20221221Final_Order_No_35639.pdf

ORDER NO. 35639 1
Office of the Secretary
Service Date
December 21, 2022

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
TO BE USED FOR AVOIDED COST
CALCULATIONS
)
)
)
)
)
)
)
)
CASE NO. AVU-E-22-15

ORDER NO. 35639

On October 14, 2022, Avista Corporation (“Company”) filed a compliance filing (“Filing”)
requesting the Commission issue an order accepting its updated load forecast, natural gas price
forecast, and long-term contracts used as inputs to calculate its incremental cost Integrated
Resource Plan (“IRP”) 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 qualifying
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”).
On November 10, 2022, the Commission issued a Notice of Filing and Notice of Modified
Procedure establishing public comment and Company reply deadlines. Order No. 35592. Staff
filed comments, and the Company replied that it supported Staff’s recommendations. No other
comments were received.
Having reviewed the record in this case, including Staff’s comments, the Commission
approves the Company’s annual update.
BACKGROUND
Pursuant to the PURPA and the Federal Energy Regulatory Commission’s (“FERC”)
implementing regulations, this Commission has approved the IRP Method to calculate avoided
cost rates for qualifying facilities (“QFs”) that are above the resource-specific project eligibility
cap. QFs that are below the applicable project eligibility cap are eligible to receive published
avoided cost rates calculated using the surrogate avoided resource (“SAR Method”). See Order
No. 32697 at 7-8. The avoided cost rate is the purchase price paid to QFs for the energy, or the
energy and capacity, that the QF provides to the utility. 18 C.F.R. § 292.101(b)(6) (defining

ORDER NO. 35639 2
“avoided cost”). To ensure that avoided costs most accurately reflect the utility’s marginal cost of
energy or capacity, the Commission has directed utilities to “update fuel price forecasts and load
forecasts annually – between IRP filings,” and to update the Commission about its “long-term
contract commitments because of [their] potential effect . . . on a utility’s load and resource
balance.” Order No. 32697 at 22.
THE FILING
The Company forecasted its average load growth at 0.74% annual average growth rate for
2023 through 2045. Filing at 2.
The Company stated its natural gas forecast was developed using a “blend of two national
forecasting consultant’s [sic] most recent forecasts, the U.S. Energy Information Administration’s
Annual Energy Outlook…, and forward market prices as of July 26, 2022.” Id. at 3.
The Company “signed eight new long-term PURPA contracts, one Power Purchase
Agreement (PPA), and one PURPA contract is scheduled to conclude at the end of 2022. The new
PURPA contracts include six renewed contracts with existing resources.” Id. at 4.
STAFF COMMENTS
Staff recommended approval of the updated energy load forecast, natural gas forecast, and
long-term contracts used as inputs to calculate its IRP avoided cost rates with a January 1, 2023,
effective date.
Staff compared the higher, proposed load forecast with the approved forecast from last
year and believed that the proposed forecast is reasonable. Staff noted that there is faster long-term
load forecast growth due to increased population, changes in Washington building codes, and an
increase in electric vehicles in the Company’s service territory. However, Staff noted that there is
little change in short-term growth projections which are more important for the forecasting relevant
to this Filing.
The updated natural gas forecast is also higher than the comparable forecast from last year.
“Staff conducted two analyses on the natural gas forecast: (1) a comparison of the proposed Henry
Hub forecast and last year’s forecast approved in Order No. 35274; and (2) a comparison of the
Company’s proposed Henry Hub forecast to the Henry Hub forecasts of Idaho Power and Rocky
Mountain Power.” Staff Comments at 3. Staff noted that, despite differing methods, each of these
forecasts were similar for the near-term. This is important because avoided cost rates determined
using the IRP method are only needed for the first few years due to IRP-based contracts being

ORDER NO. 35639 3
limited to two years. Incorporating these analyses, Staff believed the increase is due to natural
market demands and the forecast for the next few years is reasonable.
Although contract related updates are continuously incorporated into the IRP model, Staff
recommended that contract updates continue to be a part of future filing to optimize the
Commission’s oversight of updates. Staff noted that project characteristics of Chelan PUD power
purchase agreement (“PPA”) were incorrect and recommended corrections followed by an
adjustment to the IRP model.
COMMISSION FINDINGS AND DISCUSSION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, -502 and -
503. The Commission is empowered to investigate rates, charges, rules, regulations, practices, and
contracts of public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provision of law, and to fix the same by order. Idaho Code §§
61-502 and -503. In addition, the Commission has authority under PURPA and FERC regulations
to set avoided costs, to order electric utilities to enter fixed-term obligations for the purchase of
energy from QFs, and to implement FERC rules. The Commission may enter any final order
consistent with its authority under Title 61 and PURPA.
Pursuant to this authority, we have reviewed the record, including the Filing, comments,
and reply comments. We find that the Filing complies with our directives in Order Nos. 32697 and
32802. The load growth and natural gas price forecasts are reasonable given the information
available at this time, and the contract information was confirmed. We, therefore, approve the
Company’s annual updates.
Lastly, due to the initial inaccuracy of the Chelan PUD PPA, the Commission finds it
necessary to correct the project characteristics of Chelan PUD PPA in the IRP model to reflect
derates for Canadian Entitlement obligations and estimate capacity reductions due to water
availability.
O R D E R
IT IS HEREBY ORDERED that the Company’s annual updates to its energy load, natural
gas price forecasts and contracts are reasonable and approved, effective January 1, 2023.
IT IS FURTHER ORDERED that the project characteristics of Chelan PUD PPA be
corrected in the IRP model to reflect derates for Canadian Entitlement obligations and estimate
capacity reductions due to water availability.

ORDER NO. 35639 4
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 21st day of
December 2022.

__________________________________________
ERIC ANDERSON, PRESIDENT

__________________________________________
JOHN CHATBURN, COMMISSIONER

__________________________________________
JOHN R. HAMMOND JR., COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\ELECTRIC\AVU-E-22-15 forecast update\orders\AVUE2215_Final_md.docx