20231116Reply Comments.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170

November 16, 2023

Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd. Bldg. 8, Ste. 201-A
Boise, Idaho 83714

RE: Case No. AVU-E-23-12 Capacity Deficiency Period for the Avoided Cost Calculations

Dear Ms. Noriyuki:

Avista Corporation, dba Avista Utilities (Avista or the Company), provides the following reply
comments in Case No. AVU-E-23-12, regarding Avista’s compliance filing to update and establish
its capacity deficiency period to be used for avoided cost calculations. The comments contained
herein are in response to the comments filed by Commission Staff on November 2, 2023.

Avista agrees with Staff to adopt the capacity deficiency date using the traditional method
described below, subject to change from the new load forecast with the following conditions for
the next capacity deficiency filing to be made within 30 days after filing the 2025 Electric
Integrated Resource Plan (IRP). Given the present concerns in this filing, Avista suggests the
following solutions to the resource capacity valuation and Planning Reserve Margin (PRM) in
future filings.

1) Avista will continue to use the Western Reginal Adequacy Program’s (WRAP’s) qualified
capacity contribution (QCC) methodology and accounting for resources.
2) Any variable energy resource (VER), demand response, or energy storage facility included in
the resource position will include a modified QCC for future years given expected changes in
its ability to meet regional loads. This will either use the methodology described in the 2023
IRP (Chapter 6, pages 22-23) or will use any future guidance provided by the WRAP, if
available.
RECEIVED
Thursday, November 16, 2023 3:49:50 PM
IDAHO PUBLIC
UTILITIES COMMISSION

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3) Avista will conduct a loss of load probability (LOLP) or reliability study in the 2025 IRP
process to determine the appropriate Planning Reserve Margin (PRM) necessary to achieve a
5% LOLP using the WRAP accounting methodology and the resulting resource QCC values.1

Load Forecast
Avista agrees with Staff to update the load forecast once it is available. Avista is working with
Applied Energy Group to develop an end use load forecast to use in resource planning. The first
load forecast under this methodology should be available toward the end of November 2023. This
forecast uses the Company’s most recent 5-year load forecast along with long term projections of
energy use given projected customer growth and technology availability. Avista will update this
load forecast again in March 2024 for the 2025 IRP to be filed on January 2, 2025.

New Resources
Avista agrees with the inclusion of signed resources coming online in future years and not
including Colstrip in the capacity determination year.

L&R Methodology
Avista agrees with Staff to file an updated L&R as a compliance filing using its traditional method
for capacity determination for this filing only, but requests to use the WRAP method of resource
accounting in future filings with PRMs to be determined by meeting Avista’s reliability targets
rather than the regional program.

Background on L&R Accounting Methodology
Avista’s “traditional” method for determining its capacity position has been used for several years
as the industry governing bodies required a specific methodology. Over the last two years, a
regional market design and methodology has been developed by the Western Power Pool using
industry best practices for capacity planning. Moving to a well-defined regional industry
determined methodology will reduce disagreement on the valuation of resource capacity, market
availability, and align the utility with the future requirements the Company must maintain for
capacity requirements under the WRAP.

The traditional load and resource balance methodology was developed by Avista to determine its
capacity net position and was vetted during multiple IRP cycles. However, there are differences
between the traditional and WRAP methodologies, such as:

• Forced Outages: the WRAP reduces resource capacities by its forced outage rate
while the traditional method assumes this risk is embedded in the PRM calculation.
• Operating reserves: the WRAP includes operating reserves in the PRM while the
traditional method separates these values between PRM and operating reserves.
• ELCC: the WRAP determines values using a regional model, while the traditional
method uses only Avista’s system.

1 This reliability study will be for a future year the utility is short, such as 2040 and include the following market
assumptions: 330 MW on-peak and 500 MW off-peak during extreme temperature days and 1,000 MW during any
non-extreme temperature periods.

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• Storage hydro resources: the WRAP uses a 10-year historical water availability
model accounting for head limitations and water availability to estimate capacity
during northwest regional peak hours while the traditional method only considers
availability over a single hour.

Avista agrees with Staff’s opinion the QCC values for storage hydro and variable energy resources
are northwest region focused rather than Avista load focused. First, Avista’s loads are highly
correlated with Northwest loads to lessen this concern. Further, program participants are required
to supply Avista with resource capacity if it is short in day ahead scheduling once the program is
binding to assist in meeting loads from regional surpluses.

PRM Background
Avista’s traditional method used a PRM determined by conducting a LOLP study to determine
how much additional capacity is required to meet a 5% LOLP over 1,000 simulations assuming
330 megawatts of market availability for Avista during peak hours. Avista has shown in IRP
Technical Advisory Committee meetings and other commission proceedings the resulting PRM is
a determination of the amount of market reliance assumed. PRM determination is shown in Table
No. 1 below. In this example, the reliability study determined 100 MW of additional generation
(line 5) is required to maintain a 5% LOLP. The amount is added to the available resources and
this total is divided by the peak load value to determine the PRM.

Table No. 1: Traditional Method Planning Reserve Margin Calculation

Row Item MW
1 Expected Peak Load 1,000
2
Operating
reserves/regulation 75
3 Total Obligation 1,075

4 Existing Resources Capacity 1,100
5
LOLP Model Capacity
Addition 100
6 Total Resources 1,200
7 Planning Reserve Margin 20%

Avista’s is less concerned about the accounting methodology of WRAP QCC values but is
concerned with using the WRAP program’s short-term PRM for long-term planning. Currently the
WRAP only provides a short term PRM and it is not in a binding phase yet. As discussed in Staff
comments, Avista does not use the WRAP’s PRM and instead uses a value calculated to align its
new methodologies position with the WRAP’s method; this value is 22% in the winter and 13%
in the summer. The WRAP is working on a process to develop long-term guidance on PRMs and
QCC values, but the results of this process are not expected to be available until mid-2024.

Therefore, for long term planning purposes and future capacity determination proceedings, Avista
proposes to conduct a reliability study in its 2025 IRP where it determines its required PRM using

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the WRAP accounting of its resources. The reliability study will be performed in a similar manner
as past studies attempting to determine additional capacity needed for Avista’s system to meet a
5% LOLP in a future year. Once this additional capacity is determined, Avista will estimate a new
PRM using a methodology that will resemble the example in Table No. 2 below. In this case the
same additional capacity is required to the system to meet the 5% LOLP target but the resulting
PRM is different due to existing resource deductions due to forced outage rates and the operating
reserves are removed from the obligation requirement in line 2.

Table 2: WRAP Methodology Planning Reserve Methodology

Row Item MW
1 Expected Peak Load 1,000
2 Regulation 15
3 Total Obligation 1,015
4 Existing Resources Capacity 1,040
5 LOLP Model Capacity Add 100
6 Total Resources 1,140
7 Planning Reserve Margin 14%

Please direct any questions regarding this filing to John Lyons at 509-495-8515.

Sincerely,

/s/Shawn Bonfield

Shawn Bonfield
Sr. Manager of Regulatory Policy & Strategy
Avista Utilities
509-495-2782
[e-mail]