20130910notice_of_filing_order_no_32888.pdf

Office of the Secretary
Service Date
September 10, 20 13
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA 1
CORPORATION'S 2013 ELECTRIC ) CASE NO. AVU-E-13-07
INTEGRATED RESOURCE PLAN 1
) NOTICE OF FILING
)
) NOTICEOF
) MODIFIED PROCEDURE
)
) ORDER NO. 32888
On August 29, 2013 Avista Corporation dba Avista Utilities filed its 2013 Electric
Integrated Resource Plan ("IRP") with the Commission. The Company is headquartered in
Spokane, Washington and serves electricity customers in eastern Washington and northern
Idaho. It files an Electric IRP with the Commission every two years to explain how it intends to
meet its customers expected energy needs over the next 20 years.
With this Order, the Commission provides notice that Avista has filed its 2013
Electric IRP and that interested persons may file written comments about the IRP as set forth
below.
NOTICE OF FILING
YOU ARE HEREBY NOTIFIED that Avista's 20 13 Electric IRP is about 2 10 pages
long and is accompanied by 913 pages of appendices. The 2013 Electric IRP includes an
Executive Summary plus the following sections: (1) Introduction and Stakeholder Involvement;
(2) Loads & Resources; (3) Energy Efficiency; (4) Policy Considerations; (5) Transmission &
Distribution; (6) Generation Resource Options; (7) Market Analysis; (8) Preferred Resource
Strategy; and (9) Action Items. The information discussed below is taken from the Executive
Summary.
YOU ARE FURTHER NOTIFIED that the 2013 Electric IRP guides Avista's
resource strategy over the next two years and directs resource procurements over the 20-year
plan. It provides a snapshot of Avista's resources and loads and guides future resource
acquisitions over a range of expected and possible future conditions. IRP Executive Summary at
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ORDER NO. 32888 1
YOU ARE FURTHER NOTIFIED that Avista says its 2013 Preferred Resource
Strategy ("PRS") includes energy efficiency, upgrades at existing generation and distribution
facilities, demand response and new gas-fired generation. The PRS balances cost, reliability,
rate volatility, and renewable resource requirements. The Company says its management and
Technical Advisory Committee ("TAC") guide the development of the PRS and the IRP by
providing significant input on modeling and planning assumptions. TAC members include
customers, Commission Staff, the Northwest Power and Conservation Council, consumer
advocates, academics, utility peers, government agencies, and interested internal parties. Id.
YOU ARE FURTHER NOTIFIED that Avista says it uses a multiple-step approach
to develop its PRS. Id. at iii. The Company first identifies and quantifies potential new
generation resources to serve projected electricity demand across the West. A Western
Interconnect-wide study explains the impact of regional markets on the Northwest electricity
marketplace. The Cornpany then maps its resources to the present transmission grid
configuration in a model simulating hourly operations for the Western Interconnect from 201 4 to
2033. The model adds cost-effective new resources and transmission to meet projected loads.
Id Monte Carlo-style analysis varies hydroelectric and wind generation, loads, forced outages
and natural gas price data over 500 iterations of potential future market conditions. The
simulation estimates Mid-Columbia electricity market prices by iteration, and the results
collectively form the IRP Expected Case. Id.
YOU ARE FURTHER NOTIFIED that Avista's 2013 IRP forecasts electricity price
for the Expected Case, including the price range over the 500 Monte Carlo iterations. The
Company forecasts the levelized average Mid-Columbia market price to be $44.08 per megawatt
hour ("MWh") in nominal dollars over the next 20 years. Id. The Company observes that
electricity and natural gas prices are highly correlated because natural gas fuels marginal
generation in the Northwest during most of the year. Id. at iv. The Company reports that
nominal levelized Expected Case natural gas prices at Stanfield trading hub, located in
northeastern Oregon, and the forecast range from the 500 Monte Carlo iterations performed for
the case result in an average $5.40 per decatherm over the next 20 years. Id.
YOU ARE FURTHER NOTIFIED that Avista says the 201 3 Electric IRP includes a
20-year Conservation Potential Assessment. Id. The study analyzed over 4,300 energy
efficiency equipment and measure options for residential, commercial, and industrial
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applications. Based on this data, Avista says its historical energy efficiency efforts decrease its
energy requirements by 125 average MW ("aMW"), or about 10%. By 2033, energy efficiency
reduces load by 164 aMW. Id.
YOU ARE FURTHER NOTIFIED that Avista says its management and the
Technical Advisory Committee guided the development of the 2013 PRS after carefully
considering the information gathered and analyzed in the IRP process. Id. at v. The resulting
2013 PRS meets future load growth with efficiency upgrades at existing generation and
distribution facilities, conservation, wind, and natural gas-fired technologies. It also describes a
reasonable low-cost plan along the efficient frontier of potential resource portfolios accounting
for fuel supply risk and price risk. Id. However, major changes from the 201 1 PRS include
reduced contributions from conservation, wind, and natural gas-fired resources. Id at v-vi. And
for the first time, the Company's PRS includes a modest contribution from demand response. Id
at vi.
YOU ARE FURTHER NOTIFIED that Avista says it then values each new resource
and energy efficiency option against the Expected Case Mid-Columbia electricity market to
identify its future value to the Company, as well as its inherent risk measured by year-to-year
portfolio cost volatility. These values, and their associated capital and fixed operation and
maintenance costs, are input into Avista's PRS Linear Programming Model ("PRiSM"). PRiSM
then develops optimal mixes of new resources along an efficient frontier. Id.
YOU ARE FURTHER NOTIFIED that Avista says its PRS provides a "least
reasonable cost" portfolio that minimizes future costs and risks given actual or expected
environmental constraints. Id An efficient frontier helps determine the tradeoffs between risk
and cost. Avista likens the approach to finding an optimal mix of risk and return in an
investment portfolio. As expected returns increase, so do risks. Reducing risk reduces overall
returns. There is a trade-off between power supply costs and power supply cost variability.
Lower power cost variability comes from investments in more expensive, but less risky,
resources. The PRS selection is the location on the efficient frontier where reduced risk justifies
the increased cost. Id.
YOU ARE FURTHER NOTIFIED that Avista says the 2013 Electric IRP includes
several scenarios that help identify tipping points where the PRS could change under alternative
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conditions to the Expected Case. It includes scenarios for load growth, capital costs, higher
energy efficiency acquisitions, and greenhouse gas policies. Id. at vii.
YOU ARE FURTHER NOTIFIED that the Company says its 2013 PRS significantly
differs from the 201 1 IRP resource strategy. The Company says 201 1 PRS resources included,
on a nameplate capacity basis: 120 MW of Northwest Wind by the end of 201 2 and 201 9-2020;
83 MW of simple-cycle combustion turbine by the end of 2018 and 2020, and 46 MW by 2029;
4 MW of existing thermal resource upgrades by the end of 2019; 270 MW of combined-cycle
combustion turbine by the end of 2023 and 2026. Further, 201 1 PRS efficiency improvements
included 28 MW of distribution efficiencies and 41 9 MW of energy efficiency from 2012-203 1
on a peak reduction basis. Id.
YOU ARE FURTHER NOTIFIED that Avista says its renewable and capacity needs
have changed since the 201 1 plan. For example, the Company says it satisfied the 2012
Northwest Wind component of the 201 1 PRS by adding Palouse Wind to its resource mix in
December 2012. Also, changes in Washington law eliminated the need for a 201912020 wind
resource. Further, while the 201 1 IRP forecast 1.6% annual load growth, the 2013 I W forecasts
just over 1% growth. The Company says the lower expected load growth delays the first natural
gas-fired resource need by one year and eliminates the need for a combined-cycle combustion
turbine in 2023. Id.
YOU ARE FURTHER NOTIFIED that Avista says that since 2007, its Expected
Case has included forecasts of greenhouse gas emissions costs. However, based on current
legislative priorities and the President's Climate Action Plan, the Company says a national
greenhouse gas cap-and-trade system or tax is no longer likely. Therefore, the 201 3 Expected
Case does not include a market or tax solution to reduce emissions. Instead, because the states
and the federal Environmental Protection Agency are implementing regulatory models limiting
emissions for new facilities, and requiring current facilities to either implement best available
control technologies or shut down, the 2013 IRP forecasts significant numbers of plant
retirements to meet these environmental rules. Avista projects greenhouse gas emissions from its
existing and new generation resources will modestly increase, while Western Interconnect
Greenhouse Gas emissions will fall from historic levels as less-cost-effective coal and older
natural gas-fired plants retire. Avista explains that it does not follow this overall trajectory
because the carbon intensity of its portfolio already is relatively low. Id. at viii-ix.
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YOU ARE FIJRTHER NOTIFIED that Avista says its 2013 Action Plan updates
progress on the 201 1 Action items and outlines activities Avista intends to perform for the 201 5
IRP. Avista states the 201 3 Action Plan includes input from Commission Staff, the Company's
management team, and the TAC. Id. Action item categories include resource additions and
analysis, demand-side management, environmental policy, modeling and forecasting
enhancements, and transmission planning. Id. at x.
YOU ARE FURTHER NOTIFIED that the Companny's 201 3 Electric IRP and any
supporting workpapers, testimonies and exhibits have been filed with the Commission and are
available for public inspection during regular business hours at the Commission offices. The
Application and testimonies are also available on the Commission's web site at
uww.puc.idaho.gov. Click on the "File Room" tab at the top of the page, scroll down to "Open
Electric Cases," and then click on the case number as shown on the front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission's jurisdiction under Title 61 of the Idaho Code. The Commission
may enter any final order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission's Rules of Procedure, IDAPA 3 1.0 1.0 1.000 et seq.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FIJRTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal evidentiary hearing in this matter and will proceed under
Modified Procedure pursuant to the Commission's Rules of Procedure 201 through 204, IDAPA
3 1 .O1 .01.201 through .204. The Commission notes that Modified Procedure (with written
comments) has proven to be an effective means for obtaining public input and participation in
cases of this nature.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on the
Application may file a written comment in support or opposition with the Commission no later
than November 13, 2013. The comment must contain a statement of reasons supporting the
comment. Persons desiring a hearing must specifically request a hearing in their written
comments. Written comments concerning the Application shall be mailed to the Commission
and the parties at the addresses reflected below:
NOTICE OF FII,ING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 32888 5
Commission Secretary Linda Gervais
Idaho Public Utilities Commission Manager, Regulatory Policy
PO Box 83720 Avista Corporation
Boise, ID 83720-0074 141 1 E. Mission Avenue
Spokane, WA 99220
Street Address for Express Mail: E-mail: linda.jier\~aisic~avistacorp.corn
472 W. Washington Street
Boise, ID 83702-5918
These comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission's home page located at ww~v.~uc.idaho.~ov. Click the "Case Comment or Question
Form" under the "Consumers" tab, and complete the comment form using the case number as it
appears on the front of this document. These comments must also be sent to Avista at the e-mail
address listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing. The Company shall have until November 27,2013 to file reply comments, if any.
O R D E R
IT IS HEREBY ORDERED that this case shall be processed by Modified Procedure,
IDAPA 31.01.01.201-.204. Persons interested in submitting written comments in this matter
must do so by November 13, 20 1 3. The Company shall have until November 27, 20 1 3 to file
reply comments, if any.
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 32888 6
J 8 DONE by Order of the Idalio Public Utilities Commission at Boise, Idaho this
day of September 201 3.
ATTEST:
Barbara Barrows
Assistant Commission Secretary
NOTICE OF FILING
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ORDER NO. 32888 7