20231220Compliance Filing.pdf

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

December 20, 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-23-13 – Updated Load and Natural Gas Forecast Compliance Filing

Dear Commission Secretary:

Avista Corporation’s, doing business as Avista Utilities’ (Avista or the Company), in
compliance with Order No. 36023 in Case No. AVU-E-23-13, Avista submits the following
updates to the electric load and natural gas price forecasts. Attached are the confidential
workpapers that support this filing.

Updated Load Forecast
Avista’s last long term load forecast was developed for the 2023 IRP, while the IRP was
filed in June 2023, the underlying data used in the forecast was produced in mid-2022 with
additional adjustments for weather and electrification completed in early 2023. Avista’s long term
load forecasting technique uses econometric techniques to project customer loads. This approach
works well when the load fundamentals of the historical dataset continue to represent future
relationships and is common industry practice. Due to projections of significantly changing
customer energy use due to energy efficiency, electric transportation, building electrification, and
RECEIVED
Wednesday, December 20, 2023 4:20:29 PM
IDAHO PUBLIC
UTILITIES COMMISSION

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roof top solar, Avista adjusted this methodology with single load type forecasts for specific energy
uses. Avista is considering changing long-term load forecasting methodologies for the 2025 IRP
to better understand the fundamental changes in use by investigating a full end use load forecast
technique. This updated forecast includes steps toward this new end use methodology. This
forecast was developed for internal purposes as a proof of concept and has not been fully vetted
for IRP or other “official” use and may still be revised. Avista’s first 5 years of this forecast is
based on the existing econometric methodology then transitions to the end use methodology.
The end use load forecast technique forecasts each customer end use by the number and
energy demand for each “appliance” type, i.e., electric water heater versus electric heat pump water
heaters. Avista expects this technique should do a better job of estimating future use due to changes
in appliance efficiency and stock turnover. Avista also sees this methodology being useful in
forecasting loads by customer demographic type and may also be useful in future spatial load
forecasting needs for the distribution system. The data, time, and expertise to conduct such load
forecasting is currently not possible with current staffing. To investigate this type of forecasting
further, Avista found a low-cost approach to learn more about this forecasting type by engaging
with Applied Energy Group (AEG). AEG currently does the Conservation Potential Assessment
(CPA) for Avista and has an estimated end use break out of Avista’s loads already developed for
use in the CPA. AEG was engaged in the summer of 2023 to conduct a long-term load forecast
with their load model using Avista’s updated forecast assumptions, including population growth.
The forecast uses the 2023 IRP assumptions for electric vehicles and roof-top solar, but the model’s
intent is to consider how customers will choose future appliances as stock turnover changes and
new customers are added to the system.

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The arrangement with AEG was to conduct a proof-of-concept load forecast now and
update the forecast in the early spring 2024 for use in the 2025 IRP with new data and lessons
learned from this process. The load forecast for the 2025 IRP will include updated assumptions on
electric vehicle adoption and Avista’s latest long-term economic projections.
The updated load forecast shows approximately the same load in the beginning and end of
the planning horizon, but lower loads in between. The new forecast is flat load growth until the
early 2030s then grows at a higher rate of growth (see Table 1 and Figure 1 below). On a monthly
basis the forecast’s methodology of handling weather assumptions is different, while both forecasts
use similar temperature forecasts for future temperatures, but how the weather is allocated between
the months is different, Avista will be working with AEG to determine the best way to deal with
issue prior the 2025 IRP.
Table 1: Updated Load Forecast (aMW)
Year 2023 IRP Updated Delta
2024 1,119 1,122 3
2025 1,122 1,122 0
2026 1,127 1,112 (14)
2027 1,132 1,113 (20)
2028 1,139 1,112 (27)
2029 1,144 1,111 (33)
2030 1,149 1,110 (39)
2031 1,156 1,112 (44)
2032 1,164 1,115 (50)
2033 1,171 1,121 (50)
2034 1,179 1,128 (51)
2035 1,188 1,137 (50)
2036 1,197 1,147 (51)
2037 1,206 1,158 (48)
2038 1,216 1,171 (45)
2039 1,226 1,184 (42)
2040 1,238 1,199 (39)
2041 1,250 1,217 (32)
2042 1,263 1,236 (26)
2043 1,277 1,258 (18)
2044 1,293 1,282 (11)
2045 1,309 1,309 1

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Figure 1: Load Forecast Comparison

Updated Natural Gas Price Forecast
Expected prices at Henry Hub were derived through a blend of forecasts from four sources,
including the New York Mercantile Exchange (NYMEX) forward strip, the Energy Information
Administration’s (EIA) 2022 Annual Energy Outlook (AEO) (2023 IRP), the EIA’s 2023 AEO
(2025 IRP), and two reputable market consultants. The weightings applied to each source vary
throughout the forecasting horizon that will be used in the 2025 IRP, as depicted in Table 2. The
resulting average annual prices for the 2025 IRP at Henry Hub and Stanfield can be found in Table
3. Prices at Stanfield are calculated based on the forecasted basis differential to Henry Hub from
Consultant 2. This data will be reviewed the with Natural Gas Technical Advisory Committee
(TAC) for the 2025 Natural Gas IRP and updated as needed.
Table 2: Forecast Components by Year
-
200
400
600
800
1,000
1,200
1,400
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
20
3
3
20
3
4
20
3
5
20
3
6
20
3
7
20
3
8
20
3
9
20
4
0
20
4
1
20
4
2
20
4
3
20
4
4
20
4
5
Av
e
r
a
g
e

M
e
g
a
w
a
t
t
s
Load Forecast Comparision
2023 IRP Updated

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2023 IRP
(Years)
2025 IRP
(Years)
NYMEX EIA/AEO Consultant 1 Consultant 2
2023 & 2024 2025 & 2026 100% 0% average consultant forecasts
2025 2027 75% 25% average consultant forecasts
2026 2028 50% 50% average consultant forecasts
2027 2029 25% 75% average consultant forecasts
2028-2045 2030-2045 0% 100% average consultant forecasts

Table 3: Updated Natural Gas Price Forecast
Average Annual Price 2025 IRP
($/mmbtu)
Year Henry Hub Stanfield
2024 $2.69 $2.42
2025 $3.51 $3.17
2026 $3.82 $3.52
2027 $3.93 $3.57
2028 $3.99 $3.58
2029 $4.00 $3.47
2030 $4.10 $3.61
2031 $4.28 $3.74
2032 $4.52 $3.97
2033 $4.78 $4.20
2034 $4.95 $4.28
2035 $5.23 $4.45
2036 $5.40 $4.57
2037 $5.65 $4.75
2038 $5.86 $4.82
2039 $5.93 $4.82
2040 $6.36 $5.15
2041 $6.72 $5.38
2042 $6.89 $5.54
2043 $7.16 $5.76
2044 $7.44 $5.95
2045 $7.74 $6.13

Variations between the four Henry Hub price forecasts used in the 2023 IRP and their
respective, more recent, forecasts to be used in the 2025 IRP (Figures 2 and 3) will result in higher

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prices at Henry Hub for the 2025 IRP across all years of the forecasting horizon except in 2025
and 2026 (Figure 3).
Figure 2: 2023 IRP Natural Gas Price Forecast ($/mmbtu)

Figure 3: 2025 IRP Natural Gas Price Forecast ($/mmbtu)

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2023: Nymex 2023: EIA/AEO 2023: Consultant 1
2023: Consultant 2 2023: Henry Hub
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2025: Nymex 2025: EIA/AEO 2025: Consultant 1
2025: Consultant 2 2025: Henry Hub

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Figure 4: Henry Hub Natural Gas Price Forecast 2023 vs. 2025 ($/mmbtu)

Comparisons of each source’s 2023 and 2025 forecasts are further detailed below.
The NYMEX forward strip prices on December 15, 2023 (2025 IRP) have decreased from
those on July 26, 2022 (2023 IRP) as shown in Figure 4 above.
Figure 5: NYMEX Forward Strip Prices December 15, 2023 ($/mmbtu)

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2023: Henry Hub 2025: Henry Hub
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2023: Nymex 2025: Nymex

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Prices from the EIA’s AEO to be used in the 2025 IRP have decreased in the near term and
increased in the outer years of the forecast horizon, relative to those used in the 2023 IRP (Figure
6).
Figure 6: 2023 vs. 2025 EIA AEO Forecasts ($/mmbtu)

Average annual prices from both consultants have increased in each year of the forecast horizon
(Figures 7 and 8).

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2023: EIA/AEO 2025: EIA/AEO

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Figure 7: 2023 vs. 2025 Consultant 1 Price Forecast ($/mmbtu)

Figure 8: 2023 vs. 2025 Consultant 2 Price Forecast ($/mmbtu)

Questions regarding this compliance filing should be directed to James Gall at 509-495-2189 or
[e-mail].

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2023: Consultant 1 2025: Consultant 1
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2023: Consultant 2 2025: Consultant 2

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Sincerely,

/s/Shawn Bonfield

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