20131129Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:RICK STERLING
DATE:NOVEMBER 27,2013
RE:AVISTA’S ANNUAL COMPLIANCE FILING TO UPDATE THE LOAD
AND GAS FORECASTS AND LONG-TERM CONTRACTS IN THE
INTEGRATED RESOURCE PLAN AVOIDED COST METHODOLOGY;
CASE NO.AVU-E-13-11
BACKGROUND
In its final Order No.32697,the Commission determined that the inputs to the Integrated
Resource Plan (“IRP”)avoided cost methodology,utilized for all proposed Public Utility
Regulatory Policies Act of 1978 (“PURPA”)qualifying facility (“QF”)projects that exceed the
published rate eligibility cap,will be updated every two years upon acknowledgement of the
utility’s IRP filing,with the exception of the load forecast and the natural gas forecast—which is
to be updated annually by October 15 of each year.The Commission stated:
We find that,in order to maintain the most accurate and up-to-date
reflection of a utility’s true avoided cost,utilities must update fuel price
forecasts and load forecasts annually —between IRP filings.For the sake
of consistency,these annual updates should occur simultaneously with
SAR updates —on June 1 of each year.In addition,it is appropriate to
consider long-term contract commitments because of the potential effect
that such commitments have on a utility’s load and resource balance.We
find it reasonable to include long-term contract considerations in an IRP
Methodology calculation at such time as the QF and utility have entered
into a signed contract for the sale and purchase of QF power.We further
find it appropriate to consider PURPA contracts that have terminated or
expired in each utility’s load and resource balance.We find it reasonable
that all other variables and assumptions utilized within the IRP
Methodology remain fixed between IRP filings(every two years).
Order No.32697.p.22.The date for the annual update was later changed from June 1 to October
15 of each year.Order No.32802.
DECISION MEMORANDUM -I -NOVEMBER27,2013
On October 15,2013,Avista (‘Company)submitted its annual updates for fuel prices,
load forecasts,and changes to long term contracts for purchases or sales and any new or expiring
QF contracts in compliance with Order Nos.32697 and 32802.
STAFF REVIEW
Load Forecast
Avist&s current energy load forecast was developed in July 2013 and its peak load
forecast was prepared in September2013 using the same methodology used for the 2013 IRP
forecasts.The Company provided a copy of its 20-year peak and average energy forecasts with
its filing.
Gas Forecast
Avista’s current natural gas price forecast is the same as that used in its 2013 IRP.The
Company provided a copy of its 20-year gas price forecasts with its filing for all hubs the
Company considers in development of its 11W.
Contract Terminations,Expirations,and Additions
Avista reports one new,very small PURPA contract in the state of Washington and the
renewal of the 6.75 MW Nichols pumping contract at the Colstrip plant since the submission of
its 2013 IRP.
STAFF RECOMMENDATION
Staff believes that the load and gas price forecasts submitted by Avista reflect the
Company’s most current estimates,and were prepared consistent with the methods used in the
IRP.Staff believes the load and gas price forecasts and the long-term contract changes
submitted by the Company comply with the requirements of Order Nos.32697 and 32802.Staff
recommends that the Commission accept the forecasts and contract changes for filing without
further process or procedure.
DECISION MEMORANDUM -2 -NOVEMBER 27,2013
COMMISSION DECISION
Does the Commission wish to accept Avista’s compliance filing without further process
or procedure?
sttt
Rick Sterling /
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DECISION MEMORANDUM -3-NOVEMBER 27,2013