20100128acceptance_of_filing.pdf

Office of the Secretary
Service Date
January 28, 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING BY
AVISTA CORPORATION OF ITS 2009
INTEGRA TED RESOURCE PLAN (IRP)
CASE NO. A VU-09-
ACCEPTANCE OF FILING
On August 31 , 2009, A vista Corporation dba A vista Utilities ("A vista ) filed its 2009
Electric Integrated Resource Plan ("IRP") with the Commission pursuant to the Commission
biennial IRP filing requirements mandated in Order No. 22299, and later modified in Order No.
24729 and Order No. 30262. Avista is headquartered in Spokane, Washington and serves
electric customers in northern Idaho.
On October 9 , 2009, the Commission issued a Notice of Application and Modified
Procedure and established a 60-day open comment period. See Order No. 30928. Subsequently,
Commission Staff and the Idaho Conservation League ("ICL") were the only parties to submit
written comments regarding Avista s 2009 IRP.
AVISTA'S 2009 INTEGRATED RESOURCE PLAN
Avista states that the 2009 IRP "guides the utility s resource acquisition strategy over
the next two years and the overall direction of resource procurements for the remainder of the
20-year planning horizon." IRP Executive Summary at i. Avista also states that its "Preferred
Resource Strategy (PRS) is a mix of renewable resources, conservation, upgrades at existing
facilities, and new gas-fired generation.Id.
The following is a summary of the Company s 2009 IRP filing:
. A vista contends that conservation and plant upgrades will not be enough
to compensate for an anticipated 1.7 percent energy and capacity load
growth and the expiration of long-term contracts in the future. Id. TheCompany estimates that it will experience annual energy deficits
beginning in 2018, increasing to 126 aMW in 2022 and 527 aMW in 2029.
Id. Capacity deficits are forecasted to be 139 MW in 2022 and 667 MW
in 2029. Id.
. A vista states that the development of its PRS began with theidentification and quantification of potential new resources" to serve
future resource demands. Id. at iii. A vista then performed a Western
Interconnect-wide study "to understand the impact of regional markets. . .
Id. The Company subjected data developed "from over 250 iterations
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of potential future conditions" to a "Monte-Carlo style analysis" and "theresults were used to estimate the Mid-Columbia electricity market. . . .
Id. Ultimately, the selection of the PRS was "based on forecasted energy
and capacity needs, resource values, state mandated portfolio standards
and limiting power supply expense variability.Id.
The IRP notes the strong correlation between natural gas prices andelectricity prices because gas-fired generation is currently the marginalresource relied upon within the Western Interconnect. Id. at v. TheCompany forecasts that the "Mid-Columbia market price is expected to
average $79.56 per MWh in 2009 dollars" through 2029. Id. at iv.
. A vista again included carbon emissions in its "Base Case" cost estimates.
Id. at ix. Id. Not surprisingly, the Company projects a precipitous rise in
carbon dioxide emissions prices over the next twenty years. Id.Figure 8
at viii.
The 2009 PRS aims for an additional 250 of Nameplate (MW) Capacity of
Combined Cycle Combustion Turbine (CCCT) by 2019, 2024 and 2027;
150 MW ofNW Wind by 2012 and 2019, and 50 MW by 2022; 5 MWofDistribution Efficiencies by 2010-2015; 5 MW in Upgrades to its LittleFalls and Upper Falls hydro facilities by 2020; and 339 MW of
conservation throughout the planning period. Id.Table 2, at viii.
STAFF COMMENTS
Public Process
Staff began its analysis with a summary description of its participation in the
preparation of Avista s 2009 IRP document. Comments at 2. Staff notes that it was in "close
contact" with Company officials during the preparation of the document and offered comments
throughout the process. Id. Staff is satisfied that A vista adequately addressed "Staffs comments
in preparing the final IRP document." Id. Staff mentioned that public participation in the IRP
process was improved but it "continues to be difficult to achieve full participation from a broad
cross section of customers and interest groups.Id. Staff urges the Company to "continue its
efforts to involve key customers, customer group representatives, environmental organizations
and others. . . on the Technical Advisory Committee.Id.
Load Forecast
Staff believes that the load forecast prepared by A vista is reasonable. Id. at 3. Staff
notes that Avista s economic forecast was completed in July 2008, more than a year before the
final IRP was submitted. Id. Thus
, "
Staff does not believe that the full impact of the current
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recession is reflected in the Company s load forecast." Id. Nevertheless, it does not believe that
questions regarding the accuracy of the economic forecast are problematic because the Company
is in a "surplus condition for several years into the future.Id. Further, new resource additions
are planned for the future when forecasted loads are expected to rebound to forecasted levels. Id.
Environmental Policy
Staff notes the increasing impact that environmental issues have upon electric utility
resource planning. Id. at 4. The Company devoted a substantial portion of its IRP document to
environmental policy and has instituted a formal Climate Change Committee to monitor new
emissions legislation and issues. Id. A vista laid out its plan to comply with all existing state
regulations (W A) of greenhouse gas emissions and "has made reasonable assumptions about the
content, timing and costs of meeting proposed federal requirements.Id.
Demand-side Management and Supply-side Efficiency
Avista s IRP discloses the Company s plan to "acquire 102 aMW of energy
efficiency over the next 10 years and 226 aMW over 20 years.Id. It is anticipated that these
energy efficiency gains will shave 153 MW from the 2020 system peak and 339 MW from the
2029 system peak. Id.
Energy Efficiency
Staff detailed the Company processes in "identifying energy efficiency
improvement potentials. . . .Id. In identifying potential energy efficiency improvements, the
Company relies primarily "upon the Northwest Power and Conservation Council's Power Plans
and its own contracted studies of energy savings potentials.Id. at 5. The last contracted study
was conducted in 2005 and Avista states that it will contract another study prior to its 2011 IRP
filing. Id. The energy efficiency goals identified during the IRP process "helps the Company
develop its conservation business plan and establish acquisition targets, while meeting its
regulatory requirements.Id. While Staff believes that Avista s approach to identifying and
updating DSM potential is well-reasoned, it urged the Company to utilize all of its options in
evaluating potential DSM programs so as to ensure "maximum, long-term cost-effective DSM
for a utility's entire customer base and equitable treatment among its customers.Id.
Resource Options
Staff summarized the resource options considered by A vista to "meet future resource
deficits. "Id. at 6.In addition to conservation programs, the Company also evaluated
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upgrading existing hydro projects, building new facilities and contracting with other energy
companies for future delivery.Id. Simple and combined-cycle gas-fired combustion turbines
remain a reliable and relatively inexpensive source of both energy and capacity. Id. Staff added
that the main drawback for these types of facilities continues to be the cost volatility associated
with natural gas. Id.
The Company is not considering adding a pulverized coal facility for the 2009 IRP.
Id. Concerns over the environmental impact of carbon-based generation technologies have
increased demand for renewable generation, particularly wind.Id.
Washington State Renewable Portfolio Standard
Staff addressed the impact that the 2006 Washington state voter initiative (1-937), the
Energy Independence Act, had upon the Company s decision to acquire new renewable
resources. Id. at 7. A vista was compelled by the statute to acquire renewable resources that it
would not otherwise need to meet forecasted loads through the year 2017. Id.
Staff declined to express a position as to the prudency of these acquisitions. Id. at 8.
Preferred Resource Strategy
Staff commented that Avista s Preferred Resource Strategy (PRS) over the 20-year
IRP planning period will include the acquisition of approximately 1 449 MWs in nameplate
capacity of "hydro upgrades, wind, conservation, distribution efficiency programs and natural
gas combined-cycle gas turbines.Id. Following the acquisition of the wind/renewable that
Avista is currently seeking, the next large capacity addition would be a 250 MW combined-cycle
combustion turbine in 2019.Id.
A vista will be seeking at least 150 MW of wind capacity by the end of 2019 in order
to meet Washington s RPS standard and another 50 MW wind resource in 2022 due to additional
RPS obligations created by anticipated load growth over that time period. Id. at 9. Finally,
capacity deficits in 2024 and 2027 will force the Company to acquire another 250 MW natural
gas combined-cycle plant. Id.
Differences from the 2007 IRP
Staff cites the Company s increased reliance on wind resources as the major
difference between the 2007 IRP and the current IRP. Id.Wind was selected over other
renewable resources due to its availability in large quantities. Id.
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Risk Analysis
Staff agreed that A vista s PRS is "superior to the other resource strategies considered
in the IRP.Id.
Transmission
Staff commented that the Company s transmission planning and IRP planning process
appears "to be much more closely aligned and better coordinated than in the past." Id. at 10.
Avista included a new segment in its current IRP with an "analysis of potential distribution
system efficiency improvements" and a multi-phase plan to identify and "evaluate potential
energy savings from transmission and distribution feeder upgrades.Id.
2009 Action Plan Items
The Company identified specific action plan items in five key areas to be developed
and studied in Avista s 2011 IRP:Resource additions and analysis, energy efficiency,
environmental policy, modeling and forecasting enhancements and transmission planning. Id.
Staff believes that the listed action items are reasonable and will support A vista s PRS/planning
process going forward. Id. at 12.
Staff Recommendation
Staff stated that A vista s resource needs are largely driven by the Company
obligation to meet Washington s RPS standards and not its overall load-resource balance. Id.
Accordingly, Staff recommended that the Commission "scrutinize the Company s decision for
early acquisition of renewables at the time it makes a filing to begin recovering the cost of
renewables in customer rates.Id. at 13. Staff also recommended that the Commission address
the Idaho and Washington jurisdictional allocation issues presented by the acquisition of new
resources in order to meet Washington s RPS standards and not load growth. Id. Because the
2009 IRP was based upon a load forecast which was finalized prior to the full impact of the
current recession, Staff recommended that A vista revisit that forecast and make appropriate
revisions in its 2011 IRP. Id. Staff recommended that the Commission accept and acknowledge
Avista s 2009 IRP. Id.; see also Errata to Staff Comments at 1.
IDAHO CONSERVATION LEAGUE COMMENTS
The Idaho Conservation League (ICL) is "Idaho s largest state-based conservation
organization" representing over 9 500 members.ICL Comments at ICL is generally
supportive of Avista s 2009 IRP and focused its comments on three main issues: Energy
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efficiency, renewable energy, and carbon emissions. Id. ICL applauded Avista s plan to meet
26 percent of its new load growth through 2020 with energy efficiency" and was "pleased to see
the Preferred Resource Strategy (PRS) includes 350 megawatts of wind generation.Id. The
organization encouraged Avista to "explore other non-wind renewable energy options.Id. ICL
was also "pleased to see no significant increase in carbon emissions over the 20-year timeframe
in the PRS . . .Id. at 2. ICL generally supports efforts by the utility to develop "a more diverse
renewable energy portfolio and increasing energy savings with efficiency.Id.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. A VU-09-
including Avista s 2009 Integrated Resource Plan and related comments. We find that the
Company s 2009 IRP contains the required information and is in the appropriate format as
directed by the Commission in Order No. 22299. The IRP, as we have noted in the past, is a
utility planning document that incorporates many assumptions and projections at a specific point
in time. It is the ongoing planning process that we acknowledge, not the conclusions or results.
The Commission supports the Company s efforts in developing a plan with an
opportunity for meaningful input from a variety of sources, including the public at large. We
also note ICL's supportive comments of Avista Preferred Resource Strategy. The
Commission is encouraged by Avista s apparent focus on responsible measures to improve its
system-wide energy efficiency as well as the diversification and expansion of its renewable
energy portfolio.
The Commission recognizes that the current economic downturn can pose a difficult
challenge toward achieving an accurate forecast of future load requirements. Thus, we find
Staffs recommendation that, in the future, Avista seek to conduct a load forecast that is more
temporally proximate to the adverse economic climate to be reasonable; and we order that, prior
to submitting its 2011 IRP, the Company conduct additional load forecasting and make
appropriate revisions which more accurately reflect the current economic situation.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corporation dba
Avista Utilities, an electric utility, pursuant to Title 61 of the Idaho Code and the Commission
Rules of Procedure, IDAP A 31.01.01.000 et seq.
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Based upon our review, we find it reasonable to accept and acknowledge A vista
filed 2009 Electric Integrated Resource Plan. Our acceptance of A vista s 2009 IRP should not
be interpreted as an endorsement of any particular element of the plan, nor does it constitute
approval of any resource acquisition contained in the plan.
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DATED at Boise, Idaho this r2 f! day of January 2010.
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D. KE , P IDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
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