20140228Comments.pdf

KRISTINE A. SASSERDEPUTYATTORNEYGENERAL l,:"'i,'Ii, Iil:i,Z
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
BAR NO. 6618
Street Address for Express Mail:
472 W, WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA CORPORATION'S )
APPLICATTON FOR APPROVAL OF ITS ) CASE NO. AVU-E-13-10
CAPACITY DEFICIENCY PERIOD TO BE )
UTILIZED IN THE COMPANY'S SAR )METHODOLOGY. ) COvTMENTS OF THE) corvrMrssroN srAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Kristine A. Sasser, Deputy Attorney General, and in response to the Notice
of Modified Procedure issued in Order No. 32971 on January 28,2014, in Case No. AVU-E-l3-
10, submits the following comments.
BACKGROUND
In Order No. 32697, the Commission directed that a case be initiated outside of each
utility's Integrated Resource Plan (IRP) filing to establish a capacity deficiency period to be
utilized in the utility's Surrogate Avoided Resource (SAR) methodology for computing avoided
cost rates to be included in PURPA power purchase agreements. On October 16, 2013, Avista
Corporation filed an Application requesting that the Commission approve its updated capacity
deficiency periods to be utilized in its SAR avoided cost methodology.
STAFF COMMENTS FEBRUARY 28,2014
STAFF ANALYSIS
Avista's 2013IRP
On August 29,2013, Avista filed its 2013 IRP with the Commission. In its 2013 IRP,
Avista identified winter capacity deficits in 2015 and2016. Those deficits disappear beginning
in2017 due to the addition of long-term contracts. Winter deficits reappear in2020 and persist
throughout the remainder of the 2}-year planning period. A very small, temporary, summer
capacity deficit is identified in 2016. Many near-term deficits are from decreased
hydroelectricity capacity during periods of planned maintenance and upgrades. An annual
energy deficit is not expected to begin until2026. See Attachment A showing pages 8-38
through 8-40 of Avista's 2013 IRP.
Because the capacity deficits identified in 2015 and 2016 are only temporary, Avista
plans to meet them with short-term market purchases. Market purchases of 75 and 100 MW are
planned in 2015 and20l6, respectively. Avista relied on work by the Northwest Power and
Conservation Council in its Resource Adequacy Forum to determine a reasonable level of
reliance on the market for surplus summer energy and capacity. Reliance is limited to Avista's
prorated share of the regional load. Avista believes that the present market can meet these minor
summer and winter capacity shortfalls; therefore, the Company plans optimize its portfolio to
postpone new resource investments for winter capacity until 2020. See 2013IRP p. 2-37.
Updates to the 2013 IRP
In its Application, Avista has updated its capacity and energy load forecasts from its 2013
IRP. The updated load and resource balances also take into account new long-term contracts.
Attachment B is a copy of Avista's current capacity and energy positions.
Compared to the 2013 IRP, the updated capacity load forecasts are generally higher in
winter and lower in summer. This results in larger winter capacity deficits than were identified
in the 2013 IRP. The current forecasts show capacity deficits of 123 and I 39 MW in the winters
of 2015 and 2016, and continue to show a summer deficit of 36 MW in the summer of 2016.
Looking at annual energy, Avista's updated forecast is lower than its 2013 IRP. This
results in larger average energy surpluses through 2026 and smaller deficits throughout the
remainder of the planning period.
STAFF COMMENTS FEBRUARY 28,2014
Capacity and Energy Deficits for Avoided Cost Computations
Based on its updated capacity and energy balance, Avista appears to continue to plan to
meet summer and winter capacity deficits in 2015 and2016 with short-term market purchases.
No short-term contracts have yet been signed to satis$ these deficits. However, Staff does not
believe Avista's strategy to rely on short-term purchases is imprudent, especially considering
that these deficits only persist for two years, after which the Company is again in a surplus
position. Avista presents a unique set of circumstances. Avista must procure something to
satisfu its short-term deficits. However, if Avista acquired a long-term resource to satisfy
deficits in 2015 and 2016, that resource would not be needed again until2020. It would not be
prudent to acquire a long-term resource to satisfy a short-term deficit.
The Commission determined in Order No. 32802, and clarified in Order No. 32871, that
for existing PURPA projects with expiring contracts, once a PURPA project begins receiving
capacity payments, it should continue to receive them in any replacement contract it may seek.
That situation differs somewhat from the situation presented here, however. Existing PURPA
projects seeking replacement contracts already occupy a place in the utility's portfolio, so
removal of them would theoretically create an immediate deficiency, thus ongoing capacity
payments make sense. New PURPA contracts, on the other hand, arguably should only be paid
for capacity that has value to the utility. Capacity provided during a utility's surplus period,
regardless of when the surplus period occurs, has no value. Consequently, Staff computed
Avista's avoided cost rates so that capacity value is paid only in those years in which it has value
to the utility.
Results of Avoided Cost Computations
Using the capacity and energy deficits presented in Avista's Application, Staff computed
the SAR methodology avoided cost rates.l The rates are shown on Attachment C for wind, solar,
non-seasonal hydro, seasonal hydro, and other project types. Note that rates in 2017-2019
decrease due to capacity value not being paid, consistent with the rationale presented above.
I In computing avoided cost rates, Staff used Avista's 2014 capacity and energy positions from its 2013 IRP. For
the period 2015 through 2034, Staff used the capacity and energy positions from Avista's Application in this case.
This was necessary because Avista's Application did not include capacity and energy positions for 2014.
STAFF COMMENTS FEBRUARY 28,2014
STAFF RECOMMENDATIONS
Staff recommends approval of the capacity and energy positions as proposed by Avista in
its Application. Staff further recommends approval of the SAR methodology avoided cost rates
as contained in Attachment C to Staff s comments. Finally, Staff recommends that the rates be
effective as of the date of Commission approval.
Respecttully submitted this L# day of Febru ary 2014.
Technical Staff: Rick Sterling
i:umisc:comments/avuel3. l0ksrps comments.doc
Kristine A. Sasser
Deputy Attomey General
STAFF COMMENTS FEBRUARY 28,2014
8-38
hment A
Comments
No. AVU-E-13-10
14 Page 1 of3
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Attachment A
Staff Comments
Case No. AVU-E-I3-10
2128/14 Page 2 of 3
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Staff Comments
Case No. AVU-E-I3-10
2l28l14 Page 3 of 3
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Case No. AVU-E-13-10
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Staff Comments
Case No. AVU-E-13-10
2128114 Page 2 of 2
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AVISTA
AVOIDED COST RATES FOR WIND PROJECTS
March XX, 2014
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects 100 kW or smaller.
LEVELIZED NON,LEVELIZED
CONTRACT
LENGTH
/YFARS}
ON.LINE YEAR
CONTMCT
YEAR
NON-LEVELIZED
RATES2014 2015 2016 2017 2018 2019
1
2
3
4
5
6
7I
I
10
11
12
13
14
15
16
17
18
19
20
29.08
31.03
33.21
34.24
35.44
36.56
37.91
39.20
40.48
41.69
42.76
43.72
44.59
45.36
46.09
46.78
47.44
48.09
48.73
49.36
33.1 5
35.52
36.24
37.36
38.43
39.81
41.13
42.45
43.71
44.80
45.76
46.64
47.41
48.14
48.84
49.51
50.1 6
50.81
5 t.45
52.11
38.09
37.98
38.99
40.02
41.48
42.86
44.23
45.54
46.65
47.64
48.52
49.29
50.03
50.73
51.41
52.07
52.73
53.40
54.08
54.79
37.86
39.49
40.77
42.50
44.05
45.56
46.96
48.14
49.16
50.06
50.86
51.61
52.32
53.01
53.70
54.38
55.06
55.77
56.51
57.29
41.25 43.6442.40 46.0044.29 47.7245.91 49.35
47.48 50.85
48.93 52.02
50. t ,l 53.01
51.12 53.88
52.01 54.6352.79 55.3453.52 56.0454.23 56.7354.92 57.4155.61 58.11
56.30 58.83
57.00 59.57
57.72 60.3758.49 61.2159.30 62.0860.13 62.99
2014
201 5
201 6
2017
201E
201 I
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
29.08
33.1 5
38.09
37.86
41.25
43.64
48.54
51.58
55.1 1
58.06
59.41
60.84
62.22
63.20
64.97
66.93
68.93
71 .41
74.29
77.30
81.30
86.32
9'1.58
97.02
103.23
106.92
Note: These rates will be further adjusted with the applicable integration charge.
Note: The rates shown in this table have been computed using the U.S. Energy lnformalion Administration (ElA)'s Annual Energy
Outlook 2013 released May 2, 2013. See'Annual Energy Outlook 20'13, All Tables, Energy Prices by Sector and Source, Mountain,
Reference case" at http://www.eia. gov/oiaf/aeo/tablebrowser/.
AVISTA Page 1
Attachment C
Staff Comments
Case No. AVU-E-13-10
2/28114 Page 1 of 5
AVISTA
AVOIDED COST RATES FOR SOLAR PROJECTS
March XX,2014
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eligibility for these rates is limited to projects 100 kW or smaller.
LEVELIZED NON.LEVELIZED
CONTMCT
LENGTH
/YtrARS\
ON.LINE YEAR
CONTRACT
YEAR
NON.LEVELIZED
RATES2014 2015 2016 2017 2018 2019
1
2
3
4
4
6
7
8
9
10
11
12
13
14
'15
16
17
18
't9
20
29.08
31.65
34.03
34.88
3s.97
37.O2
38.47
39.84
41.18
42.45
43.56
44.55
45.45
46.25
47.00
47.72
48.40
49.06
49.72
s0.36
34.42
36.81
37.13
38.05
39.00
40.49
41.90
43.28
44.58
45.71
46.71
47.61
48.41
49.17
49.88
50.57
51.24
51.90
52.56
53.23
39.38
38.65
39.45
40.38
42.01
43.51
44.97
46.34
47.51
48.54
49.45
50.26
5'1.o2
51.75
52.44
53.1 3
53.81
54.49
55.1 8
55.91
37.86
39.49
40.77
42.80
44.54
46.1 8
47.67
48.92
49.99
50.95
51.78
52.56
53.30
54.02
54.72
55.43
56.1 3
56.86
57.61
58.40
41.25 43.6442.40 46.6644.72 48.61
46.55 50.3748.25 5',1.9249.79 53. t551.03 54.1852.',10 55.08s3.03 55.8553.84 56.59
54.61 s7.3155.34 58.0156.05 58.7156.76 59.43
57 .47 60.1 5
58.18 60.91
58.92 61.72
59.71 62.57
60.s3 63.4561.37 64.37
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
29.08
34.42
39.38
37.86
41.25
43.64
49.91
52.98
56.52
59.49
60.86
62.32
63.72
64.72
66.51
68.50
70.52
73.03
75.92
78.96
82.98
88.03
93.31
98.78
1 05.02
108.73
Note: These rates will be further adjusted with the applicable integration charge.
Note: The rates shown in this table have been computed using the U.S. Energy lnformation Administration (ElA)'s Annual Energy
Outfook 20 1 3 released May 2, 2013. See "Annual Energy Outlook 2013, All Tables, Energy Prices by Sector and Source, Mountain,
Reference case" at http:/ ,vww.eia.gov/oiaf/aeo/tablebrowser/.
AVISTA page 2
Attachment C
Staff Comments
Case No. AVU-E-I3-10
2l28ll4 Page 2 of 5
AVISTA
AVOIDED COST RATES FOR NON.SEASONAL HYDRO PROJECTS
March )(X, 2014
$/MWh
New Gontracts and Reolacement Contracts without Full Capacitv Pavments
Eligibility for these rates is limited to projects smatler than 10 aMW.
LEVELIZED NON.LEVELIZED
CONTRAC'I
LENGTH
/VtrAEIS\
ON-LINE YEAR
CONTRACT
YEAR
NON.LEVELIZED
RATES2014 201s 2016 2017 2018 2019
1
2
3
4
4
6
7I
9
't0
11
12
13
14
15
16
17
18
19
20
29.08
34.49
37.84
37.85
38.43
39.1 4
41.O7
42.80
44.43
45.93
47.24
48.40
49.44
50.37
51.23
52.04
52.82
53.56
54.29
s5.00
40.33
42.7s
41.25
41.25
41.66
43.65
45.42
47.O9
48.62
49.93
51.09
52.13
53.05
53.90
54.71
55.48
56.23
56.96
57.69
58.42
45.37
41.76
41.60
42.06
44.48
46.52
48.38
50.05
51.46
52.69
53.77
54.73
55.61
56.45
57.24
58.01
58.78
59.53
60.29
6'1.07
37.86
39.49
40.77
44.21
46.81
49.03
50,95
52.52
53.86
5s.02
56.03
56.96
57.84
58.67
59.48
60.28
61.07
61.87
62.70
63.55
41.25 43.64
42.40 49.7146.67 52.7049.51 55.01
51.82 56.9053.77 58.36
55.33 59.58
56.63 60.62
57 .76 61.5258.73 62.3659.63 63.1660.48 63.94
6 t.29 64.7262.09 65.50
62.89 66.28
63.67 67.09
64.48 67.9565.33 68.8566.21 69.7867.11 70.74
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
29.08
40.33
45.37
37.86
41.25
43.64
56.26
59.42
63.06
66.12
57.59
69.14
70.55
71.75
73.64
75.73
77.87
80.48
83.48
86.63
90.77
95.93
101.32
106.91
113.27
117.11
Note: The rates shown in this table have been computed using the U.S. Energy lnformation Administration (ElA)'s Annual Energy
Outlook 2013 released May 2,2013. See'Annual Energy Outlook 2013, All Tables, Energy Prices by Sector and Source, Mountain,
Reference case" at http://www.eia.gov/oiaf/aeo/tablebrowser/.
AVISTA page 3
Attachment C
Staff Comments
Case No. AVU-E-I3-10
2l28l14 Page 3 of 5
AVISTA
AVOIDED COST RATES FOR SEASONAL HYDRO PROJECTS
March XX,20l4
$/MWh
New ContracG and Replacement Contracts without Full Capacity Pavments
Eligibility for these rates is limited to projects smaller than 10 aMW.
LEVELIZED NON.LEVELIZED
]ONTRAC]
LENGTH
/YFARS\
ON.LINE YEAR
CONTRACT
YEAR
NON.LEVELIZED
RATES2014 2015 2016 2017 2018 2019
1
2
3
4
5
6
7II
'10
11
12
13
14
15
16
17
18
19
20
29.08
29.70
31.42
32.85
34.28
35.56
36.69
37.80
38.95
40.06
41.03
41.91
42.71
43.43
44.10
44.75
45.37
45.97
46.58
47.17
30.37
32.73
34.31
35.85
37.1 I
38.33
39.48
40.66
41.81
42.81
43.70
44.51
45.23
45.91
46.57
47.19
47.81
48.43
49.05
49.68
35.27
36.52
37.98
39.24
40.31
41.44
42.63
43.79
44.79
45.68
46.48
47.',19
47.87
48.52
49.1 5
49.77
50.40
51.03
51.67
52.36
37.86
39.49
40.77
41.83
42.98
44.22
45.42
46.44
47.34
48.1 5
48.86
49.53
50.19
50.82
51.46
52.10
52.74
53.41
54.12
54.87
41.25 43.6442.40 44.5643.37 45.7944.52 47.1845.81 48.5147.05 49.5648.09 50.4748.99 51.2749.79 51.96
50.49 52.6351.16 53.2951.82 53.9452.46 54.5953.10 55.26
53.75 55.9454.41 56.57
55.1 1 57.44s5.85 58.26s6.63 59.1 |57.43 60.00
2014
2015
201 6
2017
201 8
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
29.08
30.37
35.27
37.86
41.25
43.64
45.55
48.56
52.O4
54.94
56.24
57.63
58.96
59.90
61.61
63.53
65.48
67.91
70.73
73.69
77.64
82.60
87.81
93.20
99.35
1 02.98
Note: A "seasonal hydro project" is defined as a generation facility which produces at least 55% of its annual generation during the
months of June, July, and August. Order 32802.
Note: The rates shown in this table have been computed using the U.S. Energy lnformation Administration (ElA)'s Annual Energy
Outlook 2013 released May 2, 2013. See "Annual Energy Outlook 2013, All Tables, Energy Prices by Sector and Source, Mountain,
Reference case" at http://www.eia.gov/oiaf/aeo/tablebrowser/.
AVISTA page 4
Attachment C
Staff Comments
Case No. AVU-E-13-10
2128114 Page 4 of 5
AVISTA
AVOIDED COST RATES FOR OTHER PROJECTS
March XX,2014
$/MWh
New Contracts and Reolacement Contracts without Full Gapacitv Pavments
Eligibility for these rates is limited to projects smaller than 10 aMW.
LEVELIZED NON.LEVELIZED
CONTRAC]
LENGTH
/VFAPq\
ON-LINE YEAR
CONTRACT
YEAR
NON.LEVELIZED
RATES2014 2015 2016 2017 2018 2019
I
2
3
4
5
6
7II
10
11
12
13
14t<
16
17
18
19
20
29.08
38.91
43.77
42.46
42.25
42.44
45.'l 1
47.40
49.48
51.35
s2,96
54.38
55.65
56.77
57.8'l
58.78
59.69
60.56
61.41
62.23
49.52
52.O1
47.65
46.22
45.78
48.57
50.91
53.02
54.90
56.51
57.9'l
59.1 6
60.26
61.27
62.23
63.13
63.99
64.83
65.66
66.48
54.70
46.60
44.95
44.66
48.33
51.21
53.69
55.83
57.62
59.16
60.50
61.58
62.76
63.76
64.71
65.62
66.50
67.37
68.23
69.11
37.86
39.49
40.77
46.41
50.34
53.47
56.05
58.13
59.87
6'1.36
62.65
63.82
64.90
65.92
66.89
67.83
68.75
69.67
70.61
71.56
41.25 43.64
42.40 54.46
49.72 59.0854.10 62.2357.37 64.6559.98 66.49
62.01 67.9863.68 69,25
65.'l 1 70.33
66.33 71.3367.44 72.2768.48 73.1769.45 74.0670.39 74.9471.3',t 75.8272.22 76.72
73.1 3 77 .66
74.08 78.63
75.05 79.6376.03 80.65
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
29.08
49.52
54.70
37.86
41.25
43.64
66.14
69.44
73.23
76.44
78.06
79.77
81.43
82.69
84.74
87.00
89.29
92.07
95.25
98.57
102.88
108.22
1 13.80
1 19.57
126.11
1 30.1 4
Note: "Other projects" refers to projects other than wind, solar, non-seasonal hydro, and seasonal hydro projects. These "Other poects"
may include (but are not limited to): cogeneration, biomass, biogas, landfill gas, or geothermal projects.
Note: The rates shown in this table have been computed using the U.S, Energy Information Administration (ElA)'s Annual Energy
Outlook2013releasedMay2,2013. See"Annual EnergyOutlook20l3,All Tables,EnergyPricesbySectorandSourc6,Mountain,
Reference case" at http://www.eia.gov/oiaf/aeo/tablebrowser/,
AVISTA Page 5
Attachment CStaff Conrnents
Case No. AW-E-13-102/28/L4 Page 5 of 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 28TH DAY OF FEBRUARY 2014,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU.E-I3-10, BY E.MAILING AND MAILING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
LINDA GERVAIS
MGR REGULATORY POLICY
AVISTA CORPORATION
PO BO){ 3727
SPoKANE W A 99220-3727
MICHAEL G ANDREA
AVISTA CORPORATION
PO BOX3727
SP0KANE WA99220-3727
SECRETARY
CERTIFICATE OF SERVICE