20231102Comments of the Commission Staff.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074 MMISSiCN
[phone]
IDAHO BAR NO.11714
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 )CORPORATION'S APPLICATION TO )CASE NO.AVU-E-23-12
UPDATE AND ESTABLISH ITS CAPACITY )DEFICIENCY PERIOD TO BE USED FOR )AVOIDED COST CALCULATIONS )COMMENTS OF THE
)COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
throughits Attorneyof record,Michael Duval,Deputy AttorneyGeneral,submits the following
comments.
BACKGROUND
On August 24,2023,pursuant to Order No.35810,Avista Corporation d/b/a Avista
Utilities ("Company")applied ("Application")to the Public Utilities Commission
("Commission")for approval of its capacity deficiency period used for its avoided cost
calculations.
A capacity deficiency case is used to determine when new qualifying facilities under the
Public Utility Regulatory Policy Act of 1978 ("PURPA")begin avoiding capacity costs for a
utility and are therefore eligible to start receiving capacity payments.See Order No.32697.
Originally,each utility was required to file its capacity deficiency date case when a utility
STAFF COMMENTS 1 NOVEMBER 2,2023
submitted its Integrated Resource Plan ("IRP")to the Commission,and the capacity deficiency
determinedthrough the IRP planning process would be the starting point subject to the outcome
of the proceeding.Id.In 2017,the Commission amended Order No.32697 to require "that each
Idaho electric utility shall submit its updated capacity deficiency filing after the Commission has
acknowledged its IRP report,rather than upon its IRP filing."Order No.33917 at 4.On June 8,
2023,the Commission further adapted this instruction in Order No.35810 and required Idaho
Power Company,Rocky Mountain Power,and the Company to file a capacity deficiency case
within 30 days of each company's respective IRP being filed.The Company proposed a first
capacity deficit date of January 1,2034.
STAFF ANALYSIS
Staff recommends that the first capacity deficiency date and amounts of deficiency for
purposes of determining when capacity payments should begin for new PURPA contracts should
be based on a compliance filing that includes the Company's new peak load forecast and an
updated load and existing resource balance ("L&R")using the Company's traditional method for
deriving the L&R,instead of the method used in the Company's Application.The Company
stated it will have a new load forecast in November 2023.See Response to Staff Production
Request No.1(a)in Case No.AVU-E-23-13.Further,Staff is concerned with the new method
the Company used to quantifythe capacity amounts of resources needed to reliably meet
customer loads.Because of these concerns,Staff also recommends that prior to the next
deficiency date update case:
1.The Company demonstrate that the method and inputs used to derive the
Company's Qualified Capacity Contribution ("QCC")values reflect the
generation capabilities of the Company's resources relative to the peak loads
within the Company's system;and
2.The Company develop its Planning Reserve Margin ("PRM")driven by the
Company's reliability target.
If the Commission agrees with Staff's recommendation to update the load forecast and
refile the L&R througha compliance filing using the Company's traditional methods,Staff will
verify the updated load forecast and L&R.If it finds no issues,Staff will submit a decision
STAFF COMMENTS 2 NOVEMBER 2,2023
memo recommending Commission approval of the resulting first capacity deficiency date,
amounts of deficiency,the updated SAR model that uses the capacity deficiency information,
and resulting published avoided cost rates.
Load and Resource Balance
Staff reviewed the loads and resources used to determine the Company's proposed L&R,
which identifies the Company's first capacity deficiency date and the amounts of deficiency.In
addition,the Company developedan L&R using its traditional method.See Response to Staff
Production Request No.1(b).Table Nos.1 and 2 below show a comparison of the Company's
proposed L&R and the L&R determined under the traditional method.
Staff compared the Company's winter and summer capacity positions and identified that
the first deficit year remains the same,even though each year's capacity position (length and
shortfall)is different between the two methods over the planning horizon.As shown in the
tables,the capacity positions determined under the traditional method are consistently higher
than capacity positions determinedunder the Company's proposed method.'Because of the
relatively small,but material differences in capacity positions between the two methods,Staff
believes it is reasonable to continue to use the Company's traditional method for developing the
L&R,until the Company can address Staff's concerns,discussed in more detail below.
'According to the Company,differences are due to the Mid-Columbiacontracts havinga higher capacitycontributionunderthetraditionalmethodthanintheproposedmethod.See Response to StaffProduction Request
No.5.
STAFF COMMENTS 3 NOVEMBER 2,2023
Table No.1:Winter Capacity Position Comparison
Capacity positions in
Capacity positions in January under
January under proposed traditional method Capacity Difference
Year rnethod (IVliN)(AdvV)inJanuary(AnVV)
2024 224 318 94
2025 214 308 94
2026 122 215 93
2027 150 233 83
2028 140 224 83
2029 113 186 73
2030 99 172 73
2031 76 148 72
2032 53 126 72
2033 35 107 72
2034 (52)(8)43
2035 (76)(32)43
2036 (166)(125)41
2037 (196)(155)41
2038 (227)(186)42
2039 (261)(219)42
2040 (297)(256)42
2041 (405)(343)62
2042 (730)(670)60
2043 (790)(725)66
2044 (842)(777)66
2045 (896)(830)66
STAFF COMMENTS 4 NOVEMBER 2,2023
Table No.2:Summer Capacity Position Comparison
Capacity positions in Capacity positions in
August under proposed August under traditional capacity Difference
Year rnethod(AnVV)rnethod(AnvV)inAugust(nãVV)
2024 264 350 85
2025 326 411 85
2026 233 316 83
2027 271 355 84
2028 262 346 84
2029 228 308 79
2030 208 287 79
2031 184 273 90
2032 158 248 90
2033 128 218 90
2034 40 105 65
2035 16 81 65
2036 (49)8 57
2037 (82)(25)57
2038 (116)(61)55
2039 (152)(97)55
2040 (185)(129)55
2041 (281)(208)73
2042 (572)(486)86
2043 (636)(542)95
2044 (686)(591)95
2045 (738)(644)95
LoadshitheL&dR
The load used in the L&R consists of two major components:the load forecast and the
PRM.The total of these two components represents the Company's total load obligation,which
the Company should reliably meet through acquisition of a sufficient amount of resource
capacity.
Load Forecast
Staff reviewed the proposed load forecast and is concerned about its accuracy due to it
being prepared 15 months before the Commission makes a decision on the capacity deficiency
and the resulting avoided cost rates.Staff recommends the Company file an updated L&R as a
STAFF COMMENTS 5 NOVEMBER 2,2023
compliance filing using an updated load forecast,along with explanations of the difference
between the updated load forecast and the proposed load forecast.
The Commission requires utilities to use the latest information to determine the capacity
deficiency used for calculating avoided cost rates as was done in previous cases.Order Nos.
33958,34918,and 35415.The forecast submitted with this filing was developedin the summer
of 2022,2 and the Company is expected to have an updated forecast in November 2023.See
Response to Staff Production Request No.1(a)in Case No.AVU-E-23-13.Because of the age
of the forecast,Staff is concerned the forecast may have changed given changes in market
fundamentalswithin the Company's service territory.
PRM
The PRM is added to the load forecast and represents the amount of additional capacity
needed to ensure it meets its reliability target.In IRPs circa the 2023 IRP,the Company used 16
percent of the winter load and 7 percent of the summer load as PRMs,which were derived from
1,000 simulations of varyingweather for loads and thermal generationcapability,forced outage
rates on generation,water conditions for hydro plants,and wind generationto achieve a 5
percent of loss of load probability ("LOLP").2023 IRP at 4-2.However,the Company used 22
percent for winter load and 13 percent for summer load as PRMs in the 2023 IRP,to maintain a
capacity position similar to the capacity positions developedunder the Company's traditional
method,instead of explicitlyderiving its PRMs to meet the Company's reliability target.See
Response to Staff Production Request No.1(f);the 2023 IRP at 4-2.Although Staff believes
backing into the PRM values to maintain a similar capacity position in the short term is
reasonable in this case due to the lack of significant change in the Company's resource mix and
consumption patterns from previous years,the PRMs should be explicitlyderived from the
Company's reliability target using appropriately developed capacity contribution values.
2 This load forecast has been used in the 2022 Annual Update case (Case No.AVU-E-22-15),the 2023 IRP case
(Case No.AVU-E-23-05),the 2023 Annual Update case (Case No.AVU-E-23-13),and this capacity deficiency
case (Case No.AVU-23-12).The Company confirmedthis informationwith Staff during a phone call on October
27,2023.
STAFF COMMENTS 6 NOVEMBER 2,2023
Resources in the L&R
Staff's evaluation of resources focused on two areas:(1)whether the resources included
in the L&R should be included for purposes of determining the capacity deficiency date for
avoided cost rates,and (2)whether the capacity contribution factors at system peak for those
resources are reasonable.
Resources included in the L&R
Staff believes the resources included in the L&R are appropriate and reasonable for
purposes of determining the capacity deficiency for avoided cost rates.Staff 's review focused
on resources that are new to the system or are approaching end of life.These include the
Colstrip coal plant,the Lancaster natural gas purchased power agreement ("PPA"),the Chelan
PUD Hydro PPA,the Columbia Basin Hydro PPA ("CBH"),and the Clearwater Wind PPA.
Colstrip
On January 16,2023,the Company entered into an agreement with NorthWestern to
transfer its 15 percent ownership of Colstrip Units 3 and 4 to NorthWestern on December 31,
2025.See Response to Staff Production Request No.4.Therefore,the L&R does not have any
coal generation starting in 2026.Because this agreement has been signed and fully executed it
should be reflected in the L&R.
Lancaster
The current Lancaster PPA ends on October 31,2026,and the extended PPA was signed
on March 31,2023,which will allow the PPA to continue through December 31,2041.The
Company includes the extended Lancaster PPA in the L&R.See Response to Staff Production
Request No.3.Because this contract does not require pre-approval,and it is fully executed and
is eligible for rate recovery,Staff believes the Company's treatment of Lancaster in the L&R is
reasonable.
Chelan PUD Hydro
The Chelan PUD contract was signed on May 24,2022,which includes three parts:
STAFF COMMENTS 7 NOVEMBER 2,2023
"5.0%share of their Rocky/Reach and Rock Island hydroelectric projects from
January 1,2024,throughDecember 31,2033,for 87.5 MW of capability and 52.4
aMW of energy;
5.0%share from January 1,2026,through December 2030 for 87.5 MW of
capability and 52.4 aMW of energy;and,
10.0%share from January 1,2031,through December 31,2045,for 174.9 MW of
capability and 104.8 aMW of energy."See Response to Staff Production Request
No.3.
Because this contract does not require pre-approval,and it is fully executed and is
eligible for rate recovery,Staff believes the Company's treatment of Chelan PUD Hydro in the
L&R is reasonable.
CBH
The CBH PPA was signed on December 2,2022.Table No.3 shows each plant's size
and start time.See Response to Staff Production Request No.3.Because this contract does not
require pre-approval,and it is fully executed and is eligible for rate recovery,Staff believes the
Company's treatment of CBH in the L&R is reasonable.
Table No.3.CBH Plants
Russell D.Smith 1/1/2023 6.1 1.5
EBC 4.6 5/1/2023 2.2 0.9
Summer Falls 1/1/2025 94 41.4
PEC 66 3/1/2025 2.4 0.5
Quincy Chute 10/1/2025 9.4 3.6
Main Canal 1/1/2027 26 11.6
PEC Headworks 9/1/2030 6.2 2.3
Total 146.3 61.8
STAFF COMMENTS 8 NOVEMBER 2,2023
Clearwater Wind
The Clearwater Wind 30-year PPA was signed on January 20,2023.See Response to
Staff Production Request No.3.This project will provide approximately 100 MW of wind
energy.2023 IRP at 3-12.Because this contract does not require pre-approval,and it is fully
executed and is eligible for rate recovery,Staff believes the Company's treatment of CBH in the
L&R is reasonable.
Resource Capacity Contributions
The Company used QCC values from the Western Resource Adequacy Program
("WRAP")to determine the amount of capacity it can rely upon from its own resources included
in the Company's L&R.See Response to Staff Production Request No.1 (a).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 of the
resource capability during regionalpeak periods [emphasis added]."See Response to
Production Request No.1(b),Case No.AVU-E-23-05.For example,the Company stated that
renewableenergy's QCC values are determined based on the geographic footprint of WRAP
participants.The 2023 IRP at 4-4.
Staff believes 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 own 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 the purpose of this case.Until the Company can
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,Staff recommends
the Company utilize its traditional methods for developing its L&R and the resulting capacity
deficiency dates and amounts of deficiency for purposes of PURPA.
STAFF COMMENTS 9 NOVEMBER 2,2023
STAFF RECOMMENDATION
Staff recommends the Company file an updated L&R as a compliance filing using the
Company's traditional method for deriving it and by using the peak load forecasts available in
November of this year for both winter and summer.In addition,Staff recommends that prior to
the next capacity deficiency date update case:
1.The Company demonstrate that the method and inputs used to derive the
Company's QCC values are reflective of the generationcapacity of the
Company's resources relative to the peak loads within the Company's system;
and
2.The Company develop its PRM driven by the Company's reliability target and
appropriately developed capacity contribution factors.
Respectfully submitted this 2nd day of November 2023.
---Whael Duv l
Deputy AttorneyGeneral
Technical Staff:Yao Yin
i:umisc/comments/AVU-E-23-12 Comments
STAFF COMMENTS 10 NOVEMBER 2,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 2nd DAY OF NOVEMBER 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
AVISTA CORPORATION,IN CASE NO.AVU-E-23-12,BY MAILING A COPY
THEREOF,POSTAGE PREPAID,TO THE FOLLOWING:
MICHAEL G.ANDREA SHAWN BONFIELD
SENIOR COUNSEL SR.MANAGER,REGULATORY POLICY
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]
SECRETARY
CERTIFICATE OF SERVICE