20150925notice_of_filing_order_no_33385.pdf

Office of the Secretary
Service Date
September 25,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION’S 2015 ELECTRIC )CASE NO.AVU-E-15-08
INTEGRATED RESOURCE PLAN )
)NOTICE OF FILING
)
)NOTICE OF
)MODIFIED PROCEDURE
)
____________________________
)ORDER NO.33385
On August 31,2015 Avista Corporation dba Avista Utilities (the “Company”)filed
its 2015 Electric Integrated Resource Plan (“IRP”)with the Commission.The Company 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 the Company has filed its 2015
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 the Company’s 2015 Electric IRP is about 214
pages long and is accompanied by 934 pages of appendices.The 2015 Electric IRP includes the
following sections:(1)Executive Summary;(2)Introduction and Stakeholder Involvement;(3)
Economic &Load Forecast;(4)Existing Supply Resources;(5)Energy Efficiency &Demand
Response;(6)Long-Term Position;(7)Policy Considerations;(8)Transmission &Distribution
Planning;(9)Generation Resource Options;(10)Market Analysis;(11)Preferred Resource
Strategy;(12)Portfolio Scenarios;and (13)Action Items.The information discussed below is
taken from the Executive Summary.
YOU ARE FURTHER NOTIFIED that the 2015 Electric IRP guides the Company’s
resource strategy over the next two years,and resource procurements over the next 20 years.It
provides a snapshot of the Company’s resources and loads and guides future resource
acquisitions over a range of expected and possible future conditions.IRP at 1-1.
YOU ARE FURTHER NOTIFIED that the Company states that its 2015 Preferred
Resource Strategy (“PRS”)includes energy efficiency,generation upgrades,and new natural
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gas-fired generation.PRS development depends on modeling techniques to balance cost,
reliability,rate volatility,and renewable resource requirements.The Company’s management
and Technical Advisory Committee (“TAC”)guide the development of the PRS and IRP by
providing input on modeling and planning assumptions.TAC members include customers,
Commission Staff,the Northwest Power and Conservation Council,consumer advocates,
academics,environmental groups,utility peers,government agencies,and other interested
parties.Id.
YOU ARE FURTHER NOTIFIED that in describing its resource needs,the Company
reports that it experiences its highest peak loads in the winter under extreme weather conditions.
The Company explains its peak-planning methodology includes operating reserves,regulation,
load following,wind integration and a 14%planning margin over winter-peak load levels.The
Company states that it can meet peak-load requirements through 2020 using existing resources,
conservation,and market purchases.Id.The Company notes that a short-term capacity need
exists in the winter of 2015-2016,that it addressed this deficit with market purchases,and that
the first long-term capacity deficit begins in 2021.The Company notes that it has acquired
resources to meet projected winter deficiencies,and that these resources will provide capacity
that exceeds summer needs.Id.at 1-2.
YOU ARE FURTHER NOTIFIED that the Company explains that it develops its
PRS through a multiple-step approach.The Company first identifies and quantifies potential
new generation resources to serve projected electricity demand across the West.This Western
Interconnect-wide study determines the impact of extra-regional markets on the Northwest
electricity marketplace of which the Company is a part.The Company then maps its existing
resources to the transmission grid in a model simulating hourly operations for the Western
Interconnect from 2016 to 2035,the IRP study timeframe.The model adds new resources and
transmission to the Western Interconnect as regional loads grow and older resources are retired.
Monte Carlo-style analyses vary hydroelectric and wind generation,loads,forced outages,and
natural gas price data over 500 iterations of potential future market conditions to develop the
Mid-Columbia electricity marketplace through 2035.Id.
YOU ARE FURTHER NOTIFIED that the Company’s 2015 IRP forecasts the Mid
Columbia electricity price for the Expected Case,including the price range over the 500 Monte
Carlo iterations,to be a levelized price of $38.48 per megawatt hour (“MWh”)in nominal dollars
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over the 2016-2035 timeframe.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 1-3.The Company reports that nominal levelized Expected Case natural gas
prices at the Stanfield trading hub in northeastern Oregon,and the forecast range from the 500
Monte Carlo iterations performed for the Expected Case,result in an average $4.97 per
dekatherm over the next 20 years.Id.
YOU ARE FURTHER NOTIFIED that the Company’s 2015 IRP includes a 20-year
Conservation Potential Assessment that analyzed over 3.000 equipment and 2,300 measure
options for residential,commercial,and industrial energy efficiency applications.Based on this
data,the Company reports that its historical energy efficiency efforts have decreased its load
requirements by 127 average MW (“aMW”),or about 11 %of its total load in 2014.Id.
YOU ARE FURTHER NOTIFIED that the Company states that its management and
the TAC guided the development of the 2015 PRS after carefully considering the information
gathered and analyzed in the IRP process.Id.at 1-4.The resulting 2015 PRS meets future load
growth with upgrades at existing generation facilities,energy efficiency,and natural gas-fired
technologies.Id.
YOU ARE FURTHER NOTIFIED that the Company states its 2015 PRS describes a
reasonable low-cost plan along the efficient frontier of potential resource portfolios accounting
for fuel supply risks and price risks.Id.at 1-5.However,major changes from the 2013 IRP
include a reduced contribution from natural gas-fired peakers,and the elimination of demand
response because of lower projected load growth,more thermal plant upgrades,and higher
demand response costs.Id.
YOU ARE FURTHER NOTIFIED that the Company also states that it values each
new resource and energy efficiency option against the Expected Case Mid-Columbia electricity
market to identify its future value and inherent risk measured by year-to-year portfolio cost
volatility.The Company then inputs these values,and their associated capital and fixed
operation and maintenance costs,into a PRS Linear Programming Model (“PRiSM”)that
optimally mixes new resources along an efficient frontier.Id.
YOU ARE FURTHER NOTIFIED that the Company explains that its PRS provides a
least reasonable cost portfolio that minimizes future costs and risks within actual and expected
environmental constraints.Id.An efficient frontier helps determine the tradeoffs between risk
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and cost.The Company likens the approach to finding an optimal mix of risk and return in an
investment portfolio.As expected returns increase,so do risks.Conversely,reducing risk
generally reduces overall returns.In describing the change in cost and risk from the PRS on the
efficient frontier,the Company notes that lower power cost variability comes from investments
in more expensive,but less risky,resources like wind and hydroelectric upgrades.The PRS
selection is the location on the efficient frontier where reduced risk justifies the increased cost.
id.
YOU ARE FURTHER NOTWTED that the Company notes that its IRP includes
several scenarios that help identify tipping points where the PRS could change under different
conditions from the Expected Case.The TRP also evaluates the impacts of,among other things,
varying load growth,resource capital costs,and greenhouse gas policies.Id.at 1-6.
YOU ARE FURTHER NOTWIED that the Company’s IRP describes the Company’s
plans for complying with the State of Washington’s Energy Independence Act (“EIA”).The
Company explains that Washington’s ETA requires the Company to meet 3%of retail load from
qualified renewable resources by 2012,9%by 2015,and 15%by 2020.The ETA also requires
the Company to acquire all cost-effective conservation and energy efficiency measures.The
Company states that it will satisfy its ETA obligations through the IRP tirneframe by combining
qualifying hydroelectric upgrades,the Palouse Wind project,Kettle Falls Generating Station
output,and renewable energy certificate (“REC”)purchases.Id.
YOU ARE FURTHER NOTIFIED that the Company notes that regulation of
greenhouse gases,or carbon emissions,is in various stages of development and implementation
throughout the country.Some states have active cap and trade programs,emissions performance
standards,renewable portfolio standards or a combination of active and proposed regulation
affecting emissions from electric generation resources.Id.Further,the Environmental
Protection Agency (“EPA”)issued a proposed rule under the Clean Power Plan (“CPP”)in June
2014 that aimed to reduce greenhouse gas emissions from existing fossil fuel electric generating
plants based on state-by-state emission rates targets.Id.at 1-6,-7.The Company notes that its
2015 IRP reduces emissions consistent with the EPA’s proposed rule,and includes all active
regulations affecting generation in the Western Interconnect,including a $12 per metric ton
carbon cost that escalates over time.Id.at 1-7.However,because the Company had completed
its modeling for the 2015 IRP before August 3,2015,when the EPA issued the final CPP rule,
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the Company states it will analyze the EPA’s final CPP rule and resulting state implementation
plans in the 2017 IRP.The Company predicts that western region emissions will likely fall from
historic levels over the IRP timeframe,while the Company’s emissions will modestly increase.
The Company explains this discrepancy by noting that the Company does not own any of the less
cost-effective coal and natural gas-fired plants projected to retire over the IRP timeframe.Id.
YOU ARE FURTHER NOTIFIED that the Company reports that its 2015 Action
Plan updates the Company’s progress on Action items from the 2013 IRP,and outlines activities
the Company intends to perform between the publication of the 2015 IRP and the publication of
the 2017 IRP.The Company notes that the 2015 Action Plan is based on input from
Commission Staff,the Company’s management team,and the TAC,and that action item
categories include generation resource-related analysis,energy efficiency,and transmission
planning.Id.at 1-8.
YOU ARE FURTHER NOTIFiED that the Company’s 2015 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.These
documents are also available on the Commission’s web site at ‘cidahoov.Click on the
“File Room”tab at the top of the page,scroll down to “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 31.01.01.000 et seq.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules
of Procedure,IDAPA 31.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation.
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YOU ARE FURTHER NOTIFIED that any person desiring to state a position on the
Company’s 2015 IRP case may file a written comment in support or opposition with the
Commission no later than December 18,2015.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 this IRP shall be mailed to the
Commission and the Company at the addresses reflected below:
Commission Secretary Linda Gervais
Idaho Public Utilities Commission Manager,Regulatory Policy
P0 Box 83720 Avista Corporation
Boise,ID 83720-0074 1411 E.Mission Avenue
Spokane,WA 99220
Street Address for Express Mail:E-mail:IindgçisvisLacopcorn
472 W.Washington Street
Boise,ID 83702-59 18
YOU ARE FURTHER NOTIFIED that 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
w\vpucidahogy.Click the “Utility 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 the Company at the e-mail
addresses listed above.
YOU ARE FURTHER NOTIFIED that the Company shall file reply comments,if
any,no later than January 8,2016.
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.
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ORDER
IT IS HEREBY ORDERED that this case shall be processed by Modified Procedure,
IDAPA 31.0l.Ol.20l-.204.Persons interested in submitting written comments in this matter
niiist do so no later than December 18,2015.The Company shall have until January 8,2016 to
file reply comments,if any.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this Z51
day of September 2015.
ATTEST:
(ian D.Jewelf,!
Commission secretary
O:AVU-E-I 5-O8kk
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33385
MARSHA H.SMITH,COMMISSIONER
12 J
KRIS1iNE RAPER,COMMISSIONER
PRESIDENT
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