20080123notice_of_filing.pdf

Office of the Secretary
Service Date
January 23, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING BY
VISTA CORPORATION DBA A VISTA
UTILITIES OF ITS 2007 NATURAL GAS
INTEGRA TED RESOURCE PLAN (IRP)NOTICE OF FILING
CASE NO. A VU-07-
NOTICE OF
COMMENT DEADLINE
YOU ARE HEREBY NOTIFIED that on December 28 , 2007, Avista Corporation
dba Avista Utilities (Avista) filed its 2007 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
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 and reasonable and sufficient. A vista
regards its 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. Avista s 2007 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.
Avista s 2007 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 2007 IRP, the Company sponsored four
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 linear programming model widely
used to solve natural gas supply and transportation optimization questions) to develop the least-
cost resource mix for the 20-year planning period. The model performs least-cost optimization
based on daily, monthly, seasonal and annual assumptions related to:
NOTICE OF FILING
NOTICE OF COMMENT DEADLINE
Customer growth and customer natural gas usage to form demand
forecasts;
Existing and potential transportation and storage options;
Existing and potential natural gas supply availability and pricing;
Revenue requirements on all new asset additions;
Weather assumptions; and
Demand-side management.
Additionally, the Company has incorporated VectorGas , a module within SENDOUT~, to
simulate weather and price uncertainty. Some examples of the analyses VectorGasTM provides
include:
Probability distributions of price and weather;
Probability distributions of costs (i., system costs, storage costs, and
commodity costs);
Resource mix (optimally sizing a contract or asset level for various and
competing resources); and
Hedging percentages.
Demand Forecast
The Company s approach to demand forecasting focuses on customer growth and use
per customer as the base components of demand. The Company considers various factors that
influence these components, including population and employment trends, age and income
demographics, natural gas prices, price elasticity, and use per customer trends.
In its Expected Case, A vista has sufficient natural gas resources in Oregon until
2011-2012 and in Washington and Idaho until 2014-2015. Peak day resource deficits begin in
these years and are driven primarily by projected average demand growth of 2% per year and
average natural gas customer growth of 2.4%.
A major change from the 2006 IRP to the 2007 IRP is the lower demand forecast.
This reduction was driven mainly by a lower economic growth rate and a lower use per customer
than previously forecasted in the Company s service territories.
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Natural Gas Price Forecast
The natural gas market, the Company contends, has dramatically changed over the
last several years as it has transitioned from a regional to a national or perhaps global market.
Regional and national natural gas supplies since 2005 have experienced increased volatility. The
elevated prices and increased volatility have influenced the way the Company plans in the short
term and in the long term. The Company s natural gas procurement plan seeks to competitively
acquire natural gas supplies while reducing exposure to short-term price volatility, using a
number of tools such as financial hedging and storage.
Resources
A vista has a diversified portfolio of natural gas supply resources, including owned
and contracted storage, firm capacity rights on five pipelines and commodity purchase contracts
from several different supply basins. The Company s philosophy is to reliably provide natural
gas to customers with an appropriate balance of price stability and prudent costs. A vista plans to
meet the identified resource deficits with demand-side management measures and firm
resources, including distribution, system enhancements and pipeline transportation capacity.
Demand-Side Management
A vista actively promotes and offers energy-efficiency programs to its natural gas
customers.These demand-side management (DSM) programs are one component of a
comprehensive strategy to provide customers with a best cost/risk energy resource.
Demand-side management efforts include a review and implementation of customer
programs, including residential space and water heating efficiency; wall, floor and window
audits and replacement programs; and commercial and industrial gas efficiency programs
among others. Avista has implemented an energy efficiency initiative called the "Heritage
Project." It builds on the Company s long-time commitment to energy conservation and
efficiency, introducing new products and services to increase customers' energy savings.
Resource Needs
In the Expected Case for Washington and Idaho, the first deficiency is in 2014-2015.
Given this timing, the Company contends that it has sufficient time to carefully monitor, plan
and take action on potential resource additions. The Company also plans to define and analyze
sub-regions within this broad region for potential resource needs that may materialize earlier
than 2014-2015.
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2008-2009 Action Plan
The Company s IRP identifies and establishes an action plan that will steer the
Company toward the risk-adjusted, least-cost method of providing service to its natural gas
customers. Included in this action plan are efforts to improve modeling, evaluation of its
planning standard, further research into supply-side resource options and goals for demand-side
management. The action plan includes efforts to:
Refine specific resource acquisition action plans for Klamath Falls and
Medford service areas.
Research and refine the evaluation of resource alternatives, including
implementation risk factors and timelines, updated cost estimates, and
feasibility assessments, targeting options of the service territories with
nearer term unserved demand exposure.
Explore non-traditional resources to address the Company s needle-
peaking requirements. This review will emphasize potential structured
transactions with neighboring utilities and other market participants that
leverage existing regional infrastructure as an alternative to incremental
infrastructure additions.
Reevaluate the Company s peak day weather planning standard to
ascertain if it still provides the best risk-adjusted methodology for
resource planning.
Continue pursuit of cost-effective demand-side solutions to reducedemand. In Oregon demand-side measures are targeted to reduce
demand by 350 000 therms in the first year. In Washington and Idaho
demand-side measures are targeted to reduce demand by more than
425 000 therms in the first year.
Define and analyze sub-regions within the Washington/Idaho region for
potential resource needs that may materialize earlier than the broaderregion indicates.
Integrate the VectorGasTM module in the Company SENDOUT~modeling software to strengthen its ability to analyze demand impacts
under varying weather and price scenarios as well as conduct sensitivity
analysis to identify, quantify and manage risk around these demandinfluencing components.
Continue to assess methods for capturing additional value related to
existing storage assets, including methods of optimizing recently recalled
capacity.
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YOU ARE FURTHER NOTIFIED that the Commission has reviewed the
Company s filing in Case No. A VU-07-04 and finds it reasonable to establish the following
schedule for comment on Avista s 2007 Natural Gas Integrated Resource Plan:
Friday, March 14 2008 Deadline for filing written comments
YOU ARE FURTHER NOTIFIED that the Company s 2007 Natural Gas IRP filing
is 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 it may be viewed electronically at
www.puc.idaho.gov by clicking on "File Room" and "Gas Cases.Written comments
concerning the Company s 2007 Natural Gas IRP 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:
Greg Rahn
A vista Corporation
1411 E. Mission
PO Box 3727
Spokane, W A 99220-3727
E-mail: greg.rahn(0avistacorp.com
472 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 A vista at the e-mail address listed above.
DATED at Boise, Idaho this ;).:3 day of January 2008.
~~~
Jea . Jewell
Co mission Secretary
bls/N:A VU-07-
NOTICE OF FILING
NOTICE OF COMMENT DEADLINE