20230918AVU to Staff 8.pdf

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 09/18/2023
CASE NO: AVU-E-23-05 WITNESS: N/A
REQUESTER: IPUC RESPONDER: Tom Pardee
TYPE: Production Request DEPARTMENT: Natural Gas Supply
REQUEST NO.: Staff-008 TELEPHONE: [phone]

REQUEST:

In the 2023 natural gas IRP filing, Case No. AVU-G-23-05, the Company included a national
carbon tax on the cost of natural gas beginning in 2030. The 2023 electric IRP at 8-15 describes a
similar tax but with a 33% chance of being implemented.
a. Please explain how the national carbon tax is modeled in the 2023 electric IRP and its impact
on the Preferred Resource Strategy;
b. Please explain the effect that the carbon tax has on each of the avoided cost value streams
presented in "Staff-PR-007 Attachment A" provided by the Company in response to Production
Request No. 7; and
c. Please provide an updated version of "Staff-PR-007 Attachment A" that has the impact of the
described national carbon tax removed from the avoided costs.

RESPONSE:

a. The national carbon tax modeled as a dispatch price adder used to develop the wholesale
electric prices. The price adder is the carbon price per metric ton times 33% and is applied
as a dispatch cost to power plants emitting carbon. Effectively this adder reduces dispatch
of higher emitting resources and has an indirect cost adder to the wholesale electric market
price. This risk does have a small impact to the PRS, the tax places carbon emitting
resources at a disadvantage compared to non-emitting resources, given Avista’s PRiSM
model selected mostly natural gas fired CT generation in the PRS this risk of a cost adder
did not change the result, although the model may have selected slightly more energy
efficiency then it would have absent the risk adder. Avista did not study a wholesale price
forecast without the national carbon tax risk adder.
b. The national carbon tax from Staff-PR-007 Attachment A goes directly into each
dekatherm of the avoided cost calculation starting in 2030 and adds to the marginal cost in
serving demand.
c. Please see Staff_PR_008 Attachment A
RECEIVED
2023 SEPTEMBER 18, 2023 5:04PM
IDAHO PUBLIC
UTILITIES COMMISSION