20141031Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:YAO YIN
DATE:OCTOBER 30,2014
RE:ANNUAL COMPLIANCE FILING TO UPDATE THE LOAD AND GAS
FORECASTS AND LONG-TERM CONTRACTS IN THE
INCREMENTAL COST INTEGRATED RESOURCE PLAN AVOIDED
COST METHODOLOGY,CASE NOS.AVU-E-14-1l,IPC-E-14-25,
PAC-E-14-09
BACKGROUND
In Final Order Nos.32697 and 32802,the Commission determined that the inputs to the
Integrated Resource Plan (“IRP”)avoided cost methodology’shall be updated every two years
upon acknowledgement of the utility’s IRP filing,with the exception of the load forecast and the
natural gas forecast—which is to be updated annually by October 15 of each year.The
Commission stated:
We find that,in order to maintain the most accurate and up-to-date
reflection of a utility’s true avoided cost,utilities must update fuel price
forecasts and load forecasts annually —between IRP filings...In addition,it
is appropriate to consider long-term contract commitments because of the
potential effect that such commitments have on a utility’s load and
resource balance...We further find it appropriate to consider PURPA
contracts that have terminated or expired in each utility’s load and resource
balance (See Order No.32697,p.22.).
Each of the three electric utilities (Avista,Idaho Power,and Rocky Mountain Power)has
now submitted their annual updates for fuel prices,load forecasts,and changes to long-term
The IRP methodology is utilized for all proposed Public Utility Regulatory Policies Act of 1978 (“PURPA”)
qualifying facility (“QF”)projects that exceed the published rate eligibility cap.
DECISION MEMORANDUM -1 -
contracts for purchases or sales and any new or expiring QF contracts in compliance with Order
Nos.32697 and 32802.
STAFF REVIEW
Avista’s Filing
Avista’s most recent load forecast was developed in July 2014 for energy and September
2014 for peak.The recent energy load forecast shows,on average,a 0.6 percent annual average
growth rate,down from 0.7 percent.The peak forecast growth rate is unchanged at 0.7 percent.
Avista’s most recent Forward Price Curve was developed using the blend of two national
price forecasting consultants most recent forecasts and fonvard market prices as of October 7,
2014.
Avista has signed one new long-term PPA,representing a four percent slice of Chelan
County PUD’s Rocky Reach and Rock Island production for the 2015 calendar year.The slice
product is expected to add 64.5 MW of peak capacity for both summer and winter peaks and add
35.4 aMW of energy.As of the filing date,Avista has no additions or subtractions of PURPA
resource contracts.
Although the Commission did not receive Avista’s update until October 22,2014,Staff
believes it is still appropriate,in compliance of the Commission’s order,to implement the update
as of October 15,2014.
Idaho Power’s Filing
Idaho Power’s most recent load forecast is dated September 9,2014,and is the same load
forecast that will be used in Idaho Power’s 2015 IRP.This recent load forecast shows,on
average,a slight decrease in Idaho Power customer loads when compared to the October 7,2013,
load forecast.
Idaho Power updates the natural gas price forecast to reflect the most recent U.S.Energy
Information Administration (‘ElK’)natural gas price forecast.The October 2014 gas forecast,
planned for use in the 2015 IRP.is the nominal EIA forecast for Henry 1-lub in compliance with
the direction from Order No.32980.It indicates,on average,a slight decrease in the average
annual natural gas forecast prices over the next 20 years in comparison to the EIA 2013 natural
gas price forecast.
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Idaho Power currently has three non-PURPA,long-term power purchase agreements:
Elkhorn Valley Wind (101 MW),Raft River Geothermal (18 MW),and Neal Hot Springs
Geothermal (30 MW).Idaho Power currently has 133 signed contracts with PURPA QF projects
with a total nameplate capacity of 1,302 MW.This is an increase of 30 new contracts,and 524
additional MW of PURPA QF generation above the amounts from this time last year.This
includes two large solar contracts:Grand View (80 MW)and Boise City Solar (40 MW),which
are currently filed with the Commission,as well as II new solar QF contracts signed on October
13,2014.Also included are six new Oregon solar QF contracts totaling 60MW,5 new Oregon
wind QF contracts totaling 50 MW,and several Idaho hydro QF contracts.
Rocky Mountain Power’s Filing
Rocky Mountain Power’s long term load forecast to be used for the update to the IRP
avoided cost methodology was prepared in September 2014.
Rocky Mountain Power’s most recent Official Forward Price Curve was prepared
September 30,2014 (1409 OFPC).
Since the previous IRP method update compliance filing made in October 2013,
Rocky Mountain Power has signed 43 long-term contracts with QFs for a total nameplate
capacity of 893.2 MW.Two long-term contracts with a combined nameplate capacity of
159.8 MW were terminated.
STAFF RECOMMENDATION
Staff believes that the load and gas price forecasts submitted by Avista,Idaho Power,and
Rocky Mountain Power reflect their most current estimates,and were all prepared consistent
with the methods used in their IRPs,Staff believes the load and gas price forecasts and the long-
term contract changes submitted by the utilities comply with the requirements of Order Nos.
32697 and 32802.Staff recommends that the Commission accept the forecasts and contract
changes for filing without further process or procedure.
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COMMISSION DECISION
Does the Commission wish to accept the compliance filings of Avista,Idaho Power,and
Rocky Mountain Power without further process or procedure?
Yao Yin
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