As such, the Company is still evaluating various
scenarios and strategies to mitigate impacts. That said, the implementation of the lesser-than methodology alone has reduced the amount of expense applicable to Idaho customers to approximately $340,000 for the first five months of the year (please see Staff_PR_005).
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/03/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-014 TELEPHONE: [phone]
REQUEST:
Please explain the strategies the Company will use to optimize its resources to minimize the impact
of the CCA and total cost to Idaho ratepayers. Please provide examples illustrating these strategies and provide potential model run scenarios to test these strategies in the Company's Integrated Resource Plan.
RESPONSE:
Please see the Company’s response to Staff_PR_013.
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/03/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-015 TELEPHONE: [phone]
REQUEST: Please provide a flow chart illustrating the flow of allowances from allowance acquisition through
retirement. For each step in the process, please provide the specific transactions that flow through
the Company's various workpapers and ultimately into the deferral in the PCA. Please include all corresponding accounts in the description and use an example with spreadsheets attached to further illustrate the process.
RESPONSE:
The Company does not have a flow chart, in the technical sense, readily available. However, in order to be responsive to this data response, the Company has provided a t-account, and excel version of each step in the process and the associated accounting entry. Please see the Company’s
response to Staff_PR_015 Attachment A Avista CCA Allowance Inventory Accounting Entries
file. Illustrated in this manner, each step in the process is transparent through the allowance life-cycle, including how it will be recorded in accounting records from acquisition through to the PCA
Deferral.