20121002notice_of_filing_order_no_32655.pdf

Office of the Secretary
Service Date
October 2,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING BY )CASE NO.AVU-G-12-08
AVISTA CORPORATION DBA AVISTA )UTILITIES OF ITS 2012 NATURAL GAS )NOTICE OF FILINGINTEGRATEDRESOURCEPLAN(IRP))
)NOTICE OF
MODIFIED PROCEDURE
ORDER NO.32655
On August 31,2012,Avista Corporation dba Avista Utilities filed its 2012 Natural
Gas Integrated Resource Plan (IRP)with the Commission.Avista provides natural-gas service to
74,800 customers in northern Idaho,and to about 243,500 customers in Washington and Oregon.
Avista files a natural gas IRP every two years to describe the Company’s plans to meet its
customers’future natural gas needs.The IRP must discuss the subjects required by Commission
Order Nos.25342,27024 and 27098,and Section 303(b)(3)of the Public Utility Regulatory
Policies Act (PURPA).1 With this Order,the Commission provides notice of the IRP,sets
deadlines by which interested persons may submit written comments on the IRP,and orders that
the case be processed under the Commission’s rules of Modified Procedure.
NOTICE OF IRP FILING
YOU ARE HEREBY NOTIFIED that Avista’s Natural Gas IRP consists of two
spiral-bound manuals,including appendices.The IRP contains an Executive Summary,and
chapters on Demand Forecasts;Demand-Side Resources;Supply-Side Resources;the
Company’s Integrated Resource Portfolio;Alternate Scenarios,Portfolios,and Stochastic
Analysis;Distribution Planning;and the Company’s Action Plan.IRP,Ch.1-10.The following
summary comes from the Executive Summary of the IRP.Further detail may be obtained in the
IRP’s remaining chapters and appendices.
YOU ARE FURTHER NOTIFIED that Avista says its IRP identifies a strategic
natural gas resource portfolio that meets expected customer demand requirements over the next
20 years.The IRP involves input from the Company’s Technical Advisory Committee (TAC),
Per Commission Order No.32233,Avista must file its IRP by August 31 of every even-numbered year.
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ORDER NO.32655 1
which includes Commission Staff,peer utilities,customers and other stakeholders.Topics
discussed with the TAC include natural gas demand forecasts,demand-side management (DSM),
supply-side resources,computer modeling tools and distribution planning.The Company says
the end result is an integrated resource portfolio designed to serve customers’natural gas needs
well into the future while balancing cost and risk.IRP at 1.
YOU ARE FURTHER NOTIFED that Avista discusses the IRP planning
environment by noting that shale gas has changed the landscape for North American supply and
turned the price of natural gas on its head.The Company says a supply glut exists that has
driven prices to lows not seen in the last decade.The Company hopes low-cost natural gas will
continue to be available for many years,but it continues to perform “what if’analyses in order to
cover the broad range of possibilities.Id.at 1.
YOU ARE FURTHER NOTIFIED that Avista discusses the Company’s demand
forecasts.The Company says it forecasts a 1.1%annual,average growth rate (net of projected
demand-side management (DSM)program savings)of 1.1%,with average day,system-wide
core demand increasing from 96,160 dekatherms per day (Dthlday)in 2012 to 117,660 Dthlday
in 2031.The Company forecasts that coincidental peak day,system-wide core demand will
increase from a peak of 365,720 Dthlday in 2013 to 474,670 Dth/day in 2031.Forecasted non-
coincidental peak day demand peaks at 341,850 Dthlday in 2012 and increases to 440,630
Dthlday in 2031,for a 1.3%compounded growth rate in peak day requirements (when net of
projected DSM savings).IRP at 1-1.3.
YOU ARE FURTHER NOTIFIED that Avista presents its natural gas price forecasts.
The Company says gas prices are a significant part of the total cost of a resource option,which
affects the avoided cost threshold for determining cost-effectiveness of conservation measures
and how customers consume natural gas.The Company says that based on the costs and
volumes of produced shale gas,there appears to be a consensus that production costs will remain
low for quite some time.The Company’s IRP sets forth high,medium and low price forecasts in
an effort to represent a reasonable range of pricing possibilities over the next 20 years.The
Company notes that it used an expected elasticity response factor to model how customers’
consumption of natural gas will respond to price changes,and that it will monitor its assumptions
over the IRP cycle and adjust them as needed.IRP at 1.4-1.5.
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ORDER NO.32655 2
YOU ARE FURTHER NOTIFIED that Avista discusses existing and potential
natural gas supply resources.The Company says it has a diversified portfolio of gas supply
resources,including contracts to buy gas from several supply basins,stored gas,and firm
capacity rights on six pipelines.The Company also notes that during the IRP process,it
determined that current avoided costs rendered Idaho natural gas DSM programs cost-
ineffective.The Company thus asked the Commission to suspend those programs.IRP at I 52
The Commission subsequently authorized Avista to suspend its Idaho natural gas DSM
programs.See Order No.32650,issued September 25,2012,in Case Nos.AVU-G-12-03 and
AVU-G-12-06.
YOU ARE FURTHER NOTIFIED that Avista discusses projected resource needs.
The Company uses an average case demand scenario and existing supply resources scenario to
determine that the Company will not be resource deficient during the 20-year planning horizon.
Using the expected case demand scenario and the existing resources supply scenario,the
Company determined that peak day demand will not be fully served in the Washington/Idaho
service territory until 2030.The Company says it has ample time to carefully monitor,plan and
take action on potential resource additions.IRP at 1.6-1.9.
YOU ARE FURTHER NOTIFIED that Avista discusses resource selections.The
Company uses computer modeling to determine the best cost/risk resource portfolio to meet any
identified resource shortages over the 20-year planning horizon.The Company notes that after
DSM savings,the computer model generally prefers that the Company resolve resource
shortages by acquiring incremental transportation resources from existing pipelines and supply
basins.Id.at 1 .9—1.11.The IRP describes several alternate demand scenarios that the Company
considered during the planning process.Id.at 1.11.
YOU ARE FURTHER NOTIFIED that Avista says it is satisfied with the planning,
analysis,and conclusions reached in the IRP.But Avista’s IRP nevertheless recognizes and
discusses that wide spread uncertainty exists requiring diligent monitoring of issues and
challenges including what the Company describes as:Continued Economic Uncertainty;Five
Dollar Gas Forever;Exporting LNG;and Natural Gas Vehicles.Id.at 1.12-1.13.
2 On September 25,2012,the Commission authorized Avista to suspend its natural gas DSM programs in Idaho.See Order No.32650,Case Nos.AVU-G-12-03 and AVU-G-12-06.
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ORDER NO.32655 3
YOU ARE FURTHER NOTIFIED that the IRP contaiiis a 2013-2014 Action Plan
outlining activities identified by the IRP team with input from company management and TAC
members.The Company says the Action Plan is designed to position Avista to provide the best
cost/risk resource portfolio and to support and improve IRP planning.Avista says key ongoing
components of the Action Plan include:
Monitoring actual demand for indications of growth exceeding our
forecast to respond aggressively to address potential accelerated resource
deficiencies arising from exposure to ‘flat demand”risk.This will include
providing Commission Staff with IRP demand forecast-to-actual variance
analysis on customer growth and use per customer.This information will
be provided in Avista’s updates to each Commission Staff at least bi
annually;
•Pursuing the possibility of a regional elasticity study through the
Northwest Gas Association or possibly the American Gas Association;
•Assessing potential demand impact from natural gas/compressed natural
gas vehicles and other new uses of natural gas to Avista;
•Continuing to monitor supply resource trends including the availability
and price of natural gas to the region,exporting liquid natural gas,
Canadian natural gas supply availability and interprovincial consumption,
as well as pipeline and storage infrastructure availability;
•Monitoring availability of current resource options and assessing new
resource lead time requirements relative to when resources are needed to
preserve flexibility;and
•Regularly meeting with Commission Staff members to provide
information on market activities and significant changes in assumptions
and/or status of Avista activities related to the IRP or natural gas
procurement practices.
Id.at 1.13-1.14.
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
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ORDER NO.32655 4
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
Avista’s IRP may file a written comment in support or opposition with the Commission no later
than sixty (60)days from the service date of this Order.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:
Commission Secretary Kelly Irvine
Idaho Public Utilities Commission Avista Corporation
P0 Box 83720 1411 E.Mission
Boise,ID 83720-0074 P0 Box 3727
Spokane,WA 99220-05 00
Street Address for Express Mail:E-mail:keI1y.irvine(davistacorp.com
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 Avista at the e-mail address listed above.
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
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ORDER NO.32655 5
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 sixty (60)days from the
service date of this Order.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this Z
day of October 2012.
ATTEST:
..
I
Jean D Jewell
Commission Secretary
]SLL
MARSHA H.SMITH,COMMISSIONER
O:AVU-G-I 2-O8kk
NOTICE OF FILING
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ORDER NO.32655
1.
MACK A.REDFOI
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