20230705AVU to Staff 5-9.pdf

AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 06/28/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich
REQUESTER: IPUC RESPONDER: Annette Brandon
TYPE: Production Request DEPARTMENT: Energy Resources REQUEST NO.: Staff-005 TELEPHONE: [phone]
REQUEST:
Please provide Idaho's monthly Climate Commitment Act ("CCA") costs since the implementation of the CCA and explain how each month's CCA costs are calculated. Please provide workpapers with all formula intact.
RESPONSE:
Please see Avista's response Staff_PR_005C, 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.
The total amount of costs incurred on behalf of Idaho customers through May 2023 is
approximately $340K. The information below is provided for additional context. Please see the following attachments:
• Staff_PR_005C Confidential Attachment A for the memo to Avista Accounting confirming acceptance of lesser than methodology.

• Staff_PR_005C Confidential Attachment B for the May journal which recorded the
reversal of January through April expenses incurred on behalf of Idaho customers and the May year-to-date expense.
• Staff_PR_005C Confidential Attachment C for the detailed calculations, including formulas. Please see the tab “May electric CCA calculation” for step-by-step procedure for application of lesser-than methodology.
During its 2021 legislative session, the Washington legislature passed, and the Governor approved, the Climate Commitment Act (CCA). Effective January 1, 2023 all electric utilities must secure enough allowances to cover the carbon emissions of imported power and generation from sources emitting 25,000 metric tons or more annually. In order to mitigate the cost burden associated with the Climate Commitment Act on Avista’s Washington electric customers, free allowances would
be distributed based on a forecast approved by the Washington Utilities and Transportation Commission. The intent of this distribution of free allowances was to avoid double-counting as the Clean Energy Transformation Act is the applicable legislation for reducing of greenhouse gas emissions for electric utilities. Avista allocates expenses between jurisdictions based upon an approved Production/Transmission Ratio (PT Ratio). The approval of the lesser than methodology
will not change this practice. In order to ensure consistency among entities impacted by CCA, the Western Power Trading Forum (WPTF) requested clarification from the Washington Department of Ecology (Ecology)
RECEIVED
2023 JULY 5, 2023 4:02PM
IDAHO PUBLIC
UTILITIES COMMISSION
and provided a proposed methodology in the form of a white paper “Consideration of Electricity
Imports and Determination of the Electricity Importer Under the Climate Commitment Act”. This whitepaper was filed on March 1, 2023. Effective January 1, Avista incurred an obligation when off-system sales were executed or a
generation plant was utilized that exceeded the 25,000 metric tons requirement. As such, an
expense was recorded to recognize gross sales at Mid C and for generation from Boulder Park which is located in Washington State. Approximately $5.7M in expense was recorded for January – April of 2023. The expense was Idaho’s allocation of the aforementioned obligation as the understanding was that all portfolio transactions for Washington would be covered by free carbon
allowances. Note that this expense did not flow through the Purchase Cost Adjustment, however,
the revenue associated with this sale was recorded to account 447 sales for resale. These transactions are not entered into unless the cost associated with the transaction is less than the cost of the sale.
The lesser than methodology was approved by the Department of Ecology on May 24, 2023. The
implementation of the methodology will significantly reduce the emissions obligation of Idaho customers due to the ability to offset all sales with Avista aggregated “hub resources” (please see the Company’s response to Staff_DR_007 for additional explanation of “hub resources”). With the approval by Ecology, the total recalculated expense is approximately $950K for January-May,
allocated between Washington ($610K) and Idaho ($340K) based on the current production
transmission (PT) ratio. This amount represents emissions from Boulder Park, which is located within Washington State and exceeds the 25,000 metric tons requirement.
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 06/25/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-006 TELEPHONE: [phone]
REQUEST:
Please respond to the following regarding the white paper "Consideration of Electricity Imports
and Determination of the Electricity Importer Under the Climate Commitment Act" dated March 1, 2023: a. Please explain how the proposed methods in the white paper will affect Idaho's CCA costs.
b. When will the proposed methods in the white paper become effective?
c. Please explain whether the proposed methods affect existing Idaho CCA costs, retroactively. d. If the proposed methods are to be applied retroactively, please quantify the adjustments to Idaho's existing monthly CCA costs and provide workpapers that
calculates the adjustments with all formula intact.
RESPONSE: The white paper “Consideration of Electricity Imports and Determination of the Electricity Under
the Climate Commitment Act” was approved by the State of Washington Department of Ecology
on May 24, 2023. a. Please see the Company’s response to Staff_PR_005. b. The white paper was effective on the day it was approved.

c. The proposed whitepaper was retroactively applied to Idaho expense calculations. Please see the Company’s response to Staff_PR_005. d. Please see the Company’s response to Staff_PR_005.
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 06/25/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-007 TELEPHONE: [phone]
REQUEST:
Please respond to the following regarding the Lesser-of Analysis that allows netting of non-
emitting resources at the Mid-C trading hub for off-system sales: a. Please clarify whether this method _only allows Mid-C hydro generation contracts to offset off-system sales. b. Response to Staff Production Request No. 4 states that in-Washington generation can be
used to offset wholesale sales and that in-Washington generation does not have to be
renewable energy. Please explain what other energy sources can be used to offset off-system sales, besides Mid-C hydro generation. c. Please explain whether this method of netting only pertains to off-system sales through the Mid-C trading hub.
d. Please provide a list of current Mid-C hydro contracts.
e. Please explain in detail how the Company plans to implement the netting method. f. Does the Company plan to implement the netting at the monthly level? g. Please provide an example using actual data to illustrate the netting process.
RESPONSE: The Company understands this question to be in regard to the applicability of resources which may be utilized to off-set carbon emissions for net off-system sales at a trading “hub” including the
Mid-C. A trading hub represents a composite point of receipt/delivery which comprises the output
of many resources. As such, electricity in this point of receipt is considered to be a combination of resources both inside/outside of Washington State. Avista has two such “hubs” MID-C and AVA.SYS.
With that understanding, please see the following:

a. The lesser than methodology utilizes both Mid-C and AVA.SYS to support off-system sales. b. Washington In-State Generation (with the exception of Boulder Park) is comprised of clean resources including Spokane River hydroelectric generation, wind, and small PURPA generation sources. This generation is able to offset any generation remaining after netting Mid-C purchases with Mid-C generation.

c. Please see part (a).

d. The Company currently has contracts for Mid-Columbia generation with Chelan County PUD, Douglas County PUD and Grant County PUD.
e. Please see the Company’s response to Staff_PR_005 attachment A for the lesser-than calculation for January – May 2023.
f. Transactions will be tracked on an hourly basis, and summarized on a monthly basis in order to be utilized for accounting purposes.

g. Please see the Company’s response to Staff_PR_005 Attachment A for the actual lesser-
than calculation for January – May 2023.
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 06/25/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-008 TELEPHONE: [phone]
REQUEST: Please respond to the Wheel-Through method in the white paper:
a. Please explain in detail how the Company plans to implement the Wheel-Through method.
b. Does the Company plan to implement the Wheel-Through method at the monthly level? c. Please provide an example using actual data to illustrate the Wheel-Through method. RESPONSE:

a.-c. The Washington Department of Ecology has not provided guidance as to how Utilities may implement the wheel-through method, however, the CCA only regulates emissions only for power with a final point of delivery in Washington state. Therefore, wheel-throughs are not regulated
since the power ultimately does not serve Washington loads. At the time of contracting, Avista
rarely knows the destination of the power and thus cannot ascertain the carbon obligation. This is true today for all short-term transactions. However, all sales are tracked through the eTag system that does during scheduling define the ultimate path for power. This means that after the fact, using eTags it is possible to identify any power that ultimately was scheduled outside of Washington and
no subject to the procurement of a CCA Allowance.
As an example of a potential for a wheel-through transaction, we might on a day-ahead basis using the Intercontinental Exchange (ICE). ICE might match us up with Portland General Electric of Oregon that would schedule to their retail load in that state. Or it might match us up with Puget
Sound Energy in Washington. The former would not be regulated by CCA and not require an
allowance, but the transaction with Puget Sound Energy would. The eTag would define the ultimate delivery point whereby Avista relinquished ownership of the power and therefore define its regulation.
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 06/28/2023 CASE NO: AVU-E-23-04 WITNESS: Clint Kalich REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-009 TELEPHONE: [phone]
REQUEST:
Appendix 2 of the white paper provides a Wheel-Through example, where 100 MW of the
imported 125 MW from Hermiston, Oregon is wheeled through Washington to Oregon. It appears that the hubbing arrangement with Wanapum and Priest Rapids hydro projects does not play a role. Please explain how the hubbing arrangement affects the Wheel-Through process in the example. RESPONSE: In the example above, the power is not syncing in the state of Washington. As such, there is no “hubbing” arrangement applicable.