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Home My WebLink About20040206Storro Exhibits.pdfDA VID 1. MEYER SENIOR VICE PRESIDENT AND GENERAL COUNSEL A VISTA CORPORA nON O. BOX 3727 1411 EAST MISSION AVENUE SPOKANE, WASHINGTON 99220-3727 TELEPHONE: (509) 495-4316 FACSIMILE: (509) 495-4361 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICA nON OF A VISTA CORPORA nON FOR THE AUTHORITY TO INCREASE ITS RATES AND CHARGES FOR ELECTRIC AND NATURAL GAS SERVICE TO ELECTRIC AND NATURAL GAS CUSTOMERS IN THE STATEIDAAO CASE NO. A VU-04- EXHIBIT NO. RICHARD STORRO FOR A VISTA CORP OR T A TION (ELECTRIC ONLY) (SCHEDULE 3 OF THIS EXHIBIT IS CONFIDENTIAL) SCHEDULE NO SCHEDULE 1 SCHEDULE 2 SCHEDULE 3 CASE NO. A VU-O4- EXIDBIT NO. TABLE OF CONTENTS DESCRIPTION A VISTA'S RESOURCE PLANNING AND POWER OPERATIONS PHOTO - CABINET GORGE HYDRO PROJECT ENERGY RESOURCES RISK POLICY (CONFIDENTIAL) PAGE A VISTA'S RESOURCE PLANNING AND POWER OPERATIONS Company-Owned Resources The Company owns and operates two hydroelectric projects on the Clark Fork River, and six hydroelectric projects on the Spokane River. These projects are listed below, along with the number of generating units at each project, the dependable capacity of each project, and the estimated amount of energy from each project under both average (normal) streamflow conditions and "critical" streamflow conditions. Hydroelectric Projects Summary Avera e Ener Generating Dependable Average Critical Project Units Capacity Water Water (MW)(aMW)(aMW) Clark Fork River Noxon Rapids 527 206 100 Cabinet Gorge 246 123 Subtotal 773 329 169 Spokane River Post Falls Upper Falls Monroe Street Nine Mile Long Lake Little Falls Subtotal 192 128 104 Total H dro 965 457 273 I Based on NWPP 2002-03 60-year (1928-88) continuous study, adjusted for encroachment.2 Based on NWPP 2002-03 Final Regulation study, which includes reductions in Clark Fork project capacity due to Hungry Horse draft of storage prior to the Nov. 02-Apr. 03 critical period. Exhibit No., Schedule 1 R. Storro A vista Corporation lof9 In addition, the Company owns or leases six thermal generating projects. Those projects are listed below, including the number of generating units, primary fuel dependable capacity and estimated amount of energy generated based upon maximum operation with reductions to reflect maintenance outages, emissions operating limits, and unplanned outages. Thermal Projects Summary - 2005 Generating Primary Project Units Fuel Capacity Energy (MW)(aMW) Colstrip Coal 222 194 Kettle Falls 4 Wood waste Kettle Falls CT Gas Rathdrum Gas 176 127 Northease Gas Coyote Springs 2 Gas 144 131 Boulder Park9 Gas Total Thermal 704 539 Retail Electric Load Forecast Each year the Company prepares a ten-year electric retail load forecast. The forecast includes the Company s needs for both energy and capacity to serve its retail 3 Avista owns 15% of Units 3 and 4, which are operated by PP&L Montana.4 Kettle Falls is owned and operated by Avista Utilities. 5 Kettle Falls CT is a natural gas turbine that was installed at the site of the existing wood waste project. High temperature exhaust from the CT is used to produce steam in a boiler. The CT boiler steam is added to the steam from the wood-waste boiler in the main plant to increase output.6 Rathdrum was constructed by A vista, but is leased through a sale and lease-back arrangement. Avista operates the project. Air emission restrictions currently limit each unit's operation to 8,424 hours per year per unit.7 Northeast is owned and operated by A vista. Air emission restrictions currently limit each unit's operation to 1700 hours per year. The units are to only operate on natural gas fuel and must operate at 100% output capability.8 Avista owns 50% ofthe Coyote Springs 2 combined-cycle combustion turbine project including the duct burner. A vista has contracted with PGE to operate the plant.9 Boulder Park is owned and operated by A vista Utilities. Exhibit No., Schedule 1 R. Storro A vista Corporation 2 of9 load requirements. In developing the retail load forecast, the Company uses econometric models to produce kilowatt-hour sales and customer forecasts. The econometric models are systems of algebraic equations that relate past economic growth and development in the geographic communities with the past customer growth and power consumption in those same communities. Each year the forecast incorporates changes that occur in the regional and national economy which affect the Company, such as industrial activity, residential use, population growth and income levels. The forecasted annual retail load energy figures for years 2005 through 2014 are shown on line 3 on page 8 of this Exhibit. The forecast shows an annual average energy load of 1 062 aMW in 2005 , including the Potlatch Lewiston plant load. The Company retail energy load is forecasted to be 1 294 aMW in 2014, a compound growth rate of 22 percent per year. The forecasted annual retail capacity figures for years 2005 through 2014 are shown on line 3 on page 9 of this Exhibit. The capacity figures include the Potlatch Lewiston plant load. The capacity forecast shows 1570 MW in 2005 including the Potlatch Lewiston plant load. The capacity load is forecasted to be 1915 MW in 2014 yielding a compound growth rate of 2.23 percent per year. The Company s actual retail energy loads grew from 838 aMW in 1991 to 984 aMW in 2003 , a compound annual growth rate of 1.35 percent. The Company s retail Exhibit No., Schedule 1 R. Storro A vista Corporation 3 of9 capacity loads grew from 1 479 MW in 1991 to 1509 MW in 2003. The compound annual growth rate was 0.17 percent. 10 Lon2;- Term Loads and Resources Picture The tables on pages 8 and 9 of this Exhibit show a tabulation of Avista s Loads and Resources (L&R) on an annual basis for the next ten years. The Energy L&R (Load and Resource) Forecast on page 8 of this Exhibit includes a tabulation of A vista s expected average energy for the twelve-month period for both load requirements and resources. The Peak (capacity) L&R Forecast on page 9 of this Exhibit shows the highest one-hour forecasted capacity requirement in January of each year. The resource peak numbers represent the maximum available capacity output from the Company s resources to serve the one-hour peak. The Company s requirements are shown on lines 1-8 on pages 8 and 9. These requirements include the Company s retail natiye load shown on line 1 , Potlatch load obligation on line 2, long-term firm wholesale contract obligations on lines 4-7. The expected reduction in retail native load due to Company demand-side management acquisition programs is included in the load amount on line 1. Resources available to the Company are shown on lines 9-32 on each of pages 8 and 9. The Company s owned hydroelectric generation on the Clark Fork and Spokane Rivers is included on lines 20 and 21. The "Mid-Columbia" on line 22 includes the contracts A vista has with Douglas, Chelan and Grant County PUDs for a portion of the 10 These figures represent the actual loads, including losses, experienced by the Company and reflect the actual temperatures that occurred during each of the respective periods which would affect the calculated annual growth rate. Exhibit No., Schedule 1 R. Storro Avista Corporation 4of9 output from the Wells, Rocky Reach, Wanapum and Priest Rapids hydroelectric projects on the middle section of the Columbia River. It also incorporates a contract extension with Grant County PUD for output from their Priest Rapids and Wanapum projects. The figures for hydroelectric generation in the Energy L&R tabulation reflect energy that could be produced under average water conditions. Lines 4-19 show the Company s long-term contract rights and obligations. Lines 24-32 show the Company s thermal generating resources. For long-term planning, the Company shows peaking turbine annual energy output based on the amount those units would be expected to operate on an annual basis to serve load under extreme load or hydroelectric generation conditions. A comparison of the total resources with the total system requirements yields the Company s net position, based on average hydroelectric generation and load conditions, as shown on line 34. The Company adjusts the net position each year through use of an 80 percent confidence interval that accounts for the combined statistical variation due to abnormal weather and below-average hydroelectric capability. In its 2003 Integrated Resource Plan, the Company explained that use of the 80 percent confidence interval produces results similar to those of critical water planning on an annual basis, but provides better information on a monthly basis. On a monthly basis for 2005, the 80 percent confidence level varies between 96 aMW and 261 aMW. The annual 80 percent confidence interval reduction to the net position under average water conditions is show on line 36 of page 8. Line 35 of the Energy L&R tabulation shows the amount that Company s net resource position is further reduced by the Company s WNP-3 contract with BPA. That Exhibit No., Schedule 1 R. Storro A vista Corporation 5 of9 contract has a return of energy proyision equivalent to an annual energy obligation of 31 aMW.Because the contract is most likely exercised only under adverse system conditions, such as high load and/or low hydroelectric generation conditions, the Company reduces its net position by the amount shown on line 35 for essentially the same conditions as those embodied in the 80 percent confidence interval. The resultant average water net position reduced by the 80 percent confidence interval energy and further reduced by the WNP-3 contract return yields an 80% CI Net Position shown on line 37 of the Energy L&R tabulation. The adjusted net position represents an estimated position that can be expected under most combinations of adverse hydroelectric generation and load variability conditions. The capacity tabulation provides a view of the Company s forecasted peak loads and peak resources, including capacity reserves. It indicates the maximum hourly load and the resources available to the Company to meet that load on a firm basis. Values are presented for the month of January, since this is the month during which the Company forecasts its peak to occur. Thermal and hydroelectric resource capabilities are based on their "dependable capacity.Contracts include the peak capability or obligation identified within them. Reserves, as shown on line 35 of the Peak L&R tabulation, play an integral part in maintaining system reliability to serve firm loads. The planning reserves shown on this tabulation are carried to provide the Company with adequate generating capacity during periods of extreme weather or unexpected plant outages.Included in the reserve component is capacity to meet the contingencies of temperature affects on retail load (cold and hot weather), generator-forced outages, and possible river freeze-up at our Exhibit No., Schedule 1 R. Storro A vista Corporation 6 of9 hydroelectric plants. The Company plans for reserves in an amount equal to ten percent of firm peak loads, plus 90 aMW to account for river freeze-ups and forced outages. On a day-to-day operating basis, the Company is required by the Western Electricity Coordinating Council (WECC) to carry operating reserves equal to 7% of the Company online thermal resources and 5% of its online hydroelectric resources. Planning reserves in the long-term Peak L&R tabulation provide the Company with the necessary operating reserves coverage. The L&R Tabulations provide an indication of the Company s need for firm capacity and energy resources over the ten-year forecast period and include the following surpluses and deficiencies for the respective years: Year S urp lus/ (Deficiency)Capacity EnergyMW aMW 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 117 (33) (71) (159) (306) (400) (441) (481 ) (4) (27) (48) (92) (232) (283) (304) (333) The results show an energy deficient beginning in 2007, although the deficit in the first year is very small. The study also shows a need for capacity beginning in 2008. Exhibit No., Schedule 1 R. Storro Avista Corporation 7 of9 Energy Loads and Resources (in aMW) January 23, 2004 Version 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 LOADS System Load 962 985 007 034 063 095 122 143 167 190Potlatch Load 100 100 102 102 102 102 104 104 104 104Sub-Total 062 085 109 136 165 197 226 247 271 294 CONTRACT OBLIGATIONS Canadian Entitlement Nichols Pumping PGE Capacity Sub-Total 8 TOTAL OBLIGATIONS 123 145 169 198 217 248 277 297 321 344 CONTRACT RIGHTS BP Energy Duke Energy EI Paso Grant Displacement Haleywest PGE Capacity Return Potlatch Small Power Upriver WNP- Sub-Total 269 286 288 288 288 286 181 165 166 166 HYDRO RESOURCES (Average Water) Spokane River 129 129 129 129 129 129 129 129 129 129Clark Fork 329 329 329 329 329 329 329 329 329 329Mid-Columbia Sub-Total 549 534 533 532 529 513 510 492 491 490 THERMAL RESOURCES (Net Capability) Boulder Park Colstrip 194 187 187 194 194 194 194 194 194 194Coyote Springs 2 122 122 125 120 125 125 122 122 125 120Coyote Springs 2 duct burner Kettle Falls Kettle Falls CT Northeast Rathdrum 127 ill 127 ill 127 127 127 127 127 127Sub-Total 539 532 535 538 543 543 539 539 543 538 TOTAL RESOURCES 358 351 356 358 359 342 230 196 199 193 NET POSITION 235 206 187 159 142 (46)(101)(121)(150) WNP-3 Obligation 80% Confidence Interval 163 160 160 160 159 155 155 151 151 151 80% CI Net Position (4)(32)(48)(92)(232)(283)(304)(333) Exhibit No.5, Schedule I Page 8 of 9 R. Storm A vista Corporation Peak Loads and Resources (in MW) January 23, 2004 Version 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 LOADS System Load 468 504 537 576 620 667 707 740 775 809 Potlatch Load 102 102 104 104 104 104 106 106 106 106 Sub-Total 570 606 641 680 724 771 813 846 881 915 CONTRACT OBLlGA nONS Canadian Entitlement Nichols Pumping PGE Capacity 150 150 150 150 150 150 150 150 150 150 Sub-Total 172 168 168 168 158 156 156 154 154 154 8 TOTAL OBLIGATIONS 742 774 809 848 882 927 969 000 035 069 CONTRACT RIGHTS BP Energy Duke Energy EI Paso Grant Displacement Haleywest PGE Capacity Return Potlatch Small Power Upriver WNP- Sub-Total 254 274 276 276 276 275 175 154 154 154 HYDRO RESOURCES Spokane River 192 192 192 192 192 192 192 192 192 192 Clark Fork 773 773 773 773 773 773 773 773 773 773 Mid-Columbia 195 140 140 140 140 103 102 Sub-Total 160 105 105 105 105 068 067 028 026 024 THERMAL RESOURCES Boulder Park Colstrip 222 222 222 222 222 222 222 222 222 222 Coyote Springs 2 134 134 134 134 134 134 134 134 134 134 Coyote Springs 2 duct burner Kettle Falls Kettle Falls CT Northeast Rathdrum 176 176 176 176 176 176 176 176 176 176 Sub-Total 693 693 693 693 693 693 693 693 693 693 TOTAL RESOURCES 106 072 074 074 074 036 934 874 872 870 NET POSITION 364 298 265 225 192 108 (35)(126)(163)(199) 35 Planning Reserves 247 251 254 258 262 267 271 275 278 282 36 Net Position with Reserves 117 (33)(71)059)(306)(400)(441)(481' Exhibit No.5, Schedule 1 Page 9 of 9 R. Storro Avista Corporation Schedule No. R. S torro A vista Corporation Colored photo - of Cabinet Gorge Hydroelectric Proj ect -- will not scan see Case File CONFIDENTIAL Energy Resources Risk Policy THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEPARATELY FILED Exhibit No.5, Schedule 3 Pages 1- 15 R. Storro A vista Corporation