20170223final_order_no_33720.pdf

Office of the Secretary
Service Date
February 23,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING OF )
AVISTA CORPORATION DBA AVISTA )CASE NO.AVU-G-16-03
UTILITIES’2016 NATURAL GAS )
INTEGRATED RESOURCE PLAN )ACCEPTANCE OF FILING
)
)ORDER NO.33720
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On August 31,2016,Avista Corporation dba Avista Utilities (the ‘Company”)tiled
its 2016 natural gas Integrated Resource Plan (IRP).The Company files a natural gas IRP every
two years to describe the Company’s plans to meet its customers’future natural gas needs.The
Commission issued a Notice of Filing and Notice of Modified Procedure that sought comments
on the IRP.See Order No.33606.Commission Staff timely filed the only comments in the
matter,and recommended that the Commission acknowledge the IRP and accept it for filing.
The Company did not file a reply.
A natural gas IRP describes a company’s plans to meet its customers’future natural
gas needs.In Order No.25342,the Commission adopted IRP requirements for local gas
distribution companies in response to amended Section 303 of the Public Utility Regulatory
Policies Act of 1978 (PURPA).In Order No.27024,the Commission shortened the required
planning horizon from 20 years to at least 5 years.Order No.27098 removed any requirement
that IRPs formally evaluate potential demand-side management (DSM)programs,and instead
directed the companies to explain whether cost-effective DSM opportunities exist.Finally,in
Order No.32698,the Commission required the Company to offer a Technical Advisory
Committee (TAC)or other public outreach meeting that is geographically convenient for Idaho
customers.
In summary,these three Orders direct gas utilities to file an IRP every two years that
includes:
1.A forecast of future gas demand for each customer class,which includes
the number,type,and efficiency of gas end-users as well as effects from
economic forces on gas consumption;
2.An analysis of gas supply options for each customer class,which includes
a projection of spot market versus long-term purchases for both firm and
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interruptible markets,an evaluation of the opportunities for using
company-owned or contracted storage or production,an analysis of
prospects for company participation in a gas ftitures market,and an
assessment of opportunities for access to multiple pipeline suppliers or
direct purchases from producers;
3.An explanation of whether or not there are cost-effective DSM
opportunities;
4.The integration of the demand forecast and resource evaluations into a
long-range (at least a five-year)plan describing the strategies designed to
meet current and future needs at the lowest cost to the utility and its
ratepayers;
5.A short-term (e.g.,two-year)plan outlining the specific actions to be taken
by the utility in implementing the IRP;
6.A progress report that relates the new plan to the previously filed plan;and
7.Public participation,including input from the TAC.
THE 2016 IRP
The Company’s natural gas IRP is about 800 pages long.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.The following
information is from the IRP’s Executive Summary.Further detail may be obtained in the TRP’s
remaining chapters and appendices.
In the IRP,the Company “identifies a strategic natural gas resource portfolio to meet
customer demand requirements over the next 20 years.”IRP at 1.The IRP takes input from the
Company’s Technical Advisory Committee (TAC),which includes Commission Staff,peer
utilities,customers,and other stakeholders.Id.For the IRP,the Company discussed topics with
the TAC,including “natural gas demand forecasts,price forecasts,demand-side management
(DSM),supply-side resources,modeling tools,and distribution planning.”Id.According to the
Company,the end result is “a resource portfolio designed to serve our customers’natural gas
needs while balancing cost and risk.”Id.
The Company also discusses the IRP planning environment,noting that —as in its
2014 IRP process —there is “more certainty about the availability of economically extractable
ACCEPTANCE OF FILING
ORDER NO.33720
natural gas”compared to past planning cycles.Id.However,not all future uses of the resource
are known,and there remain questions about liquefied natural gas (LNG)exports,natural gas
vehicles,and power generation.Id.In the IRP,the Company addresses these uncertainties by
“evaluating multiple scenarios over a range of possible outcomes.”Id.
The Company discusses its demand forecasts by defining eight distinct demand areas
in its service territory,then recognizing and accounting for factors influencing natural gas prices
and demand,including “weather,customer growth and use per customer,”as well as
“population,employment,age and income demographics,construction levels,conservation
technology,new uses (e.g.,natural gas vehicles),and use-per-customer trends,”supply,
infrastructure,regulation,and industry innovations.Id.at 1-2.The Company states it forecasts a
0.5%annual growth rate (net of projected DSM program savings),with average day,system-
wide core demand increasing from an average of 94,164 dekatherms per day (Dth/day)in 2016
to 102,840 Dthlday in 2035.The Company forecasts that coincidental peak day,system-wide
core demand will increase from a peak of 361,901 Dthlday in 2016 to 387,742 Dthlday in 2035,
for a 0.8%average annual growth rate in peak day requirements (net of projected DSM savings).
Id.at3.
In addition,the Company presents its natural gas price forecasts.The Company
states that gas prices are a “significant component of the total cost of a resource option,”thus
affecting the “avoided cost threshold for determining cost-effectiveness of conservation
measures”and how customers consume natural gas.Id.at 5.According to the Company,
information about costs and volumes of produced shale gas reflect that “production costs will
remain low for quite some time ...even with increased incremental demand for LNG exports,
transportation fuels,and increased industrial consumption.”1d The Company states that it
developed high and low price forecasts to “represent a reasonable range of pricing possibilities”
for its IRP analysis,providing variation needed to address the uncertainty of future prices.Id.
The Company discusses existing and potential natural gas supply resources.The
Company states it has a “diversified portfolio of natural gas supply resources,”including
contracts to buy gas from several supply basins,stored gas,and firm capacity rights on six
pipelines.Id.at 6.In addition,the Company considers “incremental pipeline transportation,
storage options,distribution enhancements,and various forms of LNG storage or service”for
potential resource additions.Id.The Company states that,starting with its 2018 IRP,it “intends
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to include conservation as a potential resource addition.”Id However,according to Avista,due
to current avoided costs,“a limited number of DSM programs are cost-effective”in its service
territories.Id.at 7.
Further,the Company discusses projected resource needs.The Company states that
average and expected case demand scenarios show it will not be resource deficient in the 20-year
planning horizon.Id.The Company anticipates that,“where a resource deficiency is [expected
to be]nearly present,”it will have “time to carefully monitor,plan and take action on potential
resource additions.”Id.at 8-9.
The Company states that uncertainty still exists,even with “the planning,analysis,
and conclusions reached in [its]IRP.”Id.at 12.Thus the Company states it will diligently
monitor issues and challenges,including:(1)demand scenarios that will “provide[j insight into
how quickly resource needs can change if demand varies from the expected case”;(2)price
issues arising from increased supply due to the “industrial renaissance”of shale gas and drilling
technology (see id.at 1);and (3)the effects on demand and price from LNG exports and the
development of new pipeline resources.Id.at 13.
The Company’s IRP also includes a 2017-2018 Action Plan,outlining “activities for
study,development and preparation for the 2018 IRP.”According to the Company,the purpose
of its Action Plan is “to position Avista to provide the best cost/risk resource portfolio and to
support and improve IRP planning.”Id.Key ongoing components of the Action Plan include:
•Monitor actual demand for accelerated growth [to]address 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 at least bi-annually.
•Continue to monitor supply resource trends including the availability and
price of natural gas to the region,LNG exports,methanol plants,supply
and market dynamics and pipeline and storage infrastructure availability.
•Monitor availability of resource options and assess new resource lead-time
requirements relative to resource need to preserve flexibility.
•Meet regularly with Commission Staff 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.
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•Appropriate management of existing resources including optimizing
underutilized resources to help reduce costs to customers.
Id.at 13-14.
STAFF COMMENTS
Staff reviewed the Company’s 2016 natural gas IRP and believes the IRP generally
complies with Order Nos.25342,27024,27098,and 32698.Staff thus recommended that the
Commission accept the IRP for filing.See Comments at 2,8.
Staff noted that the Company proposes a number of projects in Idaho to upgrade the
distribution system,including the Coeur d’Alene High Pressure Reinforcement project in 2017-
2018 at a cost of $8M,the Schweitzer Mountain Rd High Pressure Reinforcement project in
2018 at a cost of $1.5M,and projects in 2019 at the Athol #219,Bonners Ferry #208,and
Genesee #320 gate stations.Comments at 4 (citing IRP at 136-37).Staff suggested that the
Company explore the “potential for deferring additional supply or distribution resources through
targeted conservation programs.”Id.at 7.Staff also noted that the Company suspended its
DSM program in 2012 (approved by the Commission in Order No.32650),then resumed the
program in 2015 (Order No.33444),and is now “exploring a number of DSM alternatives for the
2018 IRP.”Id.at 5-6.Staff stated it supports the Company’s continued evaluation of DSM
avoided costs —including through participation in the DSM Advisory Group and IRP TAC team
—to possibly defer distribution capacity upgrades.Id.at 5-7.
Finally,as to public participation,Staff appreciated that the Company made its
presentations and information available to the public via meetings and the Company’s website,
Id.at 7-8.Staff believes public participation could be further enhanced through “bill stuffers,
public flyers,local media,individual invitations,and other methods.”Id.at 8.
DISCUSSION
The Commission has reviewed Avista’s IRP and Staff’s comments.We appreciate
Staff’s thorough review and input in this matter.We find that the Company’s IRP contains the
required information and is appropriately formatted,consistent with Order Nos.25342,27024,
27098,and 32698,as well as Section 303(b)(3)of PURPA.We therefore acknowledge the
Company’s 2016 natural gas IRP and accept it for filing.
Our acceptance of the IRP should not be interpreted as an endorsement of,or
judgment of prudence as to any particular element of the plan,nor an approval of any resource
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ORDER NO.33720 5
acquisition or proposed action included in the TRP.We appreciate the Company’s ongoing
efforts to keep customers informed,including through TAC meetings and other forms of public
outreach.We encourage the Company to continue in its efforts to engage affected and interested
persons.
ORDER
IT IS ORDERED that the Company’s 2016 natural gas TRP is acknowledged and
accepted for filing.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §S 61-626,62-6 19.
P42
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of February 2017.
KR TINE RAPER,CGMMISSIONER
ATTEST:
/iw
Diane M.Hanian
Commission Secretary
ACCEPTANCE OF FILING
ORDER NO.33720
ERIC ANDERSON,
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