20211214Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
(208) T4-A3n
IDAHO BAR NO. 9917
IN TIM MATTER OF AVISTA'S AI\INUAL
COMPLIANCE FILING TO TJPDATE TITE
LOAD AI\ID GAS FORECASTS IN TTIE
INCREMENTAL COST INTEGRATED
RESOURCE PLAI\ AVOIDED COST MODEL
TO BE USED FOR AVOIDED COST
CALCULATIONS
CASE NO. AVTJ.E'ALI4
COMMENTS OF THE
COMN{ISSION STAFF
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Street Address for Express Mail:
I 1331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE TIIE IDAIIO PUBLIC UTILITIES COMMISSION
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
recor4 Dayn Hardie, Deputy Afforney General, submits the following comments.
BACKGROITNI)
On October 13,2021, Avista Corporation ("Company") filed a compliance filing
requesting the Commission issue an order accepting its updated load forecast, natural gas price
forecast, and contracts used as inputs to calculate its incremental cost Integrated Resource Plan
("IIU"'; avoided cost rates. The Company must update these inputs by October 15 of each year.
,See Order Nos. 32697 and 32802. IRP avoided cost rates are available to qualifring facilities
("QFs") that are above the resource-specific project eligibility cap for published avoided cost
rates under Idaho's implementation of the Public Utility Regulatory Policies Act of 1978
("PURPA").
ISTAFF COMMENTS DECEMBER I4,2O2I
On November ll,2Ozl,the Commission issued notice of the Company's Filing and
established public comment and Company reply deadlines. OrderNo. 35236.
At the Commission's November 23,2021, decision meeting, the Commission agteed to
arnend the public comment and Company reply deadlines to December 14,2021, and December
2l,z0zl,respectively, to allow additional time for the Company to submit its most recent load
forecas! not included in the Application. OnNovember 26,2021,the Commission formalized
this decision in Order No.35236. Staffs analysis is based on this new forecast.
STATT'REVIEW
Staffreviewed the Company's Application and recommends approval of the load forecast
in the Attachment Al to these comments, the natural gas forecast in the Attachment 82 to these
comments, and the contract changes included in the Application to be used in the IRP method for
determining avoided cost rates in future PURPA contacts. f inally, Staffrecommends that the
effective date ofthe load and natural gas forecast and contract changes should occur on January
ls, for this and all future filings.
Loed Forecast
The proposed load forecast included in the Company's Filing was the same forecast
submitted in Case No. AVU-E-20-10 and was more than a year ol4 having been developed in
the snmmer of 2020. The Company's Response to StaffProduction Request No. I (a) stated that
a preliminary updated load forecast was completed, but it needed to be reviewed and finalized
internally. Staffwas concerned that using an outdated load forecast was likely to impact the
accuftrcy of avoided cost rates for future contracts. Lale4 the Company finalized its intemal
review of the updated load forecast and submiued the data subsequently.
Staffcompared the updated load forecast with last year's filing in Figure No. l, which
shows that the updated load forecast is higher than the last year's load forecast. The differences
in the two forecasts are primaxily due to four changes: (1) splits between the Idaho and
tffashington portions of the load fore,cast before som[ining into the system ban; Q) updates
1 Attachment A is the Company's Supplemental Response to StaffProduction Request No. I (c).
2 Atachment B contains the rrydated Henry Hub natural gas forecast from fte confidential excel fiIe srbmitted in
Response to StaffMuction Request No. 2 (c). Although the excel file is a confidential docnrnent the Company
confirmed with Statrthrough email trat tre Henry Hub natrral gas forecast data in the excel file is not confide,ntial.
2STAFF COMMENTS DECEMBERI4,2O2I
made with historical data collected since last year's forecast; (3) updated data on the number of
electic vehicles and use per vehicle based on studies from Pacific Northwest National
Laboratories; and (4) usrng data from the Company's community solar project to inform solar
load allocation. See Attachment A to these comments. Staffbelieves the load forecast using
more recent data will lead to a more accurate load forecast.
f igure No. l: Load Forecast Comparison
Avista Energy Load Forecast
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2023 2024 2025 2026 2027 2028 2029 2030 203t 2032 2033 2034 2035 2036 2037 2038 2039 2040 204L
.. . . .. 2020 Energy Forecast
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Energy Forecast
Natural Gas Forecast
The Filing also included last year's natural gas forecast for this year's update. However,
the Company had developed a more recent natural gas forecast after submitting the Filing as
shown in Attachment B to these comments. After reviewing the updated natural gas forecast,
Staffdetermined the more recent forecast is reasonable to set avoided cost rates. Staffs
conclusion is based on two analyses: (1) a comparison of the new forecast and last year's
forecast in Case No. AVU-E-20-10; and (2) a comparison ofthe Company's Henry Hub forecast
to Rocky Mountain Power's Henry Hub forecast.
Staffcompared the Company's updated Henry Hub forecast as shown in Attachment B to
these comments to the forecast in last year's filing in Case No. AVU-E-2G'10. See Figure No. 2.
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3STAFF COMMENTS DECEMBER14,2O2I
The new forecast is higher than last year's forecast over the next four years but is lower than last
year's forecast after that timeframe.
According to analysis ofthe natural gas market in recent publications, the higher new
forecast in the near tenn is driven by rebounding demand as the COVID-l9 pandemic has
moderated3 and also due to the impacts of Hurricane Ida on natural gas productiona. Over the
long tenn, lower gas prices compared to last year's forecast will be driven by increased natural
gas production from continued development of shale gas and tight oil plays, which is projected to
outpace gas consumption.
Fieure No.2: Henry Huh Naturel Gas Price Forecast Comparison
Henry Hub Natural Gas Price Forecast
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Henry Hub Forecast in AVU-E-20-10
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Hub Forecast in AVU-E-21-14
Staffalso compared Henry Hub forecasts used by Avista and Rocky Mountain Power.
The results show similar hends between the two utilities. See Figure No. 3. The two utilities use
different methods and sources to determine their natural gas forecasts. Avista uses a blend of
two national price fonecasting consultant's most recent forecasts: the U.S. Energy lnfonnation
3 See Three Reqsons lYlry Gas Prices Are So High Now at https://www.businessinsider.com/why-are-gas-prices-so-
high-right-now-3 -reasons-202 l - I 0
a See Hurricane lda Contributes to Higher Nolural Gas Prices at https://talkbusiness.net/202 I /09/hurricane-ida-
contributes-to-h igher-natural-gas-orices/
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4STAFF COMMENTS DECEMBER I4,2O2I
Administration's Annual Energy Outlook forecast and forward market prices. Rocky Mountain
Power uses a combination ofthird-party forecasts and forward market prices.
Forthe annual update filings, both utilities include the Henry Hub forecast Staffused for
comparison. Despite different methods and sources, both Henry Hub forecasts reflect a high
level of similarity, especially for the first few yeus. This is important because avoided cost rates
determined in the IRP method are only needed for the first few years due to IRP-based contracts
being limited to two years. Based on the analyses above, Staffbelieves the Company's natural
gas forecast is reasonable.
Figure No 3: Henry Hub Naturel Gxs Forecasts Used bv Avista and Rockv Mountain Power
Henry Hub Natural Gas Forecasts Used by
Avista and Rocky Mountain Power
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2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
-Henry
Hub Forecast in AVU-E-21-14 ooocoo |.lsnry Hub Forecast in PAC-E-21-20
Contract Terminations, Expirations, and Additions
Since the2020 filing, the Company has signed two new long-term PURPA contacts and
two Power Purchase Agreements. Statrhas verffied the contact information. The contract
information is updated on a continuous basis in the IRP method.
5STAFF COMMENTS DECEMBER I4,2O2I
Effective Dete
Order No. 32802 requires that the three electic utilities in Idaho should update natural
gas and load forecasts for each utility's IRP Method on October 15 of each year. Since the
Commission's order was issued, the three utilities have filed their annual update cases by
October 15, and the Commission's authorizations utilized the same effective date as the deadline
for the filing. To allow for adequate time to review each utility's filing and prevent having a
filing deadline that is the same as the effective date, Staffrecommends that all three utilities
continue to file their annual update cases by October 15 but establish a fixd effective date of
January 1s of the following year in this case and in future annual update cases.
STAFF RECOMMENDATIONS
Staffrecommends approval of the load forecast in Attachment A to these comments, the
natural gas forecast in Attachment B to these comments and the contract changes included in the
Application to be used in the IRP methodology with an effective date of January 1,2022. Statr
also rccommends that the effective date be set to January I for all subsequent annual updates.
/n6*rof Decembe r 2o2tRespectfully submitted this
Technical Staff: Yao Yin
Travis Culbertson
i:umisc./comments/avrc2 l. l4dhyyttc comm€nts
Deputy Attomey General
6STAFF COMMENTS DECEMBER 14,2O2I
AVISTA CORPORATION
RE,SPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-21 - l4
Staff
Production Request
Staff-OO1
DATE PREPARED: l2lll202lWITNESS: Clint Kalich
RESPONDER: John Lyons
DEPARTMENT: Energy Resources
TELEPHONE: (s09) 495-8515
REQUEST:
Please answer the following questions regarding the load forecast in Case No. AVU-E-21-14.
a. Please explain why the Company used last year's load forecast in Case No. AVU-E-20-10 for
this year's annual update.
b. Please confirm that last year's load forecast was developed in the summer of 2020.
c. If a newer load forecast has become available since Case No. AVU-E-20-10 was submitted,
please provide the data. If not, please explain why there is not a newer load forecast available.
RESPONSE:
a. The load forecast submitted in Case No. AVU-E-21-14 was the latest data available as of
October l5th. A preliminary updated load forecast has been completed, but still needs to be
reviewed and finalized internally prior to submitting and utilizing for planning purposes due to
major assumption changes involved with the new load forecast, such as spliuing the Idaho and
Washington load out from each other.
Update: The new load forecast from November 2021has been reviewed and finalized.
b. Yes, the load forecast submitted in this filing was developed in the summer of 2020
c. As explained in part a above, the new load forecast has been developed, but has not been
finalized and approved for use at this point in time.
Update: The new load forecast developed in November 2021 is as follows
Year Load (aMW)
2023 1.1 17.0
2024 t,tt9.7
2025 1.t22.3
2026 1.125.3
2027 1,128.8
2028 1,132.8
2029 l,13s.4
2030 1,137 .5
2031 1,139.5
2032 1,142.0
ATTACHMENTNO. A
Case No. AVU-E-21-14
Comments of the Commission Staffl2ll4/21 Page 1 of 2
2033 1,143.3
2034 t.t45.2
2035 t.t47.t
2036 1,149.8
2037 1,1 51 .4
2038 1,153.7
2039 1,156.2
2040 1,159.9
2041 r,762.6
2042 1,166.6
2043 l"r7t.2
2044 r.t77.3
2045 1"183.1
The major changes to the new forecast include:o showing the splits between the Idaho and Washington portions of the load forecast
before combining into the system load;
o updates made with historical data collected since the summer of 2020 forecast;. updated data on the number of electric vehicles and use per vehicle based on studies
from Pacific Northwest National Laboratories; and. compared to the 2021 IRP, the allocation of solar load over the months is more
precisely allocated using data from Avista's community solar installation.
ATTACHMENTNO. A
Case No. AVU-E-21-14
Comments of the Commission Staffl2ll4/21 Page2 of 2
Updated Henry Hub Forecast in AVU-E-21-14
2022 4.49
2023 3.43
2024 3.08
2025 3.O7
2026 3.2L
2027 3.32
2028 3.47
2029 3.62
2030 3.77
2031 3.85
2032 4.O2
2033 4.74
2034 4.35
2035 4.48
2036 4.63
2037 4.77
2038 4.9L
2039 5.05
2040 s.24
204L 5.4L
2042 5.54
2043 5.63
2044 5.78
2045 5.98
ATTACHMENTNO. B
Casc No. AYU-E-21-14
Comments of the Cornmission Staff
12/14/21
CERTIHCATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE TIIIS 146 DAY OF DECEMBER 2021,
SERVED THE FOREGOTNG COMMENTS OF TrrE COMMTSSION STATF, IN
CASE NO. AW.E-21.14, BY E-MAILING A COPY T}IEREOF, TO TIIE
FOLLOWING:
MICHAEL G A}.IDREA
SEMOR COIJNSEL
AVISTA CORPORATION
POBO)(3727
SPOKA}IE WA9922G3727
E-MAIL: [e-mail]
[e-mail]
SHAWN BONFIELD
SR MGR REGIJLATORY POLICY
AVISTA CORPORATION
POBOX3727
SPOKA}IE WAWNU3727
E-MAIL: [e-mail]
tlhlruCry^rt*
SECRETARY
CERTIFICATE OF SERVICE