20210830Reply Comments.pdf

^iiststa
Avista Corp.
1411 East Mission P.O.Box3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
August 30,2021
Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd. Bldg. 8, Ste. 201-A
Boise,Idaho 83714
RE: Case No. AW-E-21-04
DearMs. Noriyuki:
Avista Corporation, dhlalAvista Utilities, hereby submits for filing with the Commission its reply
comments regarding the Company's202lElectric Integrated Resource Plan (IRP).
If you have any questions regarding this filing, please contact James Gall at 509-495-2189 or John
Lyons at509-495-8515.
Sincerely,
lolsla* &q4tdd
Shawn Bonfield
Sr. Manager of Regulatory Stategy & Policy
509-434-6502
shawn.bonfi eld@avistacom. com
I
2
3
4
5
6
7
8
9
l0
1l
t2
l3
t4
l5
t6
t7
18
t9
20
2t
22
23
24
25
26
27
28
29
30
MICHAEL G. ANDREA
SENIOR COUNSEL
AVISTA CORPORATION
I4I I EAST MISSION AVENUE
P.O. BOX3727
SPOKANE, WASHINGTON 99220-37 27
PHONE: (s09) 49s-2s64
rni chael. andrea(rD,avi stacorp. com
IDAHO BAR #8317
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE AVISTA
CORPORATION' S 2O2I ELECTRIC
INTEGRATED RESOURCE PLAN
CASE NO. AVU-E-21-04
REPLY COMMENTS OF AVISTA
CORPORATION
I. INTRODUCTION
Avista Corporation, doing business as Avista Utilities (hereinafter Avista or the
Company), at l4ll East Mission Avenue, Spokane, Washington, respectfully submits
reply comments regarding the Company's 2021Electric Integrated Resource Plan (*2021
IRP") in accordance with Order No. 35062. Avista requests that the Commission
acknowledge the 2021 IRP as filed.
II. BACKGROUND
The Commission issued a Notice of Modified Procedure, Order No. 35062, on June
4,2021, setting forth a comment deadline of August 11,2021. Commission Staff("Staff')
and the Idaho Conservation League ("ICL"), submitted comments on or prior to the
deadline. The deadline for reply comments is August 31,2021 .
)
)
)
)
)
REPLY COMMENTS OF AVISTA CORPORATION - I
1
2
3
4
5
6
7
8
I
l0
ll
t2
13
t4
l5
t6
t7
l8
l9
2t
20
III. COMPANY RESPONSE
Avista's IRP process is transparent and public. The IRP assumptions and results
are reviewed by the Technical Advisory Committee ("TAC") made up of customers, Idaho
and Washington Commission Staff, consumer advocates, environmental advocates,
academics, utility peers, government agency staff and Avista's energy analysts. Avista
would like to thank Staff and ICL for supporting the 2021 IRP and for their continued
participation and involvement in the IRP planning processes.
Between June 18, 2020 and May 18, 2021, Avista invited over 100 representatives
from many external organizations and held six TAC meetings, two workshops, and a virtual
public meeting to inform participants, answer questions, and receive feedback about the
plan inputs, assumptions, and modeling results. The 2021 IRP was completed on an
accelerated basis to comply with other state IRP requirements. The Avista IRP team
discussed additional IRP-related information via telephone, email and meetings with staff
and participants.
None of the commenters in this matter recommended the Commission to not
acknowledge the 2021 tRP. Staff specifically states on page 2 of its filed comments that
the IRP meets the requironents of Commission Orders for developing and filing an IRP.
There is ample evidence to support acknowledging the 2021 IRP as filed. However,
commenters did ask the Commission to direct Avista to perform various analyses in future
IRP processes and to provide an annual report related to Colstrip. Avista provides the
following response to issues raised by Staff and tCL.
REPLY COMMENTS OF AVISTA CORPORATION - 2
1
2
J
4
5
6
7
8
9
l0
ll
t2
l3
t4
l5
16
t7
l8
t9
20
2l
22
23
A. Response to StaffComments
The Company acknowledges StafPs concerns about the202l IRP and the following
discussion provides information to help address those concerns. Avista looks forward to
further addressing these concerns in the 2023 IRP and future resource planning processes.
Avista will begin the 2023 IRP process in November 2021 with a draft of Avista's
2023 IRP to be available by October 3,2022 and the final IRP filed on January 3,2023.
Once again, this shortened IRP process is driven by filing deadline requirements amongst
the other states within Avista's service territory. Moving forward, Avista intends to
continue to work at aligning the biannual requirements through a collaborative process with
Staff to resolve any differences in requirements between Idaho and Washington and to
prevent any adverse impacts between Avista's customers in these states.
i. Reliabitity Analysis
Avista agrees with Staffs concerns regarding reliability of Avista's system when
the potential resource portfolios are changing. The region is also taking notice of the risk
to reliability because of these changes. Avista will continue to improve its methods to
ensure it plans for reliability as its resource portfolio changes. For the next IRP, there are
two options to address reliability planning.
The first option is to continue improving existing methodologies. Avista is
evaluating new software (Plexos) to increase the breadth of reliability planning studies
across additional scenarios and time horizons as compared to its internal ARAM model.
The Company acknowledges its evaluation of Plexos, or an alternative software, may not
be available for a complete analysis of all portfolios in time for the 2023 IRP even if the
utility finds the new technology to be satisfactory. Continuing to use existing methods will
REPLY COMMENTS OF AVISTA CORPORATION - 3
1
2
3
4
5
6
7
8
9
10
11
12
13
l4
15
16
t7
l8
19
2l
20
22
help to better understand market exposure but will continue to leave the utility planning for
a reliability target based on an acceptable level of risk from market resources.
The second option is to forgo detailed utility reliability modeling and use regional
planning requironents set by the Western Resource Adequacy Programr (RA Program).
The Northwest utilities, through the Northwest Power Pool, are creating a RA Program to
ensure reliability of the participating utilities to meet a loss of load expectation (LOLE)
objective of one event in l0 years. This RA Program design sets minimum criteria for each
participating utility's capacity position for both summer and winter months based on
detailed regional modeling utilizing a corlmon planning methodology. The region will set
regional planning reserve margins and resources are accounted for based upon their
Qualiffing Capacity Contribution (QCC) of meeting peak loads. Once this RA Program is
fully operational after a 12-18 month tial that is scheduled to begin in March of 2022,
there will be penalties for utilities who have not met requirernents and a resource sharing
mechanism in the event of utility shortfalls during real-time operation.
Avista plans to select resources in its next IRP to meet the requironents of the RA
Program so long as the region continues to pursue the objectives of regional coordination.
Avista will plan to continue conducting reliability studies to understand its market exposure
using Plexos, ARAM, or other software. Avista may use this analysis to recommend higher
planning margins to either increase reliability above the I in 10 criteria or to reduce market
exposure. Avista plans to discuss these concepts with the TAC before deciding which
option to pursue.
I www.nwpp.org/adequacy
REPLY COMMENTS OF AVISTA CORPORATION - 4
1
2
J
4
5
6
7
8
9
t0
ll
t2
l3
t4
l5
t6
t7
18
t9
20
2t
22
23
ii. Market Reliance
There are two main tradeoffs to examine for Lost of Load Probability (LOLP)
reliability studies for interconnected systems. By interchanglng Planning Reserve Margin
(PRM), the amount of excess resources under utility control, as compared to expected peak
load and market reliance, the amount power available from the region during peak hours,
the utility can achieve the same reliability metric. If market reliance increases, then PRM
lowers since the utility will rely on the market for resources at time of peak rather than its
own resources; increasing PRM will effectively create less reliance on the market because
the utility will have additional resources to access. In the 2021 IRP, Avista retains the same
level of reliability metric of 5 percent LOLP by retaining its PRM of 16 percent in the
winter and 7 percent in the surlmer as the 2020 IRP. This decision increased market
reliance based on the study results to maintain 5 percent LOLP.
When estimating the amount of regional market availability, the first limitation is
access to the market through transmission and secondly whether there are excess resources
from neighboring systems to meet demand. Avista's access to other utilities through its
owned or purchased third party transmission has not and is not anticipated to be a limiting
factor to access energy, so the primary concern is availability of surplus resources. Avista
has significant transmission interconnections to other utilities including BPA and market
purchases from the Mid-Columbia trading hub to the Avista systern is in a direction that
creates counter flow to congested east to west flow. Avista's resource need may differ from
other utilities, or occur at the same time, which makes it difficult to determine the level of
market depth for a given period. All utilities consider this a major issue when conducting
reliability analysis on a stand-alone utility basis. Due to this concem, the development of
REPLY COMMENTS OF AVISTA CORPORATION - 5
I
2
3
4
5
6
7
8
9
l0
1l
t2
13
t4
15
t6
t7
18
l9
2t
20
the RA Program was first initiated along with ensuring utilities do not depend on the same
market surplus to meet their customers' peak load.
As stated in the previous section, Avista will use the RA Program's planning
criteria for resource planning since these requirements are based upon a regional analysis
ensuring regional reliability. Avista will also study the level of risk it will be relying on in
the market and determine if it should acquire additional resources beyond the minimum
capacity levels to lessen this market risk.
iii. Colstrip Economic Analysis
Avista made considerable improvernents to the Colstrip modeling based on
previous Staff and TAC member recommendations. In particular, the suggestion to allow
the model to "exit" the plant in any year of the study if found to be cost effective. This
change resulted in it being economic to exit Colstrip immediately in202l. While it is not
feasible under the current plant operating agreement for Avista to exit the plant now, the
result is illustrative of the plant economics. Avista acknowledged in the plan, that while
uneconomic, it is not realistic for Avista's to remove Colstrip from its resource portfolio in
2021. Rather than selecting an unknown year at which Colstrip could retire, the Company
chose to indicate it will pursue exiting the plant as discussed on Page 1 I -5 of the IRP
because the current operating agreonent does not have a clear exit option for the plant.
Recently adopted legislation in Montana associated with future Colstrip operations,
associated lawsuits and on-going arbitration among the owners have further complicated
the ability for Avista to withdraw from Colstrip. Until these issues are resolved Avista will
not have a good understanding of when it can legally exit Colstrip.22
REPLY COMMENTS OF AVISTA CORPORATION - 6
I
2
J
4
5
6
7
8
9
l0
ll
t2
13
14
t5
t6
l7
18
t9
21
20
22
Avista did consider reliability effects of exiting Colstrip in other years than 2030.
lncluding the reliability effects in2025 (Table 11.5), where Avista will still be within the
5 percent LOLP without Colstrip but will need to replace this lost capacity when its
capacity position reverses to a deficit due to the Lancaster contract expiring in2026. Avista
did not model any earlier years due to the fact the resource portfolio is not materially
different between 202I and2025.
Avista will update the Commission on any new information related to Colstrip in
its annual update which will be filed on October 1,2021.
iv. Portfolio Optimization by State or for the System
Avista appreciates Staff s guidance to investigate new ways to model, finance and
operate the systern going forward. Avista looks forward to working with Staff and other
parties to determine the best course of action for resource allocation to individual states
and recommendations made by the Commission. Avista plans to hold its first workshop in
late fall of 2021to begin this process.
v. Energy Efficiency and Demand Response
Avista appreciates the acknowledgement for improving both the accuracy and
communication regarding energy efficiency. Avista's goal is to be transparent in its method
of selecting all resources through its planning efforts.
While evaluating needs for new resources, Avista expects demand response to be a
viable resource option as it becomes economic and customers choose to participate in
future programs. Avista plans to pilot multiple dernand response programs in the next four
years to evaluate opportunities for dernand response to help meet system peaks beginning
in2026.23
REPLY COMMENTS OF AVISTA CORPORATION - 7
I
2
J
4
5
6
7
8
9
10
1l
t2
l3
14
15
t6
t7
l8
t9
2t
20
vi. PublicParticipation
Avista plans to continue engaging the public regarding resource planning. This
includes engaging technical audiences regarding the development of the resource plan and
considering comments and suggestions from customers and extemal parties. On February
24,2021, Avista conducted its first virtual public meeting for all customers to leam about
Avista's plan, answer questions and gather public comments. Avista plans to continue to
engage all interested customers to provide an overview of Avista's resource planning
efforts, answer questions and to listen to customers concerns about resource planning.
vii. StaffRecommendations
Avista thanks tdaho Stafffor their support for the Commission to acknowledge the
2021 IRP, and we commit to continue to work with Staff to address their concerns during
the2023IRP process.
B. Response to ICL
ICL provides two comments regarding the 2021 IRP. The first involves modeling
the risks of natural gas and the second is related to Avista's Colstrip exit strategy.
Avista believes it fully models the risk of natural gas resources by studying the cost
of the resource, natural gas prices and carbon pricing risk. As for natural gas pricing risk,
Avista models 500 simulations of natural gas price risk within its Expected Case market
study used to select its resources. The utility demonstrates the portfolio risk of its Preferred
Resource Strategy compared to other portfolios. Further, Avista subjected multiple
resource portfolios to both high and low natural gas pricing scenarios to understand the
impact to the portfolio under these scenarios. Avista also conducted a risk analysis showing22
REPLY COMMENTS OF AVISTA CORPORATION - 8
I
2
3
4
5
6
7
8
9
l0
u
t2
l3
t4
l5
t6
t7
l8
t9
the portfolio cost impacts of a national carbon tax, priced at the social cost of carbon. Based
on these analyses, Avista has provided significant risk analysis of natural gas resources.
Avista thanks ICL for their encouragement to exit the Colstip facility. Avista is
committed to exit the Colstrip facility so long as it is in the best interest of its customers
and has the legal right to do so. Avista will continue to keep ICL and all TAC members
updated on Colsfrip issues throughout the2023IRP process.
C. Conclusion
Avista appreciates the opportunity to provide reply comments regarding the
Company's 2021 IRP. Please direct any questions regarding these comments to James Gall
at 509-495-2189 or John Lyons at 509-495-85 I 5.
DATED at Spokane, Washington, this 30ft day of August 2021.
AVISTA CORPORATION
By /s/Nfichael Andrea
Michael G. Andrea
Senior Counsel
REPLY COMMENTS OF AVISTA CORPORATION - 9