20231116Comments of the Commission Staff.pdf

CHRIS BURDIN O
DEPUTY ATTORNEY GENERAL 5 3IDAHOPUBLICUTILITIESCOMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.9810
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA'S 2023 )ELECTRIC INTEGRATED RESOURCE )CASE NO.AVU-E-23-05
PLAN )
)COMMENTS OF THE
)COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
throughits Attorney of record,Chris Burdin,Deputy AttorneyGeneral,submits the following
comments.
BACKGROUND
On May 31,2023,Avista Corporation d/b/a/Avista Utilities ("Company")filed its 2023
Electric IntegratedResource Plan ("2023 IRP")with the Idaho Public Utilities Commission
("Commission").The 2023 IRP outlines and analyzes the Company's strategy for meeting its
customers'projected electricityneeds.The Company files an IRP every two years and uses it to
guide resource acquisitions."TheCompanywasgrantedatwo-month extension to file its 2023 IRP.Order No.35352.The filing date waschangedfromApril1,2023,to June 1,2023,to allow the Company to include the results of the Company's 2022
Request of Proposals in the 2023 IRP.
STAFF COMMENTS 1 November 16,2023
The Commission requires the utility to update the IRP biennially,allow the public to
participate in its development,and to implement the IRP.See Order Nos.22299 and 25260.
More specifically,the Commission has asked that a utility's IRP explain its current load/resource
position,its expected responses to possible future events,and the role of conservation in its
explanations and expectations.The IRP should also discuss "any flexibilities and analyses
considered during comprehensive resource planning,such as:(1)examination of load forecast
uncertainties;(2)effects of known or potential changes to existing resources;(3)consideration of
demand and supply-side resource options;and (4)contingencies for upgrading,optioning and
acquiring resources at optimum times (considering cost,availability,lead time,reliability,risk,
etc.)as future events unfold."See Order No.22299.
STAFF REVIEW
Staff recommends the Commission acknowledge the Company's 2023 IRP.This
recommendation is based on Staff's active participation in the IRP Technical Advisory
Committee ("TAC"),Staff's review of the Company's IRP filing,the Company's responses to
audit and production requests,and Staff's review of the customer and stakeholder feedback
received through the public input process.Staff believes the 2023 IRP meets the minimum
requirements set forth in Order Nos.22299 and 25260.
Staff has identified several topic areas from the 2023 IRP it believes require additional
review or focus in future IRPs.Staff believes the Company can address these topics in future
IRPs because the 2023 IRP identified the first capacity and energy resource deficiencies in
January 2034,which allows time to address these topics without impacting reliability of the
system and cost to Idaho.The topic areas identified include:
Washington Environmental Legislation
Western Resource Adequacy Program Planning Requirements
Planning Reserve Margin
Demand Side ManagementPrograms
Staff comments are organized into sections to address these topic areas that Staff believes are
important.
STAFF COMMENTS 2 November 16,2023
Preferred Resource Strategy
The Company's 2023 IRP Preferred Resource Strategy ("PRS")was largely influenced
by the Company's resource acquisitions and the divestiture of Colstrip since the 2021 IRP.
Figure 9.1 below shows the committed resource decisions and acquisitions since publishingthe
2021 IRP.2023 IRP at 9-2.These new resource acquisitions and the divestiture of Colstrip
resulted in the Company's system not being at a capacity or energy deficit until 2034.
Chelan PUD's Rock Island &
Rocky Reach (#2)
Columbia Basin Hydro'sInigationGeneration 146.3 MW
Chelan PUD's Rock Island &
Rocky Reach (#3)
Kettle Falls Biomass Upgrade
30-Year Wind PPA 100 MW
Cotstrip 3 &4 (222)MW
Lancaster CCCT 283 MW
Post Falls Hydro Upgrade 6.4 MW
The 2023 IRP PRS selected a total of 2,139 MWs of new resources during the IRP
planning horizon.The table below shows the new resource selections for the 2023 IRP PRS.
2023 IRP,Executive Summary at iii.
STAFF COMMENTS 3 November 16,2023
-O'*OO .O
NW Wind 2030 WA 200 63
Natural Gas CT 2034 ID 90 86
Renewable Fueled CT 2036 WA 88 31
Long Duratiog}togg2 39 WA 52
PPA Wind Renewal 2041 WA 140 53
Renewable Fueled CT 2041 WA 74 26
Natural Gas (ICE)2041 ID 46 46
PPA Wind Renewal 2042 WA 105 36
Renewable Fueled CT 2042 WA 186 65
Natural Gas CT 2042 10 102 97
Long Duration Storage (>24 hr)2043 WA/ID 68 -1
NW Wind 2044 WA 100 31
Long Duration Storage (>24 hr)2044 WA/IO 50 -1
NW Wind 2045 WA 200 63newaggfueggiWA348122
Natural Gas (ICE)2045 ID 65 65
Short Duration Storage (<8 hr)2045 ID 25 0
Total New Resources 2,139 878
The wind resources selected for Washington in the PRS prior to the system deficit date in
2034 were selected to meet Washington's clean energy targets and to take advantage of expiring
tax credits.2023 IRP at 9-12.It is important for the Company to continue to differentiate the
need for new resource selections driven by Washington Environmental Legislation since
resource selections to meet system reliability are not needed for about 10 years.
Washington Environmental Legislation
The Company generally keeps TAC members informed on updates and changes related to
Washington Environmental Legislation,but Staff still has concerns with the impacts
Washington's legislation will have on the Company's system and Idaho ratepayers.Staff
recommends the Company report to the Idaho Commission regarding the status of the Climate
Commitment Act ("CCA")rules outside of the IRP planning efforts in a timely manner.
Staffreviewed the IRP risk variables included in the IRP to determine if the IRP process
produced a least-cost,least-risk plan for the system and for Idaho.The risk variables included in
the review are:natural gas prices,legislation in other states,and Federal regulations.The risk
STAFF COMMENTS 4 November 16,2023
variables having the largest impact on the Company's ability to produce a least-cost,least-risk
plan is Washington's legislation related to the CCA,the Energy Independence Act ("EIA"),and
the Clean Energy Implementation Act ("CEIP").The Company updated the IRP assumptions
and performed scenario analyses related to these Acts,but some of the rules associated with
these Acts are still being determined or updated making it difficult to know the impact on the
system and to Idaho ratepayers.
The Final CCA rules were released in October 2022.However,the CCA continues to
cause a large amount of uncertaintyas the Company states:
Ecology has not yet provided detailed descriptions or examples to aid regulated
entities such as Avista in calculating compliance costs and it is unclear how this
legislation will impact energy markets.Therefore,carbon pricing continues to be
extremely uncertain and modeling methodologies will be updated in a future
resource plan once the full requirements are known.
2023 IRP at 8-14.
There are many unknowns and uncertainties associated with the CCA.It is important to
keep the Idaho Commission informed of the status of the CCA rules,as the Department of
Ecology is finalizing its rules.Besides accurately modeling CCA for the 2025 IRP,Staff
recommends the Company report to the Idaho Commission regarding the status of the CCA
rules outside of the IRP planning efforts on a timely and regular basis.
Western Resource AdequacyProgram Planning Requirements
Staff is concerned with the Company using the Western Resource Adequacy Program
("WRAP")planning requirements,specifically the QualifyingCapacity Contribution ("QCC"),
in the 2023 IRP since these requirements are based on a short-term and regional prospective and
not on the Company's system.Staff recommends that the Company demonstrate through
evidence that the QCC values of its resources are representativeof the capacity contributions of
its resources at the Company's system peak loads in the next IRP.The Company's decision to
rely on the WRAP QCC values impacts several areas of the IRP and associated filings that rely
on the IRP including:(1)the Load and Resource Balance for determining deficit dates;(2)
whether the system has sufficient resources to meet reliability requirements,and (3)the design of
Demand Response ("DR")programs.
STAFF COMMENTS 5 November 16,2023
Load and Resource Balance
The Company used QCC values from the WRAP to determine the amount of capacity
that it can rely upon from its own resources included in the Company's load and resource
balance.When asked how the Company verified that the QCC values are equivalent to capacity
values for the Company's system and resources,the Company responded that "the values
calculated for our resources aligned with the historical performance of these resources and the
regional context ofthe resource capability during regional peak periods [emphasis added]."See
Response to Production Request No.1(b).For example,the Company stated that renewable
energy's QCC values are determinedbased on the loads and geographic footprint of WRAP
participants.2023 IRP at 4-4.
Staff believes that the Company should base its resource plans on the contribution of its
own resources and on the timing and the amount of peak loads within its system,and not
necessarily for the region.Because the WRAP regional peak hours and amounts may be
different than Avista's peak hours,Staff believes it may not be appropriate to use WRAP QCC
values as proposed by the Company for system planning.Staff recommends that the Company
demonstrate through evidence that the QCC values of its resources are representative of the
capacity contributions of its resources at the Company's system peak loads in the next IRP.
Reliability Analysis
Staff continues to have concerns about the Company's reliability analysis in the IRP and
would like to see a reliability analysis that measures resource adequacy metrics on all portfolios
under evaluation across the full planning horizon.The Company made some progress in the
2021 IRP to address Staff's concerns,but the reliance on WRAP QCC values has only added to
Staff s reliability concerns.
Instead of the 2021 IRP loss of load probability ("LOLP")reliability modeling,the 2023
IRP reliability analysis relies largely on the regional planning requirements set by the WRAP.
The Company selects resources in the 2023 IRP based on WRAP QCC values and assumes these
QCC values will provide adequate reliability for their system.Relyingon the WRAP QCC
values with little evidence to demonstrate these values are appropriate for the Company's system
adds additional uncertainty.Althoughthe Company did perform a market risk analysis that
STAFF COMMENTS 6 November 16,2023
determined the LOLP on the Preferred Resource Strategy and evaluated years 2030 and 2045 to
ensure the resources were sufficient to meet reliabilityin those years,Staff would like to see
additional portfolios,years,and resource adequacy metrics included in the evaluation to
accurately validate the reliabilityof its portfolios.
Demand Response Selection
In the distributed energy resources section of its IRP,the Company describes one of the
major factors used to evaluatethe cost-effectiveness of the potential DR resources is the
resources'ability to meet QCC requirements.Staff disagrees with the Company's practice of
valuingits DR program selections using QCCs.Firstly,the Company describes that QCCs for
DR programs are uncertain and that the WRAP has not completed a study of the long-term QCC
of DR resources.2023 Electric IRP at 5-16.Staff believes it is inappropriate to model its
selections using undeveloped WRAP methodology.Additionally,by modeling its DR options as
a QCC resource instead of a reduction to the Company's P50 peak loads,the resource is
considered available for dispatch into the WRAP.Staff believes that dispatch of the Company's
DR programs should be determinedby the need on its own system.For these reasons,Staff
recommends that the Company model all future Idaho DR programs in the WRAP as a reduction
to the P50 peak load and that the Company model the value of its DR selections using the
avoided cost of energy and generationcapacity on the Company's system to reflect DR dispatch
based on needs within the Company's system.
PlanningReserve Margin
The Planning Reserve Margin ("PRM")is added to the load forecast and represents the
amount of additional capacity needed to ensure it meets its reliability target.In IRPs prior to the
2023 IRP,the Company used 16%of the winter load and 7%of the summer load as PRMs,
which were derived from 1,000 simulations of varyingweather for loads and thermal generation
capability,forced outage rates on generation,water conditions for hydro plants and wind
generation to achieve a 5%of LOLP.2023 IRP at 4-2.However,the Company used 22%for
winter load and 13%for summer load as PRMs in the 2023 IRP to maintain a capacity position
similar to the capacity positions developed under the Company's traditional method,instead of
explicitlyderiving its PRMs to meet the Company's reliability target.2023 IRP at 4-2.
STAFF COMMENTS 7 November 16,2023
AlthoughStaff believes backing into the PRM values to maintain a similar capacity position in
the short term is reasonable,as the Company's system and resource mix changes,the PRMs
should be explicitlyderived from the Company's reliability target using appropriately developed
capacity contribution values.
Demand Side ManagementPrograms
Energy Efficiency ("EE")
In the Company's PRS,energy efficiency is expected to provide 696 GWh of cumulative
savings,reducing the Company's future load growth by 27%.Of that,29%of the new energy
efficiency savings are expected to come from Idaho programs.2023 IRP at 9-8.The majority of
these savings are provided by interior lighting measures (47.7%)and space heating and cooling
measures (10.7%),with 11 other measure types contributingbetween 7.8%and 1.3%.Id.at 9-9.
While a large portion of savings is driven by lighting savings,the 2023 lighting backstop
for general service lamps and the increasing penetration of high efficiency lighting have led to
decreased savings potential in residential lighting programs.This is reflected in the
Conservation Potential Assessment ("CPA");however,the back stop does not extend to other
lighting types such as high bay and linear fixtures.The majority of estimated lighting savings
are from the Commercial sector where these types of fixtures are more common.CPA at 45.
DR
For its 2023 DR resources,the PRS selected only one DR program,voluntarytime-of-use
rates in Washington.IRP at 9-7.There were no DR selections for Idaho even after the assumed
implementation of AMI meters in the Company's service territory.The Company estimates the
implementation of AMI meters to begin in 2025.As described in greater detail in the WRAP
planning requirements section,Staff has concerns over how the Company modeled the value of
its potential DR options which could lead to unselected,cost-effective DR resources for Idaho.
Avoided Costs
In order to select potential EE programs,the Company uses avoided costs to estimate the
value of program savings.Avoided costs are provided as an input into the Company's PRiSM
model to define whether potential EE measures are cost-effective.These value streams represent
STAFF COMMENTS 8 November 16,2023
the estimated energy,capacity,and transmission and distribution upgrade costs that the Company
defers or otherwise avoids through implementing the EE measures.These values are important
as they define the EE measures selected for DSM planning and to evaluate the cost-effectiveness
of those program's performance.The Company's initial electric avoided costs are shown in
Table 9-11 of the IRP.
Similar to its recent natural gas IRP,Staff is concerned with the Company's addition of a
national carbon tax.The Company's electric IRP describes a national carbon tax adder of $12
per metric ton beginning in 2030 and escalating to $62 per metric ton by 2045.Unlike the Gas
IRP,the electric IRP models this carbon tax with a 33%probabilityof being implemented.IRP
at 8-15.In its Supplementresponse to Production Request No.8,the Company describes that
beginning in 2030 the carbon tax is "applied to load-serving resource option in Idaho according
to each option's respective carbon intensity."Staff disagrees with the Company's decision to
include a national carbon tax in the 2023 IRP for several reasons.With many EE measures
having measure lives greater than 7 years,the addition of a national carbon tax overstates the
avoided costs and could result in the selection of DSM programs that would not otherwise be
cost-effective.Also,the inclusion is inconsistent with both previous natural gas IRP
assumptions and current state policy regarding carbon and greenhouse gas adders.In its
supplemental response to Production Request No.8,the Company provided an updated version
of its avoided cost calculations with the national carbon tax removed.Staff recommends that the
Company use this set of avoided costs as the most recently filed avoided costs for purposes of
program planning and future cost-effectiveness calculations.Additionally,Staff recommends
that in future IRPs,the Company exclude the national carbon tax adder and all similar national
environmental adders that are not known and final from its baseline portfolio.The Company
should continue to exclude other state's environmental adders,known or otherwise,that do not
apply to Idaho from its baseline portfolio.
STAFF RECOMMENDATION
Staff recommends the Commission acknowledge Avista's 2023 IRP filing.Additionally,
Staff recommends the Company:
Report to the Idaho Commission regarding the status of the CCA rules and its
impact on Idaho customers,in a timely manner;
STAFF COMMENTS 9 November 16,2023
Demonstrate through evidence that the QCC values of its resources are
representative of the capacity contributions of its resources at the Company's
system peak loads in the next IRP;
Improve the IRP reliability analysis to measure resource adequacy metrics on all
portfolios under evaluation across the full planning horizon;
Develop a method to determine the PRMs that are explicitlyderived from the
Company's reliability target using appropriately developedcapacity contribution
values;
Model future Idaho DR programs within the WRAP as a reduction to P50 peak
load;
Consider and use the avoided costs provided in Supplement to Production
Request No.8 as the most recently filed avoided costs for the purposes of
program planning and future cost-effectiveness calculations;and
Exclude the national carbon tax and similar national environmental adders that are
not known and final from its baselineportfolio.
Exclude other state's environmental adders,known or otherwise,that do not apply
to Idaho from its baseline portfolio.
Respectfully submitted this 16th day of November 2023.
Deputy Attorney General
Technical Staff:Michael Eldred
Jason Talford
Yao Yin
i:umisc/comments/avue23.5mejjtyy comments
STAFF COMMENTS 10 November 16,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16TH DAY OF NOVEMBER 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
AVISTA CORPORATION,IN CASE NO.AVU-E-23-05,BY E-MAILING A COPY
THEREOF TO THE FOLLOWING:
PATRICK EHRBAR DAVID J MEYER
DIR OF REGULATORY AFFAIRS VP &CHIEF COUNSEL
AVISTA CORPORATION AVISTA CORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail:[e-mail] E-mail:[e-mail]
[e-mail]
SECRETARY
CERTIFICATE OF SERVICE