20161104Decision Memo.pdf

TO:
DECISION MEMORANDUM
COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: YAO YIN
DATE: OCTOBER 26, 2016
RE: ANNUAL COMPLIANCE FILING TO UPDATE THE LOAD AND GAS
FORECASTS AND LONG-TERM CONTRACTS IN THE INCREMENTAL
COST INTEGRATED RESOURCE PLAN A VOIDED COST
METHODOLOGY, CASE NOS. AVU-E-16-07, IPC-E-16-22, PAC-E-16-15
BACKGROUND
In final Order Nos. 32697 and 32802, the Commission determined that the inputs to the
Integrated Resource Plan ("IRP") avoided cost methodology1 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 are 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 PURP A contracts that have terminated or expired
in each utility's load and resource balance.
Order No. 32697 at 22.
The three electric utilities (A vista, Idaho Power, and Rocky Mountain Power) have each
submitted their annual updates for fuel prices, load forecasts, and changes to long-term contracts
for purchases or sales and any new or expiring qualifying facility ("QF") contracts in compliance
with Order Nos. 32697 and 32802.
1 The IRP methodology is used for all proposed qualifying facility ("QF") projects under the Public Utility Regulatory
Policies Act of 1978 ("PURPA") that exceed the published rate eligibility cap.
DECISION MEMORANDUM - 1 -OCTOBER 26, 2016
STAFF REVIEW
A vista's Fili11g
Avista's most recent load forecast was developed in July 2016 for energy, and September
2016 for peak. The recent energy load forecast escalates at 0.5 percent annual average growth
rate. The peak forecast growth rate decreased from 0.6 percent to 0.4 percent.
A vista's most recent Forward Price Curve was developed using a blend of two national
price forecasting consultants' most recent forecasts and forward market prices as of September 14,
2016.
Avista has not signed any new long-term PP As or PURP A contracts since the 2015 filing.
However, one small Washington State PURP A hydro facility contract was extended.
Idaho Power's Fili11g
Idaho Power's most recent load forecast from October 2016 shows, on average, a decrease
in Idaho Power customer loads when compared to the October 2015 load forecast that was
provided to the Commission in Case No. IPC-E-15-25 and approved by the Commission in Order
No. 33417.
As of October 15, 2016, Idaho Power will update the natural gas price forecast within the
Incremental Cost IRP ("ICIRP") avoided cost model to reflect the most recent U.S. Energy
Information Administration ("EIA") natural gas price forecast published in 2016. The October
2016 gas forecast is the nominal EIA forecast for Henry Hub in compliance with the direction
from Order No. 32980. It indicates a decrease in the average annual natural gas forecast prices
over the 20-year period in comparison to the EIA 2015 natural gas price forecast used in the ICIRP
avoided cost model from the previous update.
Idaho Power currently has three non-PURP A, long-term power purchase agreements:
Elkhorn Valley Wind (101 megawatts ("MW")), Raft River Geothermal (13 MW), and Neal Hot
Springs Geothermal (22 MW). Idaho Power currently has 130 contracts with PURP A QF projects
with a nameplate capacity of 1,132 MW. New contracts, terminated or expired contracts, as well
as new contract pricing are all included in the ICIRP model on a continuous basis.
DECISION MEMORANDUM ·2-OCTOBER 26, 2016
Rocky Mo1mtai11 Power's Fili11g
Rocky Mountain Power's current long-tenn load forecast was prepared in July 2016. The
load forecast used in the 2015 annual compliance filing was prepared in May 2015.
Rocky Mountain Power's most recent Official Forward Price Curve was prepared October
12, 2016 ("161012 OFPC"). The price forecast used in the last annual compliance filing was
prepared September 30, 2015 ("1509 OFPC").
Since the last annual compliance filing, Rocky Mountain Power has signed 17 long-tenn
contracts including 15 long-tenn contracts with QFs for a total nameplate capacity of 185.6 MW.
Eleven long-tenn contracts with a combined nameplate capacity of 134.0 MW have tenninated.
STAFF RECOMMENDATION
Staff believes that the load and gas price forecasts submitted by A vista, 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-tenn
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.
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
U dmcmos/ipce 1622 _ avue 1607 _pace 1615 __yy _ djh dee memo
DECISION MEMORANDUM -3 -OCTOBER 26, 2016