20181213Comments.pdf

EDITH PACILLO
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5430
L)
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILTTIBS COMMISSION
IN THE MATTER OF AVISTA CORPORATION )
DBA AVISTA UTILITIES' 2018 NATURAL GAS
INTEGRATED RESOURCE PLAN
CASE NO. AVU.G-18.05
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Edith Pacillo, Deputy Attorney General, and in response to the Notice of
Filing, Notice of Modified Procedure and Notice of Intervention Deadline issued in Order
No. 34149 on September 21,2018, in Case No. AVU-G-I8-05, submits the following comments.
BACKGROUND
On August 31,2018, Avista Corporation dba Avista Utilities (the Company) filed its
2018 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
IRP must discuss the subjects required by Commission Order Nos. 25342,27024 and27098, and
Section 303(bX3) of the Public Utility Regulatory Policies Act (PURPA), l5 USC $ 3202.1
I Per Commission Order No. 32233, Avista must file its IRP by August 3l of every even-numbered year,
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STAFF COMMENTS DECEMBER 13,2018
The Company's natural gas 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; Policy Considerations, and the Company's Action Plan.
The Company states its IRP identifies a strategic natural gas resource portfolio that meets
expected customer demand requirements over the next 20 years. The tRP involves input from
the Company's Technical Advisory Committee (TAC), 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 states that it addresses uncertainties surrounding
supply and demand by evaluating multiple scenarios with wide-ranging possible outcomes. 1d.
The Company states the result is an integrated resource portfolio designed to serve customers'
natural gas needs well into the future while balancing cost and risk. IRP at l.
STAFF REVIEW
Staff reviewed the Company's 2018 natural gas IRP to affirm that it complies with
Commission requirements. Based on its review, Staff believes that the2018 IRP meets these
requirements. Staff examined the Company's natural gas demand forecasts, supply-side
resources, demand-side management (DSM), distribution planning, and2019-2020 Action Plan
with each of these subjects addressed in greater depth in sections below.
Natural Gas Demand
Staff reviewed the Company's demand forecast methodology assumptions, along with
projections for demand growth rates. Staff confirmed the Company's demand forecast
methodology is based on reasonable assumptions over the planning horizon and provides a range
of demand projections to test the sensitivity of future resource investments.
The Company forecasts a 0.02oh system-wide average annual daily demand increase and
a}.7lo/o increase in peak day demand requirements (net of projected DSM program savings)
projected to occur in2037 . Id at l-4. In the Washington/Idaho service territory, the number of
customers are projected to increase at an average annual rate of 1.30%. Id at 42-43. Staff
believes these rates are based on reasonable growth and consumption projections in the
Company's service area.
2STAFF COMMENTS DECEMBER 13,2018
In addition to the average case, which represents normal planning, and the expected case,
which represents the most likely scenario given peak weather conditions, the Company modeled
four additional demand scenarios - high growth/low price, low growth/high price, alternate
weather standard, and 80% below 1990 emissions - to account for variations in customer growth,
usage, weather, and carbon regulation. The Company also generated demand sensitivities from
different time periods for use-per-customer (e.g. 2,3, and 5 year historical) and weather (e.g. 20
year average, coldest on record, and coldest in 20 years) to account for variations in both.
Performing multiple demand scenarios creates a more robust analysis by allowing the Company
to evaluate and plan for a range of possible futures.
The Company shows that it will not be resource dehcient during the 2}-year planning
horizon in all cases except for the High Growth and Low Prices modeling scenario. Under the
High Growth and Low Prices scenario, existing resources would be inadequate to meet peak
demand starting in year 2032. The Company has not recommended resource options to meet the
2032 deficiency. Staff believes that this a reasonable approach because the deficiency occurs
well past the five-year planning horizon, which gives Company sufficient time to explore and
analyze alternatives as needed.
The demand forecast methodology is similar to past IRPs, although the Company
increased the number of defined demand areas. The 2018 IRP includes eleven demand areas,
instead of eight demand areas used in the 2016 IRP. The additional demand areas were created
by separating three Washington/Idaho combined demand areas by state. Separating the two
states benefits Idaho by providing greater detail and allows the model to accept inputs that affect
each state differently, such as each states' carbon policies.
Natural Gas Supply Resources and Options
The IRP describes both existing and potential natural gas supply resources. The
Company's portfolio of gas supply resources includes contracts to purchase gas, stored gas, and
firm pipeline capacity rights. The Company stated that slightly higher customer growth
continues to be offset by lower use-per-customer and increased DSM.
Gas prices are a significant part of the resource cost which affects the avoided cost
threshold for determining the cost-effectiveness of conservation measures and how customers
consume natural gas. The Company developed high, expected, and low price forecasts to
represent a reasonable range ofnatural gas pricing possibilities over the next 20 years. Each of
JSTAFF COMMENTS DECEMBER 13,2018
the three forecasts start in 2017-2018 at approximately $3.00 per dekatherm. The high price
scenario peaks at approximately $1 1.00 per dekatherm and the expected case peaks at
approximately $7.00 per dekatherm. The low price scenario remains at approximately $3.00 per
dekatherm over the 2017 -2037 plartrring horizon. Staff believes the expected case scenario is
reasonable.
Distribution Planning
The Company's Idaho distribution system contains approximately 3,300 miles of service
and main pipelines. Transportation-only customers are excluded in long-term capacity planning
exercises but are included in distribution planning because of their use of the Company's
distribution system. The Company uses a modeling tool to assess distribution system growth and
needs.2 The tool provides a graphic representation of the Company's system, which behaves
very similar to the actual system allowing Company users to simulate and model alternatives.
The Company has started an enhancement to its distribution system in Idaho. The Post
Falls area distribution system was unable to meet growth demands. As a result, the Company is
working on a project known as the Coeur d'Alene High Pressure Reinforcement - Post Falls
Phase. Construction on the project started in 2018 and includes installation of approximately
14,600 feet of high pressure steel gas main pipe from Rathdrum to Post Falls at an estimated cost
of $4,000,000.
The Company has also included two additional projects in its plans to serye increased or
new commercial demand. These two projects, called Schweitzer Mountain Road and Warden
High Pressure Reinforcements, are both planned for construction in 2020 or later. The
Schweitzer Mountain Road project is estimated to cost $1,500,000 and the Warden High
Pressure Reinforcements project is estimated to cost $6,000,000. The Company will continue to
list these projects in their plans but not start construction until actual distribution constraints
occur.
Staff appreciates the descriptions and details provided by the Company for distribution
system enhancement and projects that impact Idaho customers. However, Staff is concerned that
these projects were undertaken without being analyzed in the IRP. Staff recommends that in
future IRPs, the Company provide an analysis of alternatives to resolve each identified
2 GL Noble Denton Synergi modeling tools.
STAFF COMMENTS 4 DECEMBER 13,2OI8
distribution system issue and justification for selecting each project. Staff believes this is
important for developing least-cost, least-risk solutions.
Demand-Side Management
In20l7, the Company contracted with Applied Energy Group (AEG) to complete a
Conservation Potential Assessment (CPA) evaluation of its DSM potential. AEG indexed its
CPA tool, known as LoadMAP, to the Company's unique service area characteristics to
determine technical, economic, and achievable conservation potential. The primary cost-
effectiveness measure used in Idaho is the UCT (Utility Cost Test), which assesses resource
value from the utility's perspective. If benefits are greater than costs for a given measure, the
UCT will be 1.0 or greater. Only measures with a UCT ratio of 1.0 or greater were included in
AEG's cumulative achievable economic potential, as shown in the following table:
Table 1: Idaho Cumulative UCT Achievable Economic Potential by Sector (dekatherms)3
Sector 2018 2019 2022 2028 2038
Residential 18,354 41,17 6 174,333 720,226 1,615,844
Commercial 7,417 16,03 5 5 8,1 60 239,015 481,888
Industrial 569 1,140 ) q))6,584 9,952
Total 26,340 58,352 235,414 965,825 2,107,694
In its 2016 IRP, the Company planned to use a new DSM modeling method known as
Dynamic DSM in its 2018 IRP. The Dynamic DSM Model examines individual measures and
combinations of measures from the CPA to optimize conservation potential and minimize costs
in future portfolios. This model is intended to mirror a similar modeling structure used in the
Company's electric IRP, where DSM measures are modeled simultaneously with supply side
alternatives to determine least cost resources options. Prior gas DSM modeling used a
deterministic method based on the Expected Case assumptions, examining DSM grouped by
dollar or savings values rather than individual measures.
3 201 8 Natural Gas Appendix page I 84
STAFF COMMENTS 5 DECEMBER 13,2018
In April 2018, the Company shared with Staff that SENDOUTa was not able to provide
dynamic DSM modeling. However, the Company confirmed that it is developing an Excel-
based add on function for SENDOUT that will be able to provide Dynamic DSM modeling in the
2020 IRP. Staff encourages the Company to continue this work and to keep Staff updated on its
progress.
In the Company's 2016 IRP, targeted location conservation programs were discussed as a
potential method to delay or defer supply side investments in distribution system constraint
areas. In that case, Staff asked the Company to provide information about targeted location
conservation programs in Idaho. The Company responded that its Demand-Side Management
Group, Gas Supply, and Gas Engineering teams would work together to determine projects for a
pilot program. However, the 2018 IRP did not include any mention of this work. In discovery,
Staff requested a description of work completed in this arena since the last IRP. The Company
responded that it has not identified any projects where targeted location conservation benefits
would offset needed enhancements, but that it will continue to consider targeted conservation
and all cost-effective DSM programs in the future. Staff recommends that the Company include
updates on this work for the 2020IRP and associated TAC meetings.
2019 - 2020 Action PIan
The IRP 2019-2020 Action Plan contains activities identified by the Company's IRP
team with input from Company management and TAC members. The Company states "the
purpose of the Action Plan is to position Avista to provide the best cost/risk resource portfolio
and to support and improve IRP planning." Id. at 12-14.
Key components of the 2019 -2020 Action Plan relevant to Idaho include:
o Adopt an individual measure level for Dynamic DSM program structure in its
analytics for individual portfolios;
o Work with Staff to clariff distribution system analyses in the 2020 IRP;
o Work with Staff to clarify types of distribution costs for possible inclusion in avoided
cost calculation;
o Revisit coldest on record planning standard and discuss with the TAC for prudency;
4 SENDOUT is a linear programming-based model used to solve natural gas supply, storage, and transportation
optimization problems.
6STAFF COMMENTS DECEMBER 13,2018
o Provide additional information on resource optimization risks and benefits;
o Perform high pressure distribution or city gate station capital work as needed; and
o Meet regularly with Staff to provide information on market activities and significant
changes in assumptions and/or status of activities related to the IRP or natural gas
procurement. Id. at l2-I4
Based on StafPs review of the 2018 IRP, Staff believes these action items are reasonable.
Public Participation
The Company conducted four TAC meetings held at Company headquarters in Spokane,
Washington. Each of the four meetings was also available online via WebEx and by phone. The
Company provided details on the mechanics of its planning strategies, tools and results.
Meetings included feedback and input from TAC team members as well as stakeholders.
STAFF RECOMMENDATIONS
Staff believes that the Company's 20 I 8 Natural Gas IRP satisfies the requirements for a
natural gas IRP set forth in Commission OrderNos. 25342,27024,27098,32233,and32698.
Staff recommends the Company's 2018 Natural Gas IRP be acknowledged and accepted for
filing.
Respectfully submitted this
Technical Staff: Kevin Keyt
Michael Eldred
Brad Iverson-Long
i:umisc:comments/avugl S.5epkskmebl comments
L&dav of December 2018
Edith Pacillo
Deputy Attorney General
7STAFF COMMENTS DECEMBER 13,2018
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I3TH DAY OF DECEMBER 2018,
SERVED THE FOREGOING COMMENTS OF' THE COMMISSION STAFF, IN
CASE NO. AVU-G.18-05, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWNG:
LINDA GERVAIS
MGR REGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SP0KANE W A 99220-3727
E-MAIL: linda. servais@,avistacorp.com
avistadockets @avistacorp. com
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE W499220-3727
E-MAIL: [e-mail]
SECRET
CERTIFICATE OF SERVICE