20100128notice_of_filing_order_no_30990.pdf

Office of the Secretary
Service Date
January 28 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING BY
A VISTA CORPORATION DBA A VISTA
UTILITIES OF ITS 2009 NATURAL GAS
INTEGRATED RESOURCE PLAN (IRP)NOTICE OF FILING
CASE NO. A VU-09-
NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 30990
On December 30, 2009, Avista Corporation dba Avista Utilities filed its 2009 natural
gas Integrated Resource Plan (IRP) with the Commission. In Order No. 22290 issued in January
1989, the Commission required electric and natural gas utilities to file a biennial IRP describing
the utility s plans to meet the future energy needs of its customers. Typically, an IRP analyzes
an energy company s changes in customer base, load growth, supply-side resources, demand-
side management (DSM) programs and various risks facing the Company. Avista s IRP and its
related appendices contain information regarding available resource options, planning forecasts
potential portfolios, a 20-year resource plan, and a near-term (2010-2011) action plan.
A vista serves approximately 315 000 natural gas customers in three states including
about 73 000 natural gas customers in northern Idaho. In Avista s northern operating division
(eastern Washington and northern Idaho), it serves roughly 218 000 natural gas customers. The
Company s customer base is generally comprised of 94% residential customers, 5% commercial
customers, and 1 % industrial customers. IRP at p. 2.
NOTICE OF IRP FILING
YOU ARE HEREBY NOTIFIED that Avista s 2009 IRP was developed with the
participation of its Technical Advisory Committee (TAC). Members of the TAC include
customers, Commission Staff, consumer advocates, academics, utility peers, governmental
agencies, and other interested parties. A vista sponsored four T AC meetings to assist in the
preparation of the IRP. The Company states that this IRP was developed during the last two
years when the United States and other countries were experiencing a financial and credit crisis.
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30990
These financial uncertainties prompted the Company to "consider a wider range of scenarios to
evaluate and prepare for a broad spectrum of potential outcome" in this IRP. IRP at p. 1.
YOU ARE FURTHER NOTIFIED that the IRP is a comprehensive long-range
planning tool designed to identify and evaluate forecasted natural gas requirements. The purpose
of the IRP is to plan for the acquisition of the most cost-effective, risk-adjusted portfolio of
existing and future resources, and to meet the daily and peak-day demand and delivery
requirements over the next 20-year period. IRP at p. 2.4. Avista s IRP has five parts: Demand
forecast; natural gas price forecast; supply resources; demand-side management (DSM)
programs; resource needs; and the 2010-2011 near-term action plan.
YOU ARE FURTHER NOTIFIED that the Company s approach to demand
forecasting focuses on customer growth and consumption per customer as the basic components
of demand. The Company considers various factors that influence these components including
population, employment trends, age and income demographics, construction trends, conservation
technologies, new uses (e., natural gas vehicles), and consumption per customer.In the
demand forecast, A vista lays out six different scenarios including its "expected case" scenario.
In the expected case, A vista anticipates an average growth in daily demand of 1.1 % during the
period 2010 to 2028-2029 (net of projected conservation savings from DSM programs). IRP at
p. 1.3. During the same time frame, the Company estimates that its peak-day demand will
increase by a compound rate of 1.3%. Id.
YOU ARE FURTHER NOTIFIED that the Company maintains that natural gas
prices are a fundamental component of integrated resource planning. Although A vista does not
believe that it can accurately predict future prices over the 20-year horizon, it has developed
high, medium and low-price forecasts for the price of natural gas. A vista maintains that issues of
economic recovery, expectations of new shale gas production, and increased natural gas-fired
power generation make long-term pricing forecasts difficult. IRP at p. 1.4. The Company used
low-price elasticity response factors in its expected case.
YOU ARE FURTHER NOTIFIED that Avista has a diverse portfolio of natural gas
supply resources including owned and contract storage, firm capacity rights on six pipelines and
commodity purchase contracts from several different supply basins. The Company also
evaluated resource additions from incremental pipeline transportation, storage options
distribution enhancements, and various forms of liquefied natural gas storage or service. Id. at p.
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30990
5. Matching its resource supply scenarIo with its expected case demand scenario, the
Company forecasts that its Idaho/Washington service territory will not experience a supply
deficiency until the year 2023. IRP at p. 1.6. The graph of the forecast shortages is almost flat
which leads the Company to conclude that its existing resources will be sufficient for quite some
time to meet demand. "However, if demand growth accelerates, the steep demand curve could
quickly accelerate resource shortages by several years.Id. at 1.8. Given the estimated
deficiency in 2023, the Company plans to monitor the forecasts underlying the projected
shortages to address the future shortages in a timely manner.
YOU ARE FURTHER NOTIFIED that demand-side management (DSM) programs
are intended to encourage customers to reduce their energy consumption. Cost-effective DSM
measures may include incentives for the purchase of high efficiency appliances (water heaters
clothes dryers, furnaces), insulation, weather-stripping, insulated windows and duct work, and
heat recovery systems. The Company considered a total of 155 residential and 147 non-
residential DSM measures in this IRP. Id. at p. 4.4. The Company s IRP then analyzed various
DSM and other conservation measures and calculates that these measures may save
approximately 3.12 million therms in the Company s north division in 2010. Id. at p. 4.
THE 2010-2011 ACTION PLAN
YOU ARE FURTHER NOTIFIED that the Company s IRP identifies and establishes
a near-term 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 computer modeling, evaluate planning standards, and apply various risk analyses. Key
components of the action plan include:
Monitoring actual demand and responding aggressively when growth
exceeds the Company s forecast demand.
Researching and refining the evaluation of resource alternatives including:
The implementation of risk factors and timelines; updated cost estimates;
feasibility assessments; and targeting options of the service territory with
near-term unserved demand exposure.
Analyzing per-customer data and DSM program results for indications of
price elasticity response trends that may be influenced by evolving
economic conditions. Determining if the American Gas Association willupdate its analytical work or consider hiring outside experts in price
elasticity on a regional basis.
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30990
Continuing pursuit of cost-effective demand-side solutions to reduce
demand. In Washington and Idaho, conservation measures are targeted to
reduce demand by 2.193 million therms in 2010. This goal represents an
increase of25% in Washington/Idaho from the 2007 IRP.
Performing an updated assessment of technical and achievable potential
for conservation in the Company s service territory prior to the 2011 IRP.
Continuing to monitor issues of diminishing Canadian natural gas
importing and looking for signals that indicate increased risk of disrupted
or dwindling supply from Canada.
Exploring and evaluating alternatives and additional forecasting
methodologies for potential inclusion in the next IRP.
Id. atpp.1.11-l2.
YOU ARE FURTHER NOTIFIED that the Company has identified three general
issues that require monitoring and may increase risk. First, the Company will continue to
monitor economic conditions and financial markets on natural gas demand, infrastructure
development, credit availability, and commodity prices. Second, the Company will continue to
monitor federal climate change legislation and its projected effects upon emission target levels,
phase-in time frames, allocation of allowances, availability of offsets, cost mitigation to
customers, and a host of implementation challenges. Third, an increasing supply of natural gas
in North America is forecasted to come from "unconventional" gas, especially shale gas. In
addition, international liquefied natural gas (LNG) projects are in the permitting stage and may
become a reality in the future. The availability of LNG combined with the projected increase in
supply of unconventional gas may mean lower prices in the future. "Although beneficial to end
users in the near term, this dramatic volatility and uncertainty could cause long-term disruption
in production, pipeline and storage capital investment, exacerbating boom/bust cycles in the long
term." IRP at 1.14.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission s Rules
of Procedure IDAPA 31.01.01.201 through .204.The Commission notes that Modified
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30990
Procedure and written comments have proven to be an effective means for obtaining public input
and participation in past IRP cases.
YOU ARE FURTHER NOTIFIED that Avista s IRP and supporting workpapers have
been filed with the Commission and are available for public inspection during regular business
hours at the Commission offices. The IRP is also available on the Commission s web site at
www.puc.idaho.gov by clicking on "File Room" and then "Gas Cases.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code. The Commission
may enter any final Order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on
A vista s IRP may file a written comment in support or opposition with the Commission no
later than March 23, 2010. The comment must contain a statement of reasons supporting the
comment.Persons desiring a hearing must specifically request a hearing in their written
comments. Written comments concerning Avista s IRP shall be mailed to the Commission and
the Applicant at the addresses reflected below:
Street Address for Express Mail:
Greg Rahn
A vista Corporation
1411 E. Mission
PO Box 3727
Spokane, WA 99220-3727
E-mail: greg.rahn~avistacorp.com
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
472 W. Washington Street
Boise, ID 83702-5918
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.
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30990
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
ORDER
IT IS HEREBY ORDERED that persons desiring to comment on Avista s natural gas
IRP shall file written comments with the Commission no later than March 23 , 2010.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;).g-rA
day of January 2010.
D. KEM , RESIDENT
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ATTEST:
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Commission Secretary
bls/O:A VU-09-
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30990