20210218Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917
IN THE MATTER OF AVISTA
CORPORATION'S COMPLIANCE FILING
TO UPDATE AND ESTABLISH ITS
CAPACITY DEFICIENCY PERIOD TO BE
USED FOR AVOIDED COST
CALCULATIONS
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Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. AVU-8.20-11
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission ("Staff'), by and through its Attorney
of record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On October 21,2020, Avista Corporation dlblal Avista Utilities ("Company") filed its
capacity deficiency update ("Filing") to update the capacity deficiency period used to calculate
avoided costs. The Commission requires the Company to file the update after the Commission
acknowledges the Company's Integrated Resource Plan ("IRP"). Order Nos. 32697 and32802.
The Commission acknowledged the Company's 2020IRP on October 15,2020. OrderNo.
34814. The Filing projected the Company's first load deficit to occur in January 2026.
STAFF COMMENTS FEBRUARY I8,2O2I1
STAFF ANALYSIS
Staff examined the peak-load forecast and resources in the Load and Resource Balance
("L&R") filed in this case. The L&R is used to determine the proposed capacity deficiency date
used in both the IRP Method and the Surrogate Avoided Resource ("SAR") Method.l Based on
its analysis, Staff recommends an updated L&R and a capacity deficiency date of November
2026 which includes: (1) utilizing the most recent peak-load forecast developed by the
Company; and (2) considers Colstrip exit dates that are different for Idaho and Washington State.
Once the Commission rules on the recommendations and approves a capacity deficiency
date, Staff proposes to update published rates on the Commission's website. Details for each of
the recommendations are contained below.
Peak-Load Forecast
The peak-load forecast in the L&R was created in July 2019. Staff is concemed that
circumstances have changed since it was developed and changes in customer consumption
patterns could change the amount of load during the system coincident peak. An updated load
forecast was created in August 2020. See Response to Staff s Production Request No. 22. Staff
believes using the more recent forecast will lead to a more accurate L&R.
Resources the L&R
Staff reviewed the resources included in the Company's L&R Balance for determining
the first capacity deficiency date. Resources can be represented either as resources serving load
or reflected as a reduction to the peak-load forecast in the L&R. In this year's review, Staff
performed a comparison of the different types of resources included in the L&R between Idaho's
three regulated electric utilities to develop consistency between the utilities. In Order No. 29880,
the Commission made it clear that consistency is important between the three regulated utilities:
I In the Company's Cover Letter, it appears the Company incorrectly references using the capacity deficiency date
in the SAR Method only. It should be used in both the SAR Method and the IRP Method. See Order Nos. 33377,
33 I 59, 33898, and 33933.
STAFF COMMENTS FEBRUARY 18,20212
The Commission develops its PURPA contract standards and requirements in
generic methodology, ratesetting[,] and complaint cases....It is reasonable for
QFs to expect that the contract requirements of Idaho regulated electric
utilities will be similar and that a QF will not be disadvantaged by choosing
to sell to one utility rather than another.
Order No. 29880 at 10.
Ensuring consistency required Staff to develop a o'default" standard for each type of
resource that can be used to evaluate inclusion in the L&R. To develop the standard, Staff
compared the resources and the rationale each utility used for determining the resources
included in their L&R by examining the most recent filings by Pacif,rCorp (PAC-E-20-13),
Avista (AVU-E-20-03), and Idaho Power (IPC-E-l9-20). After identi$ing differences between
the utilities, Staff used the justifications and rationales obtained through production requests,
meetings with utilities, and Staff s evaluation of resources used to determine a common standard
for inclusion of resources in an L&R based on the Commission's criteria of "available" and/or
"existing."2 When the Company files its L&R, Staff may use the standards as a default. If the
utility deviates from the standard, Staff may perform an investigation and if the Company
provides sufficient evidence and justification, an exception can be made. A summary of these
common standards for each resource type are included in Attachment A.
Staff s review against its standards indicates that the Company's overall resource
assumptions in the L&R are reasonable, except for Market Reliance and Colstrip 3 and 4 exit
dates as discussed in more detail below.
Market Reliance
Market Reliance is the amount of market capacity the Company can rely on to meet load
at system peak. The Company does not include its Market Reliance as a separate line item in its
L&R, which deviates from Staff s default position listed in Attachment A. Instead of reflecting
Market Reliance as separate line item in the Company's L&R - similar to Idaho Power and
Rocky Mountain Power - the Company reflects its Market Reliance through its l6Yo planning
margin. According to the Company, the 16%o planning margin is based on including 330 MW of
Market Reliance to achieve a five percent Loss of Load Probability ('LOLP"). Response to
2 The Commission expressed its expectation for focusing on "available" and/or "existing" resources when deciding
whether transmission capacity should be included in the L&R in Order No. 33425.
JSTAFF COMMENTS FEBRUARY I8,2O2I
Staff s Production Request No. 15. Despite Market Reliance not being represented as a separate
line item in the L&R, Staff believes it is reasonable for the Company to reflect its value through
the planning margin.
Colstrip 3 and 4 Exit Dates
The Company reflects the exit of Colstrip Units 3 and 4 in its L&R to occur at the end of
2025 based on the Washington State Legislature passing the Clean Energy Transformation Act
- requiring electric utilities in Washington State to eliminate coal-fired generation serving
Washington state customers by December 31, 2025.3 However, in PacifiCorp's capacity
deficiency case (PAC-E-20-13), the Commission found that "the Company's decision not to
include early retirement of various coal-fired thermal resources in its load and resource balance
to be reasonable." Order No. 34918 at 5. Early retirements have "not been evaluated by the
Commission, much less approved [in Idaho]." Id. The Commission stated:
The decision of whether or when these units will be retired is uncertain.
Under such circumstances, it would not be fair, just, and reasonable to
approve a capacity deficit date that is unconfirmed and would operate to the
detriment of ratepayers."
Id. at 6.
The Company has not yet determined when the Colstrip units should be economically
retired as reflected in its most recent IRP (Case No. AVU-E-19-01). StafPs comments in that
case outlined several outstanding issues and deficiencies in the Company's analysis related to the
Company's continued ownership share in Colstrip that would allow the Company and the
Commission to make a final exit date determination. In that case, the Commission stated:
Only after Avista has made a decision on its ownership interest in Colstrip
Units 3 and 4 and a record is fully developed before this Commission will we
make a prudency determination based on all the facts and evidence presented.
It would be unjust and unreasonable for Idaho ratepayers to pay for the policy
decisions made in other states if the benefits are not also realized by Idaho
customers.
OrderNo. 34814 at74.
3 Actual decommissioning dates could still be later than2025 under Washington's CETA 2025 requirement, because
Avista could sell Washington's Colstrip portion and meet Washington's corresponding native load with new
resources without shutting down the plant.
STAFF COMMENTS 4 FEBRUARY 18,2021
Because of this uncertainty, Staff asked the Company to determine the capacity
deficiency date and the amount of deficiency for a likely range of exit dates using bookends of
2025 for both units (Scenario 1) based on a Colstrip exit date being driven by Washington State,
and2034 for Unit 3 and 2036 for Unit 4 (Scenario 5) based on Colstrip's 5O-year plant life. Staff
also asked the Company to provide results for three other scenarios in between the bookends.
Scenarios 2 and 3 use different Colstrip exit dates for Washington and Idaho by jurisdictionally
allocating the amount of Colstrip capacity included in the L&R using each state's jurisdictional
allocation. Scenario 4 assumed exit dates of both units for Washington and Idaho using Idaho's
stipulated depreciation date of 2027 that the Commission authorized in Order No. 34276, Case
No. AVU-E-18-03, if only for providing an additional scenario to span the range between the
two bookends. StafPs recommendation in that case and reflected in the Stipulation approved by
the Commission, was to use a depreciation date of 2027 for both Colstrip units for depreciation
and rate recovery purposes only. The level of uncertainty about Colstrip that exists today also
existed during that case.a The results are shown in Table No. I below:
a ln the Stipulation approved in Order No. 34276 (p.7), it states, "The Company agrees to adopt a depreciation
schedule for Colstrip Units 3 and 4 that assumes a remaining useful life for depreciation purposes of
December 31,2027 . The Parties also acknowledge that there presently is no plan to close Colship Units 3 and 4
by a specific date, nor has Avista agreed to do so."
STAFF COMMENTS FEBRUARY I8,2O2I5
Table No. 1. Five Scenarios of Retirement Dates
Note: The first deficit date for each of these scenarios includes the Company's latest (August
2020) peak load forecast.
Results of this analysis show that the first deficit year does not change; only the first
deficit month and the deficiency amount change. This would not affect a QF's capacity payment
under the SAR Method, because the published rates are calculated on an annual basis, starting
from the first month of the first deficit year. However, it would affect the start of QF capacity
payments for new contracts under the Company's IRP Method because the IRP-based avoided
cost rates are calculated on a monthly basis.
The deficiency date remains in2026 for all five scenarios and Staff believes the impact
difference to customers using any of these scenarios will be relatively small. However, Staff
believes that Scenario 2 provides a reasonable choice between the five scenarios because it
respects both the authority of the Idaho Commission and Washington Commission to determine
what is best for each respective state and the ratepayers by reflecting each state's jurisdictional
share of Colstrip using exit dates determined by each state.
STAFF COMMENTS FEBRUARY I8,2O2I6
WA Exit ID Exit First
Deficit
Date
Amount
of Deficit
Data Source
Scenario 1
(WA-based
bookend)
2025
(both units)
2025
(both units)
January
2026
17 MW Response to
Staff s Production
Request No. 35
Scenario 2 2025
(both units)
203412036
(Uni8runit4)
November
2026
17 MW Response to
Staff s Production
Request No. 36
Scenario 3 2025
(both units)
2027
(both units)
November
2026
17 MW Response to
Stafls Production
Request No. 37
Scenario 4 2027
(both units)
2027
(both units)
December
2026
77MW Response to
Staffls Production
Request No. 39
Scenario 5
(ID-based
bookend)
203412036
(Unit3tunit4)
203412036
(Unit3/Unit4)
December
2026
77MW Response to
Staff s Production
Request No. 38
STAFtr' RECOMMENDATION
Staff recommends that the Commission approve the Company's L&R reflected in
Scenario 2, which results in a first deficit date of November 2026 using the Company's August
2020 peak load forecast. If authorized, Staff recommends that the inputs of the SAR Method and
the IRP Method be updated accordingly.
Respectfully submiued this lt6+h day of Feb rwry 2ozl.
Dayn
Deputy Attomey General
Technical Staff: Yao Yin
Kevin Keyt
i:umisc/comments/avue20. I I dhyyksk comments
7STAFF COMMENTS FEBRUARY I8,2O2I
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ATTACHMENTNO. A
Case No. AVU-E-20-01
Comments of the Commission Staff
02118121 Page2 of 2
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I8TH DAY oF FEBRUARY 2021,
SERVED THE FOREGOING COMMENTS OF' THE COMMISSION STAF'F, IN
CASE NO. AVU-E-20-11, BY E-MAILING A COPY THEREOF TO THE
FOLLOWING:
MICHAEL G ANDREA
SENIOR COI.]NSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-MAIL: [e-mail]
avi stadockets@avistacom. com
SHAWN BONFIELD
SR MGRIREGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-MAIL: [e-mail]
SECRET
CERTIFICATE OF SERVICE