20200811Avista to Staff 1-9.pdf

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
ruRISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AW-G-20-04
IPUC
Production Request
Staff-OO1
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Michael Brutocao
DEPARTMENT: Gas Supply
TELEPHoNE: (s09) 49s-8177
REQUEST:
Please provide supporting information for Lost and Unaccounted for Gas, including:
a. The workpapers with all formulas intact and enabled, used to determine the Lost and
Unaccounted for Gas values shown in Exhibit D,Page 12.
b. The Lost and Unaccounted for Gas numbers reported to Pipeline and Hazardous Material
Safety Administration (PHMSA) for the five-year period reported in this PGA filing and
explain any differences between what is reported in the PGA filing and reported to
PHMSA. Please reconcile any differences.
RESPONSE:
Year Delivery Revenue Loss f/-oh of
Purchase
PGA
Report
PHMSA
Report
20t6 120,958,577 120.058.585 899.992 0.74 0.74 0.74
2017 147.097.624 146,490.005 607,619 0.41 0.41 0.41
2018 134,637,626 134.139.456 498.170 0.37 0.37 0.37
2019 143.375.963 t4t.549.516 t.826.447 1.27 1.27 1.29
2020 r54.340.500 156,662,982 (2322,482\(1.s0)(1.s0)N/A
5-Year
Averaqe
140,082,058 137,780,109 301,949 0.22 0.22
Please see StaflPR_00I Attachment A through StaflPR_00I Attachment E for the Lost and
Unaccounted for ("LAUF") Gas Excel workbooks for years 2016-2020, as well as StaflPR_O0I
Attachment F through Staf[_PR_00l Attachment I for the annual PHMSA gas distribution systern
reports for calendar years 2016-20191. The deadline for submitting the PHMSA report for the
previous reporting period is March 15ft; the PHMSA report for calendar year 2020 has not been
submitted as of this date, August 10,2020.
Notes:
a "Delivery" is representative of throughput at the city-gate meter at the last day of the
period. Given the interconnected nature of the Company's Washington and Idaho system,
it is not possible to physically trace each therm to an individual state. However, in order to
develop an Idaho-specific amount, assumptions are made in order to allocate between states
and between regions.
I The reporting period or "calendar year" as determined by PHMSA is a l2-month period beginning July and ending
June of the following year. As illustrated in SIaLPR_00I Attachment A through StafLPR_O0I Attachment E, the
LAUF Gas reports follow this same timing convention to sync up with the PHMSA required reporting period. I.e.
year "2016" contains data from July l, 20 1 5 through June 30, 20 1 6.
Page I of2
RECEIVED
2020 August 11, AM 8:59
IDAHO PUBLIC
UTILITIES COMMISSION
a "Revenue" is representative of actual billed therms via our Customer Service and Billing
system. Billing dates are based on a2l-day bill cycle and do not correspond directly to a
month-end numbers. Therms included in this amount are based on actual physical location
of each customer and is therefore specific to the individual state. Embedded within these
amounts are true ups, cancel/rebill, and certain other billing activities which may cross over
time periods.
Avista has implemented the same methodology in each of the last five years when providing
figures for both PGA and PHMSA reports except for calendar year 2019.In the 2019 PHMSA
report, LAUF Gas was divided by Revenues rather than Deliveries, resulting in the reporting of a
figure 0.02% greater than the true value. To clarifr, the figure provided to PHMSA in 2019 was
the resultant of 1,826,447 divided by 141,549,516 which equals 1.29, and the correct figure
(provided in the PGA report) was the resultant of 1,826,447 divided by 143,375,963 which equals
t.27.
Page2 of2
AVISTA CORPORATION
RESPONSE TO REQUEST FOR TNFORMATTON
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-20-04
IPUC
Production Request
Staff-002
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Eric Scott
DEPARTMENT: Gas Supply
TELEPHONE: [phone]
REQUEST:
Please provide the workpapers, with all formulas intact and enabled, used to determine the capacity
release values for this PGA. Include the total capacity release and share by jurisdiction.
RESPONSE:
Please note that the attached document contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and is separately filed under IDAPA 31.01.01, Rule 067 and233,
and Section 9-340D, Idaho Code.
Please see Staff PR_002C Confidential Attachment A for a schedule of all third-party capacity
releases in total, and with the associated Idaho allocation percentage, for the period November 1,
2019 through June 30,2020.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-20-04
TPUC
Production Request
Staff-003
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Keri Meister
DEPARTMENT: Resource Accounting
TELEPHONE: [phone]
REQUEST:
Please provide the GADD spreadsheets for the months July 2019 through May 2020. Staff intends
to pull a sample from these months for further review, including invoices and billing statements.
RESPONSE:
Please note that the attached document contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and is separately filed under IDAPA 31.01.01, Rule 067 and233,
and Section 9-340D,Idaho Code.
Please see Sta[PR_003C Confidential Attachment A for the GADD spreadsheets for the months
July 2019 through }l4.ay 2020.
Page 1 of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-20-04
IPUC
Production Request
Staff-004
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Keri Meister
DEPARTMENT: Resource Accounting
TELEPHONE: [phone]
REQUEST:
Please provide the 2019 and2020 WA-ID Deferral & Amort spreadsheets for the months included
in Schedule 155.
RESPONSE:
The activity in the natural gas deferral and amortization accounts is submiued monthly in
compliance with Order Number 34472 issued in the Company's Purchase Gas Cost Adjustment
filings (Case Nos. AVU-G-18-04 & AW-G-19-06). For ease of reference, please see
Staff PR_004 Attachment A through Stafl PR_004 Attachment K for the monthly deferral cost
reports as filed for the months of July 2019 through May 2020.
Page I of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR TNFORMATTON
JURISDICTTON
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-20-04
IPUC
Production Request
Staff-005
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Keri Meister
DEPARTMENT: Resource Accounting
TELEPHONE: (s09) 49s-2102
REQUEST:
Please provide the Gas Costs Journals - DJ 430, for the months of July 2019 through l|l{ay 2020
RESPONSE:
Please note that the attached document contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and is separately filed under IDAPA 31.01.01, Rule 067 and233,
and Section 9-340D,Idaho Code.
Please see Staff PR_005C Attachment A through Sta[PR_005C Attachment K forthe Gas Costs
Journals - DJ 430, for the months of July 2019 through May 2020.
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO
CASE NO: AW-G-20-04
REQUESTER: IPUC
TYPE: Production Request
REQUEST NO.: Staff-006
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Eric Scott, Leslie Filer
DEPARTMENT: Gas Supply
TELEPHONE: (509) 49s-400r
REQUEST:
Please explain the Company's process steps for purchasing natural gas and transmission capacity
needed for direct service to gas customers and compare it to the steps used to purchase natural gas
and transmission capacity needed for electric power generation from natural gas. In addition,
please answer the following:
a. Are the entities within Avista who are responsible for purchasing natural gas and
transmission capacity for nafural gas customers the same entities that purchase natural gas
and pipeline capacity for electricity generation? If so, please explain which parts of the
process are common and which parts are kept separate.
b. For Avista entities and process steps that are common to both natural gas and electricity,
please explain how the Company ensures purchases for natural gas are not being sub-
optimized for electricity generation, or vice versa.
RESPONSE:
Avista's natural gas and transportation capacity needs are determined in accordance with the
Company's Electric and Natural Gas Integrated Resource Plans which are generally filed every
two years. Specific to the Local Distribution Company (LDC), resource acquisition is ultimately
the responsibility of the Director of Gas Supply. For electric operations, resource acquisition is
ultimately the responsibility of the Director of Power Supply. Both groups will maintain sufficient
transportation capacity from a variety of pipelines and production basins in order to serve their
respective core customers on a peak day. Separate transportation contracts are maintained specific
to LDC operations versus those specific to electric operations. Where possible, commodity
purchases are directly assigned to Electric or Natural Gas. Typically, forward purchases are
directly assigned, whereas daily purchases are often transacted on a total Company basis, and after-
the-fact accounting entries appropriately allocate between services (electric and/or LDC
operations) based on usage and contract capacity.
Forward transactions for the LDC are made in accordance with Risk Management Policies and the
Natural Gas Supply Department's Procurement Plan. These transactions are based on a method
which utilizes both dynamic window hedges and risk-responsive hedge policies. The Company's
Risk Management Policy provides for discretion to deviate from these parameters should
economics or other events deem necessary. If at any point the Company deviates from the policy,
this is communicated with Senior Managernent and Commission Staff as soon as possible. Forward
transactions for the Power Supply Department are made in accordance with Risk Management
Policies and the Power Supply Hedge Plan. Please see Staff DR 009 for the confidential Risk
Management Policy.
Purchases in the day ahead market are determined based on the short-term load forecast for LDC
customer load. The Power Supply goup determines the dispatches of electric generators and
request the corresponding volume of gas to be purchased. Gas Supply traders then net the volumes
for both utilities and purchase the lowest cost gas available to satisff both syston load (LDC) and
thermal plant fuel needs. Purchased gas will be scheduled to Avista's LDC system and the thermal
plants on each utility's transport contracts. As previously noted, in order to appropriately assign
costs by service (Electric and Natural Gas), and by jurisdiction (Washington/Idaho and Oregon),
afterthe-fact accounting procedures are performed which appropriately assign the purchases/sales
with each entities pipeline capacity and natural gas requirements.
a. Yes, common natural gas traders are utilized for both the LDC and electric power
operations. As previously noted, transportation contracts are directly assigned by contract
to either electric or LDC. Commodity purchases are directly assigned where possible.
When purchases are combined, after-the-fact accounting entries appropriately assign.
Combining the volumes enables traders to avoid trying to manage two different competing
positions in the market at the same time. In utilities which have two separate trading
operations - one for natural gas and one for electric - two sets of trades would be done in
the market, creating additional transaction costs for both sets of customers. [n addition,
there may be pricing differences since it is unlikely each trader would be able to transact
at the same time and prices often change quickly. Finally, there are additional labor costs
incurred by having two different trading and potentially scheduling functions.
b. The Company takes great steps to ensure the appropriate allocation between service and
jurisdiction. Please see the direct assignment and/or allocation sections described above.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATTON
JURISDICTION
CASE NO:
REQUESTER:
IDAHO
AVU-G-20-04
IPUC
TYPE: Production Request
REQUEST NO.: Staff-007
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: E. Soreng/L. Filer/
K. Meister
DEPARTMENT: Gas Supply/
Resource Acct.
TELEPHONE: [phone]
REQUEST:
Please explain how the Company assures that costs and physical delivery of natural gas to each
state are properly tracked and recorded.
RESPONSE
Please see the Company's response to StaflPR_006 for additional information regarding how
purchases and sales are procured for both the Local Distribution Company (LDC) and electric
power supply ("Power Supply") for generation needs.
Avista's Gas Supply group purchases natural gas in both the forward and spot markets for delivery
to local distribution company (LDC) customers and to optimize unused pipeline capacity. The
LDC and Power Supply each maintain separate, directly assigned firm transportation rights on
several different pipelines. Forward purchases are typically directly assigned based on
Procurement Plan for the LDC, or anticipated needs for our power supply electric generation. In
the spot market, often deals are transacted on a total Company basis. In this instance, costs are
assigned based on the amount of natural gas scheduled to flow either to serve customer load in one
of Avista's LDC jurisdictions or for electric power generation. Should there be open transportation
capacity and it makes economic sense to do so, the Company will enter into wholesale transaction
providing optimization revenue to benefit customers. Schedules are created from pipeline
nominations in Avista's trading system, Nucleus, that track where the purchased natural gas was
delivered. Each jurisdiction is assigned the cost of the volume of purchased natural gas that was
delivered to that jurisdiction from each market hub. In the spot market often purchases are
combined, and an after-the-fact calculation is performed within nucleus to confirm each
jurisdiction is assigned the appropriate amount of commodity costs and benefits based on load and
transportation capacity. The Company is very diligent in tracking costs in order to appropriately
assigned to individual jurisdictions (Washington/Idaho, Oregon, or Electric Power Generation).
Due to the interconnected nature and close proximity of our Washington and Idaho customers,
costs are assigned 66AN" (Allocated North) and in the accounting close process they are separated
to each State's customers based specific Commodity Volumes for that month.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURTSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AW-G-20-04
IPUC
Production Request
Staff-008
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Eric Scott
DEPARTMENT: Gas Supply
TELEPHONE: (s09) 495-4001
REQUEST:
Please explain the criteria used to determine pipeline capacity releases and how they are allocated
between jurisdictions.
RESPONSE:
Avista, under state commission guidance and as supported by the Integrated Resource Plan, is
required to hold enough firm pipeline transportation to serve core customers on a peak day. Since
Avista's transportation load requirements vary so much throughout the year, Avista finds itself
with excess capacity across its service territory. Avista historically has sought to optimize its
transportation portfolio by releasing capacity to third parties. All capacity release revenue is
credited back 100% to our customers. Avista will analyze each capacity release request to ensure
we can continue to serve all core customers on a peak day. Avista, as a rule, will not release
transportation capacity if it degrades firm service to core customers, or if it creates additional
exposure to higher priced commodity markets.
Capacity release revenue is recorded as a reduction to total transportation costs in the same manner
as transportation contracts. Capacity release revenue is split and recorded between Washington
and Idaho based on the 5-day peak ratio.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AW-G-20-04
IPUC
Production Request
Staff-009
DATE PREPARED: 0811012020WITNESS: N/A
RESPONDER: Megan Thilo
DEPARTMENT: Risk Management
TELEPHONE: (s09) 49s-2149
REQUEST:
Please provide a current copy of the Company's natural gas Procurement Plan (Application page
3). In addition, please provide any and all associated risk management policies and procedures.
RESPONSE:
Please note that the attached document contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and is separately filed under IDAPA 31.01.01, Rule 067 and233,
and Section 9-340D,Idaho Code.
The most recent version of the Risk Management Policy, including a copy of the Company's
Natural Gas Hedging Plan as Exhibit 3 beginning on page 22 of the PDF, is attached as
Staff PR 009C Confidential Attachment A.
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