20171215Comments.pdf

DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03 l 8
IDAHO BAR NO. 8370
RECEIVED
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; :T lL i' r i :i'tl ;aiJ l,i ISS ION
Street Address for Express Mail
472 W . WASHINGTON
BOISE, IDAHO 83702-5918
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA
CORPORATION'S 2OI7 ELECTRIC
INTEGRATED RESOURCE PLAN
CASE NO. AVU.E.17.O8
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Daphne Huang, Deputy Attorney General, and in response to the Notice of
Filing and Notice of Modified Procedure issued in Order No. 33900, submits the following
comments.
BACKGROUND
On August 37,2017, Avista Corporation dba Avista Utilities filed its 2017 Electric
Integrated Resource Plan (IRP). The IRP outlines and analyzes the Company's strategy for
meeting its customers' projected energy needs over the next 20 years.
The Company states its 2017 Preferred Resource Strategy (PRS) includes energy
efficiency, generation upgrades, and new natural 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.
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1STAFF COMMENTS DECEMBER 15, 2017
TAC members include customers, Commission Staff, the Northwest Power and Conservation
Council, consumer advocates, academics, environmental groups, utility peers, govemment
agencies, and other interested parties. Id.
The Company states its 2017 PRS describes a reasonable low-cost plan along the efficient
frontier of potential resource portfolios accounting for fuel supply risks and price risks. Id. Major
changes from the 2015 IRP include a reduced contribution from natural gas-fired peakers, and
inclusion of demand response, solar, and storage resources. 1d.
The Company also states it values each new resource and energy efficiency option against
the Expected Case Mid-Columbia electricity market price forecast 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 EfficientProntier. Id.
The Company's IRP describes the Company's plan for complying with the State of
Washington's Energy Independence Act (EIA). The Company explains that Washington's EIA
required or requires the Company to meet 9o/o of retail load from qualified renewable resources by
2016 and 15%by 2020. The EIA also requires the Company to acquire all cost-effective
conservation and energy efficiency measures. The Company states it will satisfy its EIA
obligations through the IRP timeframe by combining qualifying hydroelectric upgrades, the
Palouse Wind project, and Kettle Falls Generating Station output. 1d
The Company reports its 2017 Action Items chapter outlines activities the Company
intends to perform between the publication of the 2017 IRP and publication of its 2019 IRP. The
Company notes the 2017 Actron Items are based on input from Commission Staff, the Company's
management team, and the TAC, and action item categories include generation resource-related
analysis, energy efficiency, and transmission planning. Id. at l-7.
STAFF ANALYSIS
The Avista 2017 IRP guides the Company's resource strategy for the next two years and
provides insight into its preferred resource procurements for the next 20 years. Through analysis
of existing energy resources and load and future energy needs, the Company shows it can meet
customer energy needs through 2037 with Company-owned or contractually-controlled generation
resources, conservation, and market purchases. However, the Company expects a capacity deficit
in Novemb er 2026 if new resources are not added to the system. Staff believes the Company's
2STAFF COMMENTS DECEMBER 15, 2017
IRP satisfies the Commission's requirements as outlined in Order No.22299 and as later adopted
in Order Nos.24729 and25260. Although Staff believes the IRP meets its regulatory obligations,
Staff identified deficiencies that may have impacted the selection of the Company's Preferred
Resource Strategy.
Economic and Load Forecast
Staff reviewed the assumptions, methodologies, and models used in the load forecast and
believes the load forecasts prepared by Avista for its 2017 IRP are reasonable. Avista projects
annual load growth will decrease from the 0.6% found in the 2015 IRP to 0.47ohinthe2017
expected case energy forecast.
Avista builds generation capacity to meet winter and summer peak loads and uses
historical temperature extremes for peak load forecasting. The highest peak loads are expected to
occur in winter where peak loads reflect a greater range of temperature fluctuation and use per
customer. However, summer peak load is forecasted to grow faster than winter peak and could
result in a future summer peak load exceeding winter peak.
Peak load growth is projected to be lower than energy growth. Winter peak is expected to
grow by 0.42% annually and summer peak is expected by grow by 0.46% annually. This is a
decrease from the 20 I 5 IRP winter peak growth rate of 0 .7 4%o and a summer peak growth rate of
0.85%.
Existing Supply Resources
Avita's existing resources mix is approximately equal parts hydroelectric and thermal
resources. IRP at 6-1. The Company owns six hydroelectric projects on the Spokane River and
two on the Clark Fork River for a total of 972 megawatts (MW) of nameplate hydro capacity. The
Company owns seven thermal resources (one coal, five natural gas, and one wood buming
facility), all of which are expected to operate through the 20-year IRP planning period. The
Company's coal resource is a l5oZ ownership in Colstrip plant Units 3 and 4 (247 MW). The
Company's natural gas resources are the Rathdrum (167 MW), Northeast (61 MW), Boulder Park
(25 MW), Coyote Springs 2 (288 MW), and the Kettle Falls Combined Turbine (8 MW). The
remaining Company-owned thermal resource is the Kettle Falls wood-fired facility (51 MW).
In addition to those Company-owned resources, Avista also buys energy through Mid-
Columbia hydro contracts (165 MW), PURPA contracts (47 MW), and other contractual rights
aJSTAFF COMMENTS DECEMBER 15,2017
and obligations (416 MW). The Lancaster power purchase agreement is by far the largest of these
contracts (283 MW). Lastly, the Company has about 3.5 MW of customer-installed generation,
most of which is rooftop solar. The Company issued a Request for Proposal (RFP) in April 2017
to develop a 15 MW community solar project to meet increasing demand of commercial and
industrial customers for 100% renewable energy.
The Company's load and resource balance compares the capabilities of existing resources
with monthly forecast average load and peak demand over the 20-year IRP planning period.
Without new resources, the Company expects to be capacity deficit in November 2026.
Energy Efficiency and Demand Response
Avista has a long history of successfully acquiring demand-side management (DSM)
resources. The Company reports its DSM efforts since 1978 have decreased its load requirements
by about l2oh. The 2017 IRP identifies 88,000 megawatt hours (MWhs) of savings in 2018,
which increases to 1 ,516,000 MWhs of cumulative savings in 2037 . This IRP also estimates 53o/o
of future load growth can be served with demand-side resources, which delays the Company's first
year capacity deficit by five years from what it would have been without DSM. IRP at 5-1 and
6-1.
As a result of an action item in the Company's 2013 IRP, Avista's 2015 IRP began testing
a methodology to model demand-side resources concurrently with supply-side resources in PriSM,
the Company's resource selection model. Avista refers to this process as "co-optimization." IRP
at 5-6. In previous IRPs, the Company used the traditional method of estimating the amount of
achievable energy efficiency in a Conservation Potential Assessment and included that amount of
energy efficiency in the PRS. The 2015 IRP used both methods in order to test the co-
optimization next to the traditional method and found that while co-optimization did not change
the amount of energy efficiency in the PRS, it included differing levels of efficiency in each
portfolio along the Efficient Frontier which the Company may select depending on its preference
for risk-reduction in future scenarios.
During the development of the IRP, Staff asked the Company to model Idaho DSM
resources using utility costs rather than total costs. Although the Company had already modeled
resources in this IRP based on total costs, it responded to Staff s request in two ways. First, the
Company applied a 1.28 adjustment factor to the already-identified DSM savings in order to
approximate the amount that would have been identified using only utility costs. This method
4STAFF COMMENTS DECEMBER 15,2017
identified 15,370 MWh of Idaho savings in2018. Second, the Company committed to using only
utility costs when it models Idaho DSM in its 2019 IRP.
Staff believes modeling supply-side and demand-side resources concurrently using only
costs incurred by the Company is important to ensure both types of resources are given equal
treatment in the IRP process. Staff appreciates the significant progress Avista has made towards
this goal and looks forward to full implementation in the 2019 IRP.
In addition to energy efficiency, Avista also explored options for demand response in its
20l7IRP. The Company considered residential demand response, but determined the high-
penetration of natural gas space and water heat, low customer interest, and the Company's
inability to offer an incentive while remaining cost-effective made the program unworkable.
Although residential demand response was not feasible in this IRP, the Company remains
committed to re-evaluating the possibility for residential demand response to meet winter or
summer capacity needs in its 2019 IRP.
Although residential demand response was not feasible, the Company retained Applied
Energy Group to study the potential for commercial and industrial demand response in this IRP.
Using primarily firm curtailment, but also direct load control and opt-in critical peak pricing, the
study found the Company has 6 MW of achievable demand response in2018, increasingto 27
MW by 2037.
Long Term Position
Avista's first capacity deficit and energy deficit both occur in2026. IRP at 6-1. The
expiration of the 283 MW Lancaster power purchase agreement drives the Company's next
resource deficiency. The Lancaster contract expires in2026 and the Company plans to build a 204
MW natural gas peaker plant that year, and to begin investing in 34 MW of thermal upgrades to
make up the difference. The 2017 IRP assumes the Lancaster contract will not be renewed, but
Avista has not
adequately explained why the IRP does not consider a Lancaster contract extension. Avista plans
to build a generating resource to meet the load formerly served by Lancaster. Staff believes the
Company still should have modeled scenarios that included renewing the Lancaster contract to
determine the most economic resource for customers.
Avista explained that it carefully considers reserve margins requirements when
establishing its capacity and energy deficits. Reserve margins are the amount of capacity a utility
5STAFF COMMENTS DECEMBER 15,2017
must have available in the event load exceeds expectations or resource output is compromised
because of unplanned events, including outages and unexpected weather events. Reserve margins
for the Company were developed to accommodate a large hydroelectric system, where higher
planning margins are required to account for water condition variability. In addition to hydro
conditions, the Company's contingency case also carefully considered the impact of an outage at
Coyote Springs 2 plant because it is the Company's largest plant relative to meeting peak load.
After analysis that included comparing the deviation between summer and winter load, the
Company determined a l4Yo winter peak hour planning margin was sufficient. Including
operating reserves, Avista plans using a22.6Yo planning margin in the winter. Because the
Northwest Power and Conservation Council's (NWPCC) loss of load probability study projects
deficiencies in202l stemming from major coal plant retirements, Avista included a summer peak
hour planning margin for the first time. Because Avista's summer capacity is less constrained
than winter capacity, Avista determined 7% (15.6% including operating reserves) was adequate.
Avista currently meets its reserve requirements with short-term spot market purchases, but
because the NWPCC shows this capacity is shrinking across the region, the Company intends to
meet the planning margin using Company-owned resources or power purchase agreements.
Reserve margins can increase customer rates because it is costly to maintain infrequently used
resources. However, recent Western Electric Coordinating Council reserye rule changes allow the
Company to hold less spinning reserves and instead implement additional frequency response
reserves. Staff acknowledges the Company's efforts to optimize planning reserves to mitigate
customer expenses, even though it creates operational complexity.
Policy Considerations
Avista's Climate Policy Council monitors the Company's exposure to environmental
regulations. At the state level, the most notable regulations are Washington's Renewable Portfolio
Standard (RPS) and Washington's Clean Air Rule which were implemented January 1,2077. The
RPS will be met through a combination of hydroelectric upgrades, the Palouse Wind power
purchase agreement, and the Kettle Falls Generation facility. The Company does not have any
generation that falls under the Clean Air Rule.
At the federal level, the Environmental Protection Agency's (EPA's) Clean Power Plan
(CPP) and the Regional Haze Rules impact the Company's generation fleet. The Company states
that "this IRP used the CPP goals to guide the development of the emission reduction forecast of
STAFF COMMENTS DECEMBER 15,2OI76
this IRP" and that the CPP was "used to develop this IRP," but the Company did not clearly state
that each of the Company's portfolios comply with the existing rule.
The RegionalHaze Federal Implementation Plan (FIP) for Montana was finalized
September 2012. The Company states: "Colstrip Units 3 and 4 are not currently affected,
although the units will be evaluated for Reasonable Progress at the next review period in
September 2017. Avista does not anticipate any materials impacts on Colstrip Units 3 and 4 at
this time." IRP at 7-6.
However, the Montana Department of Environmental Quality Operating Permit Technical
Review Document (effective June 21, 2015) states:
Construction of the Units 3 and 4 fell outside the applicability timeframe
identified within the [Clean Air Act]; therefore, a [Best Available Retrofit
Technology] analysis was unnecessary for those particular units. In
addition, EPA did not require emission limits or controls pursuant to the
Reasonable Progress portion of the Regional Haze FIP for Units 3 and 4.
Staff recommends the Company specify what capital investments, if any, are required to
meet all state and federal regulations, including Regional Haze requirements, for Colstrip Units 3
and 4 over the 2l-year planning period.
Transmission and Distribution Planning
Staff believes Avista's 2017 IRP thoroughly identified, analyzed, and planned for
transmission and distribution needs. As part of the bulk electric system, the Company is obligated
to coordinate transmission planning activities with neighboring utilities and compliance entities.
The Company must maintain reliable transmission and distribution systems and plan for projects
that impact the Western Interconnect.
Avista actively participates in regional transmission planning forums and develops an
annual transmission and distribution plan. The Company's planning assessment identifies projects
needed to mitigate future reliability and load-service requirements. Planned projects include
transmission line rebuilds for system reinforcement, mitigation for voltage rises that exceed
facility ratings, station rebuilds and breaker replacements to resolve performance issues, and
supervisory control and data acquisition installations for operational resilience.
Avista states its distribution planning identifies system capacity and service reliability
constraints. Several pilot projects have been deployed to determine the best practice for meeting
7STAFF COMMENTS DECEMBER I5,2OI7
customer needs while maintaining reliability. The Company states that as storage, photovoltaic
solar, and demand response technologies mature, they will likely play a larger role as either
primary or capital deferment solutions for future distribution constraints.
Generation Resource Options
Avista considered a range of generating resources to meet future capacity and energy
deficits. The Company stated it "only modeled resources with well-defined costs and operating
histories as options to meet future resource needs." IRP at 9-1. Included in this list of modeled
resources were "natural gas-fired combined cycle combustion turbines (CCCT), natural gas fired
reciprocating engines, large scale onshore wind, energy storage, photovoltaic solar, hydroelectric
upgrades, and thermal unit upgrades." IRP at9-1. Other generation resources, such as woody
biomass, geothermal generation, landfill gas, anaerobic digesters, cogeneration, nuclear, off-shore
wind, and new coal were analyzed for cost but not explicitly modeled because they are either not
available at an appropriate size, location, and price for Avista's needs, or they have significant
waste and emissions requirements.
Market Analysis
Avista's 2017 IRP modeled market conditions and net market values to select future
resource portfolios. The Company used the AURORA model with an area resource base of
approximately 240,000 MW to simulate the Western Interconnect electricity market and estimate
the dispatch of resources to serve regional loads "given fuel prices, hydroelectric conditions, and
transmission and resource constraints." IRP at 10-1. This regional market analysis lets the
Company evaluate new resource options on "their net value within the wholesale marketplace,
rather than the summation of their installation, operation, maintenance and fuel costs." IRP at
l0-1. The Company states natural gas, solar, wind, and storage resources are projected to
dominate new generation additions in the Westem Interconnect with emission constraints, coal
plant closures, and low natural gas prices contributing to that outcome.
This analysis resulted in a2}-year levelized price of Mid-Columbia energy at $35.85 per
MWh and $4.20 per dekatherm (Dth) for Stanfield natural gas over the planning period. Fuel cost
and availability are identified as important drivers of the wholesale electricity market and resource
valuation.
8 DECEMBER 15,2OI7STAFF COMMENTS
Staffappreciates the efforts taken to forecast future energy usage and acknowledges
forecasting future energy use and market prices is challenging. Staff reviewed the inputs and
assumptions used in this modeling and found most of them to be reasonable. In particular, Staff
supports the Company's inclusion of negative pricing in its pricing model. However, Staff has
concerns about the natural gas and coal price forecasts Avista used to model both regional and
Company-owned resource dispatch.
When developing the first five years of its natural gas price forecast, Avista used a
combination of "market forwards" (contract prices for natural gas future options) and a forecast
from a o'prominent energy consultant." IPR at 10-7. The first two years of the forecast are based
entirely on market forwards, with a 25% shift in the weighting between market forwards and the
consultant's forecast over the next three years. The last fifteen years ofthe forecast are based
entirely on the consultant's forecast:
Years 2018-2019: l00Yo market forwards
Year 2020: 75o/o market forwards, 2502 consultant
Year 2021: 50Yo market forwards, 50olo consultant
Year 2022: 25Yo market forwards, 50% consultant
Years 2023-2037 : l00o/o consultant
IRP at l0-7.
Staff believes using market forwards to support near-term forecasts may be reasonable.
However, Staff is concerned the Company's gas price forecast remains extremely low throughout
the entire planning period. Staff determined Avista's gas price forecast is very similar to the
Energy Information Administration's High Oil and Gas Resource Technology case, which aligns
closely with current market forward prices extended over 20 years. Staff believes planning to an
extremely low gas price forecast is inappropriate because it assumes a "best case" scenario rather
than a robust planning criteria designed to limit disproportionate price risk.
Staff also has concems with the Company's coal price forecast for Colstrip. The Company
states that regional coal plants, which usually have medium to long-term fuel contracts, are
modeled using publically available coal prices from the Federal Energy Regulatory Commission
because coal price contracts for individual plants are not publically available. These prices are
escalated at l.2Yo for railed coal and l.4o/o for mine mouth coal over the 2}-year IRP planning
period. When it modeled future coal prices for Colstrip Units 3 and 4, "Avista used escalation
rates based on expectations from existing and . . . future contracts." IRP at l0-8.
9STAFF COMMENTS DECEMBER 15,2017
But Staff found Colstrip's coal contract expires in20l9 and the Rosebud mine (owned by
Westmoreland) that feeds Colstrip is expected to be depleted in2024.t Given those constraints,
Staff asked Avista how it modeled fuel price risk for Colstrip in this IRP. The Company
responded that it did not consider fuel availability or price increases to be risks for Colstrip and
therefore did not model those risks. While this may be justified, the Company did not provide any
evidence supporting its claim that coal price risk is not a significant factor for Colstrip operations.
Staff recommends that price risk for coal associated with Colstrip operations be explicitly modeled
in the Company's 2019 IRP.
All23 customer comments filed in this case related to Colstrip. Most of the comments
opposed investing in the plant and a few supported the plant. Staff recognizes the valid concerns
of these customers and continues to scrutinize this and other resource investments.
Staff also reviewed the Company's change in its price forecast that now allows for
negative pricing during high-load periods. The Company states: "[t]raditionally, [negative
pricing] events occur at night when loads are lower. Given increasing solar penetration, negative
pricing is now occurring during the mid-afternoon." IRP at 10-22. A change in the supply curve
of the hydro resources now allows negative marginal pricing, "which is important to avoid
overvaluing solar and other non-dispatchable resources during oversupply events." IRP at 10-22.
In addition, this allows better dispatch of least cost generation, thereby decreasing operation costs.
Staff believes this change is reasonable to get the most accurate valuation and dispatch of
resources.
Preferred Resource Strategy
The Preferred Resource Strategy is the Company's plan to meet resource needs over the
2}-year IRP planning period. The PRS is developed by first calculating the operating costs of
existing resources and new potential resources using AURORA with Expected Case forecasts of
fuel costs, customer load, and hydro conditions. The Company's intemally-developed PRiSM
model'oevaluates resource values by combining operating margins with capital and fixed operating
costs" to create "an Efficient Frontier of resources, or least-cost portfolios, given a certain level of
risk and constraints." IRP at I l-5. Avista's management chooses the PRS from the Efficient
Frontier of portfolios depending on its risk and cost preferences.
I Westmoreland Coal Securities Exchange Commission (SEC) Form l0-K.
STAFF COMMENTS 10 DECEMBER 15, 2017
Avista's 2017 Preferred Resource Strategy
Resource By End of
Year
ISO Conditions
(Nrw)
Winter Peak
(Mw)
Energy
(aMW)
Solar
(Solar Select Program)
2018 l5 0 3
Natural Gas Peaker 2026 192 204 178
Thermal Upgrades 2026-2029 34 34 31
Storage 2029 5 5 -0
Natural Gas Peaker 2030 96 t02 89
Natural Gas Peaker 2034 47 47 43
Total 389 392 344
Efficiency
Improvements
Acquisition
Range
Winter Peak
Reduction (MW)
Energy
(aMW)
Energy Efficiency 2018-2037 203 108
Demand Response 2025-2037 44 <0
Distribution Effi ciencies <l <1
Total 247 108
IRP at I l-7.
Avista is currently acquiring a utility-scale solar facility for commercial and industrial
customers voluntarily choosing solar for their power supply mix. The Company determined that
program options are more competitive compared to building new resources and is therefore
starting a commercial demand response program in2025. The Company plans to upgrade existing
thermal facilities prior to the 2026 deficit, and intends to replace the Lancaster Facility with new
natural gas peakers at the end of the power purchase agreement in2026.
There are significant changes from the PRS identified from the 2015 IRP to the current
PRS, mostly driven by lower load growth projections and contract extensions that pushed resource
needs out from 2020 to 2026. In the 2017 IRP, new resource needs are 191 MW lower due to
reduced load growth, there is a higher conservation projected at system peak, and demand
response and storage are added. The Company believes it will acquire less energy efficiency due
to lower projected loads, but it estimates energy efficiency will offset 53% of projected load
growth throughout the 2l-year planning period.
Although PRiSM created 15 portfolios along the Efficient Frontier with varying levels of
risk and cost, Staff notes the Company selected the least cost, but highest risk, portfolio. Staff
recognizes the Company believes the increase in price was not sufficient for the risk reduction
provided by the higher cost-portfolios. Staff encourages the Company to carefully consider risk
mitigation since such a large portion of its future generating resources depends on historically
volatile natural gas.
STAFF COMMENTS 11 DECEMBER 15,20I7
Portfolio Scenarios
After developing the PRS under the Expected Case, Avista modeled several additional
futures around higher or lower than the Expected Case load forecast: early Colstrip retirement
dates, meeting resource deficiencies with market purchases, meeting resource deficiencies
exclusively with market purchases, and a CCCT to replace Lancaster. Staff acknowledges the
Company's effort to respond to stakeholder requests for alternate scenario analysis and is
primarily concemed with the alternate load forecasts and Colstrip retirement analyses.
Avista states changes to the load forecast impacted the size and timing of resource
acquisition, but it did not significantly change the resource selection. In its Portfolio Scenarios,
Avista clarified the assumptions for Colstrip capital expenses in its Expected Case and modeled
two additional Colstrip scenarios, one with a2030 retirement date and one with a2035 retirement
date.
In the Expected Case, Colstrip is cost-effective for the 2)-year IRP planning period, but
dispatches less due to carbon regulation projections, receives Selective Catalytic Reduction (SCR)
in2028, incurs significant capital expenses for Coal Combustion Residual (CCR) requirements
and water management issues, and incurs increased operating and management costs when Units 1
and2 retire. These environmental investments were not mentioned in the Company's earlier
description of Colstrip compliance costs (see IRP at 7-6), so Staff reiterates its recommendation
that the Company clearly identify the specific regulatory requirement driving each investment.
The 2030 and2035 Colstrip retirement dates were selected to reflect plausible retirement
dates. Staff believes these adequately reflect the retirement dates that appear to be under
consideration by Colstrip's co-owners in Oregon and Washington. According to the Company,
early retirement avoids the SCR investment, but merely accelerates the timeline for installing CCR
requirements. The Company's IRP did not identifu either the cost of the SCR's or the CCR
requirements and it did not explain why CCR requirements are not avoided in early retirement.
For the 2030 retirement, the Company replaced the Colstrip resource with natural gas
peakers and a CCCT. The 2035 retirement o'only shows replacement with peakers," but the
Company states that a CCCT could also replace the plant. IRP at l2-3. The Company's analysis
found that "[r]etiring Colstrip early increases costs compared to the PRS, while pushing the
retirement date out to 2035 is the least cost of the retirement scenarios...." IRP at 12-3.
Staff appreciates Avista's additional analysis of the Colstrip plant and encourages the
Company to continue analyzing altematives and cost mitigation strategies for the plant since the
STAFF COMMENTS t2 DECEMBER I5,2017
plant's retirement is as likely to be driven by its co-owners' regulatory requirements as it is by
Avista's economic analysis of the resource. In future analyses, Staff recommends the Company
specify significant capital investments required for plant operation and provide a more transparent
assessment of the costs and availability of fuel for the plant. If load growth continues to lag
expectations, it may be possible to meet customer demand with a resource mix that is smaller, less
expensive, and takes advantage of low market prices more than the Company's current resource
mix estimates.
Action Items
The 2017IRP Two-Year Action Plan includes generation, energy efficiency/demand
response, and transmission and distribution planning items the Company will implement in order
to support its PRS.
To support its generation resources, the Company will review existing generation facilities
for opportunities to upgrade capacity and improve efficiency and report progress on the Post Falls
Hydroelectric redevelopment project. Commercially available storage technologies will be
modeled to include efficiency rates, capital cost, operation and maintenance, life cycle, and ability
to provide non-power supply benefits. The Company will study the value of ancillary services for
storage and peaking technologies. The Company also committed to continue studying the Energy
Imbalance Market and planning for possible participation. Avista will also continue monitoring
state and federal environmental policies affecting its generating fleet.
Regarding energy efficiency and demand response, the Company commissioned aZ}-year
Conservation Potential Assessment. The Company will also determine if and how to move from
historical to forward-looking estimates of deferred transmission and distribution and evaluate
altemative technologies to solve transmission and distribution constraints. The Company will
examine the need for a residential demand response program and update the existing commercial
and industrial analysis. For Idaho, Avista will use the Utility Cost Test methodology to screen
energy efficiency program options.
The Company's ongoing transmission activities include participating in Bonneville Power
Administration rate proceedings and in regional efforts to facilitate long-term economic expansion
of the Western transmission system.
Staff believes the action plan is sufficient to implement the preferred portfolio.
STAFF COMMENTS l3 DECEMBER I5,2017
STAFF RECOMMENDATION
After reviewing the Company's2017IRP, Staff believes the Company performed
sufficient analyses, reasonably considered supply and demand-side resources, and provided
acceptable opportunities for public input, resulting in an IRP that satisfies the requirements in
Commission Order Nos. 25260 and22299. Staff thus recommends the Commission acknowledge
the Company's 2017 IRP.
Staff also recommends the Company expand its IRP analysis as explained in the above
comments.
t6rRespectfully submitted this day of December 2017.
Deputy Attorney General
Technical Staff: Stacey Donohue
Joseph Terry
i : umisc:comments/avue I 7. Sdjhsdjt comments
STAFF COMMENTS t4 DECEMBER 15,2017
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15th DAY OF DECEMBER 2017,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E-I7-08, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
LINDA GERVAIS
MGR REGULATORY POLICY
AVISTA CORPORATION
PO BOX 3727
SPOKANE WA99220-3727
E-mail: [e-mail]
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX 3727
SPOKANE WA99220-3727
E-mail: david.meyer@avistaqorp$om
SECRET Y
CERTIFICATE OF SERVICE