20191203Comments.pdf

EDWARD J. JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 837 2O.OO1 4
(208) 334-03 l4
IDAHO BAR NO. 10446
iIECEIVED
19 DEC -3 All l0: lrtr
,{i?,l;18',o*
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA'S ANNUAL
COMPLIANCE FILING TO UPDATE THE
LOAD AND GAS FORECASTS IN THE
INCREMENTAL COST INTEGRATED
RESOURCE PLAN AVOIDED COST MODEL
cAsE NO. AVU-E-I9-ll
BACKGROUND
On October l7 ,2019, Avista Corporation dba Avista Utililies ("Avista" or "Company")
filed an Application, in compliance with Order Nos.32697 and 32802, requesting the
Commission update the load forecast, natural gas forecast, and contract information used as
inputs to determine the avoided cost rates paid by the Company to qualifying facitities ("QFs")
that are above the project eligibility cap for published rates established by the Comm.ission under
the Public Utility Regulatory Policies Act of 1978 ('PURPA").
In Commission Order No. 3269"1 , the Commission determined that inputs to the
Integrated Resource Plan ("IRP") avoided cost methodology should be updated every two years
upon acknowledgment ofthe utility's IRP filing, with the exceprion ofthe load forecast and
natural gas forecast, which are updated annually.
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STAFF COMMENTS
Street Address for Express Mail:
II33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
COMMENTS OFTHE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission comments as follows on Avista
Corporation's Application.
DECEMBER 3,2019
ln this Application, the Company proposes to update the Company's load forecast,
natural gas forecast, and contract additions used as inputs in the Company's IRP avoided cost
methodology. The Company proposes a peak energy forecast annual average growth rate of
O.3Vo for 2020 through 2045. The Company proposes a peak forecast growth rate of O.34Vo in
the winter and O.44o/c in the summer for 2020 through 2045. The Company's natural gas forecast
uses a blend of two national price forecasting consultants' most recent forecasts and forward
market prices as ofJune 12,2019. For contract updates, the Company states that it has signed
one long{erm extension ola PURPA contract, three long{erm power purchase agreements
("PPA's"), and rhat two long-term PPA's have expired since its 2018 filing.
STAF'F REVIEW
Staff reviewed the Company's Application and recommends approval of the updated load
fbrecast, natural gas fbrecast, and long-term contracts to be used in the IRP methodology. The
Commission has dctermined that all long-term contract information should be updated for the
IRP methodology when contracts are signed, terminated, or expired, in order to maintain the
most up-to-date avoided cost. See Order No. 32697.
Load Forecast
Staff compared the Company's annual system load lbrecast in this filing to last year's
filing in Case No. AVU-E-18-l I and finds the new forecast is reasonable based on the
comparison. The economic conditions in Avista's service territory have not changed
significantly from the previous year, and thus the Company's 2019 forecast increases by only
1.067c fbr energy (aMW) and l.53Va for I -hour peak (MW). The effect of this increase in load
from last year should not result in any significant change in resource needs and IRP-based
avoided cost rates.
Natural Gas Forecast
Staff believes the Company's natural gas price forecast for Henry Hub and Stanfield Hub
is reasonable for purposes of determining avoided cost in IRP-based PURPA contracts. Staffl s
conclusion is based on two types of analysis: a comparison of the Company's proposed forecast
to last year's forecast in Case No. AVU-E-18-l 1, and a comparison of the Company's Henry
Hub forecast to the other two Idaho regulated electric utilities' Henry Hub forecasts.
STAFF COMMENTS DECEMBER 3,20I92
The comparison between the 20 l9 forecasts and the 201 8 forecasts shows annual
differences that range from -22.4O7o to 0.77o/o for Henry Hub (see Figure I ) and fiom -28.137o to
4.887o for the Stanfield Hub (see Figure 2) from years 2020 through 2040. The overall 2019
forecast is lower than the overall 2018 forecast. Staff believes this can be attributed to increased
natural gas production from continued development of shale gas and tight oil plays, which is
projected to outpace gas consumption. Because natural gas market conditions are predicted to
continue to be favorable for low future gas prices, Staff believes the change in the Company's
long{erm natural gas forecast is acceptable.
Avista
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2019 Henry Hub - - 2018 Henry Hub
Figure I Avista's 2019 Forecast and 2018 Forecast for Henry Hub
STAFF COMMENTS DECEMBER 3,20I93
Avista
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Figure 2 Avista's 2019 l'orecast and 20lE ['orecast for Stanffeld
Staff also compared Henry Hub forecasts used by Idaho Power, Avista, and Rocky
Mountain Power, and results show a similar trend that natural gas prices at Henry Hub increase
over time (see Figure 3). Idaho Power uses Energy Information Administration's (EIA) High Oil
and Gas Resource and Technology natural gas forecast for Henry Hub, while Avista and Rocky
Mountain Power use a combination of third party forecasts for long-term forecasts and gas
futures market prices short-term forecasts. Despite different methodologies, all three forecasts
reflect a high level of similarity, especially for the first two years. This is important because
IRP-based PURPA projects are capped at a two-year contract length, and the avoided costs in
any new contract now will capture the trend of the first two years. Based on the comparison,
Staff believes Avista's Henry Hub natural gas forecast is reasonable.
4STAFF COMMENTS DECEMBER 3,2019
-2019
Stanfield Hub - - 2018 Stanfield Hub
Henry Hub Natural Gas Forecasts Used by
ldaho Power, Avista, and Rocky Mountain Power
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Figure 3 Comparing Henry Hub Natural Grs Forecasts by Thrte Utilities
Contract Terminations, Expirations, and Additions
Since the 2018 annual hling, Avista has signed one new long-term PURPA contract and
three long-term PPA purchases. Two long-term PPA contracts have expired. Staff has veritled
the contract information and finds it accurate.
STAFF RECOMMENDATIONS
Staff believes the load forecast, the natural gas forecast, and the contract information
updated by Avista comply with the Order Nos. 32697 and 32802. Staff recommends approval of
the updates to be used in the Company's IRP methodology with an effective date of October 15,
20t9.
5STAFF COMMENTS DECEMBER 3,20I9
4.)
Respectfully submitted this day of December 2019.
Edward J
Dcputy General
Technical Staff: Yao Yin
Travis Culbertson
Rachelle Farnsworth
i:umisc/comments/avuel9. I lejyyncrf commenls
6STAFF COMMENTS DECEMBER 3,2019
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3RD DAY OF DECEMBER 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E.I9.lI, BY MAILINC A COPY TTIER,EOF, POSTAGE PREPAID,.IO THE FOLLOWING:
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX 3727
SPoKANE WA99220-3727
E-MAIL: david.meyer(rz,l avistacorp.com
avistadockets@av i stacorp.com
SECRL'IAR
CERTIFICATE OF SERVICE
LINDA GERVAIS
MGR REGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SPoKANE WA99220-3727
E-MAIL: Iinda.servais(a)avistacom.com