20240109_AVUE2313_md.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:YAO YIN
MICHAEL DUVAL
DATE:JANUARY 9,2024
RE:IN THE MATTER OF AVISTA'S ANNUAL COMPLIANCE FILING TOUPDATETHELOADANDGASFORECASTSINTHEINCREMENTAL
COST INTEGRATED RESOURCE PLAN AVOIDED COST MODEL TO
BE USED FOR AVOIDED COST CALCULATIONS;CASE NO.AVU-E-
23-13
On December 13,2023,the Idaho Public Utilities Commission ("Commission")issued
Order No.36023,directing Avista Corporation ("Company")to submit updated load and natural
gas forecasts in a compliance filing("Compliance Filing")and explain the differencesbetween the
updated forecasts and the Company's forecasts from last year.Order No.36023 at 3.
On December 20,2023,the Company filed a Compliance Filing to comply with Order No.
36023.
STAFF ANALYSIS
Staff recommends approval of the updated natural gas forecast and the updated load
forecast to be used in the Integrated Resource Plan-based ("IRP-based")avoided cost model
effective January 1,2024.
Natural Gas Price Forecast
Staff believes that the updated natural gas price forecast is reasonable and recommends
its approval.Staff's conclusion is based on comparing the Company's updated Henry Hub
forecast to last year's HenryHub forecast originally proposed in this case and to Rocky
Mountain Power's Henry Hub forecast.
DECISION MEMORANDUM 1 January 9,2024
Comparison to 2022 HenryHub Forecast
The updated Henry Hub natural gas forecast is lower than last year's forecast originally
proposed in this case as shown in Figure No.1 below.Staff believes the changes in the updated
forecast is reasonable because the impact from the Russia and Ukraine conflict that was affecting
European gas supplies driving up U.S gas prices in last year's forecast has abated.In addition,
the near-term pattern is more critical in this case because the IRP-based Public Utility Regulatory
Policies Act ("PURPA")contracts are limited to two years.
Avista's Henry Hub Forecasts
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8
2
1
0
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-2022 Henry Hub Forecast Updated Henry Hub Forecast in Compliance Filing
Figure No.1:Comparison of 2022 HenryHub Forecast and Updated HenryHub Forecast in
Compliance Filing
Comparison to Rocky Mountain Power's HenryHub Forecast
Staff also compared the updated December 2023 HenryHub forecast included in the
Compliance Filing and Rocky Mountain Power's September 2023 HenryHub forecast filed in
Case No.PAC-E-23-20,as shown in Figure No.2.AlthoughAvista's updated Henry Hub
forecast is slightly lower than Rocky MountainPower's forecast,Staff believes it is reasonable
due to the three-month difference betweenthe two forecasts-which reflects recent increases in
natural gas production and high natural gas storage inventorylevels.I
I See Energy InformationAdministration's analysis published at
https://www.eia.gov/outlooks/steo/report/natsas.php on December 7,2023.
DECISION MEMORANDUM 2 January 9,2024
Avista vs.Rocky Mountain Power
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2
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---Avista's Henry Hub Forecast Rocky Mountain Power's Henry Hub Forecast
Figure No.2:Comparison to Rocky Mountain Power's Henry Hub Forecast
Load Forecast
Staff believes the updated load forecast is reasonable and recommends its approval.The
updated forecast uses two forecastingmethods.For the period from 2024 through 2028,the
Company utilized traditional supply and demand econometric models.For the period from 2029
through2045 the Company utilized end-use forecasting methods.
According to the Company,the econometric method "works well when the load
fundamentalsof the historical dataset continue to represent futurerelationships;"however,end-
use methods are better when there are futurechanges in customer consumption patterns driven
by "energy efficiency,electric transportation,building electrification,and roof top solar."
Compliance Filing at 1-2.The updated load forecast in the Compliance Filing is new to the
Company and has not been fully vetted through the IRP.Compliance Filing at 2.Since IRP-
based PURPA contracts are limited to two years,Staff's review is focused on the first few years
of the updated load forecast,which is developed using the traditional econometric method.
Figure No.3 compares the 2022 load forecast originally proposed in this case and the
updated load forecast included in the Compliance Filing.Since the first few years are the only
years important to contracts that could become effective before the next annual natural gas and
load update,Staff believes the load forecast included in the Compliance Filing is reasonable
given the similarity between the two forecasts over the near term.
DECISION MEMORANDUM 3 January 9,2024
Load Forecast Comparison
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-2022 Load Forecast Updated Load Forecast in Compliance Filing
Figure No.3:2022 Load Forecast and Updated Load Forecast in Compliance Filing
STAFF RECOMMENDATION
Staff recommends approval of the natural gas and load forecast submitted in the
Company's Compliance Filing to be used in the IRP-based avoided cost model with an effective
date of January 1,2024.
COMMISSION DECISION
Does the Commission wish to approve the natural gas and load forecast submitted in the
Company's Compliance Filing to be used in the IRP-based avoided cost model with an effective
date of January 1,2024?
Ya Yin
Udmemos/AVU-E-23-13 Decision Memo
DECISION MEMORANDUM 4 January 9,2024