20120824Avista to Staff 1-3.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
Alm.ism'
RECEIVED Corp.
212A1J62 AM 9:2
August 23, 2012
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702-5918
Attn: Karl T. Klein
Deputy Attorney General
Re: Production Request of the Commission Staff in Case Nos. AVU-G-12-05
Dear Mr. Klein,
Enclosed are an original and three copies of Avista's responses to IPUC Staffs production
requests in the above referenced docket. Included in this mailing are Avista' s responses to
production requests 001 - 003.
If there are any questions regarding the enclosed information, please contact Paul Kimball at
[phone] or via e-mail at paul.kimballavistacorp.com
Sincerely,
Paul Kimball
Regulatory Analyst
Enclosures
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO
CASE NO: AVU-G-12-05
REQUESTER: IPUC
TYPE: Production Request
REQUEST NO.: Staff-001
DATE PREPARED: 08/22/2012
WITNESS: Steve Harper
RESPONDER: Kelly Irvine
DEPARTMENT: Energy Resources
TELEPHONE: [phone]
REQUEST:
Please describe any changes Avista has made in its gas procurement practices as a result of current
low gas prices. If changes have been made, please describe the changes, explain your justification
for deviating from prior established procurement practices, and explain how you believe
customers will benefit from changes in procurement practices. If changes have not been made,
please explain why not.
RESPONSE:
When developing our procurement plan, Avista conducts a review assessing the performance of
previous years' plans as well as an analysis of current and projected natural gas market
fundamentals and current and future market prices. Avista begins the development of each
procurement plan by preparing a load forecast. This load forecast is generated utilizing the
methodology consistent with IRP planning, budget and forecasting, and rate making purposes.
Then hedges from previous year's long term discretionary hedging and anticipated storage
withdrawals are deducted from the forecasted load. The remaining load requirements can be
served with either short term hedges (one year or less) or index (spot/cash) purchases. For the
2012-2013 procurement plan year, the market fundamentals indicated the potential for continued
low prices. Avista' s response to these market dynamics was to allocate more supply to daily index
pricing (approximately 36% from 30%) thus reducing the amount of gas allocated for short term
hedges.
The long term discretionary hedging plan was also altered slightly. Our long term discretionary
program is an "opportunistic price shopping" program designed to capture potentially lower hedge
prices if market prices fall below pre-established price targets. The targets are derived from an
initial set point which is calculated using a mix of historical and future market prices. When
developing the 2012-2013 long term discretionary hedging plan, the set point (and thus the pricing
targets) were updated to include more recent historical and future market prices. Shortening the
historical look back component eliminated some higher priced years creating lower or more
aggressive pricing triggers. A short time after the plan was enacted, prices fell precipitously. This
caused us to hit several of our LT targets in a relatively short period of time. At that time, we
decided to recalculate the remaining volumes and targets in order to reflect the current and
projected market conditions. The change was communicated to our Risk Management Committee
and regulatory staff (including Idaho) in December 2011.
Avista maintains that it cannot accurately predict future prices, but using its experience and market
intelligence, evaluates and changes its procurement plan to provide customers with stable and
competitive rates. The changes to the 2012-2013 procurement plan provided the opportunity for
customers to participate in lower prices resulting in a more competitive and stable rate.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO- DATE PREPARED: 08/22/2012
CASE NO: AVU-G-12-05 WITNESS: Steve Harper
REQUESTER: IPUC RESPONDER: Annette Brandon
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff-002 TELEPHONE: [phone]
REQUEST:
In the Company's Application, the Company states that 29% of its estimated annual load
requirement for the PGA year are from prior multi-year hedges. Please provide the quantity, term
and price per dekatherm of each multi-year hedge. In your response, please also provide the
average quantity, term and price per dekatherm for volumes hedged for a term of one year or less.
RESPONSE:
Please see Staff _PR_002 Attachment A for October 2012 hedges and Staff_PR_002 Attachment B
for the November 2012 through October 2013 hedges as requested. Please note that the only
hedge that is included in Attachment B but was not included in the Company's filing is the July 24,
2012 hedge (the combination of Deal Keys 405348 and 405349). The Company used June 30,
2012 as the cutoff date for its filing and therefore that hedge was not included.
a,iflSTA Gas Hedge Plan Summary wIWACOG Page: 1f 2
Database: NUCUT
October 1, 2012 - October 31, 2012 gts_sum_wacog
08/21/12 14:21:39
Price Deal Key Oct12 Nov12 Dec12 Jan13 Feb13 Marl Apr13 May13 Jun13 Jul13 Aug13 Sep13
LDC Disc Prompt Yr Hedges
4.555 404371
$4.365 404372 1750
$4.045 521209 1750
LDC Prompt Yr Hedges
-$.65 403699
$4.815 403700 1750
$4.88 404097 1750
4.54 404098
$4.365 404147 1750
$4.44 404381 1750
4.555 404382
4.53 404462
$4.12 404463 1750
$4.51 522167 1750
$4.335 523306 1750
$4.045 524018 1750
$4.33 524802 1750
$4.28 525547 3500
$4.275 527594 1750
$3.585 529403 1750
Volume/Day
LDC Disc Prompt Yr Hedges 3500
LDC Prompt Yr Hedges 22750
Total Portfolio Cost
LDC Disc Prompt Yr Hedges
Executed Hedges 108500 0 0 0 0 0 0 0 0 0 0 0
Cost of Executed Hedges 426133.75 0 0 0 0 0 0 0 0 0 0 0
WACOG $3.928 $ $ $ $ $ $ $ $ $ $ $
Staff—PR-002 Attachment A.pdf Page 1 of 2
Gas Hedge Plan Summary wIWACOG
2
NUCLT
October 1, 2012 - October 31, 2012 gts_sum_wacog
08/21112 14:21:39
Price Deal Key Oct12 Nov12 Dec12 Jan13 Feb13 Marl Apr13 May13 Jun13 Jul13 Aug13 Sep13
LDC Prompt Yr Hedges
Executed Hedges 705250 0 0 0 0 0 0 0 0 0 0 0
Cost of Executed Hedges 2928686.25 0 0 0 0 0 Q 0 0 0 0 0
WACOG $4.153 $ $ $ $ $ $ $ $ $ $ $
Report Totals:
Total Volume: 813750 0 0 0 0 0 0 0 0 0 0 0
Total Cost: 3354820 0 0 0 0 0 0 0 0 0 0 0
Total WACOG: $4.123 $ $ $ $ $ $ $ $ $ $ $
Staff_PR_002 Attachment A.pdf Page 2 of 2
J7vis TA Gas Hedge Plan Summary wIWACOG Page: 1f 2
Database: NUCUT
November 1, 2012 - October 31, 2013 gtssum_wacog
08/21/12 14:22:29
Price Deal Key Nov12 Dec12 Jan13 Feb13 Marl Apr13 May13 Jun13 Jul13 Aug13 Sep13 0ct13
LDC Disc 234 Yr Hedges
$555 403339 3700 3700 3700 3700 3700
$5.2 403450 1850 1850 1850 1850 1850
$5.13 403475 1850 1850 1850 1850 1850
-$705 403772
$5.31 403773 1850 1850 1850 1850 1850
$4.46 404375 1850 1850 1850 1850 1850
$4.64 404429 1850 1850 1850 1850 1850
$7.13 505192 3700 3700 3700 3700 3700
$6.88 505232 3700 3700 3700 3700 3700
$6.31 505978 1850 1850 1850 1850 1850
$6.085 506103 1850 1850 1850 1850 1850
$5.89 506319 1850 1850 1850 1850 1850
$6.175 514043 1850 1850 1850 1850 1850
$5.85 514814 1850 1850 1850 1850 1850
$5.03 518815 1850 1850 1850 1850 1850
$4.935 518945 1850 1850 1850 1850 1850
$4.835 520123 1850 1850 1850 1850 1850
$4.71 520306 1850 1850 1850 1850 1850
$5.055 520932 1850 1850 1850 1850 1850
$5.03 520985 1850 1850 1850 1850 1850
$4.81 521165 1850 1850 1850 1850 1850
$4.595 529133 1850 1850 1850 1850 1850
$4.475 529264 1850 1850 1850 1850 1850
LOC Prompt Yr Hedges
$2.975 404712 1550 1550 1550 1550 1550 1550 1550
$2.97 404866 1550 1550 1550 1550 1550 1550 1550
$2.905 405050 4650
$2.665 405051 750 750 750 750 750
$2.748 405055 4650
$3.19 405104 1550 1550 1550 1550 1550 1550 1550
-$463 405348
$3.63 405349 1550 1550 1550 1550 1550 1550 1550
$3.823 530408 1700 1700 1700 1700 17fl0 1700 1700
Staff_PR_002 Attachment B.pdf 'age 1 of 2
ArIVISTA Gas Hedge Plan Summary wIWACOG Database:
2
ucr
November 1, 2012 - October 31, 2013 gts_sum_wacog
08/21/12 14:22:29
Price Deal Key Nov12 Dec12 Jan13 Feb13 Marl Apr13 May13 Jun13 Jul13 Aug13 Sep13 Oct13
Volume/Day
LDC Disc 234 Yr Hedges 46250 46250 46250 46250 46250
LDC Prompt Yr Hedges 750 750 750 750 750 12550 7900 7900 7900 7900 7900 12550
Total Portfolio Cost
LDC Disc 234 Yr Hedges
Executed Hedges
Cost of Executed Hedges
WACOG
LDC Prompt Yr Hedges
Executed Hedges
Cost of Executed Hedges
WACOG
Report Totals:
Total Volume:
Total Cost:
Total WACOG:
1387500 1433750 1433750 1295000 1433750 0 0 0 0 0 0 0
7600170 7853509 7853509 7093492 7853509 0 0 0 0 0 0 0
$5.478 $5.478 $5.478 $5.478 $5.478 $ $ $ $ $ $ $
22500 23250 23250 21000 23250 376500 244900 237000 244900 244900 237000 389050
59962.5 61961.25 61961.25 55965 61961.25 1150290 792580.875 767013.75 792580.875 792580.875 767013.75 1211336.625
$2.665 $2.665 $2.665 $2.665 $2.665 $3.055 $3.236 $3.236 $3.236 $3236 $3.236 $3.114
1410000 1457000 1457000 1316000 1457000 376500 244900 237000 244900 244900 237000 389050
7660132.5 7915470.25 7915470.25 7149457 7915470.25 1150290 792580.875 767013.75 792580.875 792580.875 767013.75 1211336.625
$5.433 $5.433 $5.433 $5.433 $5.433 $3.055 $3.236 $3.236 $3.236 $3.236 $3.236 $3.114
Staff-PR-002 Attachment B.pdf Page 2 of 2
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G- 12-05
IPUC
Production Request
Staff-003
DATE PREPARED
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
08/22/2012
Steve Harper
Kelly Irvine
Energy Resources
[phone]
REQUEST:
On page 6, Exhibit C, the Company estimates it will collect $4,021,340 in revenue from interstate
transportation capacity releases. Please explain how the Company estimates the number of
capacity releases and the monetary value of the releases when determining forward looking
demand costs in the PGA.
RESPONSE:
The interstate pipeline capacity releases reflected in the PGA are based on actual contracted
capacity releases and current rates.