20060511notice_of_filing.pdf

Office of the Secretary
Service Date
May 11 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING BY
VISTA CORPORATION DBA A VISTA
UTILITIES OF ITS 2006 NATURAL GAS
INTEGRATED RESOURCE PLAN (IRP)NOTICE OF FILING
CASE NO. A VU-06-
NOTICE OF
COMMENT DEADLINE
YOU ARE HEREBY NOTIFIED that on March 31 , 2006, Avista Corporation dba
Avista Utilities (Avista; Company) filed its 2006 natural gas Integrated Resource Plan (IRP) with
the Idaho Public Utilities Commission (Commission). The Company s filing complies with the
Commission s direction in Order No. 25342, Case No. GNR-93-2 (Reference PURPA Section
303(b)(3), Energy Policy Act of 1992). Pursuant to the Commission s Order, the Company is
required to file every two years.
Avista notes that it has a statutory obligation to provide reliable natural gas service to
customers at rates, terms and conditions that are fair, just, reasonable and sufficient. Avista
regards it IRP as a methodology for identifying and evaluating various resource options and as a
process by which to establish a plan of action for resource decisions. A vista s 2006 natural gas
IRP identifies a strategic gas-supply portfolio that meets the Company s future demand
requirements. Resource options include both supply-side and demand-side measures.
A vista s 2006 natural gas IRP addresses the following subject areas: natural gas
demand forecast, demand-side management, distribution planning, supply-side resources
integrated resource portfolio, avoided cost determination, and action plan.
To facilitate stakeholder involvement in the 2006 IRP, the Company sponsored six
Technical Advisory Committee (T AC) meetings. A broad spectrum of people were invited to
each meeting. The meetings focused on specific planning topics, reviewed the status and
progress of planning activities and solicited ongoing input on the IRP development.
Modeling Approach
The Company applied its SENDOUT(!!) model (a PC-based linear programming
model widely used to solve natural gas supply and transportation optimization questions) to
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develop the least-cost resource mix for the 20-year planning period. The model performs the
least-cost optimization based upon daily, monthly, seasonal and annual assumptions related to:
Customer growth and customer natural gas usage that ultimately form
demand forecasts;
Existing and potential transportation and storage options;
Existing and potential natural gas supply availability and pricing;
Weather assumptions; and
Demand-side management opportunities.
Natural Gas Price Forecasts
The market for natural gas supply, the Company contends, has undergone dramatic
changes over the last several years, as the commodity market has transitioned from a regionally
based market to a national, and perhaps global , market. Regional and national natural gas prices
have recently risen to unprecedented levels. The Company states that it is difficult to determine
the length of the price run-up, as well as the expected impact on customer loads.
Resources
A vista has a diversified portfolio of natural gas supply resources, including owned
and contracted storage, firm capacity rights on six pipelines, and contracts in place to purchase
natural gas from several different supply basins. A vista has modeled a number of conservation
measures or programs that, if cost effective, could further reduce demand.
In addition to conservation measures as supply resources, A vista evaluated
incremental pipeline transportation, storage options, distribution enhancements and various
forms of liquefied natural gas storage or service.
Demand-Side Management
Avista actively promotes and offers energy-efficiency programs to all (non-transport)
retail electric and natural gas customers. These demand-side management (DSM) programs are
one component of a comprehensive strategy to provide customers with a least-cost energy
resource. The IRP is used as an opportunity to evaluate that resource mix with the intent to
refine the approaches to the management of both supply-side and demand-side management
portfolios.
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Based on the projected natural gas prices and the estimated cost of alternative supply
resources, the SENDOUT(!!) model selected certain DSM programs for further review and
implementation. In Washington and Idaho, demand-side measures are targeted to reduce
demand by over 1 062 000 therms in the first year. In Oregon demand-side management
measures are targeted to reduce demand by over 441 000 therms in the first year.
Resource Needs
The SENDOUT
(!!)
model was run utilizing existing resources and the demand cases to
determine whether resource deficiencies exist during the planning period. In the Expected Case
for Washington and Idaho, the system first becomes capacity deficient in 2012-2013. In the
expected case for Oregon, the system first becomes capacity deficient in 2010-2011. For
Washington/Idaho and Oregon, the model shows a preference for incremental transportation
resources from existing supply basins to resolve capacity deficiencies.
2006-2007 Action Plan
Avista s 2006 action plan is focused on the following key areas:
Sales forecasting
Supply/capacity
Forecasting
Demand-side management
Distribution planning
Sales Forecasting
During 2006, the Company will update customer forecasting models
incorporating the most recent data. The dramatic increase in natural gas
retail prices will provide improved information on price elasticity and
weather sensitivity co-efficients.
Avista anticipates making two changes to the forecasting methodology, one
in 2006 and the other in 2007. The Company currently uses county-level
forecasts for eight counties in the three states it serves. During 2006, A vista
will add five counties, two in Washington and three in Idaho. This will help
identify differential growth patterns between the core areas (Spokane and
Coeur d' Alene) and the more rural and resort areas of the service area.
In 2007, utilizing the data and forecasts from these additional counties
A vista will develop a "gate-station" forecasting system that will allocate the
sales and customer forecast to the various pipeline delivery points in the
service area. A vista anticipates having this system available so that the
Company can utilize the results for the next IRP.
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Supply/Capacity
A vista will conduct regular meetings with Commission Staff members with
the intent to provide information on market updates, any material changes to
the hedging program, and significant changes in assumptions and status of
Company activity related to the IRP.
A vista will continue to seek low-cost peaking resources that do not require
annual contractual commitments and will investigate acquisition of winter
capacity releases from third-party providers.
The Company will further its understanding of LNG opportunities, including
satellite and Company-owned LNG resources. Avista will further consider
and evaluate the Coos Bay LNG/Pacific Connector Pipeline opportunity.
The Company will assess methods for capturing additional value related to
existing storage assets, including but not limited to recalling some or all of
the current releases.
A vista will further develop its storage strategy with particular focus on
storage opportunities for Oregon customers and will research non-Jackson
Prairie storage prospects for all customers.
Forecasting
The Company will complete its evaluation ofVectorGas . If purchased, the
Company will utilize VectorGasTM to strengthen Avista s ability to analyze
the financial impacts under varying load and price scenarios.
Demand-Side Management
The DSM analysis that occurred during the IRP process is the launching pad
for a more detailed investigation of the natural gas-efficiency technologies
identified as cost-effective resource options. The Company initiated this
additional evaluation and development of programs in January 2006 with the
expectation that program revisions and the launch of new programs will
occur in the spring of 2006. The Company has explicitly recognized within
this IRP the obligation to achieve all natural gas-efficiency resources
available through the intervention of cost-effective utility programs. Given
the rapid changes within the natural gas market, there are many new
efficiency opportunities within the market. Considerable uncertainty remains
regarding the customer response to these programs. This uncertainty does
not preclude the Company from pursuing the planned aggressive ramp-up of
natural gas-efficiency programs. Additionally, the Company has and will
actively seek opportunities for new or enhanced resource acquisition through
the development of cooperative regional programs.
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Distribution Planning
A vista will continue to utilize computer modeling to facilitate distribution-
planning efforts and identify least-cost opportunities to meet growth and re-
enforcement needs. A vista will determine the benefit and feasibility of using
city-gate station forecasts as a method for improving distribution planning.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the
Company s filing in Case No. A VU-06-2 and finds it reasonable to establish the following
schedule for comment on Avista s 2006 natural gas Integrated Resource Plan:
Friday, June 9, 2006 Deadline for filing written comments
YOU ARE FURTHER NOTIFIED that the Application and submitted comments are
available for public inspection during regular business hours at the Commission s office and the
Idaho offices of A vista Corporation dba A vista Utilities, or they may be viewed electronically at
www.puc.idaho.gov by clicking on "File Room" and "Gas Cases.Written comments
concerning this Application and the Company s filing should be mailed to the Commission and
the Company at the addresses reflected below:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Kevin Christie
Manager Natural Gas Planning
A vista Corporation
1411 E. Mission
PO Box 3727
Spokane, W A 99220-3727
Telephone: [phone]
E-mail: kevin.christie~avistacorp.com472 W. Washington Street
Boise, ID 83702-5983
All comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions
icon and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to the Applicant at the e-mail address listed
above.
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DATED at Boise, Idaho this
bls/N:A VU-O6-02 sw
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If)..day of May 2006.
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. mission Secretary