20151218Comment.pdf

Comments of the Snake River Alliance RECEVD
On Avista Corporation’s 2015 Electric Integrated Resource Plan
Submitted by 1ulOEC 18 PM 3:I
Ken Miller,Clean Energy Program Director,Snake River Alliance IDDUHLITiSCOMMISSION
December 18,2015
The Snake River Alliance appreciates the opportunity to submit these comments to the Idaho
Public Utilities Commission in docket AVU-E-15-08,Avista Corporation’s 2015 Integrated
Resource Plan (IRP),on behalf of our members,many of whom are Avista electricity and natural
gas customers.
As we have in the 2015 IRP filings of Idaho Power and Rocky Mountain Power,the Alliance
commends Avista for its continued progress in making its Technical Advisory Committee (TAC)
process,its recommended 2015 Preferred Resource Strategy (PRS)development,and its 2015
IRP increasingly transparent and accessible to the public.
With reservations,the Alliance recommends the Commission accept Avista’s 2015 IRP.We also
offer the following observations for PUC consideration during its IRP review.
Like many Northwest electric utilities,Avista’s IRP shows no immediate need for new supply-
side resources at least until it meets its first capacity deficit in 2021.Periodic capacity needs
before 2021 can be addressed through market purchases.Avista,like many regional utilities,is
well prepared to meet energy needs for much of the period covered in this IRP.As noted by the
Commission (ORDER No.33385,P.3),significant changes from the 2013 IRP to this IRP include
lower-than-expected annual load growth (.6 percent,down from 1 percent in 2013),reduced
contribution from natural gas peaking plants,and the elimination of demand response
programs due to what Avista says are higher estimated costs.
General Comments on Avista 2015 IRP
Avista’s 2015 PRS calls for a 96 MW gas peaker in 2020,38 MW in thermal upgrades in 2021-
2025,a 286 MW CCCI in 2026,a 96 MW gas peaker in 2027,3 MW in thermal upgrades in
2033,and a 47 MW gas peaker in 2034—for a total of 565 MW of fossil fuel additions by 2035.
Avista projects that energy efficiency will offset more than half of its projected load growth
over the 20 years covered by this IRP.While DSM offsets of new load are always welcome,we
remain concerned the IRP also states,“Colstrip remains a cost-effective and reliable source of
power to meet future customer needs.”We do not agree Colstrip is a cost-effective resource
once the environmental and the social costs of carbon are included in Colstrip’s operating costs.
Each of Idaho’s three regulated electric utilities has its own primary generation resource:
Hydropower in the case of Idaho Power,coal for most of that used by Rocky Mountain Power,
and most of Avista’s generation comes from natural gas.This IRP doesn’t change that,and we
are concerned that Avista’s reaffirmation of gas as its primary resource may create future
challenges as greenhouse gas emissions come under stricter regulations and subject to possible
financial costs such as a carbon tax,an emissions cap,a trading mechanism or a combination of
those.As the Commission knows,we raised similar concerns in Idaho Power’s pending 2015
IRP,although the issue in that case was Idaho Power’s heavy use of coal.
Avista’s first new supply-side resource acquisition is projected to be a 96-megawatt gas peaking
plant by the end of 2020 to accommodate load growth and the expiration of certain contracts.
It then envisions another 286 MW combined-cycle combustion turbine gas plant in 2026 and by
the end of this IRP’s planning horizon in 2035,Avista plans to have added about 565 MW of
new natural gas.Even given Avista’s existing gas-heavy resource mix,this is a significant
amount of fossil fuel generation that will be subject to a very uncertain regulatory and
economic climate.We recommend that as the Commission takes note of these proposed
resource acquisitions,it draws attention to inherent customer risk of such investments.
We also note that Avista’s addition of the 96 MW peaking plant in four years comes as the
Company is also shutting down its demand response programs,which are generally
implemented to address short-term peak demand challenges.Demand response is not only an
effective hedge against peak demand;it is also widely used to address system adequacy and
regulatory services challenges and to facilitate the integration of renewable energy into the
grid.We also note that the Northwest Power and Conservation Council’s Draft 7th Power Plan
for the first time envisions significant additions of new demand response for the first time as a
tool to offset the need for new fossil fuel generation.We are concerned that adding so much
new natural gas while simultaneously shutting down demand response can send mixed signals
regarding Avista’s ability to achieve deeper carbon emissions reductions.
As noted in Commission ORDER 33385,Avista is subject to the state of Washington’s Energy
Independence Act (EIA)and its renewable portfolio standards requirements that Avista meet
escalating renewable energy thresholds.The company says it will comply with EIA through a
combination of renewable energy certificates,hydropower plant improvements,the Palouse
Wind Project and the Kettle Falls Generating Station,a 53-megawatt wood-to-biomass plant.
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Carbon Emissions and the Clean Power Plan
As do other electric utilities operating coal-fired generation plants,or in this case having an
ownership interest in a coal plant,Avista’s ownership share of the Montana Coistrip Steam
Electric Station is not without impacts flowing from the Environmental Protection Agency’s
Clean Power Plan (CPP),which establishes state greenhouse emission reduction targets
associated with existing coal-fired power plants.Avista is headquartered in Spokane and
Colstrip is located in Montana,and while Montana must craft its own CPP implementation plan,
that plan will by necessity impact Colstrip operations and by extension Avista’s 15 percent
share of the plant,which at about 222 MW accounts for 13 percent of Avista’s generation.
The extent to which Coistrip operations will be affected cannot be known at least until
Montana’s CPP takes form —or until other Colstrip owners form their own plans regarding the
plant.What is known is that Colstrip’s future is very uncertain due to a combination of
regulatory,legal,and economic factors.
Large new investments in fossil fuel assets such as those envisioned in this 2015 IRP present
challenges in reducing utility greenhouse gas emissions,as is demonstrated in Figure 1.7 in
Chapter 1—Executive Summary of the IRP.That chart appears to show increasing GHG
emissions as measured in metric tons as well as metric tons per MWh from 2016 through 2035.
Avista states its emissions “will increase modestly over the IRP timeframe”compared to
western-region reductions from historic levels.The company states that is due in large part
because Avista has no ownership stake in any of the less-cost-effective coal and natural gas
plants projected to retire in the region over the same time frame.
Also like many other electric utilities,Avista completed its IRP before EPA released its final CPP.
As a result,Avista says it will need to review both the CPP and how individual states will comply
with it as part of its 2017 IRP,which is reasonable.However,the Alliance recommends that the
Commission direct Avista for any other electric utility with 2015 lRPs)to report to the
Commission how any new developments relative to the CPP and states’implementation might
impact the IRP or its Preferred Resource Strategy.
Conclusion
As stated at the outset,the Alliance generally supports Avista’s 2015 IRP and the TAC process
advising the company in developing it.With the recommendations and observations mentioned
above,we recommend the Commission accept the IRP.We remained concerned any time an
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Idaho regulated electric utility is as heavily reliant on fossil-fuel resources as are these Idaho
utilities because such carbon-laden power portfolio commits utility customers to a generation
of resources that are subject to unknown regulations,costs,reliability,and availability.We
believe Idaho utilities should be actively reducing their reliance on fossil fuels,as reflected in
the Power Council’s Draft 7th Power Plan,rather than reaffirming their use of coal and gas.To
Avista’s credit,the company continues to seek carbon-free resources,especially demand-side
resources,to at least reduce its reliance on gas and coal.The Alliance also recommends the
Commission advise Avista to continue exploring possible Western Energy Imbalance Markets
(ElMs).Avista currently participates in such studies and in this IRP notes that participation in an
ElM may help lower customer rates by providing “another market to buy and sell short-term
capacity products and services.”We concur and appreciate Avista’s interest in potential ElMs.
Finally,we note that,while Avista is experiencing an increase in solar net-metered customers,
there are no plans to incorporate other forms of solar energy onto its system.We suggest the
Commission recommend that Avista further explore such concepts as a company solar pilot
project to become more familiar with solar characteristics.We believe all Idaho electric utilities
should be actively engaged in exploring —at least on a pilot basis at the moment —various
issues regarding solar development and integration.
The Alliance appreciates the opportunity to provide these comments to the Commission for its
consideration.
Respectfully submitted,
Ken Miller
Clean Energy Program Director
Snake River Alliance
208 344-9161
[e-mail]
www.snakeriveralliance.org
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