20221205Comments.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
[phone]
TDAHO BAR NO. II7I4
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-I5
COMMENTS OF THE
COMMISSION STAFF
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Street Address for Express Mail:
I I331 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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STAFF OF the ldaho Public Utilities Commission, by and through its Attorney of
record, Michael Duval, Deputy Attorney General, submits the following comments.
BACKGROUND
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 contracts used as inputs to calculate its incremental cost Integrated Resource PIan
("IR1)''; 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 qualiffing 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 5,2022
STAFF ANALYSN
Staff has reviewed the Company's Filing and recommends approval of the proposed load
forecast and the proposed natural gas forecast to be used in the IRP model to determine avoided
cost rates, with an effective date of January 1,2023. Staff also recommends that the Company
continue to include contract updates in the future annual filings, even though contract updates are
incorporated in the IRP model on a continuous basis.
Load Forecast
Staff compared the proposed load forecast to the load forecast approved in Order No.
35274 in as illustrated in Figure No. 1 below and believes the proposed load forecast is
reasonable. Staffjustifies its conclusion because there is little change from the previous year's
forecast over the next few years of the forecast time horizon, a period most critical to IRP-based
PURPA contracts.
Although over the long term the proposed load forecast grows faster than last year's load
forecast, the most important time period of the forecast relevant to this filing is the next few
years. This is because only the immediate time period will be used to develop avoided cost rates
for lRP-based PURPA contracts until the next annual update, since [RP-based PURPA contracts
are limited to aZ-year contract term.
However, the Company provided three reasons for load growth over the long term. First,
there is faster long-run growth in forecasted population, especially in tdaho. Second,
Washington changed its building code to prevent new natural gas connections to commercial and
industrial customers starting in2023, which will shift load from natural gas to electricity. Third,
the adoption of residential commercial electric vehicles has contributed to the faster growth. See
Response to Staff s Production Request No. 1.
2STAFF COMMENTS DECEMBER 5,2022
Figure No. 1: Load Forecast Comparison
Avista Energy Load Forecasts
1300
1250
1200
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1 100
1050
1000
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 204L 2042 2043
ooo )Q)l Energy Forecast (aMW)
-2022
Energy Forecast (aMW)
Natural Gas Forecast
Staff conducted two analyses on the natural gas forecast: (l) 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. Based on the results, Staff believes the proposed natural gas
forecast is reasonable.
Staff compared the Company's proposed Henry Hub forecast to last year's forecast
approved in Order No. 35274. See Figure No. 2. This year's Henry Hub forecast is significantly
higher than last year's Henry Hub forecast for the next few years in the near term, which is the
most critical timeframe for determining avoided cost rates of IRP-based PURPA contracts. Staff
believes the difference between the two forecasts in the near term reflects the increasing prices in
the natural gas markets over the past year,l and thus Staff believes the proposed Henry Hub
forecast is reasonable.
I See natural gas market trends on Stats Tab at https:/itradingeconomics.com/commodity/natural-gas
aJSTAFF COMMENTS DECEMBER 5,2022
Figure No. 2 Comparison of Company's Henry Hub Forecasts
Comparison of Henry Hub Forecasts
in AVU-E-21,-14 and AVU-E-22-15
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rro fl61;y Hub Forecast in AVU-E-21-14
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Hub Forecast in AVU-E-22-15
Staffalso compared Henry Hub forecasts used by the Company,Idaho Power, and Rocky
Mountain Power. The results show similar trends between the three utilities. Although these
utilities use different methodologies to determine Henry Hub forecasts, all three forecasts reflect
a high level of similarity for the next few years; therefore, Staffbelieves the Company's
proposed natural gas forecast is reasonable. Figure No. 3 below shows a comparison of Henry
Hub forecasts used by the Company and Rocky Mountain Power. Because Idaho Power's
Henry Hub forecast is confidential, it was not included in the graph.
4STAFF COMMENTS DECEMBER 5,2022
Figure No. 3 Henry Hub Forecasts Used by Avista and Rocky Mountain Power
Comparison of Henry Hub Gas Forecasts Used by Avista and
Rocky Mountain Power
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Hub Forecast in AVU-E-22-15 rrr l-lg;1ry Hub Forecast in PAC-E-22-16
Contract Updates
Although contract updates are incorporated in the IRP model on a continuous basis, Staff
believes the annual filing is a good opportunity for the Commission to review and monitor these
updates. Therefore, Staff recommends that the Company continue to include contract updates in
the future annual filings. For this case, Staff believes project characteristics of Chelan PUD
Power Purchase Agreement ("PPA") should be corrected in the IRP model.
Contract updates are incorporated into the IRP model on a continuous basis. Order No.
32697 required that long-term contracts be considered in the IRP methodology at such time as
contracts were signed and when they had terminated or expired. Later, Order No. 33357 found
the "signed contract" language in Order No 32697 did not achieve its intended result and
required utilities to create a queue to track the order in which QF projects have entered
negotiations with a utility.
Project characteristics of Chelan PUD PPA reported in the Filing were incorrect.
Response to Staff s Production Request No. 3 (a) provided updated nameplate, peak
contributions, and average expected energy of the project. However, peak contributions should
be further adjusted to reflect derates for Canadian Entitlement obligations and estimate capacity
5STAFF COMMENTS DECEMBER 5,2022
reductions due to water availability.2 Staffrecommends that project characteristics of Chelan
PUD be corrected in the IRP model to reflect these adjustments.
STAFF RBCOMMENDATION
Staff recommends that the Commission approve the following updates to be used in the
Company's IRP model for determining avoided cost rates, with an effective date of January l,
2023, as required by Order No. 35274:
l. The proposed May 2022load forecast as filed;
2. The proposed natural gas forecast as filed.
Staff also recommends that project characteristics of Chelan PUD be corrected in the IRP
model to reflect derates for Canadian Entitlement obligations and estimate capacity reductions
due to water availability.
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Respectfully submiued this J day of December 2022
Michael Duval
Deputy Attorney General
Technical Staff: Yao Yin
Kevin Keyt
i:umisc/comments/grrO2. I 5mdly comments
2 Staffreceived this information through email from the Company on November 22,2022.
6STAFF COMMENTS DECEMBER 5,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 5S DAY oF DECEMBER 2022,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF, IN
CASE NO. AW-E-22.15, BY E.MAILING A COPY THEREOF, TO THE
FOLLOWING:
MICHAEL G ANDREA
SEMOR COUNSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-mail: [e-mail]
dockets@avi stacorp. com
SHAWN BONFIELD
SR MGR., REGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SPOKANE W499220-3727
E-mail: [e-mail]
SECRET
CERTIFICATE OF SERVICE