20001130_sw.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
TONYA CLARK
DON HOWELL
DAVE SCHUNKE
MICHAEL FUSS
RANDY LOBB
WORKING FILE
FROM:
DATE:
NOVEMBER 30, 2000 RE: CASE NO. AVU-G-00-02 (Avista)
INTEGRATED RESOURCE PLAN—NATURAL GAS
YEAR 2000

On July 20, 2000, Avista Corporation, dba Avista Utilities—Washington Water Power Division (Avista; Company) filed its year 2000 natural gas Integrated Resource Plan (IRP) with the Idaho Public Utilities Commission (Commission). The Company’s filing complies with the Commission’s direction in Order No. 25342, Case No. GNR-G-93-2 (reference PURPA Section 303(b)(3), Energy Policy Act of 1992). Pursuant to the Commission’s Order, the Company is required to file every two years. The Company was granted an extension in Order No. 27636 to postpone its scheduled February 1999 natural gas IRP filing until February 2000, and was informally granted further extension to August 1, 2000.
Integrated Resource Planning, the Company states, is a comprehensive, long-range planning tool that fully integrates forecasted energy requirements with potential energy resources. The process determines the most cost-effective means for the Company to meet those projected requirements.
Unlike the previous versions of the Company’s Integrated Resource Plan, the 2000 Integrated Resource Plan is not separated for Washington/Idaho and Oregon, but is presented, the Company states, in a combined format to provide the reader with an overall view of the Company’s total natural gas operations and planning processes. In addition to Idaho, the Company’s IRP is filed with the regulatory authorities in Washington and Oregon.
Avista’s 2000 natural gas IRP addresses the following subject areas: natural gas sales forecast, demand side management, supply side resources, distribution planning, integrated resource portfolio, public involvement and action plan.
Avista in its IRP filing expresses its commitment to re-evaluating the viability of a natural gas efficiency portfolio as avoided costs, gas end-use technologies and natural gas efficiency implementation techniques evolve. Because there appears to be an opportunity for a cost-effective portfolio covering residential, commercial and industrial sectors, Avista is investigating the feasibility of reinstituting the Schedule 191 natural gas tariff rider for the funding of energy efficiency activities.
The supply options of Avista’s integrated resource portfolio consist of various components. These include firm and non-firm supplies contracted for on a long-term and short-term basis, firm and interruptible transportation on seven interstate pipelines, and three storage services. A diversity of delivery points and load requirements adds to the options available to meet customers’ needs. The utilization of these components varies depending on demand and operating conditions.
The Company notes that it entered into an agreement with Avista Energy in 1999 to have Avista Energy manage all the supply and transportation needs of Avista Utilities (except California). This agreement expires in March 2002. Reference Case No. WWP-G-98-4, Order No. 27908; AVU-G-99-1, Order No. 28051.
The Company in its resource management activities also considers other potential resources. These potential resources include those requiring physical assets and those dependent upon contractual or financial arrangements, e.g., Jackson Prairie Storage Project; pipeline capacity; additional storage facilities. The Company holds several long-term contracts for supplies from three separate supply basins. These supplies are for annual and seasonal core customer needs. The Company does not make long-term firm commitments to serve interruptible customers.
Avista contends that its firm and interruptible transportation contracts provide the Company with sufficient available capacity to meet current and future core load demands. As reflected in its filing, the Company’s strategy is to contract for a reasonable amount of transportation to serve firm customers should a design peak day occur in a seven-ten year period. Too much firm transportation could keep the Company from achieving its goal of being a low-cost energy provider. The ability to release capacity, however, acts to offset the cost of holding under-utilized capacity. Too little firm transportation impairs the Company’s goal of being a reliable energy provider.
Avista’s analysis and selection of resource options in the context of the IRP for its natural gas operations as well as the resulting strategies employed to develop an Integrated Resource Plan are comprised of:
Resource options summary
Gas resource model
Analysis framework
Weather data
Avoided cost
Environmental externalities
Portfolio integration

The foundation for the selection of resources for the Company’s integrated resource portfolio is the annual and peak day load forecast requirements.

On September 26, 2000, the Commission issued a Notice of Filing in Case No. AVUG0002 and established a comment deadline of November 17, 2000. The Commission Staff was the only party to file comments (attached). Based on its review, Staff concludes that the Company’s 2000 IRP satisfies the technical requirements of Commission Order No. 25342. Staff recommends that the Company’s IRP be accepted for filing.
Staff notes that the 2000 Integrated Resource Plan of Avista is in a slightly new format from previous versions. The IRP has integrated both Avista’s North (Idaho and Washington) and South (Oregon and California) operating regions into one concise plans. Previous versions were separated by operating regions and required more duplication of efforts. The incorporation of the two operating regions into one Plan, Staff contends, greatly assists in the understanding of Avista’s total resource needs without continuous cross-checking. One possible area for improvement recommended by Staff would be to improve chart labeling to ensure it is clear which operating section is represented. In addition, Staff recommends that the Company consider including summary charts that combine the two operating areas.
The Company’s 2000 Integrated Resource Plan, Staff states, provides the Company’s load growth and pricing forecasts. It provides insight into the Company’s use of integrated resources by analyzing supply alternatives, including spot, firm and interruptible markets. The IRP, Staff notes, further includes the use of storage futures options, multiple pipeline purchases, and demand side management to provide an integrated look at the Company’s natural gas resources.
Commission Decision
Staff recommends that the year 2000 natural gas Integrated Resource Plan of Avista be accepted for filing. Does the Commission concur?

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