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Home My WebLink About20210331Natural Gas IRP Appendices.pdf2021 Natural Gas Integrated Resource Plan Appendices Safe Harbor Statement This document contains forward-looking statements. Such statements are subject to a variety of risks, uncertainties and other factors, most of which are beyond the Company’s control, and many of which could have a significant impact on the Company’s operations, results of operations and financial condition, and could cause actual results to differ materially from those anticipated. For a further discussion of these factors and other important factors, please refer to the Company’s reports filed with the Securities and Exchange Commission. The forward- looking statements contained in this document speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which such statement is made or to reflect the occurrence of unanticipated events. New risks, uncertainties and other factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the Company’s business or the extent to which any such factor, or combination of factors, may cause actual results to differ materially from those contained in any forward- looking statement. 2021 Natural Gas IRP Appendices TABLE OF CONTENTS: APPENDICES Appendix 0.1 TAC Member List ..................................................................... Page 1 0.2 Comments and Responses to the 2021 IRP ....................................... 2 Appendix 1.1 Avista Corporation 2021 Natural Gas IRP Work Plan ......................... 9 1.2 IRP Guideline Compliance Summaries ............................................ 12 Appendix 2.1 Economic Outlook and Customer Count Forecast ............................ 27 2.2 Customer Forecasts by Region........................................................ 45 2.3 Demand Coefficient Calculations ..................................................... 87 2.4 Heating Degree Day Data ................................................................ 91 2.5 Demand Sensitivities and Demand Scenarios ................................ 101 2.6 Demand Forecast Sensitivities and Scenarios Descriptions ............ 103 2.7 Annual Demand, Avg Day & Peak Day Demand (Net of DSM)........ 108 2.8 Demand Before and After DSM...................................................... 112 2.9 Detailed Demand Data .................................................................. 117 Appendix 3.1 Avista Gas CPA Report Final ......................................................... 127 3.2 Environmental Externalities ........................................................... 131 Appendix 4.1 Current Transportation/Storage Rates and Assumptions ................ 225 Appendix 5.1 Renewable Resource Development and Procurement Tree............ 227 Appendix 6.1 Monthly Price Data by Basin .......................................................... 233 6.2 Weighted Average Cost of Capital ................................................. 242 6.3 Supply Side Resource Options ...................................................... 243 6.4 Avoided Costs Detail ..................................................................... 244 Appendix 7.1 High Growth Case ........................................................................ 265 7.2 Peak Day Demand Table …........................................................... 267 Appendix 8.1 Distribution System Modeling…………………………………………...275 Appendix 8.2 Distribution within the IRP……………………………………………279 TAC Meeting #1…………………… ....................................................... 281 TAC Meeting #2 .................................................................................. 379 TAC Meeting #2.5……………………………………………………………..481 TAC Meeting #3 .................................................................................. 527 TAC Meeting #4 .................................................................................. 672 APPENDIX - CHAPTER 0 APPENDIX 0.1: TAC MEMBER LIST Organization Representatives Applied Energy Group Kenneth Walter Avista Terrence Browne Jody Morehouse Amanda Ghering Tom Pardee Ryan Finesilver Michael Brutocao Grant Forsyth Jason Thackston James Gall Jaime Majure Justin Dorr Michael Whitby John Lyons Shawn Bonfield Lisa McGarity Jeff Webb Biomethane, LLC Kathlyn Kinney Cascade Natural Gas Company Ashton Davis Brian Robertson Mark Sellers- Vaughn Citizens Utility Board of Oregon Sudeshna Pal Will Gehrke Energy Trust of Oregon Peter Schaffer Spencer Moersfelder Ted Light Fortis Ken Ross Idaho Conservation League Dainee Gibson- Webb Idaho Public Utility Commission Donn English Kevin Keyt Terri Carlock Mike Louis Joseph Terry Rick Keller Intermountain Gas Raycee Thompson Lori Blattner Dave Swenson Northwest Energy Coalition Amy Wheeless Northwest Gas Association Dan Kirschner Northwest Natural Gas Tammy Linver Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 1 APPENDIX - CHAPTER 0 Northwest Power and Conservation Council Steve Simmons Oregon Public Utility Commission Anna Kim Kim Herb Washington State Department of Commerce Peter Moulton Greg Nothstein Chuck Murray Washington State Office of the Attorney General Shay Bauman Corey J Dahl Chuck Murray Washington Utilities and Transportation Commission Jennifer Snyder Deborah Reynolds Andrew Rector Steve Johnson APPENDIX 0.2: COMMENTS AND RESPONSES TO 2021 DRAFT INTEGRATED RESOURCE PLAN The following table summarizes the significant comments on our DRAFT as submitted by TAC members and Avista’s responses. This IRP produced reduced forecasted demand scenarios and no near term resource needs even in our most robust demand scenario. We appreciate the time and effort invested by all our TAC members throughout the IRP process. Many good suggestions have been made and we have incorporated those that enhance the document. Document Reference Comment / Question Avista Response Chapter 5 For upstream methane emissions, Avista uses a global warming potential (GWP) factor that was calculated based on the International Panel on Climate Change’s Assessment Report 5 (IPCC AR5), which Staff prefers over older analyses. Avista uses the upstream methane leakage factor of 0.77 percent for Canadian natural gas, and uses 1.0 percent for the U.S. Rockies natural gas factor. Given that this U.S. Rockies natural gas emissions factor is significantly lower than any of the factors analyzed by the NWPCC in its analysis of upstream natural gas emissions, Staff recommends the Final IRP explain why the factor is appropriate. Added supplimental language to Chapter 5 Chapter 7 Consider effects of policy trends towards electrification on both the electric and natural gas systems. Included supplemental language Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 2 APPENDIX - CHAPTER 0 Chapter 2 Explain the new design day methodology, providing a more detailed narrative. Updated within Chapter 2 Chapter 2 Further explain why the new design day standard is now the most appropriate one. Updated within Chapter 2 Chapter 9 Explore the feasibility of using projected future weather conditions in its design day methodology, rather than relying exclusively on historic data. added to Action Plan Appendix 7.2 Include details of RNG cost assumptions in the appendices. Included in Appendix 7.2 Appendix 7.2 Use any up-to-date cost data that is available to model potential RNG resources. Avista will use the most recent data available where details are verified, reasonable and sufficient enough for cost determination in all resources Avista 2021 Electric IRP Avista’s Draft 2021 IRP, p11, provides some explanation for factors that could drive future natural gas demand. While Avista does not anticipate any increase in demand from the traditional residential and commercial customer classes, the Company expects growing demand from electric utilities in terms of natural gas back up for solar and wind technologies. CUB is aware that electric utilities serving the Pacific Northwest like, Portland General Electric and PacifiCorp do not have plans to build new gas plants in the long-term. Idaho Power targets for 100% clean energy by 2045. BC Hydro’s Clean Power 2040 mandate includes reduction of GHG emissions through clean electricity. CUB would therefore like to see some discussion in the IRP that could substantiate the claim that electric utilities in the Pacific Northwest region are increasingly becoming reliant on gas plants as backups for their renewable generation resources. Please refer to the Avista 2021 Electric IRP for peaking needs from natural gas plants as summarized in it's Preferred Resource Strategy (PRS). The Wood Mackenzie material shown during TAC 2 on August 6, 2020 will provide a high level summary of expected need in the Pacific Northwest, which dispite the massive expected buildout of renewable resources, less than half of the natural gas leaves the forecast. On a national level the forecast for the next 20 years remains mostly unchanged in spite of the new electric clean resources. In this case, growing demand does not infer new natural gas plants, just continued demand to meet electric capacity requirements. Chapter 2, 5 & 7 CUB realizes that Carbon price sensitivities are designed around Oregon and Washington’s carbon policy futures as Idaho does not contemplate having a carbon policy in near future. Hence Avista assumes a carbon cost of $0 for Idaho and other carbon price ranges for Oregon and Washington. CUB suggests that for a long-term planning purpose, Avista should look at a price range for Idaho with a lower limit of $0 and set a positive dollar amount as upper limit, like it has for Oregon and Washington. CUB would like to cite Idaho Power’s 2019 IRP in which the utility considers four carbon cost scenarios, namely, Chapter 2 contains the sensitivities to a high, expected and low price as compared to the reference case for all jurisdictions. The expected carbon price considers any known policy or direction by state or federal entities that may help indicate a carbon price. In the event there is no policy, like Idaho, formulating a potential price indicator is problematic leading Avista to measure the bounds for risk vs. a specific policy as done through the Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 3 APPENDIX - CHAPTER 0 scenarios of high growth and low prices and low growth and high prices. Electric utilities can use shadow pricing or inferred pricing to determine when plants are still cost effective. Natural gas, mostly, uses the single fossil commodity to determine demand. Avista will continue to look for ways to value carbon and include where appropriate. Chapter 2, 5, 7 Zero Cost – no state or federal tax or fee on carbon emissions), A low price of carbon of $0 is assumed for all 3 jurisdictions in the High Growth and Low Prices case to measure no carbon policy. Chapter 2, 5, 7 Planning Carbon – Based on Wood Mckenzie’s forecasts, starting with $2/ton in 2028 and goes up to $22/ton by the end of the planning period, A Wood Mackenzie carbon assumption was put in place to measure Oregon's cap and reduce future Chapter 2, 5, 7 Generational Carbon – Based on EPA’s estimated of social cost of carbon, starting at $55.73/ton starting in 2020 and increasing to $101.16/ton by the end of the planning period, and, This is assumed for WA in the Expected Case Chapter 2, 5, 7 High Carbon – Based on California Energy Commission’s Integrated Energy Policy Report only for federal programs. Carbon costs under this scenario are assumed to start at $28.65/ton in 2022 increasing to $107.87 by the end of the IRP planning horizon. CUB believes using a carbon price range for Idaho will address local, state and federal environment policy related uncertainties for the system as a whole for the planning period. high carbon costs are included for all jurisdictions to measure the upper limits of carbon prices in the Low Growth and High Prices Chapter 7 Avista’s Electric IRP includes a natural gas to electricity switching scenario. CUB is wondering why this scenario analysis was not also a part of the natural gas IRP. Recently there have been proposals to phase out gas space and water heating in Washington state. Around forty communities in California have imposed a ban on natural gas heating in new buildings. Avista’s service territory in Southern Oregon is well suited in terms of climate for electrification of heating load. CUB suggests that Avista explore a No Growth scenario for its long-term demand forecast. A write up is included in Chapter 7. Avista will explore a no growth scenario in the 2023 Avista Natural Gas IRP Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 4 APPENDIX - CHAPTER 0 Chapter 7 Staff is particularly interested in understanding how different RNG resources were compared for selection in the alternate scenario. Resources were compared against all resource modeled options which can be viewed in Chapter 7. The options account for all estimated costs to build and maintain the facility and account for the cost of carbon based on the carbon intensity savings by source Chapter 8 With regard to demand response (Guideline 7), the Company mentions a single project on page 165. Staff would like to see more information about demand response as a demand-side option in the final IRP, both as a system resource and its potential to offset distribution upgrades. The high pressure projects mentioned on page 165 were identified after comprehensive load study analyses. Each analysis uses 18-24 months of historical customer billing history, so any DSM or energy efficiency measures adopted by customers are reflected in the loads of the analysis. The projects listed reflect current shortfalls on the distribution system. These shortfalls or deficiencies are also too large to be eliminated or even mitigated by DSM or energy efficiency measures. Since most of these projects will be completed over more than one year, Avista will use subsequent load studies to determine if there is a change in the necessity of a project, and then revise or defer accordingly. Chapter 5 Regarding Environmental Costs (Guideline 8), Staff appreciates the Company’s analysis of a portfolio under the Carbon Reduction scenario, and the Company’s consideration of creative solutions to compete as a buyer with California’s Low Carbon Fuel Standard market. Staff has questions about the assumptions leading to a portfolio of all dairy RNG and will like to see more discussion about how realistic that portfolio is, considering both total accumulation and the timing of additions over 20 years. Unlike WWTP and landfills, for example, the ability to move livestock and create the product of methane capture seems reasonable. The quantity of these products supply needed is high. The overall potential of this is unknown and so based on the plan to go after the next cheapest resource the product potentials will be better known once carbon pricing, targets and deadlines are clear. This is mostly illustrative in nature and future potential must be estimated by state to have a realistic guideline in place for obtaining these goals. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 5 APPENDIX - CHAPTER 0 Chapter 5 In addition to the carbon reduction alternate portfolio, Staff will also consider whether the preferred portfolio and action plan are consistent with Oregon policies. Staff acknowledges that the Company is awaiting additional guidance on how to implement EO 20-04 and understands the Company is prepared to comply by guidance provided, however Staff looks forward to understanding the extent to which the preferred portfolio is consistent with current Oregon policy, including EO 20-04. Further, Staff is preparing to engage with stakeholders on the implementation feasibility and impact of the IRP related activities identified in OPUC EO 20-04 work plan section 1.1. Staff suggests that the company be familiar with this section and be prepared to discuss metrics the Company could provide to track and forecast GHG emissions and strategies to reduce emissions to be compliant with EO 20-04. The company is engaged in dialogue and meetings surrounding the effort around EO 20-04 and will implement the necessary strategies to reduce emissions. Chapter 5, 6, 7 With regards to Guideline 10 (Multi-State Utilities), Staff also has questions about how policies across states interact, particularly for RNG. Staff would like to understand the assumptions the Company is using regarding the interaction of RNG policies in Washington and Oregon, and any system-wide strategies being considered. Resources are solved on a system basis for least cost supply. In the case where Oregon and Washington may both be requiring in state emissions reduction supply sources, Avista modeled these resources directly into the demand zones. This will also help to correctly allocate costs by jurisdiction Chapter 2, 5, 6, 7 1. Staff made a number of recommendations for potential improvements to the demand forecast. Staff has identified this topic as a key area of focus, particularly in terms of forecasted customer counts and usage per customer. Many of the recommendations relate to improving the modeling of potential carbon policy. For example, although the Company describes on page 11 that “Avista does not anticipate traditional residential and commercial customers will provide increased growth in demand,” even in its low growth scenario, the Company is forecasting A scenario with reduced demand could be the carbon reduction scenario in the 2021 natural gas IRP. In future IRP's we will consider a declining customer growth scenario. The Low Growth & High Prices scenarios is the best indicator for where Avista currently sees a reduced customer set paired with DSM to offset demand. The Carbon Reduction was included for our Washington service territory with the results and demand loss summarized in Chapter 7. If a similar load loss to electrification were to occur in Oregon, the impact to Avista would strictly be a loss of natural gas demand. The impacts to local electric utilities would need to be quantified by the utilities in each Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 6 APPENDIX - CHAPTER 0 of these service areas. The costs to run natural gas service for those remaining customers would be held by fewer and fewer customers meaning their rates would continue to go up. Chapter 2 – Appendix 2.6 2. Staff also recommended that the Company explore a large-scale supply interruption scenario, and the role of storage in such a situation. This scenario does not appear to be addressed in the draft IRP. A large scale supply interruption and its impacts to Avista's natural gas system can be seen in Chapter 2. In the cases of a 100% loss of supply or even 50% loss of supply at AECO, JP, SUMAS, or Rockies trading points puts an unserved in the first or second year of planning. Based on these sensitivities it became evident as to the extreme predictions and outcomes of these supply basin outages, so Avista chose not to run a specified scenario. Chapter 8 Staff is interested in better understanding the lack of anticipated distribution system upgrades. Staff would like to learn more about the certainty of this prediction and what sorts of upgrades the Company is excluding (i.e., is the Company completely foregoing all distribution investments for the next two years, or does the exclusion of distribution projects in the Company’s IRP reflect a lack of larger investments?) the Company should include information the Company relied upon to come to this conclusion in its IRP filing. Please see Chapter 8 Table 8.2. Also, The city gate station projects in Table 8.2 are periodically reevaluated to determine if upgrades need to be accelerated or delayed. Those assigned a TBD year have relatively small capacity constraints, and thus will be monitored. There are no plans to rebuild or upgrade these city gate stations at this time. Chapter 5, 6, 7 Staff is interested in the interaction between resources, policies, and plans between the Company’s Washington and Oregon territories. Carbon Reduction scenario for specifics on the interaction between policies, resources and plans between our WA and OR territories Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 7 APPENDIX - CHAPTER 0 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 8 APPENDIX - CHAPTER 1 APPENDIX 1.1: AVISTA CORPORATION 2021 NATURAL GAS INTEGRATED RESOURCE PLAN WORK PLAN IRP WORK PLAN REQUIREMENTS Section 480-90-238 (4), of the natural gas Integrated Resource Plan (“IRP”) rules, specify requirements for the IRP Work Plan: Not later than twelve months prior to the due date of a plan, the utility must provide a work plan for informal commission review. The work plan must outline the content of the integrated resource plan to be developed by the utility and the method for assessing potential resources. Additionally, Section 480-90-238 (5) of the WAC states: The work plan must outline the timing and extent of public participation. OVERVIEW This Work Plan outlines the process Avista will follow to complete its 2023 Natural Gas IRP by April 1, 2023. Avista uses a public process to obtain technical expertise and guidance throughout the planning period via Technical Advisory Committee (TAC) meetings. The TAC will be providing input into assumptions, scenarios, and modeling techniques. PROCESS The 2021 IRP process will be similar to that used to produce the previously published plan. Avista will use SENDOUT® (a PC based linear programming model widely used to solve natural gas supply and transportation optimization questions) to develop the risk adjusted least-cost resource mix for the 20 year planning period. This plan will continue to include demand analysis, demand side management and avoided cost determination, existing and potential supply-side resource analysis, resource integration and alternative sensitivities and scenario analysis. Additionally, Avista intends to incorporate action plan items identified in the 2021 Natural Gas IRP including more detailed demand analysis regarding use per customer, demand side management results and possible price elastic responses to evolving economic conditions, an updated assessment of conservation potential in our service territories, consideration of alternate forecasting methodologies, and the changing landscape of natural gas supply (i.e. shale gas, Canadian exports, and US LNG exports) and its implications to the planning process. Further details about Avista’s process for determining the risk adjusted least-cost resource mix is shown in Exhibit 1. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 9 APPENDIX - CHAPTER 1 TIMELINE The following is Avista’s 2021 Natural Gas IRP timeline: TAC 1: Wednesday, June 17, 2020: TAC meeting expectations, 2020 IRP process and schedule, energy efficiency update, actions from 2018 IRP, and a Winter of 2018-2019 review. Procurement Plan and Resource Optimization benefits. fugitive Emissions, Weather Analysis, Weather Planning Standard TAC 2 (Dual Meeting with Power side): Thursday, August 6, 2020: Market Analysis, Price Forecasts, Cost Of Carbon, demand forecasts and CPA results from AEG, Environmental Policies TAC 3: Wednesday, September 30, 2020: Distribution, Avista’s current supply-side resources overview, supply side resource options, renewable resources, SENDOUT overview, sensitivities and portfolio selection modeling. TAC 4: Wednesday, November 18, 2020: Review assumptions and action items, final modeling results, portfolio risk analysis and 2020 Action Plan. TAC 5: February 2021: TAC final review meeting (if necessary) Avista’s TENTATIVE 2023 Natural Gas IRP timeline: Major Milestone Date Topics TAC 1 Nov-2022 Use per customer, Policy, 2021 Action Item Review, price elasticity TAC 2 Mar-2022 Customer Forecast, price forecast TAC 3 Apr-2022 sensitivities, distribution, model overview TAC 4 Jun-2022 Renewable Resources, Supply Side Resources, Demand Side Resources (CPA) TAC 5 Jul-2022 Results / Stochastics, Action Items Write IRP Draft Sep-2022 Draft Feedback Due Oct-2022 File Dec-2022 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 10 APPENDIX - CHAPTER 1 EXHIBIT 1: AVISTA’S 2021 NATURAL GAS IRP MODELING PROCESS Demand Forecast by Area and Class Customer counts Use per customer Elasticity Gas Prices Basis differential Volatility Seasonal Spreads Existing Supply-Side Resources Costs Operational Characteristics Carbon Intensity Weather 20-year NOAA average by area plus Peak Day weather Standard Optimization Run Identify when and where deficiencies occur in the 20- year planning period. Optimization Run Solve for deficiencies and incorporate those into the least costs resource mix for the 20-year period. Determine Base Case Scenario Avoided Cost Determination Compile Data and Write the IRP Document. Key Considerations •Resource Cost •Peak vs. Base Load •Lead Time Requirements •Resource Usefulness •“Lumpiness” of Resource Options Sensitivity/Scenario Analysis •Customer •Supply interruptions •Counts •Use per customer •DSM •Monte Carlo •Etc. Gate Station Analysis Price Curve Analysis Planning Standard Review Enter all Future Resource Options: Supply-Side Demand-Side Resources •Assess DSM resource options Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 11 APPENDIX - CHAPTER 1 APPENDIX 1.2: WASHINGTON PUBLIC UTILITY COMMISSION IRP POLICIES AND GUIDELINES – WAC 480-90-238 Rule Requirement Plan Citation WAC 480-90-238(4) Work plan filed no later than 12 months before next IRP due date. Work plan submitted to the WUTC on August 31, 2019, See attachment to this Appendix 1.1. WAC 480-90-238(4) Work plan outlines content of IRP. See work plan attached to this Appendix 0.1. WAC 480-90-238(4) Work plan outlines method for assessing potential resources. (See LRC analysis below) See Appendix 1.1. WAC 480-90-238(5) Work plan outlines timing and extent of public participation. See Appendix 1.1. WAC 480-90-238(4) Integrated resource plan submitted within two years of previous plan. Last Integrated Resource Plan was submitted on August 31, 2018 WAC 480-90-238(5) Commission issues notice of public hearing after company files plan for review. TBD WAC 480-90-238(5) Commission holds public hearing. TBD WAC 480-90-238(2)(a) Plan describes mix of natural gas supply resources. See Chapter 4 on Supply Side Resources WAC 480-90-238(2)(a) Plan describes conservation supply. See Chapter 3 on Demand Side Resources WAC 480-90-238(2)(a) Plan addresses supply in terms of current and future needs of utility and ratepayers. See Chapter 4 on Supply Side Resources and Chapter 6 Integrated Resource Portfolio WAC 480-90- 238(2)(a)&(b) Plan uses lowest reasonable cost (LRC) analysis to select mix of resources. See Chapters 3 and 4 for Demand and Supply Side Resources. Chapters 6 and 7 details how Demand and Supply come together to select the least cost/best risk portfolio for ratepayers. WAC 480-90-238(2)(b) LRC analysis considers resource costs. See Chapters 3 and 4 for Demand and Supply Side Resources. Chapters 6 and 7 details how Demand and Supply come together to select the least cost/best risk portfolio for ratepayers. WAC 480-90-238(2)(b) LRC analysis considers market- volatility risks. See Chapter 4 on Supply Side Resources WAC 480-90-238(2)(b) LRC analysis considers demand side uncertainties. See Chapter 2 Demand Forecasting WAC 480-90-238(2)(b) LRC analysis considers resource effect on system operation. See Chapter 4 and Chapter 6 WAC 480-90-238(2)(b) LRC analysis considers risks imposed on ratepayers. See Chapter 4 procurement plan section. We seek to minimize but cannot eliminate price risk for our customers. WAC 480-90-238(2)(b) LRC analysis considers public policies regarding resource preference See Chapter 2 demand scenarios Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 12 APPENDIX - CHAPTER 1 adopted by Washington state or federal government. WAC 480-90-238(2)(b) LRC analysis considers cost of risks associated with environmental effects including emissions of carbon dioxide. See Chapters 2 and 6 on demand scenarios and Integrated Resource Portfolio WAC 480-90-238(2)(b) LRC analysis considers need for security of supply. See Chapter 4 on Supply Side Resources Rule Requirement Plan Citation WAC 480-90-238(2)(c) Plan defines conservation as any reduction in natural gas consumption that results from increases in the efficiency of energy use or distribution. See Chapter 3 on Demand Side Resources WAC 480-90-238(3)(a) Plan includes a range of forecasts of future demand. See Chapter 2 on Demand Forecast WAC 480-90-238(3)(a) Plan develops forecasts using methods that examine the effect of economic forces on the consumption of natural gas. See Chapter 2 on Demand Forecast WAC 480-90-238(3)(a) Plan develops forecasts using methods that address changes in the number, type and efficiency of natural gas end-uses. See Chapter 2 on Demand Forecast WAC 480-90-238(3)(b) Plan includes an assessment of commercially available conservation, including load management. See Chapter 3 on Demand Side Management including demand response section. WAC 480-90-238(3)(b) Plan includes an assessment of currently employed and new policies and programs needed to obtain the conservation improvements. See Chapter 3 and Appendix 3.1. WAC 480-90-238(3)(c) Plan includes an assessment of conventional and commercially available nonconventional gas supplies. See Chapter 4 on Supply Side Resources WAC 480-90-238(3)(d) Plan includes an assessment of opportunities for using company- owned or contracted storage. See Chapter 4 on Supply Side Resources WAC 480-90-238(3)(e) Plan includes an assessment of pipeline transmission capability and reliability and opportunities for additional pipeline transmission resources. See Chapter 4 on Supply Side Resources WAC 480-90-238(3)(f) Plan includes a comparative evaluation of the cost of natural gas purchasing strategies, storage options, delivery resources, and improvements in conservation using a consistent method to calculate cost-effectiveness. See Chapter 3 on Demand Side Resources and Chapter 4 on Supply Side Resources WAC 480-90-238(3)(g) Plan includes at least a 10 year long- range planning horizon. Our plan is a comprehensive 20 year plan. WAC 480-90-238(3)(g) Demand forecasts and resource evaluations are integrated into the long range plan for resource acquisition. Chapter 6 Integrated Resource Portfolio details how demand and supply come together to form the least cost/best risk portfolio. WAC 480-90-238(3)(h) Plan includes a two-year action plan that implements the long range plan. See Section 9 Action Plan Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 13 APPENDIX - CHAPTER 1 WAC 480-90-238(3)(i) Plan includes a progress report on the implementation of the previously filed plan. See Section 9 Action Plan WAC 480-90-238(5) Plan includes description of consultation with commission staff. (Description not required) See Section 1 Introduction WAC 480-90-238(5) Plan includes description of completion of work plan. (Description not required) See Appendix 1.1. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 14 APPENDIX - CHAPTER 1 APPENDIX 1.2: IDAHO PUBLIC UTILITY COMMISSION IRP POLICIES AND GUIDELINES – ORDER NO. 2534 DESCRIPTION OF REQUIREMENT FULLFILLMENT OF REQUIREMENT 1 Purpose and Process. Each gas utility regulated by the Idaho Public Utilities Commission with retail sales of more than 10,000,000,000 cubic feet in a calendar year (except gas utilities doing business in Idaho that are regulated by contract with a regulatory commission of another State) has the responsibility to meet system demand at least cost to the utility and its ratepayers. Therefore, an ‘‘integrated resource plan’’ shall be developed by each gas utility subject to this rule. Avista prepares a comprehensive 20 year Integrated Resource Plan every two years. Avista will be filing its 2023 IRP on or before April 1, 2023. 2 Definition. Integrated resource planning. ‘‘Integrated resource planning’’ means planning by the use of any standard, regulation, practice, or policy to undertake a systematic comparison between demand-side management measures and the supply of gas by a gas utility to minimize life- cycle costs of adequate and reliable utility services to gas customers. Integrated resource planning shall take into account necessary features for system operation such as diversity, reliability, dispatchability, and other factors of risk and shall treat demand and supply to gas consumers on a consistent and integrated basis. Avista's IRP brings together dynamic demand forecasts and matches them against demand-side and supply-side resources in order to evaluate the least cost/best risk portfolio for its core customers. While the primary focus has been to ensure customer's needs are met under peak or design weather conditions, this process also evaluates the resource portfolio under normal/average operating conditions. The IRP provides the framework and methodology for evaluating Avista's natural gas demand and resources. 3 Elements of Plan. Each gas utility shall submit to the Commission on a biennial basis an integrated resource plan that shall include: Filing extension approved for 2021 IRP to be filed on or before April 1, 2021. The last IRP was filed on August 31, 2018. A range of forecasts of future gas demand in firm and interruptible markets for each customer class for one, five, and twenty years using methods that examine the effect of economic forces on the consumption of gas and that address changes in the number, type and efficiency of gas end-uses. See Chapter 2 - Demand Forecasts and Appendix 2 et.al. for a detailed discussion of how demand was forecasted for this IRP. An assessment for each customer class of the technically feasible improvements in the efficient use of gas, including load management, as well as the policies and programs needed to obtain the efficiency improvements. See Chapter 3 - Demand Side Management and DSM Appendices 3 et.al. for detailed information on the DSM potential evaluated and selected for this IRP and the operational implementation process. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 15 APPENDIX - CHAPTER 1 An analysis for each customer class of gas supply options, including: (1) a projection of spot market versus long-term purchases for both firm and interruptible markets; (2) an evaluation of the opportunities for using company-owned or contracted storage or production; (3) an analysis of prospects for company participation in a gas futures market; and (4) an assessment of opportunities for access to multiple pipeline suppliers or direct purchases from producers. See Chapter 4 - Supply-Side Resources for details about the market, storage, and pipeline transportation as well as other resource options considered in this IRP. See also the procurement plan section in this same chapter for supply procurement strategies. A comparative evaluation of gas purchasing options and improvements in the efficient use of gas based on a consistent method for calculating cost-effectiveness. See Methodology section of Chapter 3 - Demand-Side Resources where we describe our process on how demand-side and supply-side resources are compared on par with each other in the SENDOUT® model. Chapter 3 also includes how results from the IRP are then utilized to create operational business plans. Operational implementation may differ from IRP results due to modeling assumptions. The integration of the demand forecast and resource evaluations into a long-range (e.g., twenty-year) integrated resource plan describing the strategies designed to meet current and future needs at the lowest cost to the utility and its ratepayers. See Chapter 6 - Integrated Resource Portfolio for details on how we model demand and supply coming together to provide the least cost/best risk portfolio of resources. A short-term (e.g., two-year) plan outlining the specific actions to be taken by the utility in implementing the integrated resource plan. See Chapter 9 - Action Plan for actions to be taken in implementing the IRP. 4 Relationship Between Plans. All plans following the initial integrated resource plan shall include a progress report that relates the new plan to the previously filed plan. Avista strives to meet at least bi-annually with Staff and/or Commissioners to discuss the state of the market, procurement planning practices, and any other issues that may impact resource needs or other analysis within the IRP. 5 Plans to Be Considered in Rate Cases. The integrated resource plan will be considered with other available information to evaluate the performance of the utility in rate proceedings before the Commission. We prepare and file our plan in part to establish a public record of our plan. 6 Public Participation. In formulating its plan, the gas utility must provide an opportunity for public participation and comment and must provide methods that will be available to the public of validating predicted performance. Avista held four Technical Advisory Committee meetings beginning in June and ending in November. See Chapter 1 - Introduction for more detail about public participation in the IRP process. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 16 APPENDIX - CHAPTER 1 7 Legal Effect of Plan. The plan constitutes the base line against which the utility's performance will ordinarily be measured. The requirement for implementation of a plan does not mean that the plan must be followed without deviation. The requirement of implementation of a plan means that a gas utility, having made an integrated resource plan to provide adequate and reliable service to its gas customers at the lowest system cost, may and should deviate from that plan when presented with responsible, reliable opportunities to further lower its planned system cost not anticipated or identified in existing or earlier plans and not undermining the utility's reliability. See section titled "Avista's Procurement Plan" in Chapter 4 - Supply-Side Resources. Among other details we discuss plan revisions in response to changing market conditions. 8 In order to encourage prudent planning and prudent deviation from past planning when presented with opportunities for improving upon a plan, a gas utility's plan must be on file with the Commission and available for public inspection. But the filing of a plan does not constitute approval or disapproval of the plan having the force and effect of law, and deviation from the plan would not constitute violation of the Commission's Orders or rules. The prudence of a utility's plan and the utility's prudence in following or not following a plan are matters that may be considered in a general rate proceeding or other proceedings in which those issues have been noticed. See also section titled "Alternate Supply-Side Scenarios" in Chapter 6 - Integrated Resource Portfolio where we discuss different supply portfolios that are responsive to changing assumptions about resource alternatives. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 17 APPENDIX - CHAPTER 1 APPENDIX 1.2: OREGON PUBLIC UTILITY COMMISSION IRP STANDARD AND GUIDELINES – ORDER 07- 002 Guideline 1: Substantive Requirements 1.a.1 All resources must be evaluated on a consistent and comparable basis. All resource options considered, including demand- side and supply-side are modeled in SENDOUT® utilizing the same common general assumptions, approach and methodology. 1.a.2 All known resources for meeting the utility’s load should be considered, including supply-side options which focus on the generation, purchase and transmission of power – or gas purchases, transportation, and storage – and demand-side options which focus on conservation and demand response. Avista considered a range of resources including demand-side management, distribution system enhancements, capacity release recalls, interstate pipeline transportation, interruptible customer supply, and storage options including liquefied natural gas. Chapter 3 and Appendix 3.1 documents Avista’s demand-side management resources considered. Chapter 4 and Appendix 6.3 documents supply-side resources. Chapter 6 and 7 documents how Avista developed and assessed each of these resources. 1.a.3 Utilities should compare different resource fuel types, technologies, lead times, in-service dates, durations and locations in portfolio risk modeling. Avista considered various combinations of technologies, lead times, in-service dates, durations, and locations. Chapter 6 provides details about the modeling methodology and results. Chapter 4 describes resource attributes and Appendix 6.3 summarizes the resources’ lead times, in-service dates and locations. 1.a.4 Consistent assumptions and methods should be used for evaluation of all resources. Appendix 6.2 documents general assumptions used in Avista’s SENDOUT® modeling software. All portfolio resources both demand and supply-side were evaluated within SENDOUT® using the same sets of inputs. 1.a.5 The after-tax marginal weighted- average cost of capital (WACC) should be used to discount all future resource costs. Avista applied its after-tax WACC of 4.36% to discount all future resource costs. (See general assumptions at Appendix 6.2) 1.b.1 Risk and uncertainty must be considered. Electric utilities only Not Applicable 1.b.2 Risk and uncertainty must be considered. Natural gas utilities should consider demand (peak, swing and base-load), commodity supply and price, transportation availability and price, and costs to comply with any regulation of greenhouse gas (GHG) emissions. Risk and uncertainty are key considerations in long term planning. In order to address risk and uncertainties a wide range of sensitivity, scenario and portfolio analysis is completed. A description of risk associated with each scenario is included in Appendix 2.6. Avista performed 33 sensitivities on demand and price. From there five demand scenarios were developed (Table 1.1) for SENDOUT® modeling purposes. Monthly demand coefficients were developed for base, heating demand while peak demand was contemplated through modeling a weather planning standard using 99% probability (see heating degree day data in Appendix 2.4). Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 18 APPENDIX - CHAPTER 1 Avista evaluated several price forecasts and performed stochastic simulations to derive a high and a low price based on the Expected price. Avista stochastic modeling techniques for price and weather variables to analyze weather sensitivity and to quantify the risk to customers under varying price environments. While there continues to be some uncertainty around GHG emission, Avista considered GHG emissions regulatory compliance costs in Appendix 3.2. As currently modeled, we include a carbon adder if the commodity is selected in the base Utilities should identify in their plans any additional sources of risk and uncertainty. Avista evaluated additional risks and uncertainties. Risks associated with the planning environment are detailed in Chapter 0 Introduction. Avista also analyzed demand risk which is detailed in Chapter 2. Chapter 3 discusses the uncertainty around how much DSM is achievable. Supply-side resource risks are discussed in Chapter 4. Chapter 6 and 7 discusses the variables modeled for scenario and stochastic risk analysis. 1c The primary goal must be the selection of a portfolio of resources with the best combination of expected costs and associated risks and uncertainties for the utility and its customers. Avista evaluated cost/risk tradeoffs for each of the risk analysis portfolios considered. See Chapter 5 and 6 plus supporting information in Appendix 2.6 for Avista’s portfolio risk analysis and determination of the preferred portfolio. The planning horizon for analyzing resource choices should be at least 20 years and account for end effects. Utilities should consider all costs with a reasonable likelihood of being included in rates over the long term, which extends beyond the planning horizon and the life of the resource. Avista used a 20-year study period for portfolio modeling. Avista contemplated possible costs beyond the planning period that could affect rates including end effects such as infrastructure decommission costs and concluded there were no significant costs reasonably likely to impact rates under different resource selection scenarios. Utilities should use present value of revenue requirement (PVRR) as the key cost metric. The plan should include analysis of current and estimated future costs of all long- lived resources such as power plants, gas storage facilities and pipelines, as well as all short-lived resources such as gas supply and short-term power purchases. Avista’s SENDOUT® modeling software utilizes a PVRR cost metric methodology applied to both long and short-lived resources. To address risk, the plan should include at a minimum: 1) Two measures of PVRR risk: one that measures the variability of costs and one that measures the severity of bad outcomes. 2) Discussion of the proposed use and impact on costs and risks of physical and financial hedging. Avista, through its stochastic analysis, modeled 1,000 scenarios around varying gas price inputs via Monte Carlo iterations developing a distribution of Total 20 year cost estimates utilizing SENDOUT®’s PVRR methodology. Chapter 7 further describes this analysis. The variability of costs is plotted against the Expected Case while the scenarios beyond the 95th percentile capture the severity of outcomes. Chapter 4 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 19 APPENDIX - CHAPTER 1 discusses Avista’s physical and financial hedging methodology. The utility should explain in its plan how its resource choices appropriately balance cost and risk. Chapter 4, 5, 6, and 7 describe various specific resource considerations and related risks, and describes what criteria we used to determine what resource combinations provide an appropriate balance between cost and risk. 1d The plan must be consistent with the long-run public interest as expressed in Oregon and federal energy policies. Avista considered current and expected state and federal energy policies in portfolio modeling. Chapter 6 describes the decision process used to derive portfolios, which includes consideration of state resource policy directions. Guideline 2: Procedural Requirements 2a The public, including other utilities, should be allowed significant involvement in the preparation of the IRP. Involvement includes opportunities to contribute information and ideas, as well as to receive information. Parties must have an opportunity to make relevant inquiries of the utility formulating the plan. Chapter 1 provides an overview of the public process and documents the details on public meetings held for the 2018 IRP. Avista encourages participation in the development of the plan, as each party brings a unique perspective and the ability to exchange information and ideas makes for a more robust plan. While confidential information must be protected, the utility should make public, in its plan, any non- confidential information that is relevant to its resource evaluation and action plan. The entire IRP, as well as the TAC process, includes all of the non-confidential information the company used for portfolio evaluation and selection. Avista also provided stakeholders with non-confidential information to support public meeting discussions via email. The document and appendices will be available on the company website for viewing. The utility must provide a draft IRP for public review and comment prior to filing a final plan with the Commission. Avista distributed a draft IRP document for external review to all TAC members on January 4, 2021 and requested comments by February 3, 2021 Guideline 3: Plan Filing, Review and Updates 3a Utility must file an IRP within two years of its previous IRP acknowledgement order. Acknowledgement of the 2018 IRP was on March 11, 2020. The 2021 IRP will be filed on April 1, 2021 or within two years of previous acknowledgement order 3b Utility must present the results of its filed plan to the Commission at a public meeting prior to the deadline for written public comment. Avista will work with Staff to fulfill this guideline following filing of the IRP. 3c Commission staff and parties should complete their comments and recommendations within six months of IRP filing Pending 3d The Commission will consider comments and recommendations on a utility’s plan at a public meeting before issuing an order on acknowledgment. The Commission may provide the utility an opportunity to revise the plan before issuing an acknowledgment order Pending Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 20 APPENDIX - CHAPTER 1 3e The Commission may provide direction to a utility regarding any additional analyses or actions that the utility should undertake in its next IRP. Pending 3f Each utility must submit an annual update on its most recently acknowledged plan. The update is due on or before the acknowledgment order anniversary date. Once a utility anticipates a significant deviation from its acknowledged IRP, it must file an update with the Commission, unless the utility is within six months of filing its next IRP. The utility must summarize the update at a Commission public meeting. The utility may request acknowledgment of changes in proposed actions identified in an update The annual update was submitted on January 26, 2020. The filing was a filing requesting an extension from August 31, 2020 to April 1, 2021. Approval was given through Order 20-071 on March 11, 2020. 3g Unless the utility requests acknowledgement of changes in proposed actions, the annual update is an informational filing that:  Describes what actions the utility has taken to implement the plan;  Provides an assessment of what has changed since the acknowledgment order that affects the action plan, including changes in such factors as load, expiration of resource contracts, supply-side and demand-side resource acquisitions, resource costs, and transmission availability; and  Justifies any deviations from the acknowledged action plan. The updates described in 3f above explained changes since acknowledgment of the 2018 IRP and an update of emerging planning issues. The updates did not request acknowledgement of any changes. Guideline 4: Plan Components At a minimum, the plan must include the following elements: 4a An explanation of how the utility met each of the substantive and procedural requirements. This table summarizes guideline compliance by providing an overview of how Avista met each of the substantive and procedural requirements for a natural gas IRP. 4b Analysis of high and low load growth scenarios in addition to stochastic load risk analysis with an explanation of major assumptions. Avista developed six demand growth forecasts for scenario analysis. Stochastic variability of demand was also captured in the risk analysis. Chapter 2 describes the demand forecast data and Chapter 7 provides the scenario and risk analysis results. Appendix 5 details major assumptions. 4c For electric utilities only Not Applicable Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 21 APPENDIX - CHAPTER 1 4d A determination of the peaking, swing and base-load gas supply and associated transportation and storage expected for each year of the plan, given existing resources; and identification of gas supplies (peak, swing and base-load), transportation and storage needed to bridge the gap between expected loads and resources. Figures 6.10 – 6.17 summarize graphically projected annual peak day demand and the existing and selected resources by year to meet demand for the expected case. Appendix 6.1 and 6.2 summarizes the peak day demand for the other demand scenarios. 4e Identification and estimated costs of all supply-side and demand-side resource options, taking into account anticipated advances in technology Chapter 3 and Appendix 3.1 identify the demand-side potential included in this IRP. Chapter 4, 5 & 6 and Appendix 6.3 identify the supply-side resources. 4f Analysis of measures the utility intends to take to provide reliable service, including cost-risk tradeoffs. Chapter 6 and 7 discuss the modeling tools, customer growth forecasting and cost-risk considerations used to maintain and plan a reliable gas delivery system. These Chapters also capture a summary of the reliability analysis process demonstrated in the four TAC meetings. Chapter 4 discusses the diversified infrastructure and multiple supply basin approach that acts to mitigate certain reliability risks. Appendix 2.6 highlights key risks associated with each portfolio. 4g Identification of key assumptions about the future (e.g. fuel prices and environmental compliance costs) and alternative scenarios considered. Appendix 7 and Chapter 7 describe the key assumptions and alternative scenarios used in this IRP. 4h Construction of a representative set of resource portfolios to test various operating characteristics, resource types, fuels and sources, technologies, lead times, in-service dates, durations and general locations - system-wide or delivered to a specific portion of the system. This Plan documents the development and results for portfolios evaluated in this IRP (see Table 7.1 for scenarios considered). 4i Evaluation of the performance of the candidate portfolios over the range of identified risks and uncertainties. We evaluated our candidate portfolio by performing stochastic analysis using SENDOUT® varying price under 1,000 different scenarios. Additionally, we test the portfolio of options with the use of SENDOUT® under deterministic scenarios where demand and price vary. For resources selected, we assess other risk factors such as varying lead times required and potential for cost overruns outside of the amounts included in the modeling assumptions. 4j Results of testing and rank ordering of the portfolios by cost and risk metric, and interpretation of those results. Avista’s four distinct geographic Oregon service territories limit many resource option synergies which inherently reduces available portfolio options. Feasibility uncertainty, lead time variability and uncertain cost escalation around certain resource options also reduce reasonably viable options. Chapter 4 describes resource options reviewed including discussion on uncertainties in lead times and costs as well as viability and resource availability (e.g. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 22 APPENDIX - CHAPTER 1 LNG). Appendix 6.3 summarizes the potential resource options identifying investment and variable costs, asset availability and lead time requirements while results of resources selected are identified in Table 6.5 as well as graphically presented in Figure 6.18 and 6.19 for the Expected Case and Appendix 7.1 for the High Growth case. 4k Analysis of the uncertainties associated with each portfolio evaluated See the responses to 1.b above. 4l Selection of a portfolio that represents the best combination of cost and risk for the utility and its customers Avista evaluated cost/risk tradeoffs for each of the risk analysis portfolios considered. Chapter 6 and Appendix 2.6 show the company’s portfolio risk analysis, as well as the process and determination of the preferred portfolio. 4m Identification and explanation of any inconsistencies of the selected portfolio with any state and federal energy policies that may affect a utility's plan and any barriers to implementation This IRP is presumed to have no inconsistencies. 4n An action plan with resource activities the utility intends to undertake over the next two to four years to acquire the identified resources, regardless of whether the activity was acknowledged in a previous IRP, with the key attributes of each resource specified as in portfolio testing. Chapter 9 presents the IRP Action Plan with focus on the following areas:  Modeling  Policy  Supply/capacity/distribution  Forecasting  Regulatory communication  DSM Guideline 5: Transmission 5 Portfolio analysis should include costs to the utility for the fuel transportation and electric transmission required for each resource being considered. In addition, utilities should consider fuel transportation and electric transmission facilities as resource options, taking into account their value for making additional purchases and sales, accessing less costly resources in remote locations, acquiring alternative fuel supplies, and improving reliability. Not applicable to Avista’s gas utility operations. Guideline 6: Conservation 6a Each utility should ensure that a conservation potential study is conducted periodically for its entire service territory. AEG performed a conservation potential assessment study for our 2021 IRP. A discussion of the study is included in Chapter 3. The full study document is in Appendix 3.1. Avista incorporates a comprehensive assessment of the potential for utility acquisition of energy-efficiency resources into the regularly- scheduled Integrated Resource Planning process. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 23 APPENDIX - CHAPTER 1 6b To the extent that a utility controls the level of funding for conservation programs in its service territory, the utility should include in its action plan all best cost/risk portfolio conservation resources for meeting projected resource needs, specifying annual savings targets. A discussion on the treatment of conservation programs is included in Chapter 3 while selection methodology is documented in Chapter 6. The action plan details conservation targets, if any, as developed through the operational business planning process. These targets are updated annually, with the most current avoided costs. Given the challenge of the low cost environment, current operational planning and program evaluation is still underway and targets for Oregon have not yet been set. 6c To the extent that an outside party administers conservation programs in a utility's service territory at a level of funding that is beyond the utility's control, the utility should: 1) determine the amount of conservation resources in the best cost/ risk portfolio without regard to any limits on funding of conservation programs; and 2) identify the preferred portfolio and action plan consistent with the outside party's projection of conservation acquisition. Not applicable. See the response for 6.b above. Guideline 7: Demand Response 7 Plans should evaluate demand response resources, including voluntary rate programs, on par with other options for meeting energy, capacity, and transmission needs (for electric utilities) or gas supply and transportation needs (for natural gas utilities). Avista has periodically evaluated conceptual approaches to meeting capacity constraints using demand-response and similar voluntary programs. Technology, customer characteristics and cost issues are hurdles for developing effective programs. Guideline 8: Environmental Costs 8 Utilities should include, in their base-case analyses, the regulatory compliance costs they expect for CO2, NOx, SO2, and Hg emissions. Utilities should analyze the range of potential CO2 regulatory costs in Order No. 93- 695, from $0 - $40 (1990$). In addition, utilities should perform sensitivity analysis on a range of reasonably possible cost adders for NOx, SO2, and Hg, if applicable. As discussed in Chapter 5, all upstream emissions from the point of use are included in this IRP. The Environmental Externalities discussion in Appendix 3.2 describes our analysis performed. See also the guidelines addendum reflecting revised guidance for environmental costs per Order 08-339. Guideline 9: Direct Access Loads 9 An electric utility's load-resource balance should exclude customer loads that are effectively committed to service by an alternative electricity supplier. Not applicable to Avista’s gas utility operations. Guideline 10: Multi-state utilities 10 Multi-state utilities should plan their generation and transmission systems, or gas supply and delivery, on an The 2021 IRP conforms to the multi-state planning approach. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 24 APPENDIX - CHAPTER 1 integrated-system basis that achieves a best cost/risk portfolio for all their retail customers. Guideline 11: Reliability 11 Electric utilities should analyze reliability within the risk modeling of the actual portfolios being considered. Loss of load probability, expected planning reserve margin, and expected and worst-case unserved energy should be determined by year for top-performing portfolios. Natural gas utilities should analyze, on an integrated basis, gas supply, transportation, and storage, along with demand-side resources, to reliably meet peak, swing, and base-load system requirements. Electric and natural gas utility plans should demonstrate that the utility’s chosen portfolio achieves its stated reliability, cost and risk objectives. Avista’s storage and transport resources while planned around meeting a peak day planning standard, also provides opportunities to capture off season pricing while providing system flexibility to meet swing and base-load requirements. Diversity in our transport options enables at least dual fuel source options in event of a transport disruption. For areas with only one fuel source option the cost of duplicative infrastructure is not feasible relative to the risk of generally high reliability infrastructure. Guideline 12: Distributed Generation 12 Electric utilities should evaluate distributed generation technologies on par with other supply-side resources and should consider, and quantify where possible, the additional benefits of distributed generation. Not applicable to Avista’s gas utility operations. Guideline 13: Resource Acquisition 13a An electric utility should: identify its proposed acquisition strategy for each resource in its action plan; Assess the advantages and disadvantages of owning a resource instead of purchasing power from another party; identify any Benchmark Resources it plans to consider in competitive bidding. Not applicable to Avista’s gas utility operations. 13b Natural gas utilities should either describe in the IRP their bidding practices for gas supply and transportation, or provide a description of those practices following IRP acknowledgment. A discussion of Avista’s procurement practices is detailed in Chapter 4. Guideline 8: Environmental Costs a. BASE CASE AND OTHER COMPLIANCE SCENARIOS: The utility should construct a base-case scenario to reflect what it considers to be the most likely regulatory compliance future for carbon dioxide (CO2), nitrogen oxides, sulfur oxides, and mercury emissions. The utility also should develop several compliance scenarios ranging from the present CO2 regulatory level to the upper reaches of credible proposals by governing entities. Each compliance scenario should include a time profile of CO2 compliance requirements. The utility should identify whether the basis of those requirements, or “costs”, would be CO2 taxes, a ban on certain types of resources, or CO2 caps (with or without flexibility Upstream gas system infrastructure (pipelines, storage facilities, and gathering systems) do produce CO2 emissions via compressors used to pressurize and move gas throughout the system. The Environmental Externalities discussion in Appendix 3.2 describes our process for addressing these costs. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 25 APPENDIX - CHAPTER 1 mechanisms such as allowance or credit trading or a safety valve). The analysis should recognize significant and important upstream emissions that would likely have a significant impact on its resource decisions. Each compliance scenario should maintain logical consistency, to the extent practicable, between the CO2 regulatory requirements and other key inputs. b. TESTING ALTERNATIVE PORTFOLIOS AGAINST THE COMPLIANCE SCENARIOS: The utility should estimate, under each of the compliance scenarios, the present value of revenue requirement (PVRR) costs and risk measures, over at least 20 years, for a set of reasonable alternative portfolios from which the preferred portfolio is selected. The utility should incorporate end- effect considerations in the analyses to allow for comparisons of portfolios containing resources with economic or physical lives that extend beyond the planning period. The utility should also modify projected lifetimes as necessary to be consistent with the compliance scenario under analysis. In addition, the utility should include, if material, sensitivity analyses on a range of reasonably possible regulatory futures for nitrogen oxides, sulfur oxides, and mercury to further inform the preferred portfolio selection. The Environmental Externalities discussion in Appendix 3.2 describes our process for addressing these costs. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 26 APPENDIX - CHAPTER 2 APPENDIX 2.1: ECONOMIC OUTLOOK AND CUSTOMER COUNT FORECAST I. Service Area Economic Performance and Outlook Avista’s core service area for natural gas includes Eastern Washington, Northern Idaho, and Southwest Oregon. Smaller service islands are also located in rural South-Central Washington and Northeast Oregon. Our service area is dominated by four metropolitan statistical areas (MSAs): the Spokane-Spokane Valley, WA MSA (Spokane-Stevens counties); the Coeur d’Alene, ID MSA (Kootenai County); the Lewiston-Clarkson, ID-WA MSA (Nez Perce-Asotin counties); the Medford, OR MSA (Jackson County); and Grants Pass, OR MSA (Josephine County). These five MSAs represent the primary demand for Avista’s natural gas and account for 75% of both customers (i.e., meters) and load. The remaining 25% of customers and load are spread over low density rural areas in all three states. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 27 APPENDIX - CHAPTER 2 Figure 1: Employment and Population Recovery, December 2007- December 2020 Data source: Employment from the BLS; population from the U.S. Census. In the wake of the Great Recession, our service area recovered more slowly than the U.S. Although the U.S. recession officially ended in June 2009 (dated by the National Bureau of Economic Research), our service area did not start a significant employment recovery until the second half of 2012 (Figure 1, top and bottom graph). However, by the end of 2015, year-over-year employment growth exceeded U.S. growth and employment levels returned to pre-recession levels. Due to strong employment growth in the 2016-2019 period, the total percentage gain in employment was roughly the same as the U.S. by the middle of 2018. As a result, service area population growth, which is significantly influenced by in- migration through employment opportunities, continued to improve after 2014 (Figure 2). This is important because population growth is the largest contributor to overall customer growth. However, as Figure 1 shows Avista’s service areas did not escape the employment impacts of COIVD-19 induced recession at the start of 2020. The expectation in IRP customer forecast is that COVID-19 recession will slow population growth in 2021, with a return to pre-pandemic growth starting in 2022. Historically, service area population growth has slowed in one or more years following an employment shock. -16% -14% -12% -10% -8% -6% -4% -2% 0% 2% 4% De c - 0 7 Ap r - 0 8 Au g - 0 8 De c - 0 8 Ap r - 0 9 Au g - 0 9 De c - 0 9 Ap r - 1 0 Au g - 1 0 De c - 1 0 Ap r - 1 1 Au g - 1 1 De c - 1 1 Ap r - 1 2 Au g - 1 2 De c - 1 2 Ap r - 1 3 Au g - 1 3 De c - 1 3 Ap r - 1 4 Au g - 1 4 De c - 1 4 Ap r - 1 5 Au g - 1 5 De c - 1 5 Ap r - 1 6 Au g - 1 6 De c - 1 6 Ap r - 1 7 Au g - 1 7 De c - 1 7 Ap r - 1 8 Au g - 1 8 De c - 1 8 Ap r - 1 9 Au g - 1 9 De c - 1 9 Ap r - 2 0 Au g - 2 0 De c - 2 0 Ye a r -ov e r -Ye a r , S a m e M o n t h S e a s o n a l l y A d j . Non-Farm Employment Growth (Dashed Shaded Box = Recession Period) Avista WA-ID-OR MSAs U.S. 75 80 85 90 95 100 105 De c - 0 7 Ap r - 0 8 Au g - 0 8 De c - 0 8 Ap r - 0 9 Au g - 0 9 De c - 0 9 Ap r - 1 0 Au g - 1 0 De c - 1 0 Ap r - 1 1 Au g - 1 1 De c - 1 1 Ap r - 1 2 Au g - 1 2 De c - 1 2 Ap r - 1 3 Au g - 1 3 De c - 1 3 Ap r - 1 4 Au g - 1 4 De c - 1 4 Ap r - 1 5 Au g - 1 5 De c - 1 5 Ap r - 1 6 Au g - 1 6 De c - 1 6 Ap r - 1 7 Au g - 1 7 De c - 1 7 Ap r - 1 8 Au g - 1 8 De c - 1 8 Ap r - 1 9 Au g - 1 9 De c - 1 9 Ap r - 2 0 Au g - 2 0 De c - 2 0 No n -Fa r m E m p l o y m e n t F e b 2 0 2 0 = 1 0 0 Non-Farm Employment Level (Dashed Shaded Box = Recession Period) Avista WA-ID-OR MSAs U.S. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 28 APPENDIX - CHAPTER 2 Figure 2: Avista MSA Annual Population Growth, 2005-2019 Figure 3 shows that compared to the 2018 IRP, actual average customer growth in WA -ID over the 2018- 2018 period is considerably higher than forecasted. This reflects (1) stronger than expected population growth, especially in ID, and (2) Avista’s LEAP gas conversion program in WA (which expired in February 2019). In contrast, OR’s actual growth rate is equal to forecast over the same period. Figure 4 shows since the 2018 IRP, customer growth has significantly exceeded population growth, which reflects customer growth from existing homes converting to gas in addition to new construction installing gas. Compared to the 2018 IRP, this IRP shows a system-wide downward revision of approximately 1,400 customers by 2040. This reflects the net impact of a 1,400-customer increase in WA-ID and 2,800 decrease in OR. The OR change reflects lower forecasted population growth in the Roseburg and Klamath service regions. Figure 5 and Table 1 show the change in the customer forecast by for the system and by class between the 2016 and 2018 IRPs. 1.6%1.6%1.6% 1.2% 0.9% 0.7% 0.5% 0.4% 0.7% 1.0% 1.2% 1.6%1.6% 1.5%1.5% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 29 APPENDIX - CHAPTER 2 Figure 3: Comparison of 2018-IRP Customer Growth Forecasts to Actuals, 2018-2020 Data source: Company data. 1.9% 1.6%1.5%1.6% 2.6% 2.3% 2.0% 2.3% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2018 2019 2020 2018-2020 Average WA-ID Forecasted vs. Actual Customer Growth Rates WA-ID 2018 IRP Forecast WA-ID Actual 1.3% 1.2%1.1%1.2% 1.3%1.3% 1.0% 1.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 2018 2019 2020 2018-2020 Average OR Forecasted vs. Actual Customer Growth Rates OR 2018 IRP Forecast OR Actual Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 30 APPENDIX - CHAPTER 2 Figure 4: Customer and Population Growth, 2005-2019 Data source: Company data. 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 OR Population Growth vs. Residential Customer Growth OR Customer Growth OR Population Growth 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 WA-ID Population Growth vs. Residential Customer Growth WA-ID Customer Growth WA-ID Population Growth Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 31 APPENDIX - CHAPTER 2 Table 1: Change in Forecast between the 2018 IRP and 2021 IRP in 2040 Area Residential Commercial Industrial Total Change WA-ID +2,493 - 1,077 -22 +1,394 OR -2,440 -351 -2 -2,793 System 53 -1,428 -24 -1,400 Figure 5: Comparison IRP Forecasted Customer Growth in WA-ID and OR, 2021-2040 Data source: Company data. In past IRPs, the modeling approach for the majority of commercial customers assumed that residential customer growth (WA-ID schedule 101 and OR schedule 410 in Medford and Klamath Falls regions) is a driver of commercial customer growth (WA-ID schedule 101 and OR schedule 420 in Medford and Klamath Falls). The use of residential customers as a forecast driver for commercial customers reflects the historically high correlation between residential and commercial customer growth rates. However, because of the LEAP program, schedule 101 residential customers are no longer the primary driver in the commercial forecast in WA. The LEAP program altered the historical relationship between residential and commercial customers because the program was not offered to commercial customers. As a result, population has replaced residential customers as the primary driver of commercial customer forecast. This is also the case for ID, but for different reasons. In ID, the relationship between residential and commercial customers is changing such that using population directly produces better model diagnostics. The forecast for system-wide industrial customers is lower compared to the 2018 IRP. Approximately 90% of industrial customers are in WA-ID. Figure 6 (top graph) shows total system-wide firm industrial customers since 2004. Following a sharp drop over the 2004-2006 period, firm industrial customers started to decline starting in 2016. It should be noted that some of the decline between 2019 and 2020 reflects a reclassification of some WA-ID customers to firm commercial schedules. This reclassification reflects customers that were incorrectly placed in firm industrial schedules in years past. Separating out WA-ID and OR (middle graph), the number of firm customers in WA-ID continuously fell over the 2004- 2011 period; stabilized over the 2012-15; and then started to decline again. In contrast, OR customers increased over the 2004-2011 period (bottom graph). However, after a period of stability during the 2011- 2014 period, customers declined modestly. Therefore, like the 2018 IRP, the current IRP forecast shows a declining base. 300,000 320,000 340,000 360,000 380,000 400,000 420,000 440,000 460,000 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 WA-ID-OR-Base 2018 IRP WA-ID-OR-Base 2021 IRP Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 32 APPENDIX - CHAPTER 2 Figure 7: Industrial Customer Count, 2004-2020 Data source: Company data. II. IRP Forecast Process and Methodology The customer forecasts are generated from forecasting models that are either regression models with ARIMA error corrections or simple smoothing models. The ARIMA error correction models are estimated 190 200 210 220 230 240 250 260 270 280 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 WA-ID-OR Firm Industrial Customers 190 200 210 220 230 240 250 260 270 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 WA-ID Firm Industrial Customers 0 5 10 15 20 25 30 35 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 OR Firm Industrial Customers Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 33 APPENDIX - CHAPTER 2 using SAS/ETS software. The customer forecasts are used as input into Sendout® to generate the IRP load forecasts. Population growth is the key driver for the residential and commercial customer forecasts. Other variables include (1) seasonal dummy variables and (2) outlier dummy variables that control for extreme customer counts associated with double billing, software conversions, and customer movements from one billing schedule to another. As noted above, the population growth forecast is the key driver behind the customer forecast for WA-ID residential schedules 101 and OR residential schedule 410. These two schedules represent the majority of customers and, therefore, drive overall residential customer growth. Because of their size and growth potential, a multi-step forecasting process has been developed for the Spokane-Spokane Valley, Coeur d’Alene, and Medford+Grants Pass MSAs. The process for forecasting population growth starts with a medium-term forecast horizon (2021-2025). This medium-term forecast is typically used for the annual financial forecast. However, during IRP years, this medium-term forecast is augmented with third party forecasts that cover the next twenty years. Starting with Figure 8, the five-year population forecast is a multi-step process that begins with a GDP forecast that drives the regional employment forecast, which in turn, drives a five-year population forecast. Figure 8: Forecasting Population Growth, 2020-2025 The forecasting models for regional employment growth are: [1] 𝐺𝐸𝑀𝑃𝑦,𝑆𝑃𝐾= 𝜗0 +𝜗1𝐺𝐺𝐷𝑃𝑦,𝑈𝑆+𝜗2𝐺𝐺𝐷𝑃𝑦−1,𝑈𝑆+𝜗3𝐺𝐺𝐷𝑃𝑦−2,𝑈𝑆+ 𝜔𝑆𝐶𝐷𝐾𝐶,1998−2000=1+ 𝜔𝑆𝐶𝐷𝐻𝐵,2005−2007=1 +𝜖𝑡,𝑦 [2] 𝐺𝐸𝑀𝑃𝑦,𝐾𝑂𝑂𝑇= 𝛿0 +𝛿1𝐺𝐺𝐷𝑃𝑦,𝑈𝑆+𝛿2𝐺𝐺𝐷𝑃𝑦−1,𝑈𝑆+𝛿3𝐺𝐺𝐷𝑃𝑦−2,𝑈𝑆+ 𝜔𝑂𝐿𝐷1994=1+ 𝜔𝑂𝐿𝐷2009=1 + 𝜔𝑆𝐶𝐷𝐻𝐵,2005−2007=1+𝜖𝑡,𝑦 [3] 𝐺𝐸𝑀𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆= 𝜙0 +𝜙1𝐺𝐺𝐷𝑃𝑦,𝑈𝑆+𝜙2𝐺𝐺𝐷𝑃𝑦−1,𝑈𝑆+𝜙3𝐺𝐺𝐷𝑃𝑦−2,𝑈𝑆+ 𝜔𝑆𝐶𝐷𝐻𝐵,2004−2005=1+𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (1,0,0)(0,0,0)12 SPK is Spokane, WA (Spokane MSA), KOOT is Kootenai, ID (Coeur d’Alene MSA), and JACK+JOS is for the combination of Jackson County, OR (Medford MSA) and Josephine County, OR (Grants Pass MSA). GEMPy is employment growth in year y, GGDPy,US is U.S. real GDP growth in year y. DKC is a dummy variable for the collapse of Kaiser Aluminum in Spokane, and DHB, is a dummy for the housing bubble, specific to each region. The average GDP forecasts are used in the estimated model to generate five- year employment growth forecasts. The employment forecasts are then averaged with IHS’s forecasts for the same counties so that: [4] 𝐹𝐴𝑣𝑔(𝐺𝐸𝑀𝑃𝑦,𝑆𝑃𝐾)= 𝐹(𝐺𝐸𝑀𝑃𝑦,𝑆𝑃𝐾)+𝐹(𝐺𝐼𝐻𝑆𝐸𝑀𝑃)𝑦,𝑆𝑃𝐾) 2 [5] 𝐹𝐴𝑣𝑔(𝐺𝐸𝑀𝑃𝑦,𝐾𝑂𝑂𝑇)= 𝐹(𝐺𝐸𝑀𝑃𝑦,𝐾𝑂𝑂𝑇 )+𝐹(𝐺𝐼𝐻𝑆𝐸𝑀𝑃𝑦,𝐾𝑂𝑂𝑇) 2 Average GDP Growth Forecasts: •IMF, FOMC, Bloomberg, etc. •Average forecasts out 5-yrs from 2020. Non-farm Employment Growth Model: •Model links year y, y-1, and y-2 GDP growth to year y regional employment growth. •Forecast out 5-yrs from 2020. •Averaged with GI forecasts. Regional Population Growth Models: •Model links regional, U.S., and CA year y-1 employment growth to year y county population growth. •Forecast out 5-yrs from 2020 for Spokane, WA; Kootenai, ID; and Jackson+Josephine, OR. •Averaged with IHS forecasts in ID and OR and OFM forecasts in WA. •Growth rates used to generate population forecasts for customer forecasts for residential schedules 1, 101, and 410. EMP GDP Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 34 APPENDIX - CHAPTER 2 [6] 𝐹𝐴𝑣𝑔(𝐺𝐸𝑀𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆)= 𝐹(𝐺𝐸𝑀𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆 )+𝐹(𝐺𝐼𝐻𝑆𝐸𝑀𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆) 2 Averaging reduces the systematic errors of a single-source forecast. The averages [8.4] through [8.6] are used to generate the population growth forecasts, which are described next. The forecasting models for regional population growth are: [7] 𝐺𝑃𝑂𝑃𝑦,𝑆𝑃𝐾= 𝜅0 +𝜅1𝐺𝐸𝑀𝑃𝑦−1,𝑆𝑃𝐾+𝜅2𝐺𝐸𝑀𝑃𝑦−2,𝑈𝑆+ 𝜔𝑂𝐿𝐷2001=1+𝜖𝑡,𝑦 [8] 𝐺𝑃𝑂𝑃𝑦,𝐾𝑂𝑂𝑇= 𝛼0 +𝛼1𝐺𝐸𝑀𝑃𝑦−1,𝐾𝑂𝑂𝑇+𝛼2𝐺𝐸𝑀𝑃𝑦−2,𝑈𝑆+ 𝜔𝑂𝐿𝐷1994=1 + 𝜔𝑂𝐿𝐷2002=1+ 𝜔𝑆𝐶𝐷𝐻𝐵,2007↑=1 +𝜖𝑡,𝑦 [9] 𝐺𝑃𝑂𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆= 𝜓0 +𝜓1𝐺𝐸𝑀𝑃𝑦−1,𝐽𝐴𝐶𝐾+𝐽𝑜𝑠+𝜓2𝐺𝐸𝑀𝑃𝑦−2,𝐶𝐴+ 𝜔𝑂𝐿𝐷1991=1+ 𝜔𝑆𝐶𝐷𝐻𝐵,2004−2006=1 +𝜖𝑡,𝑦 D2001=1 and D1991=1 are a dummy variables for recession impacts. GEMPy-1,US is U.S. employment growth in year y-1 and GEMPy-2, and CA is California Employment growth in year y-1. Because of its close proximity to CA, CA employment growth is better predictor of Jackson, OR employment growth than U.S. growth. The averages [8.4] through [8.6] are used in [7] through [9] to generate population growth forecasts. These forecasts are combined with IHS’s forecasts for Kootenai, ID; Jackson, OR; Josephine, OR, and the Office for Financial Management (OFM) for Spokane, WA in the form of a simple average: [10] 𝐹𝐴𝑣𝑔(𝐺𝑃𝑂𝑃𝑦,𝑆𝑃𝐾)= 𝐹(𝐺𝑃𝑂𝑃𝑦,𝑆𝑃𝐾)+𝐹(𝐺𝑂𝐹𝑀𝑃𝑂𝑃𝑦,𝑆𝑃𝐾) 2 [11] 𝐹𝐴𝑣𝑔(𝐺𝑃𝑂𝑃𝑦,𝐾𝑂𝑂𝑇)= 𝐹(𝐺𝑃𝑂𝑃𝑦,𝐾𝑂𝑂𝑇 )+𝐹(𝐺𝐼𝐻𝑆𝑃𝑂𝑃𝑦,𝐾𝑂𝑂𝑇) 2 [12] 𝐹𝐴𝑣𝑔(𝐺𝑃𝑂𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆)= 𝐹(𝐺𝑃𝑂𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆 )+𝐹(𝐺𝐼𝐻𝑆𝑃𝑂𝑃𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆) 2 Here, FAvg(GPOPy) is used to forecast population to forecast residential customers in WA-ID 101 and OR 410 schedules for the Spokane, Kootenai, and Jackson+Josephine areas. In the case of Spokane, OFM forecasts are used because the IHS’s forecasts exhibit a level and time-path that is inconsistent with recent population behavior. The population growth forecasts for the Douglas (Roseburg), Klamath (Klamath Falls); and Union (La Grande) counties come directly from IHS. Since all forecasted growth rates are annualized, they are converted to monthly rates. By way of example, the following is regression model for residential 101 customers for the Spokane region: 𝐶𝑡,𝑦,𝑊𝐴101.𝑟=𝛼0 +𝜏𝑃𝑂𝑃𝑡,𝑦,𝑆𝑃𝐾+𝝎𝑺𝑫𝑫𝒕,𝒚+𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2015=1+𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2016=1 +𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2018=1 +𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2018=1+𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (12,1,0)(0,0,0)12 Where: tPOPt,y,SPK = t is the coefficient to be estimated and POPt,y,SPK is the interpolated population level in month t, in year y, for Spokane. The monthly interpolation of historical data assumes that between years, population accumulates following the standard population growth model: POPy,SPK = POPy- 1,SPKer. wSDDt,y = wSD is a vector of seasonal dummy (SD) coefficients to be estimated and Dt,y is a vector monthly seasonal dummies to account of customer seasonality. Dt,y = 1 for the relevant month. wOLDOct 2015=1 = wOL outlier (OL) coefficient to be estimated and D is a dummy that equals 1 for October 2015. There are three additional outlier dummies that follow August 2010. In some cases, the dummy variable may be a structural change (SC) dummy that takes the form, for example, wSCDOct 2015↑=1; in this case, the dummy takes the value of 1 for October 2015 forward. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 35 APPENDIX - CHAPTER 2 ARIMAet,y(12,1,0)(0,0,0)12 = is the error correction applied to the model’s initial error structure. This term follows the following from ARIMAet,y (p,d,q)(pk,dk,qk)k. The term p is the autoregressive (AR) order, d is the differencing order, and q is the moving average (MA) order. The term pk is the order of seasonal AR terms, dk is the order of seasonal differencing, and qk is the seasonal order of MA terms. The seasonal values are related to “k,” which is the frequency of the data. With the current data set, k = 12. The customer forecast is generated by inputting forecasted values of POPt,y,SPK into the model estimated with historical data. All customer forecast equations are shown in the last section of this appendix. The above describes the medium-term population forecast to 2025. For IRPs, the medium-term customer forecasts must be extended an additional 15+ years. This is done using the IHS population forecast for Kootenai, Jackson+Josephine, Douglas, Klamath, and Union counties. That is, IHS is the sole source for forecasted population growth beyond the medium-term forecast horizon by [10] through [12]. In the case of Spokane County, the forecast from Washington’s Office of Financial Management (OFM) is instead of IHS’s. The choice to use OFM’s forecasts reflects the unusually sharp changes that have occurred in the IHS forecasts for the Spokane MSA over a short period of time. Figure 9 shows how much these forecasts have changed in level and shape since June 2012. From the October 2015 to March 2018 forecasts, there were significant changes for the 2015-2025 period. There is no clear rational for why IHS’s forecasts changed so significantly between 2012 and 2018. For firm schedules without explicit regression drivers like population, the forecast model run to cover the entire forecast period of the IRP. Figure 9: Spokane MSA Forecast Comparison Data source: IHS, Washington State of Office of Financial Management, and U.S. Census. 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 IHS June 2012 Forecast IHS October 2015 Forecast IHS March 2016 Forecast Actual OFM 2017 IHS March 2017 Forecast IHS March 2018 Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 36 APPENDIX - CHAPTER 2 Figure 10: Annual Customer Growth for the Three Rate Classes, 2005-2020 Data source: Company data. Figure 10 demonstrates that residential and commercial growth rates are highly correlated over the long- run. Over the period shown, residential and commercial averaged about 1.6% and 1.1%, respectively. Residential growth is, on average, higher than population growth because of existing households converting to natural gas at the same time new construction is installing gas. However, by 2009, with the Great Recession and increased natural gas saturation, the different between customer growth and population growth almost disappears. As the economy improved in the 2015-2019 period, residential and commercial growth accelerated due to an improved economy and gas conversion incentives in Washington in the 2016-2019 period. In contrast, the behavior of Industrial customer growth looks quite different. Customer growth is both lower and more volatile. The average growth rate since 2005 is -1.4%, reflecting a trend of nearly flat or slowly declining customers, depending on the jurisdiction. In addition, the standard deviation of year- over-year growth is 2% compared to 0.8% for residential and 0.6% for commercial growth. The current IRP forecast reflects this historical trend of weak growth. Establishing High-Low Cases for IRP Customer Forecast The customer forecasts for this IRP include high and low cases that set the expected bounds around the base-case. Table 2 shows the base, low, and high customer forecasts along with the underlying population growth assumption. The underlying population forecast is the primary driver for each of the three cases. -7% -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Residential Commercial Industrial Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 37 APPENDIX - CHAPTER 2 Table 2: Alternative Growth Cases, 2021-2045 Area Low Growth Base Growth High Growth WA-ID: WA-ID Customers 0.7% 1.1% 1.5% WA Population 0.4% 0.7% 1.0% ID Population 0.8% 1.4% 2.0% OR: OR Customers 0.5% 0.7% 0.9% OR Population 0.3% 0.5% 0.7% System: System Customers 0.6% 1.0% 1.3% System Population 0.4% 0.8% 1.1% III. IRP Customer Forecast Equations 1. WA residential customer forecast models: [1] 𝐶𝑡,𝑦,𝑊𝐴101.𝑟=𝛼0 +𝜏𝑃𝑂𝑃𝑡,𝑦,𝑆𝑃𝐾+𝝎𝑺𝑫𝑫𝒕,𝒚+𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2015=1 +𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2016=1+𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2018=1+ 𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2018=1+𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (12,1,0)(0,0,0)12 [1] Model notes: 1. WA schedule 2 customers are schedule 1 customers that have been moved to a new low-income schedule. The schedule started in October 2015, so there is insufficient data for a more complicated model. In the first years of the program, the number of customers in this schedule started slowly declining under the original cap of 300 customers. However, this schedule has had its cap removed and the number of customers has started to increase. In the spring 2020 forecast the average Δ = 6.6. [2] 𝐶𝑡,𝑦,𝑊𝐴102.𝑟= 𝐶𝑡−1 +∆̅,𝑤ℎ𝑒𝑟𝑒 ∆̅ = ∑(𝐶𝑡,𝑦−𝐶𝑡−1,𝑦) 𝑁𝑓𝑜𝑟 𝑁 𝑚𝑜𝑛𝑡ℎ𝑠 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 𝑂𝑐𝑡𝑜𝑏𝑒𝑟 2015 −𝑀𝑎𝑦 2020 [2] Model notes: 1. WA schedule 102 customers are schedule 101 customers that have been moved to a new low-income schedule. The schedule started in October 2015, so there is insufficient data for a more complicated model. In the first years of the program, the number of customers in this schedule started slowly declining under the original cap of 300 customers. However, this schedule has had its cap removed and the number of customers has started to increase. In the spring 2020 forecast the average Δ = 3.4. [3] 𝐶𝑡,𝑦,𝑊𝐴111.𝑟=𝛼0 + 𝜔𝑆𝐶𝐷𝑂𝑐𝑡 2011↑=1+ 𝜔𝑆𝐶𝐷𝑂𝑐𝑡 2013↑=1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (8,1,0)(0,0,0)12 [3] Model notes: 1. Error structure white noise, but not quite normally distributed. 2. SC dummies control for a step-up in customers starting in October 2011 and October 2013. 2. ID residential customer forecast models: [4] 𝐶𝑡,𝑦,𝐼𝐷101.𝑟=𝛽0 +𝜏𝑃𝑂𝑃𝑡,𝑦,𝐾𝑂𝑂𝑇+𝝎𝑺𝑫𝑫𝒕,𝒚+𝜔𝑆𝐶𝐷𝐽𝑎𝑛 2007↑=1 +𝛾𝑅𝐴𝑀𝑃𝑇𝐽𝑎𝑛 2007 + 𝜔𝑂𝐿𝐷𝑀𝑎𝑦 2005=1 + 𝜔𝑂𝐿𝐷𝐽𝑢𝑙 2005=1 + 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2005=1+ 𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2005=1+𝜔𝑂𝐿𝐷𝐽𝑢𝑛 2006=1+ 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2006=1 + 𝜔𝑂𝐿𝐷𝐽𝑢𝑛 2007=1+ 𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2007=1 + 𝜔𝑂𝐿𝐷𝐴𝑢𝑔 2011=1 + 𝜔𝑂𝐿𝐷𝑆𝑒𝑝𝑡 2011=1+ 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2018=1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (9,1,0)(0,0,0)12 [4] Model notes: 1. SC dummy and ramping time trend control for a change in the time-path of customer growth staring in January 2007. 2. The large number of OL dummies controls for a range of factors including changes in billing cycles, billing errors, and software changes. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 38 APPENDIX - CHAPTER 2 [5] 𝐶𝑡,𝑦,𝐼𝐷111.𝑟=1 12 ∑𝐶𝑡−𝑗12𝑗=1 [5] Model notes: 1. Model changed to a 12-month moving average in fall 2020. There has been no customer growth since 2012. 3. WA commercial customer forecast models: [6] 𝐶𝑡,𝑦,𝑊𝐴101.𝑐= 𝛼0 + 𝛼1𝑃𝑂𝑃𝑡,𝑦,𝑆𝑃𝐾+ 𝝎𝑺𝑫𝑫𝒕,𝒚+𝛾𝑅𝐴𝑀𝑃𝑇𝐽𝑎𝑛 2010 +𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2005=1+𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2007=1+𝜔𝑂𝐿𝐷𝑆𝑒𝑝 2013=1+ +𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2013=1+𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2015=1 +𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2016=1 +𝜔𝑂𝐿𝐷𝐽𝑢𝑛 2017=1 +𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2019=1 +𝜓𝐶𝑂𝑉𝐼𝐷𝐷𝐴𝑝𝑟−𝐽𝑢𝑙 2020=1+ 𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (2,1,0)(0,0,0)12 [6] Model notes: 1. In the June 2017 forecast, Ct,y,WA101.r (residential customers from residential schedule 101) was replaced with POP for Spokane. This was done to account for a new hookup tariff for residential gas customers in WA’s LEAP program. This tariff is more gen erous than the previous long-standing tariff. In addition, any savings in the hookup process could be passed on to the customer for equipment purchases or replacement. Since this tariff change excluded commercial and industrial customers, this significantly accelerated residential hookups but not commercial hookups. As a result, this historical relationship between residential and commercial customer growth has been altered. See also Tables 5.1 and 5.2. 2. RAMP variable was added in June 2019 because of increasing evidence that the sensitivity of commercial customer growth to population growth fell after 2009. 3. COVIDD dummy controls for the impact of the shut-down shock. [7] 𝐶𝑡,𝑦,𝑊𝐴111.𝑐= 𝛼0 + 𝝎𝑺𝑫𝑫𝒕,𝒚+𝛾𝑅𝐴𝑀𝑃𝑇𝐴𝑝𝑟 2016 +𝛾𝑅𝐴𝑀𝑃𝑇𝑀𝑎𝑟 2018 +𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2011↑=1 +𝜔𝑆𝐶𝐷𝐴𝑝𝑟 2016↑=1 +𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2007=1+ 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2013=1 +𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2013=1 +𝜔𝑂𝐿𝐷𝐽𝑢𝑛 2017=1+𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2018=1+𝜔𝑂𝐿𝐷𝑆𝑒𝑝 2018=1 +𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2018=1+𝜔𝑂𝐿𝐷𝑆𝑒𝑝 2019=1 + 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2019=1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (1,1,0)(0,0,0)12 [7] Model notes: 1. SC dummies and RAMP variables control for a complex set of steps and slope changes in the customer count. 4. ID commercial customer forecast models: [8] 𝐶𝑡,𝑦,𝐼𝐷101.𝑐= 𝛽0 + 𝛽1𝑃𝑂𝑃𝑡,𝑦,𝐾𝑜𝑜𝑡+𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2005↑=1+𝜔𝑆𝐶𝐷𝑆𝑒𝑝 2006↑=1+𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2007↑=1+𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2005=1+ 𝜔𝑂𝐿𝐷𝐽𝑢𝑛 2005=1 +𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2005=1 +𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2005=1+𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2007=1+𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2015=1 +𝜔𝑂𝐿𝐷𝑆𝑒𝑝 2018=1+ 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2018=1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (9,1,0)(3,1,0)12 [8] Model notes: 1. In the spring 2020 forecast, Ct,y,ID101.r (residential customers from residential schedule 101) was replaced with POP for Kootenai. This was done because POP produced a model with improved diagnostic tests. Previously, Ct,y,ID101.r was being used as a forecast driver because of the historical positive correlation between residential and commercial customer growth. See Tables 5.1 and 5.2. 2. SC dummies control for a step-up in customers in November 2005, September 2006, and November 2007. [9] 𝐶𝑡,𝑦,𝐼𝐷111.𝑐= 𝛽0 +𝛾𝑅𝐴𝑀𝑃𝑇𝐽𝑎𝑛 2012 +𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2008↑=1+𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2011↑=1+𝜔𝑆𝐶𝐷𝐽𝑎𝑛 2012↑=1+𝜔𝑂𝐿𝐷𝑆𝑒𝑝 2009=1 + 𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2011=1 +𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2015=1 +𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2015=1+𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (1,1,0)(0,0,0)12 [9] Model notes: 1. SC dummies control for a large step-up in customers starting in November 2008 and November 2011. 2. Ramping time trend and SC dummy starting in Jan 2012 control for a slowdown in customer growth. 5. WA industrial customer forecasts models: [10] 𝐶𝑡,𝑦,𝑊𝐴101.𝑖= 𝛼0 + 𝜔𝑆𝐶𝐷𝐴𝑝𝑟 2008↑=1+ 𝜔𝑆𝐶𝐷𝑂𝑐𝑡 2013↑=1 +𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2006=1+𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2007=1+ 𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2007=1 + + 𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2013=1+ 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2015=1+ 𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2017=1+𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (7,1,0)(0,0,0)12 [10] Model notes: 1. SC dummies control for a step-down in customers starting in April 2008 and October 2013. [11] 𝐶𝑡,𝑦,𝑊𝐴111.𝑖= 𝐴𝑅𝐼𝑀𝐴(2,1,0)(0,0,0)12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 39 APPENDIX - CHAPTER 2 [11] Model notes: 1. Error structure is white noise, but not quite normally distributed. 2. In January 2019, all three customers in schedule 121 industrial were moved to schedule 111, in addition to Boise Cascade A rden, WA (under the company name Columbia Cedar) from schedule 25. This change of four customers falls within the normal variation of customers in schedule 111; therefore, no explicit adjustment is made to the model [7.40] to account for this shift. 6. ID industrial customer forecast models: [12] 𝐶𝑡,𝑦,𝐼𝐷101.𝑖=𝛽0 + 𝜔𝑆𝐶𝐷𝐷𝑒𝑐 2010↑=1+ 𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2011↑=1+ 𝜔𝑆𝐶𝐷𝐷𝑒𝑐 2011↑=1+ 𝜔𝑆𝐶𝐷𝐽𝑢𝑛 2014↑=1+ 𝜔𝑆𝐶𝐷𝐽𝑎𝑛 2018↑=1 + + 𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2008=1+ 𝜔𝑂𝐿𝐷𝐽𝑢𝑙 2014=1+ 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2015=1+ 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2016=1+ 𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2017=1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (13,1,0)(0,0,0)12 [12] Model notes: 1. SC dummies control for step-downs in customers starting in December 2010, November 2011, December 2011, and January 2018; June 2014 controls for a step-up in customers. 2. The large number of OL dummies controls for a range of factors including changes in billing cycles, billing errors, and software changes. [13] 𝐶𝑡,𝑦,𝐼𝐷111.𝑖= 1 12 ∑𝐶𝑡−𝑗12𝑗=1 [13] Model notes: 1. Period of restriction reflects the restriction on the UPC model for this schedule. 2. Customer count stabilized in 2012; customer count fluctuates between 31 and 34 without any clear trend or seasonality. [14] 𝐶𝑡,𝑦,𝐼𝐷112.𝑖= 1 12∑𝐶𝑡−𝑗12𝑗=1 [14] Model notes: 1. Customer count tends to increase in steps following prolonged periods of stability. No clear seasonality present. 7. Medford, OR forecasting models: The forecasting models for the Medford region (Jackson County) are given below for the residential, commercial, and industrial sectors: Residential Sector, Customers: [15] 𝐶𝑡,𝑦,𝑀𝐸𝐷410.𝑟= 𝛼0 +𝛼1𝑃𝑂𝑃𝑡,𝑦,𝐽𝐴𝐶𝐾+𝐽𝑂𝑆+𝝎𝑺𝑫𝑫𝒕,𝒚+𝛾𝑅𝐴𝑀𝑃𝑇𝐽𝑎𝑛 2008 +𝜔𝑆𝐶𝐷𝐽𝑎𝑛 2008↑ =1 + 𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2004↑ =1 + 𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2005 =1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (7,1,0)(0,0,0)12 [15] Model notes: 1. SC dummy and ramping time trend control for a change in the time-path of customer growth staring in January 2008. 2. POP is Jackson plus Josephine counties. Commercial Sector, Customers: [16] 𝐶𝑡,𝑦,𝑀𝐸𝐷420.𝑐= 𝛼0 +𝛼1𝐶𝑡,𝑦,𝑀𝐸𝐷410.𝑟 + 𝝎𝑺𝑫𝑫𝒕,𝒚+ 𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2009 =1 + 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2016 =1 +𝜓𝐶𝑂𝑉𝐼𝐷𝐷𝐴𝑝𝑟−𝐽𝑢𝑙 2020=1 + 𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (7,1,0)(0,0,0)12 [16] Model notes: 1. Ct,y,MED410.r are residential customers from residential schedule 410. They are being used as a forecast driver because of the historical positive correlation between residential and commercial customer growth. See Tables 5.1 and 5.2. However, in th e future, POP may become a better driver. Model results with POP are fairly close to model shown above. 2. COVIDD dummy controls for the impact of the shut-down shock. [17] 𝐶𝑦,𝑀𝐸𝐷424.𝑐= 𝐶𝑦−1 +(𝛼0̂+𝛼1̂∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦) [17] Model notes: Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 40 APPENDIX - CHAPTER 2 1. This model reflects a recommendation by Oregon staff in the 2016 rate case to include employment as an economic driver for schedule 424 commercial customers. The estimated equation in parenthesis reflects the regression estimated of ∆𝐶𝑦,𝑀𝐸𝐷424.𝑐= 𝛼0 +𝛼1∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦+𝜀𝑡 using annual customer data since 2004. Annual data is used to smooth over the sometimes volatile changes in the monthly customer number. In addition, customer increases and decreases around the long-run trend tend to occur in steps. The combination of steps and month-to-month volatility creates significant economic problems when trying to model around the monthly data. For example, even with intervention variables, tests for error normality always indicated non-normal error terms with the use of monthly data. 2. ∆𝐶𝑦,𝑀𝐸𝐷424.𝑐 is the change in customers in year y (customer change between year y and y-1) and ∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦 is the change in total non-farm employment in Jackson, Josephine, Klamath, and Douglas counties in year y-1 (employment change between year y-1 and y-2). Staff originally suggested lagged total employment for Oregon, but the correlation between schedule 424 customers and employment for the three-county area is higher. The forecasted employment values for Jackson+Josephine County are derived from the employment growth forecasts used in the Jackson+Josephine County population forecast. The forecasts for Douglas and Klamath counties come from IHS. In IRP years, IHS forecasts all counties will be used for the out years. 3. The annual forecast value for each year, F(∙), is assumed to hold for each month of that year. That is: 𝐹(𝐶𝑦,𝑀𝐸𝐷424.𝑐)= 𝐹(𝐶𝑡,𝑦,𝑀𝐸𝐷424.𝑐). Given the step-like behavior of the monthly series, this is a reasonable assumption. 4. The forecast and regressions for this schedule can be found in the Excel file folder “OR 4County Sch 424c Cus.” [18] 𝐶𝑡,𝑦,𝑀𝐸𝐷444.𝑐= 1 𝑖𝑓 (𝑇𝐻𝑀/𝐶𝑡,𝑦)𝑀𝐸𝐷,444.𝑐>0 [19] Model notes: 1. There is typically only one customer served by this schedule. Therefore, the customer forecast is automatically set to one whenever the load forecast is greater than zero. In IRP years, the forecast is repeated out monthly until December 2045. Industrial Sector, Customers: [19] 𝐶𝑡,𝑦,𝑀𝐸𝐷420.𝑖= 1 12∑𝐶𝑡−𝑗12𝑗=1 [19] Model notes: 1. Data starts November 2006. Excluding outliers in November 2006, November 2009, and February 2011, the customer count fluctuates between 9 and 16 without any clear trend or seasonality. Changes in the customer count occur in steps between prolonged periods of stability. [20] 𝐶𝑡,𝑦,𝑀𝐸𝐷424.𝑖=1 12 ∑𝐶𝑡−𝑗12𝑗=1 [20] Model notes: 1. Data starts January 2009. Excluding a January 2009 outlier, the customer count fluctuates between 1 and 3 without any clear trend or seasonality. Customer count is most frequently reported as 2; however, starting in March 2018, the customer cou nt fell to one. 8. Roseburg, OR forecasting models: The forecasting models for the Roseburg region (Douglas County) are given below for the residential, commercial, and industrial sectors: Residential Sector, Customers: [21] 𝐶𝑡,𝑦,𝑅𝑂𝑆410.𝑟= 𝜑0+𝜑1𝑃𝑂𝑃𝑡,𝑦,𝐷𝑂𝑈𝐺𝐿𝐴𝑆+𝝎𝑺𝑫𝑫𝒕,𝒚+ 𝜔𝑆𝐶𝐷𝐽𝑎𝑛 2005↑ =1 +𝜔𝑆𝐶𝐷𝐷𝑒𝑐 2005↑ =1+𝜔𝑆𝐶𝐷𝑁𝑜𝑣 2006↑ =1 + 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2004 =1+𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2004 =1+𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2007 =1+𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2008 =1+ 𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2009 =1 +𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2018 =1 + 𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2019 =1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (12,1,0)(0,0,0)12 [21] Model notes: 1. POP is population for Douglas County, OR. 2. SC dummies control for large step-ups in customers in 2005 and 2006. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 41 APPENDIX - CHAPTER 2 Commercial Sector, Customers: [22] 𝐶𝑡,𝑦,𝑅𝑂𝑆420.𝑐= 𝜑0 +𝜑1 𝑃𝑂𝑃𝑡,𝑦,𝐷𝑂𝑈𝐺𝐿𝐴𝑆+𝝎𝑺𝑫𝑫𝒕,𝒚+ 𝜔𝑆𝐶𝐷𝐷𝑒𝑐 2004↑ =1 +𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2004 =1+𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2005 =1 + 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2008 =1 + 𝜔𝑂𝐿𝐷𝑀𝑎𝑦 2016=1 + 𝜔𝑂𝐿𝐷𝑀𝑎𝑟 2019=1 +𝜔𝑂𝐿𝐷𝑆𝑒𝑝𝑡 2019 =1 + 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2019=1+𝜓𝐶𝑂𝑉𝐼𝐷𝐷𝐴𝑝𝑟−𝐽𝑢𝑙 2020=1+ 𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (9,1,0)(0,0,0)12 [22] Model notes: 1. Model does not use schedule 410 customers as driver. This reflects the lack of correlation between residential 410 and commercial 420 customer growth. However, POP was added for the 2018 gas IRP and it is significant at the 10% level 2. The lack of correlation noted in Point 1 could reflect Roseburg’s position between larger cities that offer a range of commercial activities. Competition from these cities may be inhibiting commercial growth in Roseburg. 3. SC dummy controls for a significant step-up in customers starting in December 2004. 4. COVIDD dummy controls for the impact of the shut-down shock. [23] 𝐶𝑡,𝑦,𝑅𝑂𝑆424.𝑐= 𝐶𝑦−1 +(𝜑0̂+𝜑1̂∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦) [23] Model notes: 1. This model reflects a recommendation by Oregon staff in the 2016 rate case to include employment as an economic driver for schedule 424 commercial customers. The estimated equation in parenthesis reflects the regression estimated of ∆𝐶𝑦,𝑅𝑂𝑆424.𝑐= 𝛼0 +𝛼1∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦+𝜀𝑡 using annual customer data since 2004. Annual data is used to smooth over the sometimes volatile changes in the monthly customer number. In addition, customer increases and decreases around the long-run trend tend to occur in steps. The combination of steps and month-to-month volatility creates significant economic problems when trying to model around the monthly data. For example, even with intervention variables, tests for error normality always indicated non-normal error terms with the use of monthly data. 2. ∆𝐶𝑦,𝑅𝑂𝑆424.𝑐 is the change in customers in year y (customer change between year y and y-1) and ∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦 is the change in total non-farm employment in Jackson, Josephine, Klamath, and Douglas counties in year y-1 (employment change between year y- 1 and y-2). Staff originally suggested lagged total employment for Oregon, but the correlation between schedule 424 customers and employment for the three-county area is higher. The forecasted employment values for Jackson+Josephine County are derived from the employment growth forecasts used in the Jackson+Josephine County population forecast. The forecasts for Douglas an d Klamath counties come from IHS. In IRP years, IHS forecasts for all counties will be used for the out years. 3. The annual forecast value for each year, F(∙), is assumed to hold for each month of that year. That is: 𝐹(𝐶𝑦,𝑅𝑂𝑆424.𝑐)= 𝐹(𝐶𝑡,𝑦,𝑅𝑂𝑆424.𝑐). Given the step-like behavior of the monthly series, this is a reasonable assumption. 4. The forecast and regressions for this schedule can be found in the Excel file file folder “OR 4County Sch 424c Cus.” Industrial Sector, Customers: [24] 𝐶𝑡,𝑦,𝑅𝑂𝑆420.𝑖= 1 12 ∑𝐶𝑡−𝑗12𝑗=1 [24] Model notes: 1. Data starts September 2009. Excluding a February 2015 outlier, the customer count fluctuates between 1 and 2 without any clear trend or seasonality. 2. Due to the Compass software conversion, February 2015 is excluded from the historical data. The conversion resulted in a double counting of customers in February 2015. Therefore, including this month leads to a significant over-forecast of customers. 9. Klamath Falls, OR forecasting models: The forecasting models for the Klamath Falls region (Klamath County) are given below for the residential, commercial, and industrial sectors: Residential Sector, Customers: [25] 𝐶𝑡,𝑦,𝐾𝐿𝑀410.𝑟= 𝛽0 +𝛽1𝑃𝑂𝑃𝑡,𝑦,𝐾𝐿𝐴𝑀𝐴𝑇𝐻+𝝎𝑺𝑫𝑫𝒕,𝒚 + 𝜔𝑂𝐿𝐷𝐴𝑝𝑟 2015 =1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (7,1,0)(0,0,0)12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 42 APPENDIX - CHAPTER 2 [25] Model notes: 1. POP is for Klamath County, OR. Commercial Sector, Customers: [26] 𝐶𝑡,𝑦,𝐾𝐿𝑀420.𝑐= 𝛽0 +𝛽1𝐶𝑡,𝑦,𝐾𝐿𝑀410.𝑟+ 𝝎𝑺𝑫𝑫𝒕,𝒚 + 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2006=1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (11,1,0)(1,0,0)12 [26] Model notes: 1. Ct,y,KLM410.r are residential customers from residential schedule 410. They are being used as a forecast driver because of the historical positive correlation between residential and commercial customer growth. See Tables 5.1 and 5.2. However, in as of the June 2019 forecast, the coefficient on Ct,y,KLM410.r is positive but no longer statistically significant. [27] 𝐶𝑡,𝑦,𝐾𝐿𝑀424.𝑐= 𝐶𝑦−1 +(𝛽0̂+𝛽1̂∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦) [27] Model notes: 1. This model reflects a recommendation by Oregon staff in the 2016 rate case to include employment as an economic driver for schedule 424 commercial customers. The estimated equation in parenthesis reflects the regression estimated of ∆𝐶𝑦,𝐾𝐿𝑀424.𝑐= 𝛼0 +𝛼1∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦+𝜀𝑡 using annual customer data since 2004. Annual data is used to smooth over the sometimes volatile changes in the monthly customer number. In addition, customer increases and decreases around the long-run trend tend to occur in steps. The combination of steps and month-to-month volatility creates significant economic problems when trying to model around the monthly data. For example, even with intervention variables, tests for error normality always indicated non-normal error terms with the use of monthly data. 2. ∆𝐶𝑦,𝐾𝐿𝑀424.𝑐 is the change in customers in year y (customer change between year y and y-1) and ∆𝐸𝑀𝑃𝑦−1,4𝐶𝑜𝑢𝑛𝑡𝑦 is the change in total non-farm employment in Jackson, Josephine, Klamath, and Douglas counties in year y-1 (employment change between year y-1 and y-2). Staff originally suggested lagged total employment for Oregon, but the correlation between schedule 424 customers and employment for the three-county area is higher. The forecasted employment values for Jackson+Josephine County are derived from the employment growth forecasts used in the Jackson+Josephine County population forecast. The forecasts for Douglas and Klamath counties come from IHS. In IRP years, IHS forecasts for all counties will be used for the out years. 3. The annual forecast value for each year, F(∙), is assumed to hold for each month of that year. That is: 𝐹(𝐶𝑦,𝐾𝐿𝑀424.𝑐)= 𝐹(𝐶𝑡,𝑦,𝐾𝐿𝑀424.𝑐). Given the step-like behavior of the monthly series, this is a reasonable assumption. 4. The forecast and regressions for this schedule can be found in the Excel file folder “OR 4County Sch 424c Cus.” Industrial Sector, Customers: Industrial Sector, Customers: [28] 𝐶𝑡,𝑦,𝐾𝐿𝑀420.𝑖= 1 12 ∑𝐶𝑡−𝑗12𝑗=1 [28] Model notes: 1. Data starts December 2006. The customer count fluctuates between 4 and 9 without any clear trend or seasonality. [29] 𝐶𝑡,𝑦,𝐾𝐿𝑀424.𝑖= 1 12 ∑𝐶𝑡−𝑗12𝑗=1 [29] Model notes: 1. Data starts April 2009. The customer count fluctuates between 1 and 4 without any clear trend or seasonality. 10. La Grande, OR forecasting models: The forecasting models for the La Grande region (Union County) are given below for the residential, commercial, and industrial sectors: Residential Sector, Customers: [30] 𝐶𝑡,𝑦,𝐿𝑎𝐺410.𝑟= 𝜃0 +𝜃1𝑃𝑂𝑃𝑡,𝑦,𝑈𝑁𝐼𝑂𝑁+𝝎𝑺𝑫𝑫𝒕,𝒚+ 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2004=1 +𝜔𝑂𝐿𝐷𝐽𝑢𝑙 2006=1 +𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2009=1 + 𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (9,1,0)(1,0,0)12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 43 APPENDIX - CHAPTER 2 [30] Model notes: 1. POP is population for Union County, OR. Commercial Sector, Customers: [31] 𝐶𝑡,𝑦,𝐿𝑎𝐺424.𝑐= 1 12∑𝐶𝑡−𝑗12𝑗=1 [31] Model notes: 1. Data starts January 2007. The customer count fluctuates between 2 and 4 without any clear trend or seasonality. Changes in the customer count appear as steps after prolonged periods of stability. Industrial Sector, Customers: [7.32] 𝐶𝑡,𝑦,𝐿𝑎𝐺440.𝑖= 1 𝑁∑𝐶𝑡,𝑦−𝑗𝑁𝑗=1 𝑓𝑜𝑟 𝑦−𝑗=2012 ↑ 𝑢𝑝 𝑡𝑜 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 𝑡ℎ𝑒 𝑛𝑒𝑎𝑟𝑒𝑠𝑡 𝑐𝑎𝑙𝑒𝑛𝑑𝑎𝑟 𝑦𝑒𝑎𝑟. [7.32] Model notes: 1. Even in the presence of some seasonality, customer count can be highly erratic. Regression models produced poor diagnostics. As a result, a historical monthly average is used as the forecast. 2. Restricted to 2012 ↑ because of a significant change in behavior starting in 2012. [7.31] 𝐶𝑡,𝑦,𝐿𝑎𝐺444.𝑖= 𝜃0 + 𝝎𝑺𝑫𝑫𝒕,𝒚+ 𝜔𝑂𝐿𝐷𝐴𝑢𝑔 2007=1 + 𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2009 =1 + 𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2010=1 + 𝜔𝑂𝐿𝐷𝐴𝑢𝑔 2012 =1 + 𝜔𝑂𝐿𝐷𝑁𝑜𝑣 2012 =1+ 𝜔𝑂𝐿𝐷𝐷𝑒𝑐 2012=1+ 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2013 =1+ 𝜔𝑂𝐿𝐷𝐹𝑒𝑏 2013 =1+ 𝜔𝑂𝐿𝐷𝐽𝑎𝑛 2014 =1 + 𝜔𝑂𝐿𝐷𝑂𝑐𝑡 2015 =1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦 (10,0,0)(2,0,0)12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 44 APPENDIX - CHAPTER 2 APPENDIX 2.2: CUSTOMER FORECASTS BY REGION WASHINGTON Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 45 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 46 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 47 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 48 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 49 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 50 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 51 APPENDIX - CHAPTER 2 APPENDIX 2.2: CUSTOMER FORECASTS BY REGION IDAHO Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 52 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 53 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 54 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 55 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 56 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 57 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 58 APPENDIX - CHAPTER 2 APPENDIX 2.2: CUSTOMER FORECASTS BY REGION MEDFORD Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 59 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 60 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 61 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 62 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 63 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 64 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 65 APPENDIX - CHAPTER 2 APPENDIX 2.2: CUSTOMER FORECASTS BY REGION ROSEBURG Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 66 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 67 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 68 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 69 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 70 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 71 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 72 APPENDIX - CHAPTER 2 APPENDIX 2.2: CUSTOMER FORECASTS BY REGION KLAMATH FALLS Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 73 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 74 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 75 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 76 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 77 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 78 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 79 APPENDIX - CHAPTER 2 APPENDIX 2.2: CUSTOMER FORECASTS BY REGION LA GRANDE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 80 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 81 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 82 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 83 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 84 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 85 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 86 APPENDIX - CHAPTER 2 APPENDIX 2.3: DEMAND COEFFICIENTS Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 87 APPENDIX - CHAPTER 2 APPENDIX 2.3: WA BASE COEFFICIENT CALCULATION APPENDIX 2.3: ID BASE COEFFICIENT CALCULATION Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 88 APPENDIX - CHAPTER 2 APPENDIX 2.3: MEDFORD BASE COEFFICIENT CALCULATION APPENDIX 2.3: ROSEBURG BASE COEFFICIENT CALCULATION Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 89 APPENDIX - CHAPTER 2 APPENDIX 2.3: KLAMATH FALLS BASE COEFFICIENT CALCULATION APPENDIX 2.3: LA GRANDE BASE COEFFICIENT CALCULATION Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 90 APPENDIX - CHAPTER 2 APPENDIX 2.4: HEATING DEGREE DAY DATA MONTHLY TABLES Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 91 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 92 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 93 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 94 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 95 APPENDIX - CHAPTER 2 APPENDIX 2.4: AVERAGE HEATING DEGREE DAILY MONTH BY AREA Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 96 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 97 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 98 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 99 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 100 APPENDIX - CHAPTER 2 APPENDIX 2.5: DEMAND SENSITIVITIES SUMMARY OF ASSUMPTIONS – DEMAND SCENARIOS Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 101 APPENDIX - CHAPTER 2 APPENDIX 2.5: DEMAND SCENARIOS PROPOSED SCENARIOS Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 102 APPENDIX - CHAPTER 2 APPENDIX 2.6: DEMAND FORECAST SENSITIVITIES AND SCENARIOS DESCRIPTIONS DEFINITIONS DYNAMIC DEMAND METHODOLOGY – Avista’s demand forecasting approach wherein we 1) identify key demand drivers behind natural gas consumption, 2) perform sensitivity analysis on each demand driver, and 3) combine demand drivers under various scenarios to develop alternative potential outcomes for forecasted demand. DEMAND INFLUENCING FACTORS – Factors that directly influence the volume of natural gas consumed by our core customers. PRICE INFLUENCING FACTORS – Factors that, through price elasticity response, indirectly influence the volume of natural gas consumed by our core customers. REFERENCE CASE – A baseline point of reference that captures the basic inputs for determining a demand forecast in SENDOUT® which includes number of customers, use per customer, average daily weather temperatures and expected natural gas prices. SENSITIVITIES – Focused analysis of a specific natural gas demand driver and its impact on forecasted demand relative to the Reference Case when underlying input assumptions are modified. SCENARIOS – Combination of natural gas demand drivers that make up a demand forecast. Avista evaluates each sensitivities impact. SENSITIVITIES The following Sensitivities were performed on identified demand drivers against the reference case for consideration in Scenario development. Note that Sensitivity assumptions reflect incremental adjustments we estimate are not captured in the underlying reference case forecast. Following are the Demand Influencing (Direct) Sensitivities we evaluated: REFERENCE CASE – This benchmark case uses expected customer growth rates, the most recent three years of actual use per customer per heating degree day data, average daily temperature (HDDs) in the most recent 20 years in each region, no DSM, expected prices, and no elasticity of demand. REFERENCE CASE PLUS PEAK – Same assumptions as in the Reference Case with an adjustment made to normal weather to incorporate peak weather conditions. The peak weather data being the coldest day on record for each weather area. LOW & HIGH CUSTOMER GROWTH – Same assumptions as in Reference Case Plus Peak with an adjustment made to customer growth rates as discussed in detail in Appendix 2.1: Economic Outlook and Customer Count Forecast. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 103 APPENDIX - CHAPTER 2 ALTERNATE WEATHER STANDARD (COLDEST DAY 20 YRS) – Same assumptions as in the Reference Case with an adjustment made to normal weather to incorporate peak day weather conditions. The peak day weather data reflecting the coldest average daily temperature (HDDs) experienced in the most recent 20 years in each region. DSM – Same assumptions as in Reference Case with the inclusion of Washington and Idaho DSM potential identified by the Conservation Potential Assessment provided by Applied Energy Group and Oregon DSM potential provided by Energy Trust of Oregon. See Appendix 3.1 for full assessment reports. PEAK PLUS DSM – Same assumptions as in Reference Case Plus Peak with the inclusion of Washington and Idaho DSM potential identified by the Conservation Potential Assessment provided by Applied Energy Group and Oregon DSM potential provided by Energy Trust of Oregon. See Appendix 3.1 for full assessment reports. 80% BELOW 1990 EMISSIONS REFERENCE CASE – Reference Case Plus Peak assumptions including reduction in Oregon and Washington consumption to 80% below 1990 emission levels by 2050. The case shows the overall risk of a scenario with the overall goal of reducing natural gas emissions but does not consider what methods will be used to get to these levels or their costs. ALTERNATE HISTORICAL 2-YEAR USE PER CUSTOMER – Reference Case Plus Peak use per customer was based upon three years of actual use per customer per heating degree day data. Same assumptions as in Reference Case Plus Peak with an adjustment made to use two years of historical use per customer per heating degree day data. ALTERNATE HISTORICAL 5-YEAR USE PER CUSTOMER – Reference Case Plus Peak use per customer was based upon three years of actual use per customer per heating degree day data. Same assumptions as in Reference Case Plus Peak with an adjustment made to use five years of historical use per customer per heating degree day data. JP OUTAGE AT 50% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from Jackson Prairie storage field reduced to 50% of expected capacity. AECO OUTAGE AT 50% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from AECO reduced to 50% of expected capacity. SUMAS OUTAGE AT 50% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from Sumas reduced to 50% of expected capacity. ROCKIES OUTAGE AT 50% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from Rockies reduced to 50% of expected capacity. GTN OUTAGE AT 50% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation on GTN reduced to 50% of expected capacity. NWP OUTAGE AT 50% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation on NWP reduced to 50% of expected capacity. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 104 APPENDIX - CHAPTER 2 JP OUTAGE AT 0% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from Jackson Prairie storage field reduced to 0% of expected capacity. AECO OUTAGE AT 0% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from AECO reduced to 0% of expected capacity. SUMAS OUTAGE AT 0% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from Sumas reduced to 0% of expected capacity. ROCKIES OUTAGE AT 0% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation from Rockies reduced to 0% of expected capacity. GTN OUTAGE AT 0% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation on GTN reduced to 0% of expected capacity. NWP OUTAGE AT 0% CAPACITY – Same assumptions as in Reference Case Plus Peak with available transportation on NWP reduced to 0% of expected capacity. Following are the Price Influencing (Indirect) Sensitivities we evaluated: EXPECTED ELASTICITY – For our Expected Elasticity Sensitivity, we incorporate reduced consumption in response to higher natural gas prices by applying a price elasticity to demand. See Price Elasticity in Chapter 2: Demand Forecasts for further detail. LOW & HIGH PRICES – To capture a wide range of alternative price forecasts, we performed a stochastic analysis based on the probability distribution of the expected price to develop 1,000 unique price forecasts around the expected price. Our high and low price forecasts represent the 95th and 25th highest percentile in each month of the 1,000 resultant price forecasts, respectively. CARBON COST LOW CASE – Same assumptions as in Reference Case Plus Peak with consideration for price elasticity including the cost of carbon. The price of carbon in Idaho, Oregon, and Washington is set to $0 in all years. CARBON COST EXPECTED CASE – The price of carbon in Oregon was based on a Wood Mackenzie study for Cap and Trade. It begins with a 2021 price of $15.83 MTCO2e and rising to $142.59 by 2045. The assumption is the cap and trade price will be similar to a cap and reduce price. Rules for EO 20-04 are still being developed and will be included in the 2023 IRP. Washington State was modeled using the required SCC @ 2.5%. This price is begins at $79.86 and increases yearly with a 2045 price of $185.75 (2019$). These values were provided by the WUTC Staff and are per their assumptions on inflation. CARBON COST HIGH CASE – Assumes the EPA estimates on the social cost of carbon. Specifically, the high case includes 95% of results at a 3% discount rate average. These costs begin at $112.20 in 2017 and increase to $174 by 2037 for a metric ton of CO2. This will measure the risk of carbon pricing in all three jurisdictions. Following are the Emissions Influencing Sensitivities we evaluated: Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 105 APPENDIX - CHAPTER 2 HIGH UPSTREAM EMISSIONS – Same assumptions as in Carbon Cost Expected Case with an adjustment to upstream emissions. Expected upstream emissions are based on 0.79% methane leakage. Per a study performed by the Environmental Defense Fund, high upstream emissions are based on 2.47% methane leakage. Higher upstream emissions increase the associated cost of carbon per dekatherm. EXPECTED UPSTREAM EMISSIONS – Same assumption as in Carbon Cost Expected Case. NO UPSTREAM EMISSIONS – Same assumptions as in Carbon Cost Expected Case with an adjustment to upstream emissions. Expected upstream emissions are based on 0.79% methane leakage. No upstream emissions are based on 0% methane leakage. Lower upstream emissions decrease the associated cost of carbon per dekatherm. 20-YEAR GWP – Same assumptions as in Carbon Cost Expected Case with an adjustment to the time period over which the energy absorbed by a gas is measured relative to CO2 and converted into its Global Warming Potential. The time period of 100 years used for the expected GWP is reduced to 20 years. The shorter lifetime of methane relative to CO2 results in a more significant GWP when the measurement’s time period is reduced. 100-YEAR GWP – Same assumptions as in Carbon Cost Expected Case. SCENARIOS After identifying the above demand drivers and analyzing the various Sensitivities, we have developed the following demand forecast Scenarios: AVERAGE CASE – This Scenario we believe represents the most likely average demand forecast modeled. We assume service territory customer growth rates consistent with the reference case, rolling 20 year normal weather in each service territory, our expected natural gas price forecast (blend of two consultants and the U.S. Energy Information Administration’s Annual Energy Outlook, along with the NYMEX forward strip), expected price elasticity, the CO2 cost adders from our Carbon Cost Expected Case Sensitivity, 100 year GWP, and DSM. The Scenario does not include incremental cost adders for declining Canadian imports or drilling restrictions beyond what is incorporated in the selected price forecast. EXPECTED CASE – This Scenario represents the peak demand forecast. We assume service territory customer growth rates consistent with the reference case, a weather standard of coldest day on record in each service territory, our expected natural gas price forecast (blend of two consultants and the U.S. Energy Information Administration’s Annual Energy Outlook, along with the NYMEX forward strip), expected price elasticity, 100 year GWP, DSM, and the CO2 cost adders from our Carbon Cost Expected Case Sensitivity. HIGH GROWTH, LOW PRICE – This Scenario models a rapid return to robust growth in part spurred on by low energy prices. We assume higher customer growth rates than the reference case, coldest day on record weather standard, our low natural gas price forecast, expected price elasticity, 100 year GWP, DSM, and no CO2 adders. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 106 APPENDIX - CHAPTER 2 LOW GROWTH, HIGH PRICE – This Scenario models an extended period of slow economic growth in part resulting from high energy prices. We assume lower customer growth rates than the reference case, coldest day on record weather standard, our high natural gas price forecast, expected price elasticity, 100 year GWP, DSM, and CO2 adders from our Carbon Cost High Case Sensitivity. 80% BELOW 1990 EMISSIONS – This Scenario models the impact of potential consumption curtailment due to carbon legislation coupled with low energy prices. We assume a straight line reduction in Washington and Oregon consumption from reference case growth in order to meet 80% below 1990 emission levels by 2050, along with our low natural gas price forecast rather than our expected natural gas price forecast. All other assumptions remain the same as our Expected Case Scenario. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 107 APPENDIX - CHAPTER 2 APPENDIX 2.7: ANNUAL DEMAND, AVERAGE DAY DEMAND AND PEAK DAY DEMAND (NET OF DSM) – CASE EXPECTED APPENDIX 2.7: ANNUAL DEMAND, AVERAGE DAY DEMAND AND PEAK DAY DEMAND (NET OF DSM) – CASE AVERAGE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 108 APPENDIX - CHAPTER 2 APPENDIX 2.7: ANNUAL DEMAND, AVERAGE DAY DEMAND AND PEAK DAY DEMAND (NET OF DSM) – CASE HIGH GROWTH Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 109 APPENDIX - CHAPTER 2 APPENDIX 2.7: ANNUAL DEMAND, AVERAGE DAY DEMAND AND PEAK DAY DEMAND (NET OF DSM) – CASE LOW GROWTH Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 110 APPENDIX - CHAPTER 2 APPENDIX 2.7: ANNUAL DEMAND, AVERAGE DAY DEMAND AND PEAK DAY DEMAND (NET OF DSM) - CARBON REDUCTION Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 111 APPENDIX - CHAPTER 2 APPENDIX 2.8: PEAK DAY DEMAND BEFORE AND AFTER DSM WASHINGTON Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 112 APPENDIX - CHAPTER 2 APPENDIX 2.8: PEAK DAY DEMAND BEFORE AND AFTER DSM IDAHO Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 113 APPENDIX - CHAPTER 2 APPENDIX 2.8: PEAK DAY DEMAND BEFORE AND AFTER DSM MEDFORD/ROSEBURG Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 114 APPENDIX - CHAPTER 2 APPENDIX 2.8: PEAK DAY DEMAND BEFORE AND AFTER DSM KLAMATH FALLS Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 115 APPENDIX - CHAPTER 2 APPENDIX 2.8: PEAK DAY DEMAND BEFORE AND AFTER DSM LA GRANDE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 116 APPENDIX - CHAPTER 2 APPENDIX 2.9: DETAILED DEMAND DATA EXPECTED MIX Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 117 APPENDIX - CHAPTER 2 APPENDIX 2.9: DETAILED DEMAND DATA LOW GROWTH HIGH PRICE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 118 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 119 APPENDIX - CHAPTER 2 APPENDIX 2.9: DETAILED DEMAND DATA HIGH GROWTH LOW PRICE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 120 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 121 APPENDIX - CHAPTER 2 APPENDIX 2.9: DETAILED DEMAND DATA AVERAGE MIX Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 122 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 123 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 124 APPENDIX - CHAPTER 2 APPENDIX 2.9: DETAILED DEMAND DATA CARBON REDUCTION Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 125 APPENDIX - CHAPTER 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 126 APPENDIX – CHAPTER 3 Energy Solutions. Delivered. This work was performed by Applied Energy Group, Inc. 211 Broad Street, Suite 206 Red Bank, NJ 07701 Executive-in-Charge: I. Rohmund Report prepared for: AVISTA UTILITIES 2020 AVISTA UTILITIES NATURAL GAS CONSERVATION POTENTIAL ASSESSMENT Volume 1, Final Report De cember 1, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 127 APPENDIX – CHAPTER 3 This work was performed by: Applied Energy Group, Inc. 500 Ygnacio Valley Road, Suite 250 Walnut Creek, CA 94596 Project Director: I. Rohmund Project Manager: K. Walter AEG would also like to acknowledge the valuable contributions of Avista Utilities 1411 E Mission MSC-15 Spokane, WA 99220 Project Team: Ryan Finesilver James Gall Leona Haley Tom Pardee Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 128 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 129 APPENDIX – CHAPTER 3 | i Applied Energy Group • www.appliedenergygroup.com EXECUTIVE SUMMARY Early in 2020, Avista Utilities (Avista) contracted with Applied Energy Group (AEG) to conduct this Conservation Potential Assessment (CPA) in support of their conservation and resource planning activities. This report documents this effort and provides estimates of the potential reductions in annual energy usage for natural gas customers in Avista’s Washington and Idaho service territories from energy conservation efforts in the time period of 2021 to 2040. To produce a reliable and transparent estimate of energy efficiency (EE) resource potential, the AEG team performed the following tasks to meet Avista’s key objectives: • Used information and data from Avista, as well as secondary data sources, to describe how customers currently use gas by sector, segment, end use and technology. • Developed a baseline projection of how customers are likely to use gas in absence of future EE programs. This defines the metric against which future program savings are measured. This projection used up-to-date technology data, modeling assumptions, and energy baselines that reflect both current and anticipated federal, state, and local energy efficiency legislation that will impact energy EE potential. • Estimated the technical, achievable technical, and achievable economic potential at the measure level for energy efficiency within Avista’s service territory over the 2021 to 2040 planning horizon. • Delivered a fully configured end-use conservation planning model, LoadMAP, for Avista to use in future potential and resource planning initiatives In summary, the potential study provided a solid foundation for the development of Avista’s energy savings targets. Table ES-1 summarizes the results for Avista’s Washington territory at a high level. AEG analyzed potential for the residential, commercial, and industrial market sectors. First-year utility cost test (UCT) achievable economic potential in Washington is 75,820 dekatherms. This increases to a cumulative total of 173,838 dekatherms in the second year and 1,386,479 dekatherms by the tenth year (2030). Table ES-1 Washington Conservation Potential by Case, Selected Years (dekatherms) Scenario 2021 2022 2023 2030 2040 Baseline Forecast (Dth) 19,118,293 19,289,575 19,805,020 20,612,516 21,619,876 Cumulative Savings (Dth) UCT Achievable Economic 75,820 173,838 457,423 1,386,479 3,560,512 Achievable Technical 41,871 416,584 1,221,810 3,183,398 6,309,826 Technical 187,983 897,098 2,314,334 5,084,999 8,908,493 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.4% 0.9% 2.3% 6.7% 16.5% Achievable Technical Potential 0.2% 2.2% 6.2% 15.4% 29.2% Technical Potential 1.0% 4.7% 11.7% 24.7% 41.2% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 130 APPENDIX – CHAPTER 3 | ii Applied Energy Group • www.appliedenergygroup.com Table ES-2 summarizes the results for Avista’s Idaho territory at a high level. First-year utility cost test (UCT) achievable economic potential in Idaho is 35,816 dekatherms. This increases to a cumulative total of 87,995 dekatherms in the second year and 737,710 dekatherms by the tenth year (2030). Table ES-2 Idaho Conservation Potential by Case, Selected Years (dekatherms) Scenario 2021 2022 2023 2030 2040 Baseline Forecast (Dth) 10,019,377 10,144,894 10,520,169 11,004,568 12,006,819 Cumulative Savings (Dth) UCT Achievable Economic 35,816 87,995 229,283 737,710 2,025,410 Achievable Technical 26,220 226,613 657,997 1,722,830 3,544,048 Technical 102,031 490,826 1,273,202 2,777,509 5,013,697 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.4% 0.9% 2.2% 6.7% 16.9% Achievable Technical Potential 0.3% 2.2% 6.3% 15.7% 29.5% Technical Potential 1.0% 4.8% 12.1% 25.2% 41.8% As part of this study, we also estimated total resource cost (TRC) potential, with the focus of fully balancing non-energy impacts. This includes the use of full measure costs as well as quantified and monetizable non-energy impacts and non-gas fuel impacts (e.g. electric cooling or wood secondary heating) consistent with methodology within the 2021 Northwest Conservation and Electric Power Plan (2021 Plan). We explore this potential in more detail throughout the report. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 131 APPENDIX – CHAPTER 3 | iii Applied Energy Group • www.appliedenergygroup.com CONTENTS Executiv e Summary ................................................................................................... i 1 INT RODUCTI ON....................................................................................................... 1 Goals of the Conservation Potential Assessment......................................................... 1 Summary of Report Contents .................................................................................... 2 Abbreviations and Acronyms .................................................................................... 4 2 ANALYS IS APPROACH AND D ATA DEVEL OPMENT ................................................... 5 Ov erview of Analysis Approach................................................................................. 5 Comparison with Northwest Power & Conservation Council Methodology ........ 5 LoadMAP Model ........................................................................................... 6 Definitions of Potential................................................................................... 7 Market Cha racterization................................................................................ 9 Baseline Projection...................................................................................... 10 Energy Efficiency Measure Development...................................................... 11 Calculation of Energy Conservation Potential ............................................... 14 Data Development ................................................................................................ 16 Data Sources .............................................................................................. 16 Application of Data to the Analysis .............................................................. 19 3 MARKET CH ARACTE RIZATI ON AND M ARKET PROFILE S .......................................... 25 Ov erall Energy Use Summary ................................................................................... 25 Residential Sector .................................................................................................. 27 Washington Characterization ...................................................................... 27 Idaho Characterization ............................................................................... 29 Commercial Sector ................................................................................................ 32 Washington Characterization ...................................................................... 32 Idaho Characterization ............................................................................... 35 Industrial Sector ..................................................................................................... 38 Washington Characterization ...................................................................... 38 Idaho Characterization ............................................................................... 39 4 BAS ELI NE P ROJECTI ON ......................................................................................... 41 Ov erall Baseline Projection ..................................................................................... 42 Washington Projection ................................................................................ 42 Idaho Projection ......................................................................................... 43 Residential Sector .................................................................................................. 44 Washington Projection ................................................................................ 44 Idaho Projection ......................................................................................... 45 Commercial Sector ................................................................................................ 46 Washington Projection ................................................................................ 46 Idaho Projection ......................................................................................... 47 Industrial Sector ..................................................................................................... 48 Washington Projection ................................................................................ 48 Idaho Projection ......................................................................................... 49 5 OVE RAL L E NE RGY E FFIC IE NCY POTENT IAL ........................................................... 50 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 132 APPENDIX – CHAPTER 3 | iv Applied Energy Group • www.appliedenergygroup.com Ov erall Energy Efficiency Potential .......................................................................... 50 Washington Potential .................................................................................. 50 Idaho Potential ........................................................................................... 54 6 SECTOR-LEVEL ENERGY EFFIC IE NCY POTE NTI AL ................................................... 57 Residential Sector .................................................................................................. 57 Washington Potential .................................................................................. 57 Idaho Potential ........................................................................................... 61 Commercial Sector ................................................................................................ 64 Washington Potential .................................................................................. 64 Idaho Potential ........................................................................................... 67 Industrial Sector ..................................................................................................... 70 Washington Potential .................................................................................. 70 Idaho Potential ........................................................................................... 73 Incorporating the Total Resource Cost Test .............................................................. 76 7 COM PARIS ON WITH C URRE NT PROGRAMS ........................................................... 77 Washington Comparison with 2019 Programs ........................................................... 77 Residential Sector ....................................................................................... 77 Commercial and Industrial Sectors ............................................................... 78 Idaho Comparison with 2019 Programs .................................................................... 79 Residential Sector ....................................................................................... 79 Commercial and Industrial Sectors ............................................................... 80 8 COM PARIS ON WITH PREVI OUS STUD Y .................................................................. 81 Residential Comparison with 2018 CPA .................................................................... 81 Nonresidential Comparison with 2018 CPA ............................................................... 81 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 133 APPENDIX – CHAPTER 3 | v Applied Energy Group • www.appliedenergygroup.com LIST OF FIGURES Figure 1-1 Avista’s Serv ice Territory (courtesy Avista) ......................................................... 2 Figure 2-1 LoadMAP Analysis Framework........................................................................... 7 Figure 2-2 Approach for ECM Assessment ....................................................................... 12 Figure 3-1 Sector-Level Natural Gas Use in Base Year 2015, Washington (annual therms, percent) .................................................................................................................... 25 Figure 3-2 Sector-Lev el Natural Gas Use in Base Year 2015, Idaho (annual therms, percent)26 Figure 3-3 Residential Natural Gas Use by Segment, Washington, 2015 ............................. 27 Figure 3-4 Residential Natural Gas Use by End Use, Washington, 2015 ............................... 28 Figure 3-5 Residential Energy Intensity by End Use and Segment, Washington, 2015 (Annual Therms/HH).................................................................................................... 28 Figure 3-6 Residential Natural Gas Use by Segment, Idaho, 2015 ...................................... 30 Figure 3-7 Residential Natural Gas Use by End Use, Idaho, 2015........................................ 30 Figure 3-8 Residential Energy Intensity by End Use and Segment, Idaho, 2015 (Annual Therms/HH).................................................................................................... 31 Figure 3-9 Commercial Natural Gas Use by Segment, Washington, 2015 ........................... 33 Figure 3-10 Commercial Sector Natural Gas Use by End Use, Washington, 2015................... 33 Figure 3-11 Commercial Energy Usage Intensity by End Use and Segment, Washington, 2015 (Annual Therms/Sq. Ft) ................................................................................... 34 Figure 3-12 Commercial Natural Gas Use by Segment, Idaho, 2015 .................................... 36 Figure 3-13 Commercial Sector Natural Gas Use by End Use, Idaho, 2015 ........................... 36 Figure 3-14 Commercial Energy Usage Intensity by End Use and Segment, Idaho, 2015 (Annual Therms/Sq. Ft) ................................................................................................ 37 Figure 3-15 Industrial Natural Gas Use by End Use, Washington, 2015 .................................. 38 Figure 3-16 Industrial Natural Gas Use by End Use, Idaho, 2015........................................... 40 Figure 4-1 Baseline Projection Summary by Sector, Washington (dekatherms) ................... 42 Figure 4-2 Baseline Projection Summary by Sector, Idaho (dekatherms) ............................ 43 Figure 4-3 Residential Baseline Projection by End Use, Washington (dekatherms)............... 44 Figure 4-4 Residential Baseline Projection by End Use, Idaho (dekatherms) ....................... 45 Figure 4-5 Commercial Baseline Projection by End Use, Washington (dekatherms)............. 46 Figure 4-6 Commercial Baseline Projection by End Use, Idaho (dekatherms) ..................... 47 Figure 4-7 Industrial Baseline Projection by End Use, Washington (dekatherms).................. 48 Figure 4-8 Industrial Baseline Projection by End Use, Idaho (dekatherms) .......................... 49 Figure 5-1 Summary of Energy Efficiency Potential as % of Baseline Projection, Washington (dekatherms)................................................................................................. 52 Figure 5-2 Baseline Projection and Energy Efficiency Forecasts, Washington (dekatherms) . 52 Figure 5-3 Cumulative UCT Achievable Economic Potential by Sector, Washington (% of Total) .................................................................................................................... 53 Figure 5-4 Summary of Energy Efficiency Potential as % of Baseline Projection, Idaho (dekatherms)................................................................................................. 55 Figure 5-5 Summary of Energy Efficiency Potential as % of Baseline Projection, Idaho (dekatherms)................................................................................................. 55 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 134 APPENDIX – CHAPTER 3 | vi Applied Energy Group • www.appliedenergygroup.com Figure 5-6 Cumulativ e UCT Achievable Economic Potential by Sector, Idaho (% of Total) .. 56 Figure 6-1 Residential Energy Conservation by Case, Washington (dekatherms) ................ 57 Figure 6-2 Residential UCT Achievable Economic Potential – Cumulative Savings by End Use, Washington (dekatherms, % of total)............................................................... 58 Figure 6-3 Residential Energy Conservation by Case, Idaho (dekatherms)......................... 61 Figure 6-4 Residential UCT Achievable Economic Potential – Cumulative Savings by End Use, Idaho (dekatherms, % of total) ....................................................................... 62 Figure 6-5 Commercial Energy Conservation by Case, Washington (dekatherms).............. 64 Figure 6-6 Commercial UCT Achievable Economic Potential – Cumulative Savings by End Use, Washington (dekatherms, % of total)............................................................... 65 Figure 6-7 Commercial Energy Conservation by Case, Idaho (dekatherms) ...................... 67 Figure 6-8 Commercial UCT Achievable Economic Potential – Cumulative Savings by End Use, Idaho (dekatherms, % of total) ....................................................................... 68 Figure 6-9 Industrial Energy Conservation Potential, Washington (dekatherms) .................. 70 Figure 6-10 Industrial UCT Achievable Economic Potential – Cumulative Savings by End Use, Washington (dekatherms, % of total)............................................................... 71 Figure 6-11 Industrial Energy Conservation Potential, Idaho (dekatherms)........................... 73 Figure 6-12 Industrial UCT Achievable Economic Potential – Cumulative Savings by End Use, Idaho (dekatherms, % of total) ....................................................................... 74 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 135 APPENDIX – CHAPTER 3 | vii Applied Energy Group • www.appliedenergygroup.com LIST OF TABLES Table ES-1 Washington Conservation Potential by Case, Selected Years (dekatherms) .......... i Table ES-2 Idaho Conservation Potential by Case, Selected Years (dekatherms).................. ii Table 1-1 Explanation of Abbrev iations and Acronyms...................................................... 4 Table 2-1 Ov erview of Avista Analysis Segmentation Scheme............................................ 9 Table 2-2 Example Equipment Measures for Direct Fuel Furnace – Single-Family Home, Washington ................................................................................................... 13 Table 2-3 Example Non-Equipment Measures – Existing Single Family Home, Washington... 14 Table 2-4 Number of Measures Evaluated ...................................................................... 14 Table 2-5 Data Applied for the Market Profiles ............................................................... 20 Table 2-6 Data Applied for the Baseline Projection in LoadMAP ...................................... 21 Table 2-7 Residential Natural Gas Equipment Federal Standards ..................................... 22 Table 2-8 Commercial and Industrial Natural Gas Equipment Standards .......................... 22 Table 2-9 Data Inputs for the Measure Characteristics in LoadMAP.................................. 23 Table 3-1 Avista Sector Control Totals, Washington, 2019 ................................................ 25 Table 3-2 Avista Sector Control Totals, Idaho, 2019 ......................................................... 26 Table 3-3 Residential Sector Control Totals, Washington, 2019 ......................................... 27 Table 3-4 Average Market Profile for the Residential Sector, Washington, 2019 ................. 29 Table 3-5 Residential Sector Control Totals, Idaho, 2019 .................................................. 29 Table 3-6 Average Market Profile for the Residential Sector, 2019 .................................... 31 Ta ble 3-7 Commercial Sector Control Totals, Washington, 2019 ....................................... 32 Table 3-8 Average Market Profile for the Commercial Sector, Washington, 2019............... 34 Table 3-9 Commercial Sector Control Totals, Idaho, 2019 ................................................ 35 Table 3-10 Average Market Profile for the Commercial Sector, Idaho, 2019 ....................... 37 Table 3-11 Industrial Sector Control Totals, Washington, 2019 ............................................ 38 Table 3-12 Average Natural Gas Market Profile for the Industrial Sector, Washington, 2019 . 39 Table 3-13 Industrial Sector Control Totals, Idaho, 2019 ..................................................... 39 Table 3-14 Average Natural Gas Market Profile for the Industrial Sector, Idaho, 2019 .......... 40 Table 4-1 Baseline Projection Summary by Sector, Washington, Selected Years (dekatherms) .................................................................................................................... 42 Table 4-2 Baseline Projection Summary by Sector, Idaho, Selected Years (dekatherms) .... 43 Table 4-3 Residential Baseline Projection by End Use, Washington (dekatherms)............... 44 Table 4-4 Residential Baseline Projection by End Use, Idaho (dekatherms) ....................... 45 Table 4-5 Commercial Baseline Projection by End Use, Washington (dekatherms)............. 46 Table 4-6 Commercial Baseline Projection by End Use, Idaho (dekatherms) ..................... 47 Table 4-7 Industrial Baseline Projection by End Use, Washington (dekatherms).................. 48 Table 4-8 Industrial Baseline Projection by End Use, Idaho (dekatherms) .......................... 49 Table 5-1 Summary of Energy Efficiency Potential, Washington (dekatherms) ................... 51 Table 5-2 Cumulative UCT Achievable Economic Potential by Sector, Washington, Selected Years (dekatherms) ........................................................................................ 53 Table 5-3 Summary of Energy Efficiency Potential, Idaho (dekatherms)............................ 54 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 136 APPENDIX – CHAPTER 3 | viii Applied Energy Group • www.appliedenergygroup.com Table 5-4 Cumulative UCT Achievable Economic Potential by Sector, Idaho, Selected Years (dekatherms)................................................................................................. 56 Table 6-1 Residential Energy Conservation Potential Summary, Washington (dekatherms). 57 Table 6-2 Residential Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Washington (dekatherms) .............................................................................. 60 Table 6-3 Residential Energy Conservation Potential Summary, Idaho (dekatherms) ......... 61 Table 6-4 Residential Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Idaho (dekatherms) ....................................................................................... 63 Table 6-5 Commercial Energy Conservation Potential Summary, Washington ................... 64 Table 6-6 Commercial Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Washington (dekatherms) .............................................................................. 66 Table 6-7 Commercial Energy Conservation Potential Summary, Idaho............................ 67 Table 6-8 Commercial Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Idaho (dekatherms) ....................................................................................... 69 Table 6-9 Industrial Energy Conservation Potential Summary, Washington (dekatherms) ... 70 Table 6-10 Industrial Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Washington (dekatherms) .............................................................................. 72 Table 6-11 Industrial Energy Conservation Potential Summary, Idaho (dekatherms) ............ 73 Table 6-12 Industrial Top Measures in 2018 and 2019, UCT Achievable Economic Potential, Idaho (dekatherms)................................................................................................. 75 Table 7-1 Comparison of Avista’s Washington Residential Programs with 2018 UCT Achievable Economic Potential (dekatherms) ................................................................... 77 Table 7-2 Comparison of Avista’s Washington Nonresidential Accomplishments with 2021 UCT Achievable Economic Potential (dekatherms) ................................................. 78 Table 7-3 Comparison of Avista’s Idaho Residential Programs with 2021 UCT Achievable Economic Potential (dekatherms) ................................................................... 79 Table 7-4 Comparison of Avista’s Idaho Nonresidential Accomplishments with 2021 UCT Achievable Economic Potential (dekatherms) ................................................. 80 Table 8-1 Comparison of Avista’s Residential UCT Achievable Economic Potential between the 2016 and 2018 CPAs (dekatherms) .................................................................. 81 Table 8-2 Comparison of Avista’s Nonresidential UCT Achievable Economic Potential between the 2016 and 2018 CPAs (dekatherms) ............................................................ 82 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 137 | 1 Applied Energy Group • www.appliedenergygroup.com 1 INTRODUCTION This report documents the results of the Avista Utilities 2021-2040 Conservation Potential Assessment (CPA) as well as the steps followed in its completion. Throughout this study, AEG worked with Avista to understand the baseline characteristics of their service territory, including a detailed understanding of energy consumption in the territory, the assumptions and methodologies used in Avista’s official load forecast, and recent programmatic accomplishments. Adapting methodologies consistent with the Northwest Power and Conservation Council’s (Council’s) 2021 Power Plan1 for natural gas studies, AEG then developed an independent estimate of achievable, cost-effective EE potential within Avista’s service territory between 2021 and 2040. Goals of the Conservation Potential Assessment The first primary objective of this study was to develop independent and credible estimates of EE potential achievably available within Avista’s service territory using accepted regional inputs and methodologies. This included estimating technical, achievable technical, then achievable economic potential, using the Council’s ramp rates as the starting point for all achievability assumptions, leveraging Northwest Energy Efficiency Alliance’s (NEEA’s) market research initiatives, and utilizing assumptions consistent with 2021 Power Plan supply curves and RTF measure workbooks when appropriate for use in natural gas planning studies. Additionally, the CPA is intended to support the design of programs to be implemented by Avista during the upcoming years. One output of the LoadMAP model is a comprehensive summary of measures. This summary documents input assumptions and sources on a per-unit value, program applicability and achievability (ramp rates), and potential results (units, incremental potential, and cumulative potential) as well as cost-effectiveness at the UCT and TRC levels. This summary was developed in collaboration with Avista and refined throughout the project. Finally, this study was developed to provide EE inputs into Avista’s Integrated Resource Planning (IRP) process. To this end, AEG developed detailed achievable economic EE inputs by measure for input into Avista’s SENDOUT planning model under the utility cost test (UCT). These inputs are highly customizable and provide potential estimates at the state level by measure and end use. We present a map of Avista’s service territory in Figure 1-1. 1 “2021 Power Plan. Northwest Power & Conservation Council, 2020. https://www.nwcouncil.org/2021-northwest-power-plan Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 138 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 2 Applied Energy Group • www.appliedenergygroup.com Figure 1-1 Avista’s Service Territory (courtesy Avista) Summary of Report Contents The document is divided into seven additional chapters, summarizing the approach, assumptions, and results of the EE potential analysis. We describe each section below: Volume 1, Final Report: • Analysis Approach and Data Development. Detailed description of AEG’s approach to conducting Avista’s 2021-2040 Natural Gas CPA and documentation of primary and secondary sources used. • Market Characterization and Market Profiles. Characterization of Avista’s service territory in the base year of the study, 2019, including total consumption, number of customers and market units, and energy intensity. This also includes a breakdown of the energy consumption for residential, commercial, and eligible industrial customers by end use and technology. • Baseline Projection. Projection of baseline energy consumption under a naturally occurring efficiency case, described at the end-use level. The LoadMAP models were first aligned with actual sales and Avista’s official, weather-normalized econometric forecast and then varied to include the impacts of future federal standards, ongoing impacts of energy codes, such as the 2015 Washington State Energy Code on new construction, and future technology purchasing decisions. • Overall Energy Efficiency Potential. Summary of EE potential for Avista’s Washington and Idaho service territories for selected years between 2021 and 2040. • Sector-Level Energy Efficiency Potential. Summary of EE potential for each market sector within Avista’s service territory, including residential, commercial, and eligible industrial customers for both Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 139 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 3 Applied Energy Group • www.appliedenergygroup.com Washington and Idaho. This section includes a more detailed breakdown of potential by mea sure type, vintage, market segment, end use, and state. • Comparison with Current Programs Detailed comparison of potential with current Avista programs, including new opportunities for potential. • Comparison with 2018 CPA Detailed comparison of potential with Avista’s 2018 CPA, conducted by AEG. Volume 2, Appendices: The appendices for this report are provided in separate spreadsheets accompanying delivery of this report and consist of the following: • Market Profiles. Detailed market profiles for each market segment. Includes equipment saturation, unit energy consumption or energy usage index, energy intensity, and total consumption. • Customer Adoption Factors. Documentation of the ramp rates used in this analysis. These were adapted from the 2021 Power Plan electrical power conservation supply curve workbooks for use in the estimation of achievable natural gas potential. • Measure List. List of measures, along with example baseline definitions and efficiency options by market sector analyzed. • Detailed Measure Assumptions. This dataset provides input assumptions, measure characteristics, cost-effectiveness results, and potential estimates for each measure permutation analyzed within the study. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 140 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 4 Applied Energy Group • www.appliedenergygroup.com Abbreviations and Acronyms Throughout the report we use several abbreviations and acronyms. Table 1-1 shows the abbreviation or acronym, along with an explanation. Table 1-1 Explanation of Abbreviations and Acronyms Acronym Explanation AEO Annual Energy Outlook forecast developed by EIA B/C Ratio Benefit to Cost Ratio BEST AEG’s Building Energy Simulation Tool BPA Bonneville Power Administration C&I Commercial and Industrial CBSA NEEA’s 2019 Commercial Building Stock Assessment Council Northwest Power and Conservation Council (NWPCC) DHW Domestic Hot Water DSM Demand Side Management EE Energy Efficiency EIA Energy Information Administration EUL Estimated Useful Life EUI Energy Usage Intensity HVAC Heating Ventilation and Air Conditioning IFSA NEEA’s 2014 Industrial Facilities Site Assessment IRP Integrated Resource Plan LoadMAP AEG’s Load Management Analysis and Planning™ tool NEEA Northwest Energy Efficiency Alliance O&M Operations and Maintenance RBSA NEEA’s 2016 Residential Building Stock Assessment RTF Regional Technical Forum RVT Resource Value Test TRC Total Resource Cost test UCT Utility Cost Test UEC Unit Energy Consumption UES Unit Energy Savings WSEC 2015 Washington State Energy Code Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 141 | 5 Applied Energy Group • www.appliedenergygroup.com 2 ANALYSIS APPROACH AND DATA DEVELOPMENT This section describes the analysis approach taken for the study and the data sources used to develop the potential estimates. Overview of Analysis Approach To perform the potential analysis, AEG used a bottom-up approach following the major steps listed below. We describe these analysis steps in more detail throughout the remainder of this chapter. 1. Performed a market characterization to describe sector-level natural gas use for the residential, commercial, and industrial sectors for the base year, 2019. This included extensive use of Avista data and other secondary data sources from NEEA and the Energy Information Administration (EIA). 2. Developed a baseline projection of energy consumption by sector, segment, end use, and technology for 2021 through 2040. 3. Defined and characterized several hundred EE measures to be applied to all sectors, segments, and end uses. 4. Estimated technical, achievable technical, and achievable economic energy savings at the measure level for 2021-2040. Achievable economic potential was assessed using both the UCT and TRC screens. Comparison with Northwest Power & Conservation Council Methodology It is important to note the Council’s methodology was developed for, and used, in electric CPAs. Natural gas impacts are typically assessed when they overlap with electricity measures (e.g. gas water heating impacts in an electrically heated “Built Green Washington” home). The Council’s ramp rates were also developed with electric utility DSM programs in mind. Electricity is the primary focus of the regionwide potential assessed in the Council’s Plans. Although Avista is a dual-fuel utility, this study focuses on natural gas measures and programs, which exhibit noticeable differences from electric programs, notably regarding avoided costs. To account for this, AEG adapted Council methodologies in some cases, rather than using them directly from the source. This is especially relevant in the development of ramp rates when achievability was determined to not be applicable to a specific natural gas measure or program. We discuss this in Section 7 of this report. A primary objective of the study was to estimate natural gas potential consistent with the Northwest Power & Conservation Council’s (NWPCC) analytical methodologies and procedures for electric utilities. While developing Avista’s 2021-2040 CPA, the AEG team relied on an approach vetted and adapted through the successful completion of CPAs under the Council’s Fifth, Sixth, Seventh, and now 2021 Power Plans. Among other aspects, this approach involves using consistent: • Data sources: Avista surveys, regional surveys, market research, and assumptions • Measures and assumptions: Avista TRM, Seventh Plan supply curves and RTF work products • Potential factors: 2021 Power Plan ramp rates • Levels of potential: technical, achievable technical, and achievable economic Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 142 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 6 Applied Energy Group • www.appliedenergygroup.com • Cost-effectiveness approaches: assessed potential under the UCT as well as Council’s TRC method, including non-energy impacts (and non-gas energy impacts) which may be quantified and monetized as well as O&M impacts within the TRC • Conservation credits: applied a 10% conservation credit to avoided energy costs for energy benefits was applied to the TRC calculation LoadMAP Model For this analysis, AEG used its Load Management Analysis and Planning tool (LoadMAP™) version 5.0 to develop both the baseline projection and the estimates of potential. AEG developed LoadMAP in 2007 and has enhanced it over time, using it for the EPRI National Potential Study and numerous utility-specific forecasting and potential studies since. Built in Excel, the LoadMAP framework (see Figure 2-1) is both accessible and transparent and has the following key features. • Embodies the basic principles of rigorous end-use models (such as EPRI’s Residential End-Use Energy Planning System (REEPS) and Commercial End-Use Planning System (COMMEND)) but in a more simplified, accessible form. • Includes stock-accounting algorithms that treat older, less efficient appliance/equipment stock separately from newer, more efficient equipment. Equipment is replaced according to the measure life and appliance vintage distributions defined by the user. • Balances the competing needs of simplicity and robustness by incorporating important modeling details related to equipment saturations, efficiencies, vintage, and the like, where market data are available, and treats end uses separately to account for varying importance and availability of data resources. • Isolates new construction from existing equipment and buildings and treats purchase decisions for new construction and existing buildings separately. This is especially relevant in the state of Washington where the 2015 WSEC substantially enhances the efficiency of the new construction market. • Uses a simple logic for appliance and equipment decisions. Other models available for this purpose embody complex customer choice algorithms or diffusion assumptions, and the model parameters tend to be difficult to estimate or observe and sometimes produce anomalous results that require calibration or even overriding. The LoadMAP approach allows the user to drive the appliance and equipment choices year by year directly in the model. This flexible approach allows users to import the results from diffusion models or to input individual assumptions. The framework also facilitates sensitivity analysis. • Includes appliance and equipment models customized by end use. For example, the logic for water heating is distinct from furnaces and fireplaces. • Can accommodate various levels of segmentation. Analysis can be performed at the sector level (e.g., total residential) or for customized segments within sectors (e.g., housing type, state, or income level). • Natively outputs model results in a detailed line-by-line summary file, allowing for review of input assumptions, cost-effectiveness results, and potential estimates at a granular level. Also allows for the development of IRP supply curves, both at the achievable technical and achievable economic potential levels. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 143 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 7 Applied Energy Group • www.appliedenergygroup.com • Consistent with the segmentation scheme and the market profiles we describe below, the LoadMAP model provides projections of baseline energy use by sector, segment, end use, and technology for existing and new buildings. It also provides forecasts of total energy use and energy-efficiency savings associated with the various types of potential. 2 Figure 2-1 LoadMAP Analysis Framework Definitions of Potential Before we delve into the details of the analysis approach, it is important to define what we mean when discussing energy efficiency (EE) potential. In this study, the savings estimates are developed for three types of potential: technical potential, economic potential, and achievable potential. These are developed at the measure level, and results are provided as savings impacts over the 20-year forecasting horizon. The various levels are described below. • Te chnical Potential is defined as the theoretical upper limit of EE potential. It assumes customers adopt all feasible measures regardless of their cost. At the time of existing equipment failure, customers replace their equipment with the most efficient option available. In new construction, customers and developers also choose the most efficient equipment option. o Technical potential also assumes the adoption of every other available measure, where technically feasible. For example, it includes installation of high-efficiency windows in all new construction opportunities and furnace maintenance in all existing buildings with installed furnaces. These retrofit measures are phased in over a number of years to align with the stock turnover of related equipment units, rather than modeled as immediately available all at once. 2 The model computes energy forecasts for each type of potential for each end use as an intermediate calculation. Annual-energy savings are calculated as the difference between the value in the baseline projection and the value in the potential forecast (e.g., the technical potential forecast). Market Profiles Base-Year Energy Consumption Projection Data Energy-Efficiency Analysis Projection Results Customer segmentation Market size Equipment saturation Technology shares Vintage distribution Unit energy consumption New construction profile By technology, end use, segment, vintage, sector, and state Economic Data Customer growth Energy prices Elasticities & HDD65s Technology Data Efficiency options Codes and standards Purchase shares List of measures Saturations Ramp rates Avoided cost Cost-effectiveness Baseline Projection Energy-efficiency Projections Technical Achievable Technical Achievable Economic (UCT and TRC) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 144 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 8 Applied Energy Group • www.appliedenergygroup.com • Achievable Technical Potential refines technical potential by applying customer participation rates that account for market barriers, customer awareness and attitudes, program maturity, and other factors that affect market penetration of conservation measures. The customer adoption rates used in this study were the ramp rates developed for the Northwest Power & Conservation Council’s Seventh Plan based on the electric-utility model, tailored for use in natural gas EE programs. • U CT Achievable E conomic Potential further refines achievable technical potential by applying an economic cost-effectiveness screen. In this analysis, primary cost-effectiveness is measured by the utility cost test (UCT), which assesses cost-effectiveness from the utility’s perspective. This test compares lifetime energy benefits to the costs of delivering the measure through a utility program, excluding monetized non-energy impacts. These costs are the incentive, as a percent of incremental cost of the given efficiency measure, relative to the relevant baseline course of action (e.g. federal standard for lost opportunity and no action for retrofits), plus any administrative costs that are incurred by the program to deliver and implement the measure. If the benefits outweigh the costs (that is, if the UCT ratio is greater than 1.0), a given measure is included in the economic potential. • T R C Achievable E conomic Potential is similar to UCT achievable economic potential in that it refines achievable technical potential through cost-effectiveness analysis. The total resource cost (TRC) test assesses cost-effectiveness from a combined utility and participant perspective. As such, this test includes full measure costs but also includes non-energy impacts realized by the customer if quantifiable and monetized. In addition to non-energy impacts, we assessed the impacts of non-gas savings following Council methodology. This includes a calibration credit for space heating equipment consumption to account for secondary heating equipment present in an average home as well as other electric end-use impacts such as cooling and interior lighting as applicable on a measure-by- measure basis. As a secondary screen, we include TRC results for comparative purposes. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 145 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 9 Applied Energy Group • www.appliedenergygroup.com Market Characterization Now that we have described the modeling tool and provided the definitions of the potential cases, the first step in the actual analysis approach is market characterization. To estimate the savings potential from energy-efficient measures, it is necessary to understand how much energy is used today and what equipment is currently in service. This characterization begins with a segmentation of Avista’s natural gas footprint to quantify energy use by sector, segment, end-use application, and the current set of technologies in use. For this we rely primarily on information from Avista, augmenting with secondary sources as necessary. Segmentation for Modeling Purposes This assessment first defined the market segments (states, building types, end uses, and other dimensions) that are relevant in Avista’s service territory. The segmentation scheme for this project is presented in Table 2-1. Table 2-1 Overview of Avista Analysis Segmentation Scheme Dimension Segmentation Variable Description 0 State Washington and Idaho 1 Sector Residential, Commercial, Industrial 2 Segment Residential: Single Family, Multifamily, Mobile Home, Low Income Commercial: Office, Restaurant, Retail, Grocery, School, College, Health, Lodging, Warehouse, Miscellaneous Industrial 3 Vintage Existing and new construction 4 End uses Heating, secondary heating, water heating, food preparation, process, and miscellaneous (as appropriate by sector) 5 Appliances/end uses and technologies Technologies such as furnaces, water heaters, and process heating by application, etc. 6 Equipment efficiency levels for new purchases Baseline and higher-efficiency options as appropriate for each technology With the segmentation scheme defined, we then performed a high-level market characterization of natural gas sales in the base year, 2019. This information provided control totals at a sector level for calibrating the LoadMAP model to known data for the base-year. Market Profiles The next step was to develop market profiles for each sector, customer segment, end use, and technology. A market profile includes the following elements: • Ma rket size is a representation of the number of customers in the segment. For the residential sector, the unit we use is number of households. In the commercial sector, it is floor space measured in square feet. For the industrial sector, it is number of employees. • S a turations indicate the share of the market that is served by a particular end-use technology. Three types of saturation definitions are commonly used: Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 146 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 10 Applied Energy Group • www.appliedenergygroup.com o The conditioned space approach accounts for the fraction of each building that is conditioned by the end use. This applies to cooling and heating end uses. o The whole-building approach measures shares of space in a building with an end use regardless of the portion of each building that is served by the end use. Examples are commercial refrigeration and food service, and domestic water heating and appliances. o The 100% saturation approach applies to end uses that are generally present in every building or home and are simply set to 100% in the base year. • U E C (Unit E nergy Consumption) or E UI (Energy U sage Index) define consumption for a given technology. UEC represents the amount of energy a given piece of equipment is expected to use in one year. EUI is a UEC indexed to a non-building market unit, such as per square foot or per employee) • These are indices that refer to a measure of average annual energy use per market unit (home, floor space, or employee in the residential, commercial, and industrial sector, respectively) that are served by an end-use technology. UECs and EUIs embody an average level of service and average equipment efficiency for the market segment. • Annual e nergy i ntensity for the residential sector represents the average energy use for the technology across all homes in 2015. It is computed as the product of the saturation and the UEC and is defined as therms/household for natural gas. For the commercial and industrial sectors, intensity, computed as the product of the saturation and the EUI, represents the average use for the technology across all floor space or all employees in the base year. • Annual u sage is the annual energy used by each end-use technology in the segment. It is the product of the market size and intensity and is quantified in therms or dekatherms. The market characterization results and the market profiles are presented in Section 3 and Appendix A. Baseline Projection The next step was to develop the baseline projection of annual natural gas use for 2021 through 2040 by customer segment and end use in the absence of new utility energy efficiency programs. We first aligned with Avista’s official forecast. AEG incorporated assumptions and data utilized in the official utility forecast. Avista’s heating degree days (base 65°F) were incorporated into the LoadMAP model to align the baseline projection with the official utility forecast. We calibrated to actual sales when available. The end-use projection includes impacts of future federal standards that were effective as of December 2017, which drive energy consumption down through the study period. Naturally occurring energy conservation, that is, energy conservation that is realized within the service area independent of utility-sponsored programs, is incorporated into the baseline projection consistent with the US Energy Information Administration’s Annual Energy Outlook for the Pacific region. Results of the primary market research were used to calibrate these assumptions to ensure the secondary sources were relevant to Avista customers. For example, some customers will purchase and install energy conservation measures that are available in the market without a utility incentive. As such, the baseline projection is the foundation for the analysis of savings in future conservation cases and scenarios as well as the metric against which potential savings are measured. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 147 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 11 Applied Energy Group • www.appliedenergygroup.com Inputs to the baseline projection include: • Current economic growth forecasts (i.e., customer growth, changes in weather (Heating Degree Day, base-65°F (HDD65) normalization)) • Trends in fuel shares and equipment saturations • Existing and approved changes to building codes and equipment standards We present the baseline projection results for the system as a whole, and for each sector in Section 4. Energy Efficiency Measure Development This section describes the framework used to assess the savings, costs, and other attributes of energy efficiency measures. These characteristics form the basis for measure-level cost-effectiveness analyses as well as for determining measure-level savings. For all measures, AEG assembled information to reflect equipment performance, incremental costs, and equipment lifetimes. This information combined with Avista’s avoided cost data informs the economic screens that determine economically feasible measures. In this section, AEG would like to acknowledge the work of the Avista team in detailed measure assumptions specific to the territory and region within the Avista TRM, which was provided at the outset of this study. Figure 2-2 outlines the framework for measure characterization analysis. First, the list of measures is identified; each measure is then assigned an applicability for each market sector and segment and characterized with appropriate savings, costs and other attributes; then the cost-effectiveness screening is performed. Avista provided feedback during each step of the process to ensure measure assumptions and results lined up with programmatic experience. We compiled a robust list of conservation measures for each customer sector, drawing upon Avista’s TRM and program experience, AEG’s own measure databases and building simulation models, and secondary sources, primarily the Regional Technical Forum’s (RTF) UES measure workbooks and the Seventh Plan’s electric power conservation supply curves. This universal list of measures covers all major types of end- use equipment, as well as devices and actions to reduce energy consumption. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 148 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 12 Applied Energy Group • www.appliedenergygroup.com Figure 2-2 Approach for ECM Assessment The selected measures are categorized into two types according to the LoadMAP modeling taxonomy: equipment measures and non-equipment measures. • E q uipment measures are efficient energy-consuming pieces of equipment that save energy by providing the same service with a lower energy requirement than a standard unit. An example is an ENERGY STAR® residential water heater (UEF 0.64) that replaces a standard efficiency water heater (UEF 0.58). For equipment measures, many efficiency levels may be available for a given technology, ranging from the baseline unit (often determined by a code or standard) up to the most efficient product commercially available. These measures are applied on a stock-turnover basis, and in general, are referred to as lost opportunity (LO) measures by the Council because once a purchase decision is made, there will not be another opportunity to improve the efficiency of that equipment item until its effective useful life (EUL) is reached once again. • N on-equipment measure s save energy by reducing the need for delivered energy, but do not necessarily involve replacement or purchase of major end-use equipment (such as a furnace or water heater). Measure installation is not tied to a piece of equipment reaching end of useful life, so these are generally categorized as “retrofit” measures. An example would be low-flow showerheads that modify a household’s hot water consumption. The existing showerheads can be achievably replaced without waiting for the existing showerhead to malfunction, and saves energy used by the water heating equipment. Non-equipment measures typically fall into one of the following categories: o Building shell (windows, insulation, roofing material) o Equipment controls (smart thermostats, water heater setback) o Whole-building design (ENERGY STAR homes) AEG universal measure list Client review / feedback Measure descriptions Measure characterization Economic screen UCT and TRC Energy savings Costs and NEIs Lifetime Base saturation and applicability Client measure data library (RTF, 7th Plan, AEO, Statewide TRMs, evaluation reports, etc.) AEG measure data library (DEEM) Building Simulations Avoided costs, discount rate, transport losses Inputs Process Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 149 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 13 Applied Energy Group • www.appliedenergygroup.com o Retrocommissioning and strategic energy management We developed a preliminary list of efficient measures, which was distributed to Avista’s project team for review. Once we assembled the list of measures, the AEG team assessed their energy-saving characteristics. For each measure, we also characterized incremental cost, service life, non-energy impacts, and other performance factors. Following the measure characterization, we performed an economic screening of each measure, which serves as the basis for developing the economic and achievable potential scenarios. Representative Measure Data Inputs To provide an example of measure data, Table 2-2 and Table 2-3 present examples of the detailed data inputs behind both equipment and non-equipment measures, respectively, for the case of residential direct-fuel furnaces in single-family homes in Washington. Table 2-2 displays the various efficiency levels available as equipment measures, as well as the corresponding effective useful life, energy usage, and cost estimates. The columns labeled “On Market” and “Off Market” reflect equipment availability due to codes and standards or the entry of new products to the market. Table 2-2 Example Equipment Measures for Direct Fuel Furnace – Single-Family Home, Washington Efficiency Level Useful Life (years) Equipment Cost Energy Usage (therms/yr) On Market Off Market AFUE 80% 20 $1,955 517 2019 2023 AFUE 90% 20 $2,058 465 2019 2023 AFUE 92% 20 $2,099 453 2019 n/a AFUE 95% 20 $2,778 438 2019 n/a AFUE 98% 20 $3,035 423 2019 n/a Convert to NG Heat Pump 20 $6,739 345 2019 n/a Table 2-3 lists some of the non-equipment measures applicable to a direct-fuel furnace in an existing single-family home. All measures are evaluated for cost effectiveness based on the lifetime benefits relative to the cost of the measure. The total savings, costs, and monetized non-energy impacts are calculated for each year of the study and depend on the base year saturation of the measure, the applicability of the measure, and the savings as a percentage of the relevant energy end uses. We model two flavors of most shell insulations measures. The first is the installation of insulation where there is none (or very little). This applies to a small subset of the population (roughly 7% of the population is eligible for this measure per RBSA 2016) but has large savings impacts. This percentage is low due to the impacts of current Avista programs, strict Washington building codes, and naturally occurring efficiency. The second is an insulation upgrade measure where homes with existing insulation below the threshold but not classified as no insulation, may be upgraded to higher R-values. This applies to a much larger percentage of the market. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 150 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 14 Applied Energy Group • www.appliedenergygroup.com Table 2-3 Example Non-Equipment Measures – Existing Single Family Home, Washington3 End Use Measure Saturation in 20194 Applicability Lifetime (yrs) Measure Installed Cost Energy Savings (%) Heating Insulation - Ceiling Installation 0% 7% 45 $1,280 31.3% Heating Insulation – Ceiling Upgrade 78% 87% 45 $1,739 1.2% Heating Ducting Repair and Sealing 20% 50% 20 $794 6.0% Heating Windows - High Efficiency5 0% 25% 45 $5,337 25.5% Table 2-4 summarizes the number of measures evaluated for each segment within each sector. Table 2-4 Number of Measures Evaluated Sector Total Measures Measure Permutations w/ 2 Vintages Measure Permutations w/ All Segments & States Residential 46 92 736 Commercial 51 102 2,040 Industrial 30 60 120 Total Measures Evaluated 127 254 2,896 Calculation of Energy Conservation Potential The approach we used for this study to calculate the energy conservation potential adheres to the approaches and conventions outlined in the National Action Plan for Energy-Efficiency (NAPEE) Guide for Conducting Potential Studies.6 This document represents credible and comprehensive industry best practices for specifying energy conservation potential. Three types of potential were developed as part of this effort: technical potential, achievable technical potential, and achievable economic potential (using UCT and TRC). The calculation of technical potential is a straightforward algorithm which, as described above, assumes that customers adopt all feasible measures regardless of their cost. Stacking of Measures and Interactive Effects An important factor when estimating potential is to consider interactions between measures when they are applied within the same space. This is important to avoid double counting and could feasibly result in savings at greater than 100% of equipment consumption if not properly accounted for. This occurs at the population or system level, where multiple DSM actions must be stacked or layered on top of each other in succession, rather than simply summed arithmetically. These interactions are automatically handled within the LoadMAP models where measure impacts are stacked on top of each 3 The applicability factors consider whether the measure is applicable to a particular building type and whether it is feasible to install the measure. For instance, duct repair and sealing is not applicable to homes with zonal heating systems since there is no ductwork present to repair. 4 Note that saturation levels reflected increase from their base year saturation as more measures are adopted. 5 The RTF has increased the efficiency requirements for what is considered a “high efficiency” window for the purpose of future programs. As a result, no respondents to the 2016 RBSA have windows that already meet this threshold. However, the qualified savings in the RTF workbook require a certain level of inefficiency in the pre-existing window to be eligible. The 25% applicability reflects the population that is eligible to participate. 6 National Action Plan for Energy Efficiency (2007). National Action Plan for Energy Efficiency Vision for 2025: Developing a Framework for Change. www.epa.gov/eeactionplan. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 151 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 15 Applied Energy Group • www.appliedenergygroup.com other, modifying the baseline for each subsequent measure. We first compute the total savings of each measure on a standalone basis, then also assign a stacking priority, based on levelized cost, to the measures such that “integrated” or “stacked” savings will be calculated as a percent reduction to the running total of baseline energy remaining in each end use after the previous measures have been applied. This ensures that the available pie of baseline energy shrinks in proportion to the number of DSM measures applied, as it would in reality. The loading order is based on the levelized cost of conserved energy, such that the more economical measures that are more likely to be selected from a resource planning perspective will be the first to be applied to the modeled population. We also account for exclusivity of certain measure options when defining measure assumptions. For instance, if an AFUE 95% furnace is installed in a single-family home, the model will not allow that same home to install an AFUE 98% furnace, or any other furnace, until the newly installed AFUE 95% option has reached its end of useful life. For non-equipment measures, which do not have a native applicability limit, we define base saturations and applicabilities such that measures do not overlap. For example, we model two flavors of ceiling insulation. The first assumes the installation of insulation where there previously was none. The second upgrades pre-existing insulation if it falls under a certain threshold. We used regional market research data to ensure exclusivity of these two options. NEEA’s 2014 RBSA contains information on average R-values of insulation installed. The AEG team used this data to define the percent of homes that could install one measure, but not the other. Estimating Customer Adoption Once the technical potential is established, estimates for the market adoption rates for each measure are applied that specify the percentage of customers that will select the highest–efficiency economic option. This phases potential in over a more realistic time frame that considers barriers such as imperfect information, supplier constraints, technology availability, and individual customer preferences. The intent of market adoption rates is to establish a path to full market maturity for each measure or technology group and ensure resource planning does not overstep acquisition capabilities. We adapted the Northwest Power and Conservation Council’s 2021 Plan ramp rates to develop these achievability factors for each measure. Applying these ramp rates as factors leads directly to the achievable technical potential. Screening Measures for Cost-Effectiveness With achievable technical potential established, the final step is to apply an economic screen and arrive at the subset of measures that are cost-effective and ultimately included in achievable economic potential. LoadMAP performs an economic screen for each individual measure in each year of the planning horizon. This study uses the UCT test as the primary cost-effectiveness metric, which compares the lifetime hourly energy benefits of each applicable measure with the incentive and administrative costs incurred by the utility. The lifetime benefits are calculated by multiplying the annual energy savings for each measure by Avista’s avoided costs and discounting the dollar savings to the present value equivalent. Lifetime costs represent incremental measure cost. The analysis uses each measure’s values for savings, costs, and lifetimes that were developed as part of the measure characterization process described above. The LoadMAP model performs this screening dynamically, considering changing savings and cost data over time. Thus, some measures pass the economic screen for some, but not all, of the years in the forecast. It is important to note the following about the economic screen: Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 152 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 16 Applied Energy Group • www.appliedenergygroup.com • The economic evaluation of every measure in the screen is conducted relative to a baseline condition. For instance, in order to determine the therm savings potential of a measure, consumption with the measure applied must be compared to the consumption of a baseline condition. • The economic screening was conducted only for measures that are applicable to each building type and vintage; thus, if a measure is deemed to be irrelevant to a building type and vintage, it is excluded from the respective economic screen. This constitutes the achievable economic potential and includes every program-ready opportunity for conservation savings. Potential results are presented in Sections 4 and 5. Measure-level detail is available as a separate appendix to this report. Data Development This section details the data sources used in this study, followed by a discussion of how these sources were applied. In general, data were adapted to local conditions, for example, by using local sources for measure data and local weather for building simulations. Data Sources The data sources are organized into the following categories: • Avista-provided data • AEG’s databases and analysis tools • Other secondary data and reports Avista Data Our highest priority data sources for this study were those that were specific to Avista, including the primary market research conducted specifically for this study. This data is specific to Avista’s service territory and is an important consideration when customizing the model for Avista’s market. This is best practice when developing CPA baselines when the data is available. • Avista customer a ccount d atabase. Avista provided billing data for development of customer counts and energy use for each sector. This included a very detailed database of customer building classifications which was instrumental in the development of segmentation. • Avista’s 2013 GenPOP Residential Survey. In 2013, Avista hired The Cadmus Group to conduct a residential saturation survey, which included results from 1,051 customers. The results of this survey helped segment the residential sector and establish fuel and technology shares for the base year. This data was very useful in developing a detailed estimate of energy consumption within Avista’s service territory. • Load forecasts. Avista provided forecasts, by sector and state, of energy consumption, customer counts, weather actuals for 2015 and 2017, as well as weather-normal HDD65s. • E conomic information. Avista provided a discount rate as well as avoided cost forecasts consistent with those utilized in the IRP. • Avista program d ata. Avista provided information about past and current programs, including program descriptions, goals, and measure achievements to date. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 153 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 17 Applied Energy Group • www.appliedenergygroup.com • Avista T R M. Avista provided a documented list of energy conservation measures and assumptions considered within current programs. We utilized this as a primary source of measure information, supplemented by Northwest data, AEG data, and secondary data as described below. Northwest Regional Data The study utilized a variety of local data and research, including research performed by the Northwest Energy Efficiency Alliance (NEEA) and analyses conducted by the Council. Most important among these are: • Northwest Power and Conservation Council, 2021 Power Plan and Regional Technical Forum workbooks. To develop its Power Plan, the Council maintains workbooks with detailed information about measu res. This was used as a primary data source when Avista-specific program data was not available, and the data was determined to be applicable to natural gas conservation measures. The most recent data and workbooks available were used at the time of this study. o https://www.nwcouncil.org/2021-northwest-power-plan o https://rtf.nwcouncil.org/measures • N orthwest Energy Efficiency Alliance, 2011 Residential Building Stock Assessment S ingle-Family , Market Research Report, http://neea.org/docs/reports/residential-building-stock- assessment-single-family-characteristics-and-energy-use.pdf?sfvrsn=8 • N orthwest Energy Efficiency Alliance, 2014 Commercial Building Stock Assessment , December 16, 2014, http://neea.org/docs/default-source/reports/2014-cbsa-final-report_05-dec- 2014.pdf?sfvrsn=12. • N orthwest Energy Efficiency Alliance, 2014 Industrial F acilities S ite Assessment, December 29, 2014, http://neea.org/resource-center/regional-data-resources/industrial-facilities- site-assessment Since Avista’s GenPOP survey contained detailed appliance saturations, the RBSA was used more for benchmarking and comparative purposes, rather than as a primary source of data. The NEEA surveys were used extensively to develop base saturation and applicability assumptions for many of the non-equipment measures within the study. AEG Data AEG maintains several databases and modeling tools that we use for forecasting and potential studies. Relevant data from these tools has been incorporated into the analysis and deliverables for this study. • AE G E nergy Ma rket Profiles. For more than 10 years, AEG staff has maintained profiles of end- use consumption for the residential, commercial, and industrial sectors. These profiles include market size, fuel shares, unit consumption estimates, and annual energy use by fuel (natural gas and electricity), customer segment and end use for 10 regions in the U.S. The Energy Information Administration surveys (RECS, CBECS and MECS) as well as state-level statistics and local customer research provide the foundation for these regional profiles. • Building E nergy S imulation Tool (BEST). AEG’s BEST is a derivative of the DOE 2.2 building simulation model, used to estimate base-year UECs and EUIs, as well as measure savings for the HVAC- related measures. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 154 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 18 Applied Energy Group • www.appliedenergygroup.com • AE G’s Da tabase of E ne rgy Conservation Measures (DEEM). AEG maintains an extensive database of measure data for our studies. Our database draws upon reliable sources including the California Database for Energy Efficient Resources (DEER), the EIA Technology Forecast Updates – Residential and Commercial Building Technologies – Reference Case, RS Means cost data, and Grainger Catalog Cost data. • R e cent studies. AEG has conducted more than 60 studies of EE potential in the last five years. We checked our input assumptions and analysis results against the results from these other studies, both within the region and across the country. Other Secondary Data and Reports Finally, a variety of secondary data sources and reports were used for this study. The main sources are identified below. • Annual E nergy Outlook. The Annual Energy Outlook (AEO), conducted each year by the U.S. Energy Information Administration (EIA), presents yearly projections and analysis of energy topics. For this study, we used data from the 2015 and 2017 AEO. • Ame rican Community Survey. The US Census American Community Survey is an ongoing survey that provides data every year on household characteristics. http://www.census.gov/acs/www/ • Local We ather Da ta. Weather from NOAA’s National Climatic Data Center for Spokane in Washington and Coure d’Alene in Idaho were used where applicable. • E PRI E nd-Use Models (R EEPS a nd COMMEND). These models provide the energy-use elasticities we apply to prices, household income, home size, heating, and cooling. • Da tabase for E nergy E fficient R esources (DEER). The California Energy Commission and California Public Utilities Commission (CPUC) sponsor this database, which is designed to provide well-documented estimates of energy and peak demand savings values, measure costs, and effective useful life (EUL) for the state of California. We used the DEER database to cross check the measure savings we developed using BEST and DEEM. • Other re levant resources: These include reports from the Consortium for Energy Efficiency, the EPA, and the American Council for an Energy-Efficient Economy. This also includes technical reference manuals (TRMs) from other states. When using data from outside the region, especially weather-sensitive data, AEG adapted assumptions for use within Avista’s territory. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 155 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 19 Applied Energy Group • www.appliedenergygroup.com Application of Data to the Analysis We now discuss how the data sources described above were used for each step of the study. Data Application for Market Characterization To construct the high-level market characterization of natural gas consumption and market size units (households for residential, floor space for commercial, and employees for industrial), we primarily used Avista’s billing data as well as secondary data from AEG’s Energy Market Profiles database. Data Application for Market Profiles The specific data elements for the market profiles, together with the key data sources, are shown in Table 2-5. To develop the market profiles for each segment, we used the following approach: 1. Develop control totals for each segment. These include market size, segment-level annual natural gas use, and annual intensity. Control totals were based on Avista’s actual sales and customer-level information found in Avista’s customer billing database. We used the market profiles from the 2016 CPA as a starting point. 2. Develop existing appliance saturations and the energy characteristics of appliances, equipment, and buildings using equipment flags within Avista’s billing data, NEEA’s 2016 RBSA, 2019 CBSA, and 2014 IFSA, DOE’s 2015 RECS, the 2019 edition of the Annual Energy Outlook, AEG’s Energy Market Profile (EMP) for the Pacific region, and the American Community Survey. 3. Ensure calibration to Avista control totals for annual natural gas sales in each sector and segment. 4. Compare and cross-check with other recent AEG studies. 5. Work with Avista staff to verify the data aligns with their knowledge and experience. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 156 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 20 Applied Energy Group • www.appliedenergygroup.com Table 2-5 Data Applied for the Market Profiles Model Inputs Description Key Sources Market size Base-year residential dwellings, commercial floor space, and industrial employment Avista 2019 actual sales Avista customer account database Annual intensity Residential: Annual use per household Commercial: Annual use per square foot Industrial: Annual use per employee Avista customer account database AEG’s Energy Market Profiles AEO 2019 – Pacific Region Other recent studies Appliance/equipment saturations Fraction of dwellings with an appliance/technology Percentage of C&I floor space/employment with equipment/technology Avista 2013 GenPOP Survey 2016 RBSA, 2019 CBSA and IFSA 2018 American Community Survey AEG’s Energy Market Profiles UEC/EUI for each end-use technology UEC: Annual natural gas use in homes and buildings that have the technology EUI: Annual natural gas use per square foot/employee for a technology in floor space that has the technology HVAC uses: BEST simulations using prototypes developed for Avista Engineering analysis AEG DEEM AEO 2019 – Pacific Region Recent AEG studies Appliance/equipment age distribution Age distribution for each technology 2016 RBSA, 2019 CBSA, and recent AEG studies Efficiency options for each technology List of available efficiency options and annual energy use for each technology Avista current program offerings AEG DEEM AEO 2019 CA DEER Recent AEG studies Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 157 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 21 Applied Energy Group • www.appliedenergygroup.com Data Application for Baseline Projection Table 2-6 summarizes the LoadMAP model inputs required for the baseline projection. These inputs are required for each segment within each sector, as well as for new construction and existing dwellings/buildings. Table 2-6 Data Applied for the Baseline Projection in LoadMAP Model Inputs Description Key Sources Customer growth forecasts Forecasts of new construction in residential and C&I sectors Avista load forecast Equipment purchase shares for baseline projection For each equipment/technology, purchase shares for each efficiency level; specified separately for existing equipment replacement and new construction Shipment data from AEO and ENERGY STAR AEO 2019 regional forecast assumptions7 Appliance/efficiency standards analysis Utilization model parameters Price elasticities, elasticities for other variables (income, weather) EPRI’s REEPS and COMMEND models In addition, assumptions were incorporated for known future equipment standards as of June 2020, as shown in Table 2-7 and Table 2-8. The assumptions tables here extend through 2025, after which all standards are assumed to hold steady. 7 We developed baseline purchase decisions using the Energy Information Agency’s Annual Energy Outlook report (2017), which utilizes the National Energy Modeling System (NEMS) to produce a self-consistent supply and demand economic model. We calibrated equipment purchase options to match distributions/allocations of efficiency levels to manufacturer shipment data for recent years. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 158 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 22 Applied Energy Group • www.appliedenergygroup.com Table 2-7 Residential Natural Gas Equipment Federal Standards8 End Use Technology 2019 2020 2021 2022 2023 2024 2025 Space Heating Furnace – Direct Fuel AFUE 80% AFUE 92%* Boiler – Direct Fuel AFUE 82% AFUE 84% Secondary Heating Fireplace N/A Water Heating Water Heater <= 55 gal. UEF 0.58 Water Heater > 55 gal. UEF 0.76 Appliances Clothes Dryer CEF 3.30 Stove/Oven N/A Miscellaneous Pool Heater TE 0.82 Miscellaneous N/A * This code was originally set to take effect in 2021 but exempts smaller systems. The comment period was also extended into 2017 and the standard will not take effect until at least 5 years after that has concluded. As a result, we modeled this standard coming online officially in 2024. Table 2-8 Commercial and Industrial Natural Gas Equipment Standards End Use Technology 2019 2020 2021 2022 2023 2024 2025 Cooling Furnace AFUE 80% / TE 0.80 Boiler Average around AFUE 80% / TE 0.80 (varies by size) Unit Heater Standard (intermittent ignition and power venting or automatic flue damper) Water Heater Water Heating TE 0.80 8 The assumptions tables here extend through 2025, after which all standards are assumed to hold steady. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 159 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 23 Applied Energy Group • www.appliedenergygroup.com Energy Conservation Measure Data Application Table 2-9 details the energy-efficiency data inputs to the LoadMAP model. It describes each input and identifies the key sources used in the Avista analysis. Table 2-9 Data Inputs for the Measure Characteristics in LoadMAP Model Inputs Description Key Sources Energy Impacts The annual reduction in consumption attributable to each specific measure. Savings were developed as a percentage of the energy end use that the measure affects. Avista TRM NWPCC workbooks, RTF AEG BEST AEG DEEM AEO 2019 CA DEER Other secondary sources Costs Equipment Measures: Includes the full cost of purchasing and installing the equipment on a per-household, per- square-foot, or per employee basis for the residential, commercial, and industrial sectors, respectively. Non-Equipment Measures: Existing buildings – full installed cost. New Construction - the costs may be either the full cost of the measure, or as appropriate, it may be the incremental cost of upgrading from a standard level to a higher efficiency level. Avista TRM NWPCC workbooks, RTF AEG DEEM AEO 2019 CA DEER RS Means Other secondary sources Measure Lifetimes Estimates derived from the technical data and secondary data sources that support the measure demand and energy savings analysis. Avista TRM NWPCC workbooks, RTF AEG DEEM AEO 2019 CA DEER Other secondary sources Applicability Estimate of the percentage of dwellings in the residential sector, square feet in the commercial sector, or employees in the industrial sector where the measure is applicable and where it is technically feasible to implement. 2016 RBSA, 2019 CBSA 2015 WSEC for limitations on new construction AEG DEEM CA DEER Other secondary sources On Market and Off Market Availability Expressed as years for equipment measures to reflect when the equipment technology is available or no longer available in the market. AEG appliance standards and building codes analysis Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 160 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 24 Applied Energy Group • www.appliedenergygroup.com Data Application for Cost-effectiveness Screening To perform the cost-effectiveness screening, a number of economic assumptions were needed. All cost and benefit values were analyzed as real dollars, converted from nominal provided by Avista. We applied Avista’s long-term discount rate of 4.34% excluding inflation. LoadMAP is configured to vary this by market sector (e.g. residential and commercial) if Avista develops alternative values in the future. Estimates of Customer Adoption To estimate the timing and rate of customer adoption in the potential forecasts, two sets of parameters are needed: • Te chnical d iffusion curves for non-equipment measures. Equipment measures are installed when existing units fail. Non-equipment measures do not have this natural periodicity, so rather than installing all available non-equipment measures in the first year of the projection (instantaneous potential), they are phased in according to adoption schedules that generally align with the diffusion of similar equipment measures. For this analysis, we used the Council’s retrofit ramp rates, labeled “Retro”. • Customer adoption rates , also referred to as take rates or ramp rates, are applied to measures on a year by year basis. These rates represent customer adoption of measures when delivered through a best-practice portfolio of well-operated efficiency programs under a reasonable policy or regulatory framework. Information channels are assumed to be established and efficient for marketing, educating consumers, and coordinating with trade allies and delivery partners. The primary barrier to adoption reflected in this case is customer preferences. Again, these are based on the ramp rates from the Northwest Power and Conservation Council’s 2021 Plan. The ramp rates referenced above were adapted for use for assessing natural gas measure potential. We describe this process in Section 7. The customer adoption rates used in this study are available in Appendix B. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 161 | 25 Applied Energy Group • www.appliedenergygroup.com 3 MARKET CHARACTERIZATION AND MARKET PROFILES In this section, we describe how customers in the Avista service territory use natural gas in the base year of the study, 2019. It begins with a high-level summary of energy use across all sectors and then delves into each sector in more detail. Overall Energy Use Summary Total natural gas consumption for all sectors for Avista’s Washington territory in 2019 was 19,411,285 dekatherms. As shown in Figure 3-1 and Table 3-1, the residential sector accounts for the largest share of annual energy use at 64%, followed by the commercial sector at 35%. The industrial sector accounts for 2% of usage. Figure 3-1 Sector-Level Natural Gas Use in Base Year 2019, Washington (annual therms, percent) Table 3-1 Avista Sector Control Totals, Washington, 2019 Sector Natural Gas Use (dekatherms) % of Use Residential 12,344,250 64% Commercial 6,718,365 35% Industrial 348,670 2% Total 19,411,285 100% Residential, 57% Commercial, 41% Industrial, 2% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 162 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 26 Applied Energy Group • www.appliedenergygroup.com Total natural gas consumption for all sectors for Avista’s Idaho territory in 2019 was 10,131,866 dekatherms. As shown in Figure 3-2 and Table 3-2, the residential sector accounts for the largest share of annual energy use at 57%, followed by the commercial sector at 41%. The industrial sector accounts for 2% of usage. Figure 3-2 Sector-Level Natural Gas Use in Base Year 2019, Idaho (annual therms, percent) Table 3-2 Avista Sector Control Totals, Idaho, 2019 Sector Natural Gas Use (dekatherms) % of Use Residential 5,782,934 57% Commercial 4,110,228 41% Industrial 238,705 2% Total 10,131,866 100% Residential, 57% Commercial, 41% Industrial, 2% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 163 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 27 Applied Energy Group • www.appliedenergygroup.com Residential Sector Washington Characterization The total number of households and gas sales for the service territory were obtained from Avista’s actual sales for 2019. Details, including number of households and 2019 natural gas consumption for the residential sector in Washington can be found in Table 3-3 below. In 2019, there were nearly 156,000 households in Avista’s Washington territory that used a total of 12,344,250 dekatherms, resulting in an average use per household of 796 therms per year. This is an important number for the calibration process. These values represent weather actuals for 2019 and were adjusted within LoadMAP to normal weather using heating degree day, base 65°F, using data provided by Avista. Table 3-3 Residential Sector Control Totals, Washington, 2019 Segment Households Natural Gas Use (dekatherms) Annual Use/Customer (therms/HH) Single Family 94,282 8,083,082 857 Multi-Family 8,684 469,031 540 Mobile Home 5,582 402,027 720 Low Income 46,521 3,390,109 729 Total 155,069 12,344,250 796 Figure 3-3 Residential Natural Gas Use by Segment, Washington, 2019 Figure 3-4 shows the distribution of annual natural gas consumption by end use for an average residential household. Space heating comprises most of the load at 82% followed by water heating at 12%. Appliances, Secondary Heating, and Miscellaneous loads make up the remaining portion (6%) of the total load. This is expected for a natural gas profile as there are very few miscellaneous technologies. One example is natural gas barbecues. Single Family 66% Multi-Family 4% Mobile Home 3% Low Income 27% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 164 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 28 Applied Energy Group • www.appliedenergygroup.com Figure 3-4 Residential Natural Gas Use by End Use, Washington, 2019 Avista’s GenPOP survey informed estimates of the saturation of key equipment types, which were used to distribute usage at the technology and end use level. However, because the vintage of the GenPOP survey is 2013, trends from more recent surveys were applied where appropriate, while still maintaining the more unique characteristics of Avista’s market. Figure 3-4 presents average natural gas intensities by end use and housing type. Single family homes consume substantially more energy in space heating. This is due to two factors. The first is that single family homes are larger. The second is that more walls are exposed to the outside environment, compared to multifamily dwellings with many shared walls. This increases heat transfer, resulting in greater heating loads. Water heating consumption is higher in single family homes as well. This is due to a greater number of occupants, which increases the demand for hot water. Figure 3-5 Residential Energy Intensity by End Use and Segment, Washington, 2019 (Annual Therms/HH) Space Heating 82% Secondary Heating 2% Water Heating 12% Appliances 2% Miscellaneous 2% 0 100 200 300 400 500 600 700 800 900 1,000 Single Family Multi-Family Mobile Home Low Income Average Home therms/ HH Space Heating Secondary Heating Water Heating Appliances Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 165 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 29 Applied Energy Group • www.appliedenergygroup.com The market profile for an average home in the residential sector is presented in Table 3-4 below. An important step in the profile development process is model calibration. All consumption within an average home must sum up to the intensity extracted from billing data. This is necessary so estimates of consumption for a piece of equipment do not exceed the actual usage in a home. Table 3-4 Average Market Profile for the Residential Sector, Washington, 2019 End Use Technology Saturation UEC (therms) Intensity (therms/HH) Usage (dekatherms) Space Heating Furnace - Direct Fuel 84.9% 747.2 634.6 9,840,233 Boiler - Direct Fuel 2.4% 674.2 16.2 251,417 Secondary Heating Fireplace 12.7% 137.3 17.4 269,840 Water Heating Water Heater <= 55 gal. 52.2% 177.8 92.9 1,440,263 Appliances Clothes Dryer 27.3% 18.0 4.9 76,440 Stove/Oven 58.9% 17.4 10.3 159,040 Miscellaneous Pool Heater 0.8% 80.1 0.6 9,491 Miscellaneous 100.0% 19.2 19.2 297,525 Total 796.0 12,344,250 Idaho Characterization Details for the residential sector in Idaho can be found in Table 3-5 below. In 2019, there were 77,804 households in Avista’s Washington territory that used a total of 5,782,934 dekatherms, resulting in an average use per household of 743 therms per year. Table 3-5 Residential Sector Control Totals, Idaho, 2019 Segment Households Natural Gas Use (dekatherms) Annual Use/Customer (therms/HH) Single Family 47,305 3,780,793 799 Multi-Family 3,812 191,962 504 Mobile Home 3,501 235,056 671 Low Income 23,186 1,575,123 679 Total 77,804 5,782,934 743 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 166 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 30 Applied Energy Group • www.appliedenergygroup.com Figure 3-6 Residential Natural Gas Use by Segment, Idaho, 2019 Figure 3-7 shows the distribution of annual natural gas consumption by end use for an average residential household. Space heating comprises a majority of the load at 82% followed by water heating at 12%. Miscellaneous loads make up a very small portion of the total load, as expected. Figure 3-7 Residential Natural Gas Use by End Use, Idaho, 2019 Avista’s 2013 GenPOP survey informed estimates of the saturation of key equipment types, which were used to distribute usage at the technology and end use level. Figure 3-8 presents average natural gas intensities by end use and housing type. Single family homes consume substantially more energy in space heating. Water heating consumption is higher in single family homes as well, due to a greater number of occupants, which increases the demand for hot water. Single Family 66% Multi-Family 4% Mobile Home 3% Low Income 27% Space Heating 82% Secondary Heating 2% Water Heating 12% Appliances 2% Miscellaneous 2% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 167 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 31 Applied Energy Group • www.appliedenergygroup.com Figure 3-8 Residential Energy Intensity by End Use and Segment, Idaho, 2019 (Annual Therms/HH) The market profile for an average home in the residential sector is presented in Table 3-6 below. An important step in the profile development process is model calibration. All consumption within an average home must sum up to the intensity extracted from billing data. This is necessary so estimates of consumption for a piece of equipment do not exceed the actual usage in a home. Table 3-6 Average Market Profile for the Residential Sector, 2019 End Use Technology Saturation UEC (therms) Intensity (therms/HH) Usage (dekatherms) Space Heating Furnace - Direct Fuel 81.0% 712.8 577.0 4,489,534 Boiler - Direct Fuel 2.2% 643.6 14.0 108,672 Secondary Heating Fireplace 16.9% 131.4 22.2 172,526 Water Heating Water Heater <= 55 gal. 54.6% 177.5 96.9 753,951 Appliances Clothes Dryer 14.7% 21.6 3.2 24,700 Stove/Oven 31.7% 20.8 6.6 51,415 Miscellaneous Pool Heater 0.3% 105.0 0.3 2,345 Miscellaneous 100.0% 23.1 23.1 179,792 Total 743.3 5,782,934 0 100 200 300 400 500 600 700 800 900 1,000 Single Family Multi-Family Mobile Home Low Income Average Home therms/ HH Space Heating Secondary Heating Water Heating Appliances Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 168 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 32 Applied Energy Group • www.appliedenergygroup.com Commercial Sector Washington Characterization The total number of nonresidential accounts and natural gas sales for the Washington service territory were obtained from Avista’s customer account database. AEG first separated the Commercial accounts from Industrial by analyzing the SIC codes and rate codes assigned in the company’s billing system. Prior to using the data, AEG inspected individual accounts to confirm proper assignment. This was done on the top accounts within each segment, but also via spot checks when reviewing the database. Energy use from accounts where the customer type could not be identified were distributed proportionally to all C&I segments. Once the billing data was analyzed, the final segment control totals were derived by distributing the total 2019 nonresidential load to the sectors and segments according to the proportions in the billing data. Table 3-7 below shows the final allocation of energy to each segment in the commercial sector, as well as the energy intensity on a square-foot basis. Intensities for each segment were derived from a combination of the 2019 CBSA and equipment saturations extracted from Avista’s database. The CBSA intensities corresponded to spaces with lower natural gas saturations than Avista’s database, so AEG increased intensities proportionally based on the additional presence of natural gas-consuming equipment. Table 3-7 Commercial Sector Control Totals, Washington, 2019 Segment Description Intensity (therms/Sq Ft) 2019 Natural Gas Use (dekatherms) Office Traditional office-based businesses including finance, insurance, law, government buildings, etc. 0.60 481,953 Restaurant Sit-down, fast food, coffee shop, food service, etc. 2.68 65,351 Retail Department stores, services, boutiques, strip malls etc. 0.83 837,065 Grocery Supermarkets, convenience stores, market, etc. 0.95 154,034 School Day care, pre-school, elementary, secondary schools 0.29 269,873 College College, university, trade schools, etc. 0.62 272,030 Health Health practitioner office, hospital, urgent care centers, etc. 1.04 315,668 Lodging Hotel, motel, bed and breakfast, etc. 0.68 172,829 Warehouse Large storage facility, refrigerated/unrefrigerated warehouse 0.68 358,315 Miscellaneous Catchall for buildings not included in other segments, includes churches, recreational facilities, public assembly, correctional facilities, etc. 1.16 1,183,111 Total 0.75 4,110,228 Figure 3-9 shows each segments’ natural gas consumption as a percentage of the entire commercial sector energy consumption. The three segments with the highest natural gas usage in 2019 are miscellaneous, retail, and office, in descending order. As expected, the highest intensity segment is restaurant. This is based on the high presence of food preparation equipment. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 169 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 33 Applied Energy Group • www.appliedenergygroup.com Figure 3-9 Commercial Natural Gas Use by Segment, Washington, 2019 Figure 3-10 shows the distribution of natural gas consumption by end use for the entire commercial sector. Space heating is the largest end use, followed closely by water heating. The miscellaneous end use is quite small, as expected. Figure 3-10 Commercial Sector Natural Gas Use by End Use, Washington, 2019 Figure 3-11 presents average natural gas intensities by end use and segment. Office 13% Restaurant 4% Retail 16% Grocery 4% School 3% College 3% Health 9% Lodging 4% Warehouse 9% Miscellaneous 35% Space Heating 61% Water Heating 25% Food Preparation 9% Miscellaneous 5% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 170 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 34 Applied Energy Group • www.appliedenergygroup.com Figure 3-11 Commercial Energy Usage Intensity by End Use and Segment, Washington, 2019 (Annual Therms/Sq. Ft) The total market profile for an average building in the commercial sector is presented in Table 3-8 below. Avista customer account data informed the market profile by providing information on saturation of key equipment types. Secondary data was used to develop estimates of energy intensity and square footage and to fill in saturations for any equipment types not included in the database. Table 3-8 Average Market Profile for the Commercial Sector, Washington, 2019 End Use Technology Saturation EUI (therms/ Sq Ft) Intensity (therms/ Sq Ft) Usage (dekatherms) Space Heating Furnace 53.6% 0.44 0.23 1,898,166 Boiler 32.6% 0.79 0.26 2,086,967 Unit Heater 4.7% 0.27 0.01 100,644 Water Heating Water Heater 69.7% 0.30 0.21 1,681,122 Food Preparation Oven 11.3% 0.06 0.01 53,746 Conveyor Oven 5.6% 0.10 0.01 45,982 Double Rack Oven 5.6% 0.15 0.01 69,855 Fryer 7.3% 0.34 0.03 202,977 Broiler 12.2% 0.07 0.01 70,869 Griddle 16.4% 0.05 0.01 70,017 Range 17.9% 0.06 0.01 82,852 Steamer 2.1% 0.06 0.00 9,251 Commercial Food Prep Other 0.2% 0.01 0.00 149 Miscellaneous Pool Heater 0.9% 0.01 0.00 1,034 Miscellaneous 100.0% 0.04 0.04 344,734 Total 0.83 6,718,365 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 Average Building Miscellaneous Warehouse Lodging Health College School Grocery Retail Office therms/Sq Ft - 0.50 1.00 1.50 2.00 2.50 3.00 Restaurant Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 171 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 35 Applied Energy Group • www.appliedenergygroup.com Idaho Characterization The total number of nonresidential accounts and natural gas sales for the Idaho service territory were obtained from Avista’s customer account database. Table 3-9 below shows the final allocation of energy to each segment in the commercial sector, as well as the energy intensity on a square-foot basis. Intensities for each segment were derived from a combination of the 2019 CBSA and equipment saturations extracted from Avista’s database. The CBSA intensities corresponded to spaces with lower natural gas saturations than Avista’s database, so AEG increased intensities proportionally based on the additional presence of natural gas-consuming equipment. Table 3-9 Commercial Sector Control Totals, Idaho, 2019 Segment Description Intensity (therms/Sq Ft) 2019 Natural Gas Use (dekatherms) Office Traditional office-based businesses including finance, insurance, law, government buildings, etc. 0.60 481,953 Restaurant Sit-down, fast food, coffee shop, food service, etc. 2.68 65,351 Retail Department stores, services, boutiques, strip malls etc. 0.83 837,065 Grocery Supermarkets, convenience stores, market, etc. 0.95 154,034 School Day care, pre-school, elementary, secondary schools 0.29 269,873 College College, university, trade schools, etc. 0.62 272,030 Health Health practitioner office, hospital, urgent care centers, etc. 1.04 315,668 Lodging Hotel, motel, bed and breakfast, etc. 0.68 172,829 Warehouse Large storage facility, refrigerated/unrefrigerated warehouse 0.68 358,315 Miscellaneous Catchall for buildings not included in other segments, includes churches, recreational facilities, public assembly, correctional facilities, etc. 1.16 1,183,111 Total 0.75 4,110,228 Figure 3-12 shows each segments’ natural gas consumption as a percentage of the entire commercial sector energy consumption. The four segments with the highest natural gas usage in 201 9 are miscellaneous, retail, office, and warehouse, in descending order. As expected, the highest intensity segment is restaurant. This is based on the high presence of food preparation equipment. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 172 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 36 Applied Energy Group • www.appliedenergygroup.com Figure 3-12 Commercial Natural Gas Use by Segment, Idaho, 2019 Figure 3-13 shows the distribution of natural gas consumption by end use for the entire commercial sector. Space heating is the largest end use, followed closely by water heating and food preparation. The miscellaneous end use is quite small, as expected. Figure 3-13 Commercial Sector Natural Gas Use by End Use, Idaho, 2019 Figure 3-14 presents average natural gas intensities by end use and segment. Office 13% Restaurant 4% Retail 16% Grocery 4%School 3% College 3%Health 9% Lodging 4% Warehouse 9% Miscellaneous 35% Space Heating 61% Water Heating 25% Food Preparation 9% Miscellaneous 5% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 173 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 37 Applied Energy Group • www.appliedenergygroup.com Figure 3-14 Commercial Energy Usage Intensity by End Use and Segment, Idaho, 2019 (Annual Therms/Sq. Ft) The total market profile for an average building in the commercial sector is presented in Table 3-10 below. Avista customer account data informed the market profile by providing information on saturation of key equipment types. Secondary data was used to develop estimates of energy intensity and square footage and to fill in saturations for any equipment types not included in the database. Table 3-10 Average Market Profile for the Commercial Sector, Idaho, 2019 End Use Technology Saturati on EUI (therms/ Sq Ft) Intensity (therms/ Sq Ft) Usage (dekatherms) Space Heating Furnace 50.7% 0.43 0.22 1,183,907 Boiler 35.7% 0.66 0.24 1,286,757 Unit Heater 4.9% 0.25 0.01 67,294 Water Heating Water Heater 69.3% 0.27 0.19 1,025,922 Food Preparation Oven 9.9% 0.07 0.01 37,863 Conveyor Oven 4.9% 0.12 0.01 32,393 Double Rack Oven 4.9% 0.18 0.01 49,212 Fryer 7.2% 0.32 0.02 125,738 Broiler 11.3% 0.05 0.01 29,409 Griddle 15.7% 0.04 0.01 32,103 Range 17.5% 0.04 0.01 39,839 Steamer 3.1% 0.04 0.00 5,935 Commercial Food Prep Other 0.3% 0.01 0.00 141 Miscellaneous Pool Heater 0.8% 0.01 0.00 563 Miscellaneous 100.0% 0.04 0.04 193,152 Total 0.75 4,110,228 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 Average Building Miscellaneous Warehouse Lodging Health College School Grocery Retail Office therms/Sq Ft - 0.50 1.00 1.50 2.00 2.50 3.00 Restaurant Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 174 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 38 Applied Energy Group • www.appliedenergygroup.com Industrial Sector Washington Characterization The total sum of natural gas used in 2019 by Avista’s Washington industrial customers was 348,670 dekatherms. Like in the commercial sector, customer account data was used to allocate usage among segments. Energy intensity was derived from AEG’s Energy Market Profiles database. Most industrial measures are installed through custom programs, where the unit of measure is not as necessary to estimate potential. Table 3-11 Industrial Sector Control Totals, Washington, 2019 Segment Intensity (therms/employee) Natural Gas Usage (dekatherms) Washington Industrial 1,716 348,670 Figure 3-15 shows the distribution of annual natural gas consumption by end use for all industrial customers. Two major sources were used to develop this consumption profile. The first was AEG’s analysis of warehouse usage as part of the commercial sector. We begin with this prototype as a starting point to represent non-process loads. We then added in process loads using our Energy Market Profiles database, which summarizes usage by end use and process type. Accordingly, process is the largest overall end use for the industrial sector, accounting for 87% of energy use. Heating is the second largest end use, and miscellaneous, non-process industrial uses round out consumption. Figure 3-15 Industrial Natural Gas Use by End Use, Washington, 2019 Table 3-12 shows the composite market profile for the industrial sector. Process cooling is very small and represents niche technologies such as gas-driven absorption chillers. Space Heating 6% Process 87% Miscellaneous 7% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 175 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 39 Applied Energy Group • www.appliedenergygroup.com Table 3-12 Average Natural Gas Market Profile for the Industrial Sector, Washington, 2019 End Use Technology Saturation EUI (therms/ sq ft) Intensity (therms/ Sq ft) Usage (dekatherms) Space Heating Furnace 27.5% 107.88 29.64 6,024 Boiler 58.8% 107.88 63.42 12,890 Unit Heater 13.7% 107.88 14.82 3,012 Process Process Boiler 100.0% 758.47 758.47 154,154 Process Heating 100.0% 675.00 675.00 137,190 Process Cooling 100.0% 7.83 7.83 1,592 Other Process 100.0% 50.93 50.93 10,350 Miscellaneous Miscellaneous 100.0% 115.41 115.41 23,457 Total 1,715.53 348,670 Idaho Characterization The total sum of natural gas used in 2019 by Avista’s Idaho industrial customers was 238,705 dekatherms. Energy use intensity is slightly higher than Washington at 2,008 therms/sq ft. Table 3-13 Industrial Sector Control Totals, Idaho, 2019 Segment Intensity (therms/employee) Natural Gas Usage (dekatherms) Idaho Industrial 2,008 238,705 Figure 3-16 shows the distribution of annual natural gas consumption by end use for all industrial customers. Two major sources were used to develop this consumption profile. The first was AEG’s analysis of warehouse usage as part of the commercial sector. We begin with this prototype as a starting point to represent non-process loads. We then added in process loads using our Energy Market Profiles database, which summarizes usage by end use and process type. Accordingly, process is the largest overall end use for the industrial sector, accounting for 87% of energy use. Heating is the second largest end use, and miscellaneous, non-process industrial uses round out consumption. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 176 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 40 Applied Energy Group • www.appliedenergygroup.com Figure 3-16 Industrial Natural Gas Use by End Use, Idaho, 2019 Table 3-14 shows the composite market profile for the industrial sector. Process cooling is very small and represents technologies such as gas-driven absorption chillers. Table 3-14 Average Natural Gas Market Profile for the Industrial Sector, Idaho, 2019 End Use Technology Saturation EUI (therms/ sq ft) Intensity (therms/ Sq ft) Usage (dekatherms) Space Heating Furnace 27.5% 126.29 34.70 4,124 Boiler 58.8% 126.29 74.24 8,824 Unit Heater 13.7% 126.29 17.35 2,062 Process Process Boiler 100.0% 887.92 887.92 105,537 Process Heating 100.0% 790.21 790.21 93,922 Process Cooling 100.0% 9.17 9.17 1,090 Other Process 100.0% 59.62 59.62 7,086 Miscellaneous Miscellaneous 100.0% 135.11 135.11 16,059 Total 2,008.33 238,705 Space Heating 6% Process 87% Miscellaneous 7% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 177 | 41 Applied Energy Group • www.appliedenergygroup.com 4 BASELINE PROJECTION Prior to developing estimates of energy conservation potential, we developed a baseline end-use projection to quantify what the consumption is likely to be in the future in absence of any energy conservation programs. The savings from past programs are embedded in the forecast, but the baseline projection assumes that those past programs cease to exist in the future. Thus, the potential analysis captures all possible savings from future programs. The baseline projection incorporates assumptions about: • 2019 energy consumption based on the market profiles • Customer population growth • Appliance/equipment standards and building codes already mandated • Appliance/equipment purchase decisions • Avista’s customer forecast Trends in fuel shares and appliance saturations and assumptions about miscellaneous natural gas growth Although it aligns closely, the baseline projection is not Avista’s official load forecast. Rather it was developed as an integral component of our modeling construct to serve as the metric against which energy conservation potentials are measured. This chapter presents the baseline projections we developed for this study. Below, we present the baseline projections for each sector, which include projections of annual use in dekatherms. We also present a summary across all sectors. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 178 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 42 Applied Energy Group • www.appliedenergygroup.com Overall Baseline Projection Washington Projection Table 4-1 and Figure 4-1 provide a summary of the baseline projection for annual use by sector for the Avista’s Washington service territory. Overall, the forecast shows modest growth in natural gas consumption, driven by the residential and commercial sectors Table 4-1 Baseline Projection Summary by Sector, Washington, Selected Years (dekatherms) Sector 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Residential 12,344,250 12,180,267 12,523,563 13,568,829 14,418,227 16.8% 0.7% Commercial 6,718,365 6,596,157 6,622,904 6,725,824 6,909,984 2.9% 0.1% Industrial 348,670 341,870 336,318 317,863 291,665 -16.3% -0.9% Total 19,411,285 19,118,293 19,482,785 20,612,516 21,619,876 11.4% 0.5% Figure 4-1 Baseline Projection Summary by Sector, Washington (dekatherms) - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 2019 2022 2025 2028 2031 2034 2037 2040 Dth Residential Commercial Industrial Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 179 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 43 Applied Energy Group • www.appliedenergygroup.com Idaho Projection Table 4-2 and Figure 4-2 provide a summary of the baseline projection for annual use by sector for Avista’s Idaho service territory. Overall, the forecast shows modest growth in natural gas consumption, driven roughly equally by the residential sector. Table 4-2 Baseline Projection Summary by Sector, Idaho, Selected Years (dekatherms) Sector 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Residential 5,782,934 5,757,753 5,989,779 6,677,657 7,614,162 31.7% 1.3% Commercial 4,110,228 4,027,575 4,071,925 4,112,209 4,199,550 2.2% 0.1% Industrial 238,705 234,049 229,897 214,701 193,107 -19.1% -1.0% Total 10,131,866 10,019,377 10,291,600 11,004,568 12,006,819 18.5% 0.8% Figure 4-2 Baseline Projection Summary by Sector, Idaho (dekatherms) - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 2019 2022 2025 2028 2031 2034 2037 2040 Dth Residential Commercial Industrial Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 180 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 44 Applied Energy Group • www.appliedenergygroup.com Residential Sector Washington Projection Table 4-3 and Figure 4-3 present the baseline projection for natural gas at the end-use level for the residential sector, as a whole. Overall, residential use increases from 12,344,250 dekatherms in 2019 to 14,418,227 dekatherms in 2040, an increase of 16.8%. Factors affecting growth include a moderate increase in number of households and customers, and a decrease in equipment consumption due to future standards and naturally occurring efficiency improvements (notably the AFUE upcoming 92% furnace standard). We model gas-fired fireplaces as secondary heating. These consume energy and may heat a space but are rarely relied on to be a primary heating technology. As such, they are estimated to be more aesthetic and less weather-dependent. This end use grows faster than others since new homes are more likely to install a unit, increasing fireplace stock. Miscellaneous is a very small end use including technologies with low penetration, such as gas barbeques. Table 4-3 Residential Baseline Projection by End Use, Washington (dekatherms) End Use 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Space Heating 10,091,649 9,884,547 10,148,613 10,898,317 11,377,205 12.7% 0.6% Secondary Heating 269,840 268,460 275,328 300,411 328,634 21.8% 0.9% Water Heating 1,440,263 1,475,763 1,532,049 1,743,214 2,015,278 39.9% 1.6% Appliances 235,480 240,292 248,325 278,255 315,399 33.9% 1.4% Miscellaneous 307,017 311,205 319,248 348,632 381,710 24.3% 1.0% Total 12,344,250 12,180,267 12,523,563 13,568,829 14,418,227 16.8% 0.7% Figure 4-3 Residential Baseline Projection by End Use, Washington (dekatherms) - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Space Heating Secondary Heating Water Heating Appliances Miscellaneous Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 181 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 45 Applied Energy Group • www.appliedenergygroup.com Idaho Projection Table 4-4 and Figure 4-4 present the baseline projection for natural gas at the end-use level for the residential sector, as a whole. Overall, residential use increases from 5,782,934 dekatherms in 2019 to 7,614,162 dekatherms in 2040, an increase of 31.7%. Table 4-4 Residential Baseline Projection by End Use, Idaho (dekatherms) End Use 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Space Heating 4,598,206 4,543,217 4,723,227 5,238,352 5,912,290 28.6% 1.2% Secondary Heating 172,526 172,767 178,636 197,303 224,372 30.1% 1.3% Water Heating 753,951 777,712 814,170 936,965 1,126,311 49.4% 1.9% Appliances 76,115 78,239 81,587 92,714 109,623 44.0% 1.7% Miscellaneous 182,137 185,819 192,158 212,322 241,565 32.6% 1.3% Total 5,782,934 5,757,753 5,989,779 6,677,657 7,614,162 31.7% 1.3% Figure 4-4 Residential Baseline Projection by End Use, Idaho (dekatherms) - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Space Heating Secondary Heating Water Heating Appliances Miscellaneous Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 182 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 46 Applied Energy Group • www.appliedenergygroup.com Commercial Sector Washington Projection Annual natural gas use in the commercial sector grows 24.7% during the overall forecast horizon, starting at 6,197,173 dekatherms in 2019, and increasing to 6,909,984 dekatherms in 2040. Table 4-5 and Figure 4-5 present the baseline projection at the end-use level for the commercial sector, as a whole. Similar to the residential sector, market size is increasing and usage per square foot is decreasing slightly. Table 4-5 Commercial Baseline Projection by End Use, Washington (dekatherms) End Use 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Space Heating 4,085,777 3,956,080 3,975,113 4,039,997 4,138,972 1.3% 0.1% Water Heating 1,681,122 1,679,620 1,678,355 1,686,750 1,736,171 3.3% 0.2% Food Preparation 605,698 611,422 617,138 636,007 658,775 8.8% 0.4% Miscellaneous 345,768 349,035 352,298 363,069 376,067 8.8% 0.4% Total 6,718,365 6,596,157 6,622,904 6,725,824 6,909,984 2.9% 0.1% Figure 4-5 Commercial Baseline Projection by End Use, Washington (dekatherms) - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Space Heating Water Heating Food Preparation Miscellaneous Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 183 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 47 Applied Energy Group • www.appliedenergygroup.com Idaho Projection Annual natural gas use in the Idaho commercial sector grows 2.2% during the overall forecast horizon, starting at 4,110,228 dekatherms in 2019, and increasing to 4,199,550 dekatherms in 2040. Table 4-6 and Figure 4-6 present the baseline projection at the end-use level for the commercial sector, as a whole. Similar to the residential sector, market size is increasing and usage per square foot is decreasing slightly. Table 4-6 Commercial Baseline Projection by End Use, Idaho (dekatherms) End Use 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Space Heating 2,537,957 2,453,619 2,482,525 2,509,340 2,555,560 0.7% 0.0% Water Heating 1,025,922 1,023,306 1,029,755 1,029,131 1,052,936 2.6% 0.1% Food Preparation 352,633 355,410 361,216 370,312 381,488 8.2% 0.4% Miscellaneous 193,715 195,240 198,430 203,426 209,566 8.2% 0.4% Total 4,110,228 4,027,575 4,071,925 4,112,209 4,199,550 2.2% 0.1% Figure 4-6 Commercial Baseline Projection by End Use, Idaho (dekatherms) - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Space Heating Water Heating Food Preparation Miscellaneous Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 184 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 48 Applied Energy Group • www.appliedenergygroup.com Industrial Sector Washington Projection Industrial sector usage increases throughout the planning horizon. Table 4-7 and Figure 4-7 present the projection at the end-use level. Overall, industrial annual natural gas use decreases from 348,670 dekatherms in 2019 to 291,665 dekatherms in 2040. Growth is consistently around -0.9% per year. Table 4-7 Industrial Baseline Projection by End Use, Washington (dekatherms) End Use 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Space Heating 21,926 20,665 20,227 18,789 16,903 -22.9% -1.2% Process 303,287 298,146 293,399 277,603 255,037 -15.9% -0.8% Miscellaneous 23,457 23,059 22,692 21,470 19,725 -15.9% -0.8% Total 348,670 341,870 336,318 317,863 291,665 -16.3% -0.9% Figure 4-7 Industrial Baseline Projection by End Use, Washington (dekatherms) - 50,000 100,000 150,000 200,000 250,000 300,000 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Space Heating Process Miscellaneous Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 185 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 49 Applied Energy Group • www.appliedenergygroup.com Idaho Projection Industrial sector usage increases throughout the planning horizon. Table 4-8 and Figure 4-8 present the projection at the end-use level. Overall, industrial annual natural gas use descreases from 238,705 dekatherms in 2019 to 193,107 dekatherms in 2040. Table 4-8 Industrial Baseline Projection by End Use, Idaho (dekatherms) End Use 2019 2021 2023 2030 2040 % Change ('19-'40) Avg. Growth Heating 15,011 14,147 13,829 12,713 11,232 -25.2% -1.4% Process 207,635 204,115 200,556 187,488 168,818 -18.7% -1.0% Miscellaneous 16,059 15,787 15,511 14,501 13,057 -18.7% -1.0% Total 238,705 234,049 229,897 214,701 193,107 -19.1% -1.0% Figure 4-8 Industrial Baseline Projection by End Use, Idaho (dekatherms) - 50,000 100,000 150,000 200,000 250,000 300,000 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Space Heating Process Miscellaneous Avista Forecast Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 186 | 50 Applied Energy Group • www.appliedenergygroup.com 5 OVERALL ENERGY EFFICIENCY POTENTIAL This chapter presents the measure-level energy conservation potential across all sectors for Avista’s Washington and Idaho territories. This includes every possible measure that is considered in the measure list, regardless of program implementation concerns. Year-by-year savings for annual energy usage are available in the LoadMAP model and measure assumption summary, which were provided to Avista at the conclusion of the study. Please note that all savings are provided at the customer site. This section includes potential from the residential, commercial, and industrial analyses. Overall Energy Efficiency Potential Washington Potential Table 5-1 and Figure 5-1 summarize the energy conservation savings in terms of annual energy use for all measures for four levels of potential relative to the baseline projection. Figure 5-2 displays the energy conservation forecasts. Savings are represented in cumulative terms, which reflect the effects of persistent savings in prior years in addition to new savings. This allows for the reporting of annual savings impacts as they actually impact each year of the forecast. • Te chnical Potential reflects the adoption of all conservation measures regardless of cost- effectiveness. In this potential case, efficient equipment makes up all lost opportunity installations and all retrofit measures are installed, regardless of achievability. 2021 first-year savings are 421,965 dekatherms, or 2.2% of the baseline projection. Cumulative savings in 2030 are 5,084,999 dekatherms, or 24.7% of the baseline. By 2040, cumulative savings reach 8,908,493 dekatherms, or 41.2% of the baseline. Technical potential is useful as a theoretical construct, applying an upper bound to the potential that may be realized in any one year. Other levels of potential are based off this level which makes it an important component in the estimation of potential. • Achievable Technical Potential refines technical potential by applying customer participation rates that account for market barriers, customer awareness and attitudes, program maturity, and other factors that affect market penetration of conservation measures. For Avista’s gas CPA, ramp rates from the 2021 Power Plan were customized for use in natural gas programs and applied. Since the 2021 Plan does not assign ramp rates for the majority of natural gas measures, we assigned these based on similar electric technologies present in the Plan as a starting point. These ramp rates may be found in Appendix B. 2021 first-year net savings are 187,983 dekatherms, or 1.0% of the baseline projection. Cumulative net savings in 2030 are 3,183,398 dekatherms, or 15.4% of the baseline. By 2040 cumulative savings reach 6,309,826 dekatherms, or 29.2% of the baseline. • U CT Achievable E conomic Potential further refines achievable technical potential by applying an economic cost-effectiveness screen. In this analysis, the cost-effectiveness is measured by the utility cost test (UCT), which compares lifetime energy benefits to the total utility costs of delivering the measure through a utility program, excluding monetized non-energy impacts. Avoided costs of energy were provided by Avista. 2021 first-year savings are 75,820 dekatherms, or 0.4% of the baseline projection. Cumulative savings in 2030 are 1,386,479 dekatherms, or 6.7% of the baseline. By 2040 cumulative savings reach 3,560,512 dekatherms, or 16.5% of the baseline. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 187 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 51 Applied Energy Group • www.appliedenergygroup.com • T R C Achievable Economic Potential further refines achievable technical potential by applying an economic cost-effectiveness screen. In this analysis, the cost-effectiveness is measured by the total resource cost (TRC) test, which compares lifetime energy benefits to the total customer and utility costs of delivering the measure through a utility program, including monetized non-energy impacts. AEG also applied benefits for non-gas energy savings, such as electric HVAC savings for weatherization and lighting savings for retrocommissioning. We also applied the Council’s calibration credit to space heating savings to reflect the fact that additional fuels may be used as a supplemental heat source within an average home and may be accounted for within the TRC. Avoided costs of energy were provided by Avista. A 10% conservation credit was applied to these costs per the Council methodologies. 2021 first-year savings are 41,871 dekatherms, or 0.2% of the baseline projection. Cumulative net savings in 2030 are 708,778 dekatherms, or 3.4% of the baseline. By 2040 cumulative savings reach 2,319,723 dekatherms, or 10.7% of the baseline. Potential under the TRC test is lower than UCT due to the inclusion of full measure costs rather than the utility portion. For most measures, these far outweigh the quantified and monetized non-energy impacts included in the TRC. Table 5-1 Summary of Energy Efficiency Potential, Washington (dekatherms) Scenario 2021 2022 2025 2030 2040 Baseline Projection (Dth) 19,118,293 19,289,575 19,805,020 20,612,516 21,619,876 Cumulative Savings (Dth) UCT Achievable Economic Potential 75,820 173,838 457,423 1,386,479 3,560,512 TRC Achievable Economic Potential 41,871 100,872 227,922 708,778 2,319,723 Achievable Technical Potential 187,983 416,584 1,221,810 3,183,398 6,309,826 Technical Potential 429,965 897,098 2,314,334 5,084,999 8,908,493 Cumulative Savings (% of Baseline) UCT Achievable Economic Potential 0.4% 0.9% 2.3% 6.7% 16.5% TRC Achievable Economic Potential 0.2% 0.5% 1.2% 3.4% 10.7% Achievable Technical Potential 1.0% 2.2% 6.2% 15.4% 29.2% Technical Potential 2.2% 4.7% 11.7% 24.7% 41.2% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 188 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 52 Applied Energy Group • www.appliedenergygroup.com Figure 5-1 Summary of Energy Efficiency Potential as % of Baseline Projection, Washington (dekatherms) Figure 5-2 Baseline Projection and Energy Efficiency Forecasts, Washington (dekatherms) Figure 5-3 shows the cumulative UCT achievable potential by sector for the full timeframe of the analysis as percent of total. Table 5-2 summarizes UCT achievable potential by market sector for selected years. While the residential and commercial sectors represent the lion’s share of the overall potential in the early years, by the late-2020s, the residential sector share grows to a significant majority of savings potential. Since industrial consumption is such a low percentage of the baseline once ineligible customers have been excluded, potential for this sector makes up a lower percentage of the total. While residential and commercial potential ramps up, industrial potential is mainly retrofit in nature, and is much flatter. This is because process equipment is highly custom and most potential comes from controls modifications or process adjustments rather than high-efficiency equipment upgrades. Additionally, we model retrocommissioning to phase in evenly over the next twenty years. This measure has a maintenance 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 2021 2022 2025 2030 2040 Dth UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Baseline Forecast Achievable Economic TRC Potential Achievable Economic UCT Potential Achievable Technical Potential Technical Potential Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 189 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 53 Applied Energy Group • www.appliedenergygroup.com component, and not all existing facilities may be old enough to require the tune-up immediately but will be eligible at some point over the course of the study. There is a notable downtick in residential savings around 2024. This is due to the impacts of the residential forced-air furnace standard, which raises the baseline from AFUE 80% to AFUE 92%, which is a substantial increase when the efficient option is an AFUE 95% unit. Figure 5-3 Cumulative UCT Achievable Economic Potential by Sector, Washington (% of Total) Table 5-2 Cumulative UCT Achievable Economic Potential by Sector, Washington, Selected Years (dekatherms) Sector 2021 2022 2025 2030 2040 Residential 45,545 102,725 208,449 725,000 2,294,322 Commercial 28,070 66,690 237,773 642,051 1,241,314 Industrial 2,206 4,424 11,200 19,428 24,876 Total 75,820 173,838 457,423 1,386,479 3,560,512 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2022 2026 2030 2034 2038 2042 Share off Total Savings Residential Commercial Industrial Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 190 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 54 Applied Energy Group • www.appliedenergygroup.com Idaho Potential Table 5-3 and Figure 5-4 summarize the energy conservation savings in terms of annual energy use for all measures for four levels of potential relative to the baseline projection. Figure 5-5 displays the energy conservation forecasts. Savings are represented in cumulative terms, which reflect the effects of persistent savings in prior years in addition to new savings. This allows for the reporting of annual savings impacts as they actually impact each year of the forecast. • Te chnical Po tential first-year savings in 2021 are 232,772 dekatherms, or 2.3% of the baseline projection. Cumulative savings in 2030 are 2,777,509 dekatherms, or 25.2% of the baseline. By 2040, cumulative savings reach 5,013,697 dekatherms, or 41.8% of the baseline. • Achievable Technical Potential first-year net savings are 102,031 dekatherms, or 1.0% of the baseline projection. Cumulative net savings in 2030 are 1,722,830 dekatherms, or 15.7% of the baseline. By 2040 cumulative savings reach 3,544,048 dekatherms, or 29.5% of the baseline. • U CT Achievable E conomic Potential first-year savings are 35,816 dekatherms, or 0.4% of the baseline projection. Cumulative savings in 2030 are 737,710 dekatherms, or 6.7% of the baseline. By 2040 cumulative savings reach 2,025,410 dekatherms, or 16.9% of the baseline. • T R C Achievable E conomic Potential first-year savings are 26,220 dekatherms, or 0.3% of the baseline projection. Cumulative net savings in 2030 are 417,020 dekatherms, or 3.8% of the baseline. By 2040 cumulative savings reach 868,456 dekatherms, or 7.2% of the baseline. Potential under the TRC test is lower than UCT due to the inclusion of full measure costs rather than the utility portion. For most measures, these far outweigh the quantified and monetized non-energy impacts included in the TRC. Table 5-3 Summary of Energy Efficiency Potential, Idaho (dekatherms) Scenario 2021 2022 2025 2030 2040 Baseline Projection (Dth) 10,019,377 10,144,894 10,520,169 11,004,568 12,006,819 Cumulative Savings (Dth) UCT Achievable Economic Potential 35,816 87,995 229,283 737,710 2,025,410 TRC Achievable Economic Potential 26,220 62,285 136,883 417,028 868,456 Achievable Technical Potential 102,031 226,613 657,997 1,722,830 3,544,048 Technical Potential 232,772 490,826 1,273,202 2,777,509 5,013,697 Cumulative Savings (% of Baseline) UCT Achievable Economic Potential 0.4% 0.9% 2.2% 6.7% 16.9% TRC Achievable Economic Potential 0.3% 0.6% 1.3% 3.8% 7.2% Achievable Technical Potential 1.0% 2.2% 6.3% 15.7% 29.5% Technical Potential 2.3% 4.8% 12.1% 25.2% 41.8% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 191 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 55 Applied Energy Group • www.appliedenergygroup.com Figure 5-4 Summary of Energy Efficiency Potential as % of Baseline Projection, Idaho (dekatherms) Figure 5-5 Summary of Energy Efficiency Potential as % of Baseline Projection, Idaho (dekatherms) Figure 5-6 shows the cumulative UCT achievable potential by sector for the full timeframe of the analysis as percent of total. Table 5-4 summarizes UCT achievable potential by market sector for selected years. . 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 2021 2022 2025 2030 2040 Dth UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 Dth Baseline Forecast Achievable Economic TRC Potential Achievable Economic UCT Potential Achievable Technical Potential Technical Potential Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 192 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 56 Applied Energy Group • www.appliedenergygroup.com Figure 5-6 Cumulative UCT Achievable Economic Potential by Sector, Idaho (% of Total) Table 5-4 Cumulative UCT Achievable Economic Potential by Sector, Idaho, Selected Years (dekatherms) Sector 2021 2022 2025 2030 2040 Residential 17,529 44,289 77,379 339,502 1,256,282 Commercial 16,775 40,676 144,201 384,730 751,926 Industrial 1,512 3,030 7,703 13,477 17,202 Total 35,816 87,995 229,283 737,710 2,025,410 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2022 2026 2030 2034 2038 2042 Share off Total Savings Residential Commercial Industrial Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 193 | 57 Applied Energy Group • www.appliedenergygroup.com 6 SECTOR-LEVEL ENERGY EFFICIENCY POTENTIAL The previous section provided a summary of potential for the Avista territory at the state level. In this section, we provide details for each sector. Residential Sector Washington Potential Table 6-1 and Figure 6-1 summarize the energy efficiency potential for the residential sector. In 2021, UCT achievable economic potential is 45,545 dekatherms, or 0.4% of the baseline projection. By 2040, cumulative savings are 2,294,322 dekatherms, or 15.9% of the baseline. Table 6-1 Residential Energy Conservation Potential Summary, Washington (dekatherms) Scenario 2021 2022 2025 2030 2040 Baseline Forecast (Dth) 12,180,267 12,342,203 12,822,709 13,568,829 14,418,227 Cumulative Savings (Dth) UCT Achievable Economic Potential 45,545 102,725 208,449 725,000 2,294,322 TRC Achievable Economic Potential 22,729 53,315 48,069 211,706 1,312,883 Achievable Technical Potential 137,500 304,182 858,976 2,272,407 4,576,510 Technical Potential 292,972 616,103 1,560,420 3,510,309 6,413,126 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.4% 0.8% 1.6% 5.3% 15.9% TRC Achievable Economic Potential 0.2% 0.4% 0.4% 1.6% 9.1% Achievable Technical Potential 1.1% 2.5% 6.7% 16.7% 31.7% Technical Potential 2.4% 5.0% 12.2% 25.9% 44.5% Figure 6-1 Residential Energy Conservation by Case, Washington (dekatherms) 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 2021 2022 2025 2030 2040 Dth UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 194 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 58 Applied Energy Group • www.appliedenergygroup.com Figure 6-2 presents forecasts of energy savings by end use as a percent of total annual savings and cumulative savings. Space heating makes up a majority of potential but declines slightly in the early to mid-2020s due to the future furnace standard. Figure 6-2 Residential UCT Achievable Economic Potential – Cumulative Savings by End Use, Washington (dekatherms, % of total) - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Dth Space Heating Secondary Heating Water Heating Appliances Miscellaneous 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Share of Savings Space Heating Secondary Heating Water Heating Appliances Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 195 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 59 Applied Energy Group • www.appliedenergygroup.com Table 6-2 identifies the top 20 residential measures by cumulative 2021 and 2022 savings. Furnaces, learning thermostats, insulation and water heating are the top measures. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 196 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 60 Applied Energy Group • www.appliedenergygroup.com Table 6-2 Residential Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Washington (dekatherms) Rank Measure / Technology 2021 Cumulative Potential Savings (dekatherms) % of Total 2022 Cumulative Potential Savings (dekatherms) % of Total 1 Furnace - AFUE 92% 21,548 47% 50,231 49% 2 Gas Furnace - Maintenance - Restored to nameplate 80% AFUE 13,118 29% 26,107 25% 3 ENERGY STAR Connected Thermostat - Interactive/learning thermostat (ie, NEST) 4,435 10% 9,925 10% 4 Insulation - Ceiling, Installation - R-38 (Retro only) 3,611 8% 8,000 8% 5 Water Heater - Instantaneous - ENERGY STAR (UEF 0.87) 1,901 4% 5,973 6% 6 Insulation - Wall Cavity, Installation - R- 11 333 1% 741 1% 7 Gas Boiler - Steam Trap Maintenance - Cleaned and restored 202 0% 399 0% 8 Building Shell - Whole-Home Aerosol Sealing - 20% reduction in ACH50 163 0% 492 0% 9 Water Heater - Low Flow Showerhead (1.5 GPM) - 1.5 GPM showerhead 75 0% 194 0% 10 Boiler - AFUE 85% 51 0% 130 0% 11 Water Heater - Faucet Aerators - 1.5 GPM faucet 51 0% 131 0% 12 ENERGY STAR Homes - Built Green spec (NC Only) 47 0% 265 0% 13 Water Heater - Pipe Insulation - Insulated 5' of pipe between unit and conditioned space 10 0% 25 0% 14 Insulation - Slab Foundation - R-11 (NC Only) 0 0% 23 0% 15 Building Shell - Liquid-Applied Weather- Resistive Barrier - Spray-on weather barrier applied 0 0% 0 0% 16 Clothes Dryer - NEEA/ENERGY STAR (CE >60%) 0 0% 0 0% 17 Combined Boiler + DHW System (Storage Tank) - Combined tankless boiler unit for space and DHW 0 0% 0 0% 18 Combined Boiler + DHW System (Tankless) - Combined tankless boiler unit for space and DHW 0 0% 0 0% 19 Doors - Storm and Thermal - R-5 door 0 0% 0 0% 20 Ducting - Repair and Sealing - 50% reduction in duct leakage 0 0% 0 0% Subtotal 45,545 100% 102,636 100% Total Savings in Year 45,545 100% 102,725 100% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 197 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 61 Applied Energy Group • www.appliedenergygroup.com Idaho Potential Table 6-3 and Figure 6-3 summarize the energy efficiency potential for the residential sector. In 2021, UCT achievable economic potential is 17,529 dekatherms, or 0.3% of the baseline projection. By 2040, cumulative savings are 1,256,282 dekatherms, or 16.5% of the baseline. Table 6-3 Residential Energy Conservation Potential Summary, Idaho (dekatherms) Scenario 2021 2022 2025 2030 2040 Baseline Forecast (Dth) 5,757,753 5,864,931 6,201,524 6,677,657 7,614,162 Cumulative Savings (Dth) UCT Achievable Economic Potential 17,529 44,289 77,379 339,502 1,256,282 TRC Achievable Economic Potential 14,700 32,896 26,285 117,618 255,801 Achievable Technical Potential 70,759 156,239 432,644 1,167,372 2,486,556 Technical Potential 148,844 313,749 798,652 1,806,313 3,485,609 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.3% 0.8% 1.2% 5.1% 16.5% TRC Achievable Economic Potential 0.3% 0.6% 0.4% 1.8% 3.4% Achievable Technical Potential 1.2% 2.7% 7.0% 17.5% 32.7% Technical Potential 2.6% 5.3% 12.9% 27.1% 45.8% Figure 6-3 Residential Energy Conservation by Case, Idaho (dekatherms) 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 2021 2022 2025 2030 2040 Dth UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 198 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 62 Applied Energy Group • www.appliedenergygroup.com Figure 6-4 presents forecasts of energy savings by end use as a percent of total annual savings and cumulative savings. Space heating makes up a majority of potential but declines slightly in the early to mid-2020s due to the future furnace standard. Figure 6-4 Residential UCT Achievable Economic Potential – Cumulative Savings by End Use, Idaho (dekatherms, % of total) Table 6-4 identifies the top 20 residential measures by cumulative 2018 and 2019 savings. Furnaces, tankless water heaters, windows, and insulation are the top measures. - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Dth Space Heating Secondary Heating Water Heating Appliances Miscellaneous 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Share of Savings Space Heating Secondary Heating Water Heating Appliances Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 199 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 63 Applied Energy Group • www.appliedenergygroup.com Table 6-4 Residential Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Idaho (dekatherms) Rank Measure / Technology 2021 Cumulative Potential Savings (dekatherms) % of Total 2022 Cumulative Potential Savings (dekatherms) % of Total 1 Furnace - AFUE 92% 14,054 80% 31,241 71% 2 Insulation - Ceiling, Installation - R-38 (Retro only) 1,643 9% 3,640 8% 3 Water Heater - Instantaneous - ENERGY STAR (UEF 0.87) 1,053 6% 3,293 7% 4 Gas Furnace - Maintenance - Restored to nameplate 80% AFUE 284 2% 4,805 11% 5 Insulation - Wall Cavity, Installation - R- 11 142 1% 316 1% 6 Water Heater - Low Flow Showerhead (1.5 GPM) - 1.5 GPM showerhead 93 1% 243 1% 7 Gas Boiler - Steam Trap Maintenance - Cleaned and restored 91 1% 180 0% 8 Building Shell - Whole-Home Aerosol Sealing - 20% reduction in ACH50 79 0% 237 1% 9 ENERGY STAR Homes - Built Green spec (NC Only) 32 0% 176 0% 10 Water Heater - Faucet Aerators - 1.5 GPM faucet 32 0% 87 0% 11 Water Heater - Low Flow Showerhead (2.0 GPM) - 2.0 GPM showerhead 21 0% 56 0% 12 Water Heater - Pipe Insulation - Insulated 5' of pipe between unit and conditioned space 5 0% 14 0% Subtotal 17,529 100% 44,289 100% Total Savings in Year 17,529 100% 44,289 100% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 200 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 64 Applied Energy Group • www.appliedenergygroup.com Commercial Sector Washington Potential Table 6-5 and Figure 6-5 summarize the energy conservation potential for the commercial sector. In 2021, UCT achievable economic potential is 28,070 dekatherms, or 0.4% of the baseline projection. By 2040, cumulative savings are 1,241,314 dekatherms, or 18.0% of the baseline. Table 6-5 Commercial Energy Conservation Potential Summary, Washington Scenario 2021 2022 2025 2030 2040 Baseline Forecast (dekatherms) 6,596,157 6,608,411 6,651,275 6,725,824 6,909,984 Cumulative Savings (dekatherms) UCT Achievable Economic Potential 28,070 66,690 237,773 642,051 1,241,314 TRC Achievable Economic Potential 18,820 46,887 177,954 492,563 999,201 Achievable Technical Potential 47,867 107,183 349,669 887,910 1,704,037 Technical Potential 133,767 274,570 737,799 1,546,608 2,459,821 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.4% 1.0% 3.6% 9.5% 18.0% TRC Achievable Economic Potential 0.3% 0.7% 2.7% 7.3% 14.5% Achievable Technical Potential 0.7% 1.6% 5.3% 13.2% 24.7% Technical Potential 2.0% 4.2% 11.1% 23.0% 35.6% Figure 6-5 Commercial Energy Conservation by Case, Washington (dekatherms) 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 2021 2022 2025 2030 2040 Thousand Therms UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 201 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 65 Applied Energy Group • www.appliedenergygroup.com Figure 6-6 presents forecasts of energy savings by end use as a percent of total annual savings and cumulative savings. Space heating makes up a majority of the potential early, but food preparation equipment upgrades provide substantial savings opportunities in the later years. Figure 6-6 Commercial UCT Achievable Economic Potential – Cumulative Savings by End Use, Washington (dekatherms, % of total) Table 6-6 identifies the top 20 commercial measures by cumulative savings in 2021 and 2022. Heat Pump Water Heaters are the top measure, followed by several HVAC and space heating measures, along with insulation. - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Dth Space Heating Water Heating Food Preparation Miscellaneous 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Share of Savings Space Heating Water Heating Food Preparation Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 202 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 66 Applied Energy Group • www.appliedenergygroup.com Table 6-6 Commercial Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Washington (dekatherms) Ra nk Measure / Technology 2018 Cumulative Potential Savings (dekatherms) % of Total 2019 Cumulative Potential Savings (dekatherms) % of Total 1 Water Heater - Gas-Fired Absorption HPWH 5,714 20% 15,883 24% 2 Space Heating - Heat Recovery Ventilator - HRV installed 4,763 17% 9,542 14% 3 Boiler - AFUE 97% 4,136 15% 10,378 16% 4 HVAC - Duct Repair and Sealing - 30% reduced duct leaking 2,323 8% 4,589 7% 5 Insulation - Wall Cavity - R-21 2,059 7% 5,578 8% 6 Insulation - Roof/Ceiling - R-38 1,584 6% 4,318 6% 7 Gas Boiler - Insulate Steam Lines/Condensate Tank - Lines and condenstate tank insulated 1,456 5% 2,871 4% 8 Water Heater - Central Controls - Central water boiler controls installed 1,267 5% 2,508 4% 9 Gas Boiler - Hot Water Reset - Reset control installed 1,127 4% 2,476 4% 10 Gas Boiler - High Turndown - Turndown control installed 766 3% 1,509 2% 11 Fryer - ENERGY STAR 751 3% 1,800 3% 12 Water Heater - Faucet Aerator - 1.5 GPM faucet 362 1% 791 1% 13 Building Automation System - Automation system installed and programmed 360 1% 1,059 2% 14 Kitchen Hood - DCV/MUA - DCV/HUA vent hood 316 1% 629 1% 15 HVAC - Demand Controlled Ventilation - DCV enabled 227 1% 539 1% 16 Furnace - AFUE 96% 129 0% 426 1% 17 Gas Furnace - Maintenance - General cleaning and maintenance 125 0% 211 0% 18 Double Rack Oven - FTSC Qualified (>50% Cooking Efficiency) 96 0% 257 0% 19 Steam Trap Maintenance - Cleaning and maintenance 78 0% 153 0% 20 Oven - ENERGY STAR (>42% Baking Efficiency) 74 0% 196 0% Subtotal 27,713 99% 65,714 99% Total Savings in Year 28,070 100% 66,690 100% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 203 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 67 Applied Energy Group • www.appliedenergygroup.com Idaho Potential Table 6-7 and Figure 6-7 summarize the energy conservation potential for the commercial sector. In 2021, UCT achievable economic potential is 16,775 dekatherms, or 0.4% of the baseline projection. By 2040, cumulative savings are 751,926 dekatherms, or 17.9% of the baseline. Table 6-7 Commercial Energy Conservation Potential Summary, Idaho Scenario 2021 2022 2025 2030 2040 Baseline Forecast (dekatherms) 4,027,575 4,047,905 4,093,096 4,112,209 4,199,550 Cumulative Savings (dekatherms) UCT Achievable Economic Potential 16,775 40,676 144,201 384,730 751,926 TRC Achievable Economic Potential 11,301 28,926 109,041 295,643 606,619 Achievable Technical Potential 29,482 66,801 216,357 539,726 1,037,584 Technical Potential 81,719 172,678 463,550 952,082 1,503,965 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.4% 1.0% 3.5% 9.4% 17.9% TRC Achievable Economic Potential 0.3% 0.7% 2.7% 7.2% 14.4% Achievable Technical Potential 0.7% 1.7% 5.3% 13.1% 24.7% Technical Potential 2.0% 4.3% 11.3% 23.2% 35.8% Figure 6-7 Commercial Energy Conservation by Case, Idaho (dekatherms) Figure 6-8 presents forecasts of energy savings by end use as a percent of total annual savings and cumulative savings. Space heating makes up a majority of the potential early, but food preparation equipment upgrades provide substantial savings opportunities in the later years. 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 2021 2022 2025 2030 2040 Thousand Therms UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 204 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 68 Applied Energy Group • www.appliedenergygroup.com Figure 6-8 Commercial UCT Achievable Economic Potential – Cumulative Savings by End Use, Idaho (dekatherms, % of total) Table 6-8 identifies the top 20 commercial measures by cumulative savings in 2021 and 2022. Water Heaters are the top measure, followed by custom HVAC measures and insulation. - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Dth Space Heating Water Heating Food Preparation Miscellaneous 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Share of Savings Space Heating Water Heating Food Preparation Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 205 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 69 Applied Energy Group • www.appliedenergygroup.com Table 6-8 Commercial Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Idaho (dekatherms) Rank Measure / Technology 2021 Cumulative Potential Savings (dekatherms) % of Total 2022 Cumulative Potential Savings (dekatherms) % of Total 1 Water Heater - Gas-Fired Absorption HPWH 3,140 19% 9,188 23% 2 Space Heating - Heat Recovery Ventilator - HRV installed 2,806 17% 5,620 14% 3 Boiler - AFUE 97% 2,507 15% 6,733 17% 4 HVAC - Duct Repair and Sealing - 30% reduced duct leaking 1,454 9% 2,872 7% 5 Insulation - Wall Cavity - R-21 1,279 8% 3,464 9% 6 Gas Boiler - Insulate Steam Lines/Condensate Tank - Lines and condenstate tank insulated 1,062 6% 2,094 5% 7 Insulation - Roof/Ceiling - R-38 924 6% 2,506 6% 8 Gas Boiler - Hot Water Reset - Reset control installed 695 4% 1,526 4% 9 Water Heater - Central Controls - Central water boiler controls installed 634 4% 1,258 3% 10 Gas Boiler - High Turndown - Turndown control installed 465 3% 915 2% 11 Fryer - ENERGY STAR 458 3% 1,145 3% 12 Building Automation System - Automation system installed and programmed 230 1% 676 2% 13 Water Heater - Faucet Aerator - 1.5 GPM faucet 218 1% 477 1% 14 Kitchen Hood - DCV/MUA - DCV/HUA vent hood 214 1% 426 1% 15 HVAC - Demand Controlled Ventilation - DCV enabled 142 1% 334 1% 16 Furnace - AFUE 96% 89 1% 304 1% 17 Gas Furnace - Maintenance - General cleaning and maintenance 78 0% 132 0% 18 Double Rack Oven - FTSC Qualified (>50% Cooking Efficiency) 67 0% 186 0% 19 Steam Trap Maintenance - Cleaning and maintenance 55 0% 109 0% 20 Oven - ENERGY STAR (>42% Baking Efficiency) 52 0% 141 0% Subtotal 16,567 99% 40,107 99% Total Savings in Year 16,775 100% 40,676 100% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 206 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 70 Applied Energy Group • www.appliedenergygroup.com Industrial Sector Washington Potential Table 6-9 and Figure 6-9 summarize the energy conservation potential for the core industrial sector. In 2021, UCT achievable economic potential is 2,206 dekatherms, or 0.6% of the baseline projection. By 2040, cumulative savings reach 24,876 dekatherms, or 8.5% of the baseline. Industrial potential is a lower percentage of overall baseline compared to the residential and commercial sectors. While large, custom process optimization and controls measures are present in potential, these are not applicable to all processes which limits potential at the technical level. Additionally, since the largest customers were excluded from this analysis due to their status as transport-only customers making them ineligible to participate in energy efficiency programs for the utility, the remaining customers are smaller and tend to have lower process end-use shares, further lowering industrial potential. As seen in the figure below, industrial potential is substantially lower due to the smaller sector size and process uses. Table 6-9 Industrial Energy Conservation Potential Summary, Washington (dekatherms) Scenario 2021 2022 2025 2030 2040 Baseline Forecast (dekatherms) 341,870 338,961 331,037 317,863 291,665 Cumulative Savings (dekatherms) UCT Achievable Economic Potential 2,206 4,424 11,200 19,428 24,876 TRC Achievable Economic Potential 321 669 1,899 4,508 7,639 Achievable Technical Potential 2,616 5,219 13,165 23,081 29,280 Technical Potential 3,226 6,425 16,116 28,082 35,546 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.6% 1.3% 3.4% 6.1% 8.5% TRC Achievable Economic Potential 0.1% 0.2% 0.6% 1.4% 2.6% Achievable Technical Potential 0.8% 1.5% 4.0% 7.3% 10.0% Technical Potential 0.9% 1.9% 4.9% 8.8% 12.2% Figure 6-9 Industrial Energy Conservation Potential, Washington (dekatherms) 0 5,000 10,000 15,000 20,000 25,000 30,000 2021 2022 2025 2030 2040 Dth UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 207 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 71 Applied Energy Group • www.appliedenergygroup.com Figure 6-10 presents forecasts of energy savings by end use as a percent of total annual savings and cumulative savings. Figure 6-10 Industrial UCT Achievable Economic Potential – Cumulative Savings by End Use, Washington (dekatherms, % of total) Table 6-10 identifies the top 20 industrial measures by cumulative 2021 and 2022 savings. Process Heat Recovery and Retrocommissioning optimization measures have the largest potential savings. Process Heat Recovery alone accounts for more than 70% of 2021-2022 industrial potential in Washington. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Dth Space Heating Process Miscellaneous 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Share of Savings Space Heating Process Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 208 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 72 Applied Energy Group • www.appliedenergygroup.com Table 6-10 Industrial Top Measures in 2021 and 2022, UCT Achievable Economic Potential, Washington (dekatherms) Rank Measure / Technology 2021 Cumulative Potential Savings (dekatherms) % of Total 2022 Cumulative Potential Savings (dekatherms) % of Total 1 Process Heat Recovery - HR system installed 1,691 72% 3,366 71% 2 Retrocommissioning - Optimized HVAC flow and controls 156 7% 306 6% 3 Retrocommissioning - Optimized process design and controls 156 7% 306 6% 4 Gas Boiler - High Turndown - Turndown control installed 112 5% 222 5% 5 Gas Boiler - Hot Water Reset - Reset control installed 111 5% 244 5% 6 Destratification Fans (HVLS) - Fans installed 40 2% 79 2% 7 Gas Boiler - Insulate Steam Lines/Condensate Tank - Lines and condenstate tank insulated 28 1% 55 1% 8 Gas Boiler - Insulate Hot Water Lines - Insulated water lines 19 1% 37 1% 9 ENERGY STAR Connected Thermostat - Wi-Fi/interactive thermostat installed 17 1% 34 1% 10 Space Heating - Heat Recovery Ventilator - HRV installed 15 1% 30 1% 11 Boiler - AFUE 97% 5 0% 14 0% 12 Insulation - Wall Cavity - R-21 4 0% 10 0% 13 Furnace - AFUE 96% 3 0% 10 0% 14 Gas Furnace - Maintenance - General cleaning and maintenance 2 0% 4 0% 15 Thermostat - Programmable - Programmable thermostat installed 2 0% 4 0% 16 Steam Trap Maintenance - Cleaning and maintenance 1 0% 1 0% 17 Unit Heater - Infrared Radiant 0 0% 1 0% 18 Insulation - Roof/Ceiling - R-38 0 0% 0 0% Subtotal 2,362 100% 4,725 100% Total Savings in Year 2,362 100% 4,730 100% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 209 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 73 Applied Energy Group • www.appliedenergygroup.com Idaho Potential Table 6-11 and Figure 6-11 summarize the energy conservation potential for the core industrial sector. In 2021, UCT achievable economic potential is 1,512 dekatherms, or 0.6% of the baseline projection. By 2040, cumulative savings reach 19,908 dekatherms, or 10.3% of the baseline. Industrial potential is a lower percentage of overall baseline compared to the residential and commercial sectors. While large, custom process optimization and controls measures are present in potential, these are not applicable to all processes which limits potential at the technical level. Additionally, since the largest customers were excluded from this analysis due to their status as transport-only customers making them ineligible to participate in energy efficiency programs for the utility, the remaining customers are smaller and tend to have lower process end-use shares, further lowering industrial potential. As seen in the figure below, industrial potential is substantially lower due to the smaller sector size and process uses. Table 6-11 Industrial Energy Conservation Potential Summary, Idaho (dekatherms) Scenario 2021 2022 2025 2030 2040 Baseline Forecast (dekatherms) 234,049 232,058 225,549 214,701 193,107 Cumulative Savings (dekatherms) UCT Achievable Economic Potential 1,512 3,030 7,703 13,477 17,202 TRC Achievable Economic Potential 220 463 1,557 3,767 6,036 Achievable Technical Potential 1,791 3,573 8,996 15,731 19,908 Technical Potential 2,209 4,398 11,000 19,113 24,123 Energy Savings (% of Baseline) UCT Achievable Economic Potential 0.6% 1.3% 3.4% 6.3% 8.9% TRC Achievable Economic Potential 0.1% 0.2% 0.7% 1.8% 3.1% Achievable Technical Potential 0.8% 1.5% 4.0% 7.3% 10.3% Technical Potential 0.9% 1.9% 4.9% 8.9% 12.5% Figure 6-11 Industrial Energy Conservation Potential, Idaho (dekatherms) Figure 6-12 presents forecasts of energy savings by end use as a percent of total annual savings and cumulative savings. 0 5,000 10,000 15,000 20,000 25,000 30,000 2021 2022 2025 2030 2040 Dth UCT Achievable Economic TRC Achievable Economic Achievable Technical Technical Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 210 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 74 Applied Energy Group • www.appliedenergygroup.com Figure 6-12 Industrial UCT Achievable Economic Potential – Cumulative Savings by End Use, Idaho (dekatherms, % of total) Table 6-12 identifies the top 20 industrial measures by cumulative 2021 and 2022 savings. Much like Washington, Process Heat Recovery is the largest measure by far, accounting for more than 70% of total industrial potential in Idaho. - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Dth Space Heating Process Miscellaneous - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Dth Space Heating Process Miscellaneous Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 211 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 75 Applied Energy Group • www.appliedenergygroup.com Table 6-12 Industrial Top Measures in 2018 and 2019, UCT Achievable Economic Potential, Idaho (dekatherms) Rank Measure / Technology 2021 Cumulative Potential Savings (dekatherms) % of Total 2022 Cumulative Potential Savings (dekatherms) % of Total 1 Process Heat Recovery - HR system installed 1,158 72% 2,304 71% 2 Retrocommissioning - Optimized HVAC flow and controls 107 7% 210 6% 3 Retrocommissioning - Optimized process design and controls 107 7% 210 6% 4 Gas Boiler - High Turndown - Turndown control installed 77 5% 152 5% 5 Gas Boiler - Hot Water Reset - Reset control installed 76 5% 167 5% 6 Destratification Fans (HVLS) - Fans installed 27 2% 54 2% 7 Gas Boiler - Insulate Steam Lines/Condensate Tank - Lines and condenstate tank insulated 19 1% 38 1% 8 Gas Boiler - Insulate Hot Water Lines - Insulated water lines 13 1% 25 1% 9 ENERGY STAR Connected Thermostat - Wi-Fi/interactive thermostat installed 12 1% 23 1% 10 Space Heating - Heat Recovery Ventilator - HRV installed 10 1% 21 1% 11 Boiler - AFUE 97% 3 0% 10 0% 12 Insulation - Wall Cavity - R-21 3 0% 7 0% 13 Furnace - AFUE 96% 2 0% 7 0% 14 Building Automation System - Automation system installed and programmed 2 0% 5 0% 15 Gas Furnace - Maintenance - General cleaning and maintenance 2 0% 3 0% 16 Thermostat - Programmable - Programmable thermostat installed 1 0% 3 0% 17 Steam Trap Maintenance - Cleaning and maintenance 1 0% 1 0% 18 Unit Heater - Infrared Radiant 0 0% 1 0% Subtotal 1,619 100% 3,240 100% Total Savings in Year 1,619 100% 3,240 100% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 212 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 76 Applied Energy Group • www.appliedenergygroup.com Incorporating the Total Resource Cost Test In addition to the UCT, LoadMAP has been configured to evaluate potential using the TRC. This test focuses on impacts for both the utility and customer, which is an alternative frame of reference from the UCT. The TRC includes the full measure cost (incremental for lost opportunities, full cost for retrofits), which is generally substantially higher than the incentive cost included within the UCT. The TRC does include one additional value stream that the UCT does not, non-energy impacts. This test is fully incorporated into LoadMAP and prepared for Avista to use in the event the Company feels a “fully balanced” TRC is identified. In accordance with Council methodology, these impacts must be quantified and monetized, meaning impacts such as personal comfort, which are difficult to assign a value to, are not included. What this does include are additional savings including water reductions due to low-flow measures or reduced detergent requirements to wash clothes in a high-efficiency clothes washer. AEG has incorporated these impacts as they are available in source documentation, such as RTF UES workbooks. Some impacts are already included within Avista’s avoided costs. These include the 10% conservation credit applied by the Council for infrastructure benefits of efficiency. The future prices of carbon are also included. Per TRC methodology, as these impacts are already captured within the avoided costs provided to AEG, we did not incorporate them a second time outside the costs. Another set of impacts captured within Council methodology include the Simplified Energy Enthalpy Model (SEEM) “calibration credits”. The Council calibrates this energy model using metered end-use energy consumption to reflect actual conditions. While these are technically energy impacts, they are not captured as a benefit to a natural-gas utility as they are instead an impact on the customer. The Council then assumes the difference between the uncalibrated and calibrated models represents the impacts of secondary heating by different fuels present in the home. In the Council’s case, these could be small gas heaters or wood stoves present alongside an electric forced-air furnace. For Avista, AEG followed a similar methodology, but instead applied the calibration percent impact to estimated gas-heating savings rather than electric. To monetize these impacts, we incorporated the latest Mid C energy prices, including carbon impacts, from the RTF’s website, adjusted for differences in efficiency between electric and natural gas heating equipment (e.g. converted therm savings from an AFUE 80% baseline to kWh savings from an EF 0.97 resistance heater baseline). We applied these impacts to many non-equipment measures with space heating impacts in all sectors as well as to residential space heating equipment, which was the primary use for the Council. Finally, AEG identified additional non-gas end uses which may be impacted by gas efficiency measures. These include impacts from other end uses, such as cooling savings due to efficient shell measures or lighting savings due to a comprehensive retrocommissioning or strategic energy management program. Like the calibration credit above, these do not have a benefit to a natural-gas utility but do to the customer. It is worth a note of caution when incorporating these impacts. Certain comprehensive building measures, such as retrocommissioning and strategic energy management have very large electric impacts that may be greater than the original estimated gas impacts. LED lighting is a very popular technology within electric utility-programs and can have massive impacts. Commercial HVAC retrocommissioning (RCx) includes both cooling and ventilation electric impacts, which could outweigh the gas space heating impacts. To realize these cost-effective savings, Avista would need to offer a comprehensive RCx program affecting both electric and natural gas end uses. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 213 | 77 Applied Energy Group • www.appliedenergygroup.com 7 COMPARISON WITH CURRENT PROGRAMS One of the goals of this study is to inform targets for future programs. As such, AEG conducted an in-depth comparison of the CPA’s 2021 UCT Achievable Economic Potential with Avista’s 2019 accomplishments at the sector-level. This involved assigning each measure within the CPA to an existing Avista program. Washington Comparison with 2019 Programs Residential Sector Table 7-1 summarizes Avista’s 2019 residential accomplishments and the 2021 UCT Achievable Economic potential estimates from LoadMAP. The LoadMAP estimate of 32,164 dekatherms is lower than Avista’s 2019 accomplishments at 49,161 dekatherms. Table 7-1 Comparison of Avista’s Washington Residential Programs with 2018 UCT Achievable Economic Potential (dekatherms) Program Group 2019 Accomplishments (dekatherms) LoadMAP 2021 UCT (dekatherms) Furnace 31,172 21,548 Boiler 433 51 Water Heater 3,303 1,901 ENERGY STAR Homes 67 47 Smart Thermostat 3,822 4,435 Ceiling Insulation 3,762 3,611 Wall Insulation 447 333 Floor Insulation 342 0 Doors 93 0 Windows 5,556 0 Air Sealing 134 163 Duct Insulation 10 0 Duct Sealing 21 0 Showerheads 0 75 Miscellaneous 1 0 Program Total 49,161 32,164 The main reason that potential is lower is that the baseline assumed for forced-air furnaces is adjusted in the following ways. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 214 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 78 Applied Energy Group • www.appliedenergygroup.com • The 2015 Washington State Energy Code (WSEC) prescribes very efficient building shell requirements, which substantially reduces the consumption of a new home. Since every new home requires a lost opportunity purchasing decision when constructed, they make up a large portion of the potential. The lower unit energy savings in new homes due to lower heating requirements reduces the unit energy savings (UES) from this measure. • Another reason is the incorporation of a market baseline, which assumes not everyone purchases the minimum federal standard in the absence of efficiency programs. This results in approximately 20% of customers purchasing an AFUE 90% and 5% purchasing an AFUE 92% in the baseline, which reduces the average unit energy consumption upon which savings for an AFUE 95% are based, Additional descriptions for other measure differences are provided below: • Potential for ENERGY STAR Homes has been reduced due to WSEC 2015. The efficient shell requirements lower space heating savings from the prior estimate, which was made before this code went into effect. • The most recently updated savings and cost characterizations for water heater and windows are reducing their cost effectiveness in some or all segments. Commercial and Industrial Sectors Table 7-2 summarizes Avista’s 2019 commercial and industrial accomplishments and the 2021 UCT Achievable Economic potential estimates from LoadMAP. The LoadMAP estimate of 22,537 dekatherms is much higher than Avista’s 2019 accomplishments at 7,902 dekatherms. Table 7-2 Comparison of Avista’s Washington Nonresidential Accomplishments with 2021 UCT Achievable Economic Potential (dekatherms) Program Group 2019 Accomplishments (dekatherms) LoadMAP 2021 UCT (dekatherms) HVAC 1,786 11,683 Weatherization 0 3,711 Food Preparation 3,547 1,044 Custom 2,569 6,099 Program Total 7,902 22,537 The following are key drivers in commercial potential: • The HVAC category includes both efficient equipment (e.g. boilers) as well as custom HVAC measures. • Fryer and convection oven potential is substantial due to the high gas consumption of restaurants and Avista’s current success with this program. This measure was heavily accelerated in LoadMAP. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 215 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 79 Applied Energy Group • www.appliedenergygroup.com Idaho Comparison with 2019 Programs Residential Sector Table 7-3 summarizes Avista’s 2019 residential accomplishments and the 2021 UCT Achievable Economic potential estimates from LoadMAP. The LoadMAP estimate of 17,117 dekatherms is lower than Avista’s 2019 accomplishments at 23,667 dekatherms. Table 7-3 Comparison of Avista’s Idaho Residential Programs with 2021 UCT Achievable Economic Potential (dekatherms) Program Group 2019 Accomplishments (dekatherms) LoadMAP 2021 UCT (dekatherms) Furnace 17,308 14,054 Boiler 247 0 Water Heater 1,735 1,053 ENERGY STAR Homes 40 32 Smart Thermostat 1,931 0 Ceiling Insulation 722 1,643 Wall Insulation 55 142 Floor Insulation 21 0 Doors 4 0 Windows 1,579 0 Air Sealing 21 79 Duct Insulation 1 0 Duct Sealing 2 0 Showerheads - 114 Miscellaneous - 0 Program Total 23,667 17,117 Cost effective measures in LoadMAP show similar potential to Avista’s programs, however some measures, such as Smart Thermostats and HE Windows, are not showing as cost effective in 2021 forward in LoadMAP. This is offset somewhat by the fact that, in contrast to Washington, Idaho’s energy code does not cannibalize a large portion of the HVAC-related savings, resulting in a much steadier range of potential. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 216 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 80 Applied Energy Group • www.appliedenergygroup.com Commercial and Industrial Sectors Table 7-4 summarizes Avista’s 2019 commercial and industrial accomplishments and the 2021 UCT Achievable Economic potential estimates from LoadMAP. The LoadMAP estimate of 14,023 dekatherms is substantially higher than Avista’s 2017 accomplishments at 3,024 dekatherms. Table 7-4 Comparison of Avista’s Idaho Nonresidential Accomplishments with 2021 UCT Achievable Economic Potential (dekatherms) Program Group 2019 Accomplishments (dekatherms) LoadMAP 2021 UCT (dekatherms) HVAC 1,337 7,068 Weatherization 0 2,241 Food Preparation 1,273 638 Custom 414 4,075 Program Total 3,024 14,023 Similar to Washington, many custom HVAC measures were included within the HVAC category to reflect actual accomplishments. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 217 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 81 Applied Energy Group • www.appliedenergygroup.com 8 COMPARISON WITH PREVIOUS STUDY Residential Comparison with 2018 CPA Table 8-1 compares first-year residential potential between Avista’s 2018 and 2020 Natural Gas CPAs conducted by AEG. For both states, first year savings are marginally lower (for program categories). Table 8-1 Comparison of Avista’s Residential UCT Achievable Economic Potential between the 2016 and 2018 CPAs (dekatherms) Program Group Washington 2018 2020 Idaho 2018 2020 Furnace 19,091 21,548 11,816 14,054 Boiler 619 51 307 0 Water Heater 4,257 1,901 2,014 1,053 ENERGY STAR Homes 294 47 146 32 Smart Thermostat 1,344 4,435 664 0 Ceiling Insulation 1,072 3,611 534 1,643 Wall Insulation 904 333 452 142 Floor Insulation 1,135 0 774 0 Doors 0 0 0 0 Windows 9,426 0 820 0 Air Sealing 0 163 0 79 Duct Insulation 367 0 181 0 Duct Sealing 0 0 0 0 Showerheads 575 75 286 114 Miscellaneous 893 0 362 0 CPA Total 39,979 32,164 18,354 17,117 The slight decrease in potential is due to a few factors: • Baseline efficiency has been improving • Some measures are no longer cost effective as a result of updates to characterization of costs and savings Nonresidential Comparison with 2018 CPA Table 8-2 compares first-year nonresidential potential between Avista’s 2018 and 2020 Natural Gas CPAs conducted by AEG. In Washington, the potential is similar, while it is higher in Idaho. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 218 2020 Avista Utilities Natural Gas Conservation Potential Assessment| | 82 Applied Energy Group • www.appliedenergygroup.com Table 8-2 Comparison of Avista’s Nonresidential UCT Achievable Economic Potential between the 2016 and 2018 CPAs (dekatherms) Program Group Washington 2018 2018 Idaho 2017 2018 HVAC 11,925 11,683 3,769 7,068 Weatherization 1,694 3,711 941 2,241 Food Preparation 2,761 1,044 1,045 638 Custom 4,082 6,099 2,033 4,075 CPA Total 21,300 22,537 7,986 14,023 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 219 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 220 APPENDIX – CHAPTER 3 APPENDIX 3.2: ENVIRONMENTAL EXTERNALITIES OVERVIEW (OREGON JURISDICTION ONLY) The methodology for determining avoided costs from reduced incremental natural gas usage considers commodity and variable transportation costs only. These avoided cost streams do not include environmental externality costs related to the gathering, transmission, distribution or end-use of natural gas. Per traditional economic theory and industry practice, an environmental externality factor is typically added to the avoided cost when there is an opportunity to displace traditional supply-side resources with an alternative resource with no adverse environmental impact. REGULATORY GUIDANCE The Oregon Public Utility Commission (OPUC) issued Order 93-965 (UM-424) to address how utilities should consider the impact of environmental externalities in planning for future energy resources. The Order required analysis on the potential natural gas cost impacts from emitting carbon dioxide (CO2) and nitric-oxide (NOx). The OPUC’s Order No. 07-002 in Docket UM 1056 (Investigation Into Integrated Resource Planning) established the following guideline for the treatment of environmental costs used by energy utilities that evaluate demand-side and supply-side energy choices: UM 1056, Guideline 8 - Environmental Costs “Utilities should include, in their base-case analyses, the regulatory compliance costs they expect for carbon dioxide (CO2), nitrogen oxides (NOx), sulfur oxides (SO2), and mercury (Hg) emissions. Utilities should analyze the range of potential CO2 regulatory costs in Order No. 93-695, from $0 - $40 (1990$). In addition, utilities should perform sensitivity analysis on a range of reasonably possible cost adders for nitrogen oxides (NOx), sulfur dioxide (SO2), and mercury (Hg), if applicable. In June 2008, the OPUC issued Order 08-338 (UM1302) which revised UM1056, Guideline 8. The revised guideline requires the utility should construct a base case portfolio to reflect what it considers to be the most likely regulatory compliance future for the various emissions. Additionally the guideline requires the utility to develop several compliance scenarios ranging from the present CO2 regulatory level to the upper reaches of credible proposals and each scenario should include a time profile of CO2 costs. The utility is also required to include a “trigger point” analysis in which the utility must determine at what level of carbon costs its selection of portfolio resources would be significantly different. ANALYSIS Unlike electric utilities, environmental cost issues rarely impact a natural gas utility's supply-side resource options. This is because the only supply-side energy resource is natural gas. The utility cannot choose between say "dirty" coal-fired generation and "clean" wind energy sources. The supply-side implication of environmental externalities generally relates to combustion of fuel to move or compress natural gas. Avista’s direct gas distribution system infrastructure relies solely on the upstream line pressure of the interstate pipeline transportation network to distribute natural gas to its customers and thus does not directly combust fuels that result in any CO2, NOx, SO2, or Hg emissions. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 221 APPENDIX – CHAPTER 3 Upstream gas system infrastructure (pipelines, storage facilities, and gathering systems), however, do produce CO2 emissions via compressors used to pressurize and move natural gas. Accessing CO2 emissions data on these upstream activities to perform detailed meaningful analysis is challenging. In the 2009 Natural Gas IRP there was significant momentum regarding GHG legislation and the movement towards the creation of carbon cap and trade markets or tax structure. Additionally, the pricing level of the framework has been greatly reduced. Whichever structure ultimately gets implemented, Avista believes the cost pass through mechanisms for upstream gas system infrastructure will not make a difference in supply-side resource selection although the amount of cost pass through could differ widely. Table 3.2.1 summarizes a range of environmental cost adders we believe capture several compliance futures including our expected scenario. The CO2 cost adders reflect outlooks we obtained from one of our consultants, and following discussion and feedback from the TAC, have been incorporated into our Expected Case, Average Case, Low Growth & High Prices, Electrification - Carbon Reduction, and High Growth & Low Prices portfolios. The guidelines also call for a trigger point analysis that reflects a “turning point” at which an alternate resource portfolio would be selected at different carbon cost adders levels. Because natural gas is the only supply resource applicable to LDC’s any alternate resource portfolio selection would be a result of delivery methods of natural gas to customers. Conceptually, there could be differing levels of cost adders applicable to pipeline transported supply versus in service territory LNG storage gas. From a practical standpoint however, the differences in these relative cost adders would be very minor and would not change supply- side resource selection regardless of various carbon cost adder levels. We do acknowledge there is influence to the avoided costs which would impact the cost effectiveness of demand-side measures in the DSM business planning process. CONSERVATION COST ADVANTAGE For this IRP, we also incorporated a 10 percent environmental externality factor into our assessment of the cost-effectiveness of existing demand-side management programs. Our assessment of prospective demand- side management opportunities is based on an avoided cost stream that includes this 10 percent factor. Environmental externalities were evaluated in the IRP by adding the cost per therm equivalent of the externality cost values to supply-side resources as described in OPUC Order No. 93-965. Avista found that the environmental cost adders had no impact on the company’s supply-side choices, although they did impact the level of demand-side measures that could be cost-effective to acquire. REGULATORY FILING Avista will file revised cost-effectiveness limits (CELs) based upon the updated avoided costs available from this IRP process within the prescribed regulatory timetable. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 222 APPENDIX – CHAPTER 3 TABLE 3.2.1: ENVIRONMENTAL EXTERNALITIES COST ADDER ANALYSIS (2020$) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 223 APPENDIX – CHAPTER 3 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 224 Appendix - Chapter 4 APPENDIX 4.1: CURRENT TRANSPORTATION/STORAGE RATES AND ASSUMPTIONS Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 225 Appendix - Chapter 4 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 226 APPENDIX 5: AVISTA RENEWABLE RESOURCE DEVELOPMENT AND PROCUREMENT DECISION TREE APPENDIX 5.1: AVISTA RENEWABLE RESOURCE LEAST COST/LEAST RISK EVALUATION CRITERIA AND CALCULATIONS Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 227 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 228 APPENDIX 5.2: AVISTA RENEWABLE RESOURCE PROJECT REVENUE REQUIREMENT MODEL Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 229 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 230 APPENDIX 5.3: AVISTA RENEWABLE RESOURCE PROJECT RATE IMPACT ANALYSIS Avista will analyze all RNG-related investment costs and determine the appropriate rate recovery mechanism, which may include an impact on base rates, purchase gas adjustments or other cost recovery tariffs. This analysis considers, but is not limited to, factors such as the jurisdictions involved, expenditure types, cost recovery mechanisms, the spread of the investment to Avista’s customer base and other potential impacts to ensure the appropriate treatment of the investment. APPENDIX 5.4: AVISTA RENEWABLE RESOURCE PROJECT CARBON REDUCTION CALCULATION Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 231 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 232 Appendix - Chapter 6 APPENDIX 6.1: MONTHLY PRICE DATA BY BASIN EXPECTED PRICE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 233 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 234 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 235 Appendix - Chapter 6 APPENDIX 6.1: MONTHLY PRICE DATA BY BASIN HIGH GROWTH LOW PRICE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 236 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 237 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 238 Appendix - Chapter 6 APPENDIX 6.1: MONTHLY PRICE DATA BY BASIN LOW GROWTH HIGH PRICE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 239 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 240 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 241 Appendix - Chapter 6 APPENDIX 6.2: WEIGHTED AVERAGE COST OF CAPITAL From 2019 Rate Case Settlement Cost of Capital Percent of Total Capital Cost Component After Tax L/T Debt 51.50%5.15%2.65%2.10% Common Equity 48.50%9.40%4.56%4.56% TOTAL 100.00%7.21%6.65% From 2019 Rate Case Settlement Cost of Capital Percent of Total Capital Cost Component After Tax L/T Debt 50.00%5.20%2.60%2.05% Common Equity 50.00%9.50%4.75%4.75% TOTAL 100.00%7.35%6.80% From 2020 Rate Case Settlement Cost of Capital Percent of Total Capital Cost Component After Tax L/T Debt 50.00% 5.07% 2.54% 2.00% Common Equity 50.00% 9.40% 4.70% 4.70% TOTAL 100.00%7.24% 6.70% Gas Net Rate Base AMA Thru December 2020 WA 435,241$ 48% ID 179,466$ 20% OR 292,204$ 32% 906,911$ 6.70% GDP price deflator 2.00% Real After Tax WACC 4.36% WASHINGTON Avista Corporation Capital Structure and Overall Rate of Return IDAHO OREGON System Weighted Average Cost of Capital (Nominal)* Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 242 Appendix - Chapter 6 APPENDIX 6.3: POTENTIAL SUPPLY SIDE RESOURCE OPTIONS Fossil Fuel Resources Modeled Renewable Resources Modeled Resource Dth per day Dth per year Levelized Cost Per Dth (Year 1) Distributed Renewable Hydrogen Production - WA 166 60,509 $53.48 Distributed Renewable Hydrogen Production - OR 166 60,509 $50.00 Distributed LFG to RNG Production - WA 635 231,790 $13.53 Centralized LFG to RNG Production - WA 1,814 662,256 $11.73 Dairy Manure to RNG Production - WA 635 231,790 $40.70 Wastewater Sludge to RNG Production - WA 513 187,245 $18.95 Food Waste to RNG Production - WA 298 108,799 $40.68 Distributed LFG to RNG Production - OR 635 231,790 $13.53 Centralized LFG to RNG Production - OR 1,814 662,256 $11.73 Dairy Manure to RNG Production - OR 635 231,790 $40.23 Wastewater Sludge to RNG Production - OR 513 187,245 $18.75 Food Waste to RNG Production - OR 298 108,799 $40.21 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 243 Appendix - Chapter 6 APPENDIX 6.4: EXPECTED CASE AVOIDED COST Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 244 Appendix - Chapter 6 APPENDIX 6.4: LOW GROWTH & HIGH PRICES CASE AVOIDED COST Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 245 Appendix - Chapter 6 APPENDIX 6.4: HIGH GROWTH & LOW PRICES CASE AVOIDED COST Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 246 Appendix - Chapter 6 APPENDIX 6.4: AVERAGE CASE AVOIDED COST Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 247 Appendix - Chapter 6 APPENDIX 6.4: CARBON REDUCTION AVOIDED COST Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 248 Appendix - Chapter 6 APPENDIX 6.4: LOW GROWTH & HIGH PRICES MONTHLY DETAIL Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 249 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 250 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 251 Appendix - Chapter 6 APPENDIX 6.4: EXPECTED CASE MONTHLY DETAIL Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 252 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 253 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 254 Appendix - Chapter 6 APPENDIX 6.4: HIGH GROWTH & LOW PRICES MONTHLY DETAIL Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 255 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 256 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 257 Appendix - Chapter 6 APPENDIX 6.4: AVERAGE CASE MONTHLY DETAIL Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 258 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 259 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 260 Appendix - Chapter 6 APPENDIX 6.4: CARBON REDUCTION MONTHLY DETAIL Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 261 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 262 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 263 Appendix - Chapter 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 264 Appendix - Chapter 7 APPENDIX 7.1: HIGH GROWTH CASES SELECTED RESOURCES VS. PEAK DAY DEMAND EXISTING PLUS EXPECTED AVAILABLE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 265 Appendix - Chapter 7 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 266 Appendix - Chapter 7 APPENDIX 7.2: PEAK DAY DEMAND TABLE HIGH GROWTH & LOW PRICES Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 267 Appendix - Chapter 7 APPENDIX 7.2: PEAK DAY DEMAND TABLE LOW GROWTH & HIGH PRICES Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 268 Appendix - Chapter 7 APPENDIX 7.2: PEAK DAY DEMAND TABLE CARBON REDUCTION Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 269 Appendix - Chapter 7 APPENDIX 7.2: PEAK DAY DEMAND TABLE AVERAGE CASE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 270 Appendix - Chapter 7 APPENDIX 7.2: PEAK DAY DEMAND TABLE EXPECTED CASE Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 271 Appendix - Chapter 7 APPENDIX 7.2: ALTERNATE SUPPLY RESOURCES Fossil Fuel Resources Modeled Renewable Resources Modeled Resource Dth per day Dth per year Levelized Cost Per Dth (Year 1) Distributed Renewable Hydrogen Production - WA 166 60,509 $53.48 Distributed Renewable Hydrogen Production - OR 166 60,509 $50.00 Distributed LFG to RNG Production - WA 635 231,790 $13.53 Centralized LFG to RNG Production - WA 1,814 662,256 $11.73 Dairy Manure to RNG Production - WA 635 231,790 $40.70 Wastewater Sludge to RNG Production - WA 513 187,245 $18.95 Food Waste to RNG Production - WA 298 108,799 $40.68 Distributed LFG to RNG Production - OR 635 231,790 $13.53 Centralized LFG to RNG Production - OR 1,814 662,256 $11.73 Dairy Manure to RNG Production - OR 635 231,790 $40.23 Wastewater Sludge to RNG Production - OR 513 187,245 $18.75 Food Waste to RNG Production - OR 298 108,799 $40.21 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 272 Appendix - Chapter 7 Resources Not Modeled Future Supply Resources Size Cost/Rates Availability Notes Co. Owned LNG 600,000 Dth w/ 150,000 of deliverability $75 Million plus $2 Million annual O&M 2024 On site, in service territory liquefaction and vaporization facility Various pipelines – Pacific Connector, Cross-Cascades, etc.Varies Precedent Agreement Rates 2022 Requires additional mainline capacity on NWPL or GTN to get to service territory Large Scale LNG Varies Commodity less Fuel 2024 Speculative, needs pipeline transport In Ground Storage Varies Varies Varies Requires additional mainline transport to get to service territory Satellite LNG Varies $13M capital cost plus 665k O&M 2022 provides for peaking services and alleviates the need for costly pipeline expansions. $3,000 per m3 with O&M assumed at 5.4%. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 273 Appendix - Chapter 7 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 274 APPENDIX 8.1: DISTRIBUTION SYSTEM MODELING OVERVIEW The primary goal of distribution system planning is to design for present needs and to plan for future expansion in order to serve demand growth. This allows Avista to satisfy current demand-serving requirements, while taking steps toward meeting future needs. Distribution system planning identifies potential problems and areas of the distribution system that require reinforcement. By knowing when and where pressure problems may occur, the necessary reinforcements can be incorporated into normal maintenance. Thus, more costly reactive and emergency solutions can be avoided. COMPUTER MODELING When designing new main extensions, computer modeling can help determine the optimum size facilities for present and future needs. Undersized facilities are costly to replace, and oversized facilities incur unnecessary expenses to Avista and its customers. THEORY AND APPLICATION OF STUDY Natural gas network load studies have evolved in the last decade to become a highly technical and useful means of analyzing the operation of a distribution system. Using a pipeline fluid flow formula, a specified parameter of each pipe element can be simultaneously solved. Through years of research, pipeline equations have been refined to the point where solutions obtained closely represent actual system behavior. Avista conducts network load studies using GL Noble Denton’s Synergi® 4.8.0 software. This computer- based modeling tool runs on a Windows operating system and allows users to analyze and interpret solutions graphically. CREATING A MODEL To properly study the distribution system, all natural gas main information is entered (length, pipe roughness and size) into the model. "Main" refers to all pipelines supplying services. Nodes are placed at all pipe intersections, beginnings and ends of mains, changes in pipe diameter/material, and to identify all large customers. A model element connects two nodes together. Therefore, a "to node" and a "from node" will represent an element between those two nodes. Almost all of the elements in a model are pipes. Regulators are treated like adjustable valves in which the downstream pressure is set to a known value. Although specific regulator types can be entered for realistic behavior, the expected flow passing through the actual regulator is determined and the modeled regulator is forced to accommodate such flows. FLUID MECHANICS OF THE MODEL Pipe flow equations are used to determine the relationships between flow, pressure drop, diameter and pipe length. For all models, the Fundamental Flow equation (FM) is used due to its demonstrated reliability. Efficiency factors are used to account for the equivalent resistance of valves, fittings and angle changes within the distribution system. Starting with a 95 percent factor, the efficiency can be changed to fine tune the model to match field results. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 275 Pipe roughness, along with flow conditions, creates a friction factor for all pipes within a system. Thus, each pipe may have a unique friction factor, minimizing computational errors associated with generalized friction values. LOAD DATA All studies are considered steady state; all natural gas entering the distribution system must equal the natural gas exiting the distribution system at any given time. Customer loads are obtained from Avista’s customer billing system and converted to an algebraic format so loads can be generated for various conditions. Customer Management Module (CMM), an add-on application for Synergi, processes customer usage history and generates a base load (non-temperature dependent) and heat load (varying with temperature) for each customer. In the event of a peak day or an extremely cold weather condition, it is assumed that all curtailable loads are interrupted. Therefore, the models will be conducted with only core loads. DETERMINING NATURAL GAS CUSTOMERS’ MAXIMUM HOURLY USAGE DETERMINING DESIGN PEAK HOURLY LOAD The design peak hourly load for a customer is estimated by adding the hourly base load and the hourly heat load for a design temperature. This estimate reflects highest system hourly demands, as shown in Table 1: This method differs from the approach that is used for IRP peak day load planning. The primary reason for this difference is due to the importance of responding to hourly peaking in the distribution system, while IRP resource planning focuses on peak day requirements to the city gate. APPLYING LOADS Having estimated the peak loads for all customers in a particular service area, the model can be loaded. The first step is to assign each load to the respective node or element. GENERATING LOADS Temperature-based and non-temperature-based loads are established for each node or element, thus loads can be varied based on any temperature (HDD). Such a tool is necessary to evaluate the difference in flow and pressure due to different weather conditions. GEOGRAPHIC INFORMATION SYSTEM (GIS) Several years ago Avista converted the natural gas facility maps to GIS. While the GIS can provide a variety of map products, the true power lies in the analytical capabilities. A GIS consists of three components: spatial operations, data association and map representation. A GIS allows analysts to conduct spatial operations (relating a feature or facility to another geographically). A spatial operation is possible if a facility displayed on a map maintains a relationship to other facilities. Spatial relationships allow analysts to perform a multitude of queries, including: Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 276 Identify electric customers adjacent to natural gas mains who are not currently using natural gas Display the number of customers assigned to particular pipes in Emergency Operating Procedure zones (geographical areas defined to aid in the safe isolation in the event of an emergency) Classify high-pressure pipeline proximity criteria The second component of the GIS is data association. This allows analysts to model relationships between facilities displayed on a map to tabular information in a database. Databases store facility information, such as pipe size, pipe material, pressure rating, or related information (e.g., customer databases, equipment databases and work management systems). Data association allows interactive queries within a map-like environment. Finally, the GIS provides a means to create maps of existing facilities in different scales, projections and displays. In addition, the results of a comparative or spatial analysis can be presented pictorially. This allows users to present complex analyses rapidly and in an easy-to-understand method. BUILDING SYNERGI® MODELS FROM A GIS The GIS can provide additional benefits through the ease of creation and maintenance of load studies. Avista can create load studies from the GIS based on tabular data (attributes) installed during the mapping process. MAINTENANCE USING A GIS The GIS helps maintain the existing distribution facility by allowing a design to be initiated on a GIS. Currently, design jobs for the company’s natural gas system are managed through Avista’s Maximo tool. Once jobs are completed, the as-built information is automatically updated on GIS, eliminating the need to convert physical maps to a GIS at a later date. Because the facility is updated, load studies can remain current by refreshing the analysis. DEVELOPING A PRESENT CASE LOAD STUDY In order for any model to have accuracy, a present case model has to be developed that reflects what the system was doing when downstream pressures and flows are known. To establish the present case, pressure recording instruments located throughout the distribution system are used. These field instruments record pressure and temperature throughout the winter season. Various locations recording simultaneously are used to validate the model. Customer loads on Synergi® are generated to correspond with actual temperatures recorded on the instruments. An accurate model’s downstream pressures will match the corresponding field instrument’s pressures. Efficiency factors are adjusted to further refine the model's pressures and better match the actual conditions. Since telemetry at the gate stations record hourly flow, temperature and pressure, these values are used to validate the model. All loads are representative of the average daily temperature and are defined as hourly flows. If the load generating method is truly accurate, all natural gas entering the actual system (physical) equals total natural gas demand solved by the simulated system (model). DEVELOPING A PEAK CASE LOAD STUDY Using the calculated peak loads, a model can be analyzed to identify the behavior during a peak day. The efficiency factors established in the present case are used throughout subsequent models. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 277 ANALYZING RESULTS After a model has been balanced, several features within the Synergi® model are used to interpret results. Color plots are generated to depict flow direction, pressure, and pipe diameter with specific break points. Reinforcements can be identified by visual inspection. When user edits are completed and the model is re- balanced, pressure changes can be visually displayed, helping identify optimum reinforcements. PLANNING CRITERIA In most instances, models resulting in node pressures below 15 psig indicate a likelihood of distribution low pressure, and therefore necessitate reinforcements. For most Avista distribution systems, a minimum of 15 psig will ensure deliverability as natural gas exits the distribution mains and travels through service pipelines to a customer’s meter. Some Avista distribution areas operate at lower pressures and are assigned a minimum pressure of 5 psig for model results. Given a lower operating pressure, service pipelines in such areas are sized accordingly to maintain reliability. DETERMINING MAXIMUM CAPACITY FOR A SYSTEM Using a peak day model, loads can be prorated at intervals until area pressures drop to 15 psig. At that point, the total amount of natural gas entering the system equals the maximum capacity before new construction is necessary. The difference between natural gas entering the system in this scenario and a peak day model is the maximum additional capacity that can be added to the system. Since the approximate natural gas usage for the average customer is known, it can be determined how many new customers can be added to the distribution system before necessitating system reinforcements. The above models and procedures are utilized with new construction proposals or pipe reinforcements to determine the potential increase in capacity. FIVE-YEAR FORECASTING The intent of the load study forecasting is to predict the system’s behavior and reinforcements necessary within the next five years. Various Avista personnel provide information to determine where and why certain areas may experience growth. By combining information from Avista’s demand forecast, IRP planning efforts, regional growth plans and area developments, proposals for pipeline reinforcements and expansions are evaluated with Synergi®. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 278 Appendix 8.2 Oregon Public Utility Commission Order No. 16-109 (the Order) included the following language: Finally, as part of the IRP-vetting process and subsequent rate proceedings, we expect that Avista conduct and present comprehensive analyses of its system upgrades. Such analyses should provide: (1) a comprehensive cost-benefit analysis of whether and when the investment should be built; (2) evaluation of a range of alternative build dates and the impact on reliability and customer rates; (3) credible evidence on the likelihood of disruptions based on historical experience; (4) evidence on the range of possible reliability incidents; (5) evidence about projected loads and customers in the area; and (6) adequate consideration of alternatives, including the use of interruptibility or increased demand-side measures to improve reliability and system resiliency. In order to address this portion of the Order, Avista has prepared this appendix, which includes documentation addressing the six points above for each of the natural gas distribution system enhancements included in the 2021 Natural Gas Integrated Resource Plan (IRP) for Avista’s Oregon service territory. Each of these three enhancement projects represents a significant, discrete project which is out of the ordinary course of business (that is to say, different from ongoing capital investment to address Federal or State regulatory requirements, relocation of pipe or facilities as requested by others, failed pipe or facilities, etc., all of which occur routinely over time and which are discussed below). The routine, ongoing capital investments can be loosely classified in the following categories (which are not mutually exclusive): • Safety – Ongoing safety related capital investment includes the repair or replacement of obsolete or failed pipe and facilities. This category includes, but is not necessarily limited to, investment to address deteriorated or isolated steel pipe, cathodic protection, and the replacement of pipeline which has been built over, as well as the remedy of shallow pipe or the repair or replacement of leaking pipe. • System Maintenance – Ongoing capital investment related to system maintenance includes replacement of facilities or pipe that has reached the end of their useful lives, as well as other general investment required to maintain Avista’s ability to reliably serve customers. • Relocation Requested by Others – Ongoing capital investment related to relocation requested by others falls primarily into two categories, relocation requested by other parties which is required under the terms of our franchise agreements (such as Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 279 relocations required to accommodate road or highway construction or relocation), or relocation requested by customers or others (in which case the customer would be responsible for the cost of the immediate request, but in which case Avista may perform additional work, such as the replacement of a steel service with polyethylene to reduce future maintenance or cathodic protection requirements on that pipe). • Mandated System Investment – Ongoing capital investment in this category is driven by Federal or State regulatory requirements, such as investment that results from TIMP/DIMP programs, among other programs. Avista’s Aldyl-A replacement program has been addressed in substantial detail in Oregon Public Utility Commission Docket UG-246, Avista/500-501. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 280 1 1 2020 Avista Natural Gas IRP Technical Advisory Committee Meeting June 17, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 281 2 2 2020 Natural Gas IRP schedule •TAC 1: Wednesday, June 17, 2020: TAC meeting expectations, 2020 IRP process and schedule, actions from 2018 IRP, and a Winter of 2018-2019 review. Procurement Plan and Resource Optimization benefits, Demand, Weather Analysis and a Weather Planning Standard, and an energy efficiency update. •TAC 2: Thursday, August 6, 2020:Market Analysis, Price Forecasts, Cost Of Carbon, demand forecasts and CPA results from AEG, Environmental Policies, fugitive emissions •TAC 3: Wednesday, September 30, 2020:Distribution, Avista’s current supply-side resources overview, supply side resource options, renewable resources, overview of the major interstate pipelines and projects, and sensitivities and portfolio selection modeling. •TAC 4: Wednesday, November 18, 2020:Review assumptions and action items, final modeling results, portfolio risk analysis and 2020 Action Plan. •TAC 5: February 2021:TAC final review meeting (if necessary) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 282 3 3 Agenda •TAC meeting expectations •2020 IRP process and schedule •Actions from 2018 IRP •Winter of 2018-2019 review •Demand •Demand Forecast Methodology •Weather Analysis •Weather Planning Standard •Procurement Plan •Resource Optimization benefits •Energy efficiency update Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 283 4 4 Avista’s IRP Process •Comprehensive analysis bringing demand forecasting and existing and potential supply-side and demand-side resources together into a 20- year, risk adjusted least-cost plan •Considers: –Customer growth and usage –Weather planning standard –Demand-side management opportunities –Existing and potential supply-side resource options –Risk –Public participation through Technical Advisory Committee meetings (TAC) –Distribution upgrades •2018 IRP filed in all three jurisdictions on August 31, 2018 and acknowledged Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 284 5 5 The Natural Gas System My House Pipeline Receipt Point Delivery Point/ Gate Station Storage Gathering System Local Distribution System Producer Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 285 6 6 2018 Avista Natural Gas IRP –Action Plan 1.Avista’s 2020 IRP will contain an individual measure level for dynamic DSM program structure in its analytics. In prior IRP’s, it was a deterministic method based on based on Expected Case assumptions. In the 2020 IRP, each portfolio will have the ability to select conservation to meet unserved customer demand. Avista will explore methods to enable a dynamic analytical process for the evaluation of conservation potential within individual portfolios. 2.Work with Staff to get clarification on types of natural gas distribution system analyses for possible inclusion in the 2020 IRP. 3.Work with Staff to clarify types of distribution system costs for possible inclusion in our avoided cost calculation. 4.Revisit coldest on record planning standard and discuss with TAC for prudency. 5.Provide additional information on resource optimization benefits and analyze risk exposure. 6.DSM—Integration of ETO and AEG/CPA data. Discuss the integration of ETO and AEG/CPA data as well as past program(s) experience, knowledge of current and developing markets, and future codes and standards. 7.Carbon Costs –consult Washington State Commission’s Acknowledgement Letter Attachment in its 2017 Electric IRP (Docket UE-161036), where emissions price modeling is discussed, including the cost of risk of future greenhouse gas regulation, in addition to known regulations. 8.Avista will ensure Energy Trust (ETO) has sufficient funding to acquire therm savings of the amount identified and approved by the Energy Trust Board. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 286 7 7 2018 Avista Natural Gas IRP Action Plan cont. •9.Regarding high pressure distribution or city gate station capital work, Avista does not expect any supply side or distribution resource additions to be needed in our Oregon territory for the next four years, based on current projections. However, should conditions warrant that capital work is needed on a high pressure distribution line or city gate station in order to deliver safe and reliable services to our customers, the Company is not precluded from doing such work. Examples of these necessary capital investments include the following: ••Natural gas infrastructure investment not included as discrete projects in IRP •–Consistent with the preceding update, these could include system investment to respond to mandates, safety needs, and/or maintenance of system associated with reliability ••Including, but not limited to Aldyl A replacement, capacity reinforcements, cathodic protection, isolated steel replacement, etc. •–Anticipated PHMSA guidance or rules related to 49 CFR Part §192 that will likely requires additional capital to comply ••Officials from both PHMSA and the AGA have indicated it is not prudent for operators to wait for the federal rules to become final before improving their systems to address these expected rules. •–Construction of gas infrastructure associated with growth •–Other special contract projects not known at the time the IRP was published ••Other non-IRP investments common to all jurisdictions that are ongoing, for example: •–Enterprise technology projects & programs •–Corporate facilities capital maintenance and improvements •An updated table 8.4 for those distribution projects in Oregon: •Location •Klamath Falls, OR •Sutherlin, OR •10. Avista will work with members of the OPUC to determine an alternative stochastic approach to Monte Carlo analysis prior to Avista’s 2020 IRP and share any recommendations with the TAC members. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 287 8 8 That Could Never Happen! Gas Supply Winter 2018-2019 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 288 9 9 Enbridge Pipeline Rupture Source: NWGA 2017 Annual Outlook Sumas AECO Rockies Pipeline Rupture Jackson Prairie Storage NWP Roosevelt Compressor Pipeline ruptured October 9th •2.4 Bcf off the system •Jackson Prairie Storage -down •NWP Roosevelt compressor maintenance •Within 24 hours, 50% of demand came off •Moderate temperatures across Pacific NW •Average gas prices < $3/Dth •Gas rebate deferral balances growing Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 289 1010 Winter 2018-2019 Outlook Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 290 1111 Historical Winter Firm Customer Load Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 291 1212 *Avg. weather - 10 20 30 40 50 60 70 10/1/2018 11/1/2018 12/1/2018 1/1/2019 2/1/2019 De g r e e s F a r e n h e i t Winter '18 -'19 Blended Temps 20 Yr Avg Historical - Blended Actual '18 - '19 - Blended Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 292 1313 Operation Flow Order (OFO) •Northwest Pipeline (NWP) Operational Flow Order An OFO is declared to provide the needed displacement on NWP’s system to meet firm commitments. When scheduled quantities exceed physical capacity, NWP is in a potential OFO situation. In other words, **Avista must flow gas from west to east.** Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 293 1414 US Storage 569 Bcf below 5 yr avg Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 294 1515 JP Storage Levels - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 4/1/2018 5/1/2018 6/1/2018 7/1/2018 8/1/2018 9/1/2018 10/1/2018 11/1/2018 12/1/2018 1/1/2019 2/1/2019 3/1/2019 Dt h JP Owned - ID & WA JP Lease - OR JP Owned - OR Avista –1.0 bcf Puget –2.2 bcf Nwp –3.5 bcf Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 295 1616 Jackson Prairie Compressor C-9 Reduction of withdrawal capability by approx. 200-300 MMscfd Avista withdrawal ability < 90 MMscfd (JP demand 50 –90 MMscfd) Compressor Failed 2/10/19 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 296 1717 Enbridge Capacity Cuts Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 297 1818 Pipeline Entitlements •Entitlements are used to balance demand –Entitlement tolerances are tiered •13%, 8%, 5%, 3% depending on severity of issue –Overrun entitlement •Total demand must not exceed nominations by the prescribed level •Example: Avista nominates 150,000 Dth on pipeline, demand must be AT MOST 169,500 Dth –Entitlement penalties •Greater of $10.00/ dth or 4x the highest midpoint price in region Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 298 1919 Historical and Current Winter Loads - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 No v - 0 1 No v - 0 7 No v - 1 3 No v - 1 9 No v - 2 5 De c - 0 1 De c - 0 7 De c - 1 3 De c - 1 9 De c - 2 5 De c - 3 1 Ja n - 0 6 Ja n - 1 2 Ja n - 1 8 Ja n - 2 4 Ja n - 3 0 Fe b - 0 5 Fe b - 1 1 Fe b - 1 7 Fe b - 2 3 Ma r - 0 1 Ma r - 0 7 Ma r - 1 3 Ma r - 1 9 Ma r - 2 5 Ma r - 3 1 Dt h / d a y Total System Firm Customer Load 5 Year Min-Max 5-Yr Avg 2018-2019 Forecasted Peak Day (2/15)Sumas/JP Sourced 2018-2019 Forecasted Peak Day: 347,228 Dth Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 299 2020 Planning Outcomes changes •In order to reduce the risk around not being able to serve load on a peak day with late winter weather Avista is moving it’s peak day from 2/15 to 2/28 for the WA/ID and La Grande Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 300 2121 Avista’s Demand Overview Tom Pardee Manager of Natural Gas Planning Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 301 2222 –Population of service area 1.5 million 385,000 electric customers 360,000 natural gas customers •Has one of the smallest carbon footprints among America’s 100 largest investor-owned utilities •Committed to environmental stewardship and efficient use of resources Service Territory and Customer Overview •Serves electric and natural gas customers in eastern Washington and northern Idaho, and natural gas customers in southern and eastern Oregon State Total Customers % of Total Washington 170,000 47% Oregon 103,000 29% Idaho 87,000 24% Total 360,000 100%Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 302 2323 Klamath Falls Res Com Ind Average demand 2,628 1,352 44 Customers 15,192 1,787 6 0 500 1,000 1,500 2,000 2,500 3,000 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Av e r a g e d a i l y u s e ( D t h ) Cu s t o m e r s Average 2019 Temp Fahrenheit 47Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 303 2424 Roseburg Res Com Ind Average demand 2,537 2,051 7 Customers 13,889 2,189 2 0 500 1,000 1,500 2,000 2,500 3,000 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Av e r a g e d a i l y u s e ( D t h ) Cu s t o m e r s Average 2019 Temp Fahrenheit 55Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 304 2525 La Grande Res Com Ind Demand 1,371 896 116 Customers 6,794 943 3 0 200 400 600 800 1,000 1,200 1,400 1,600 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Av e r a g e d a i l y u s e ( D t h ) Cu s t o m e r s Average 2019 Temp Fahrenheit 47Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 305 2626 Medford Res Com Ind Average demand 9,312 5,939 62 Customers 56,354 7,038 14 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 - 10,000 20,000 30,000 40,000 50,000 60,000 Av e r a g e d a i l y u s e ( D t h ) Cu s t o m e r s Average 2019 Temp Fahrenheit 55Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 306 2727 Idaho Res Com Ind Average demand 16,872 9,668 800 Customers 77,804 9,164 89 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Av e r a g e d a i l y u s e ( D t h ) Cu s t o m e r s Average 2019 Temp Fahrenheit 47Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 307 2828 Washington Res Com Ind Average demand 32,792 19,999 810 Customers 155,069 14,980 130 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Av e r a g e d a i l y u s e ( D t h ) Cu s t o m e r s Average 2019 Temp Fahrenheit 47Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 308 2929 OR Daily Demand Profiles -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 - 10 20 30 40 50 60 70 80 90 100 De k a t h e r m s Roseburg Daily Demand 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 - 20 40 60 80 100 Dt h Avg. Temp (F) La Grande Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 309 3030 WA-ID Daily Demand Profiles 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 020406080100 De m a n d ( Dt h ) Avg. Temp (F) Idaho Demand 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 020406080100 De m a n d ( D t h ) Avg. Temp (F) WA Demand Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 310 3131 Demand Forecast Methodology Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 311 3232 (CDD) (HDD) Temp (℉) Degree Days 100 =35 90 =25 80 =15 70 =5 65 =0 60 =5 50 =15 40 =25 30 =35 20 =45 10 =55 0 =65 -10 =75 -20 =85 Temperature & Degree Days Cooling Degree Days Heating Degree Days Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 312 3333 Weather •NOAA 20 year actual average daily HDD’s (2000- 2019) •Peak weather includes two winter storms (5 day duration), one in December and one in February •Planning Standard •Sensitivity around planning standard including –Normal/Average –Monte Carlo simulation Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 313 3434 Base Coefficients *Historic Data -July and August Average Planning Area -Residential Class 2 year 3 year 5 year Roseburg (Oregon)0.041949146 0.040148823 0.03765259 Medford (Oregon)0.04748832 0.047701223 0.04716918 La Grande (Oregon)0.069994892 0.068986632 0.073506326 Klamath Falls (Oregon)0.035881027 0.034536108 0.033843554 Idaho 0.048375922 0.046698825 0.046092068 Washington 0.047248771 0.046575066 0.047525773 *Base Coefficients Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 314 3535 Heat Coefficients Planning Area -Residential Class 2 Year 3 Year 5 Year Roseburg (Oregon)0.008829 0.008046 0.00699 Medford (Oregon)0.00639 0.0065 0.006068 La Grande (Oregon)0.006223 0.007297 0.00665 Klamath Falls (Oregon)0.005284 0.005268 0.004902 Idaho 0.006445 0.006344 0.005896 Washington 0.006307 0.006313 0.005957 *Avg. of monthly heat coefficient *Historic Data –adjusted by price elasticity and DSMAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 315 3636 Demand Modeling Equation –a closer look SENDOUT® requires inputs expressed in the below format to compute daily demand in dekatherms. The base and weather sensitive usage (degree-day usage) factors are developed outside the model and capture a variety of demand usage assumptions. # of customers x Daily weather sensitive usage / customer # of customers x Daily base usage / customer Plus Table 3.2 Basic Demand Formula Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 316 3737 1.Expected customer count forecast by each of the 6 areas 2.Use per customer coefficients –5 year, 3 year or last 2 year average use per HDD per customer 3.Current weather planning standard Developing a Reference Case Customer count forecast Use per customer coefficients Weather Reference Case Demand Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 317 3838 Weather Analysis Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 318 3939 Z-Stat •Compare one period to another •Shows how far from the average the data point falls Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 319 4040 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 320 4141 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 321 4242 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 322 4343 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 323 4444 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 324 4545 Summary •Avista’s warmer climate locations, Roseburg and Medford, continue to see a shift in temperatures vs. the reference period •The colder weather climate locations, Klamath Falls, La Grande, Spokane (ID, WA), have maintained the general shape and remain consistent vs. the reference period Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 325 4646 Weather Planning Standard Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 326 4747 Weather Standard •Has the potential to significantly change timing of resource needs •Significant qualitative considerations –No infrastructure response time if standard exceeded –Significant safety and property damage risks •Current Peak HDD Planning Standards –WA/ID 82 –Medford 61 –Roseburg 55 –Klamath 72 –La Grande 75 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 327 4848 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 328 4949 Wind chill effects •Wind on homes causes two effects.One is wind chill on the exterior of the building and the other is infiltration increases due to the pressure difference caused by wind blowing past the home. •The greatest effect of wind on heating is low humidity in the home which makes the customers feel like the temperature is 64 degrees when they have the thermostat set at 72 if their humidity is lower than 10% Relative Humidity. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 329 5050 Weather Peak Planning Day alternative •Coldest Average Day, each year, for the past 30 years combined with a 99% probability Area Coldest on Record 99% Probability Avg. Temp 99% Probability Avg. Temp & Wind Chill* La Grande -10 -11 -23 Klamath Falls -7 -9 -16 Medford 4 11 9 Roseburg 10 14 16 Spokane -17 -12 -26 *this was done with the recent 20 years of data combined with windspeed for example purposes Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 330 5151 Risks •Using wind chill effects combined with a 99% probability produces some drastic changes in peak day planning and may require a large amount of capital to meet those design criteria •Utilizing a 99% probability means there is a 1 in 100 event where Avista may not be able to meet the demand Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 331 5252 Risk around moving WA and ID peak day temps (1,000 simulated futures run) Draws 201 -400Draws 1 -200 33 38 Coldest on Record Peak Days (82 HDD’s, or -17 Avg. Temp Fahrenheit)Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 332 5353 “Flat Demand” Risk Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 333 5454 Avista Weather Recommendation •Utilize coldest day for each of the past 30 years with a 99% probability supply can be fulfilled Area 99% Probability Avg. Temp La Grande -11 Klamath Falls -9 Medford 11 Roseburg 14 Spokane -12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 334 5555 Procurement Plan Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 335 5656 Hedging Objectives and Goals Mission To provide a diversified portfolio of reliable supply and a level of price certainty in volatile markets. •Avista cannot predict future market prices, however we use experience, market intelligence, and fundamental market analysis to structure and guide our procurement strategies. •Avista’s goal is to develop a plan that utilizes customer resources (storage and transportation), layers in pricing over time for stability (time averaging), allows discretion to take advantage of pricing opportunities should they arise, and appropriately manages risk. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 336 5757 Oversight and Control Risk Management Committee (RMC) •Comprised of Executive Officers & Sr. Management •Responsible for the Risk Management Policy •Provides oversight and guidance on natural gas procurement plan Strategic Oversight Group (SOG) •Cross functional group consisting of: •Credit, Electric/Gas Supply, Rates, Resource Accounting, Risk •Co-develops the Procurement Plan •Meets regularly Natural Gas Supply •Monitors and manages the Procurement Plan on a daily basis •Leads in the annual Procurement Plan review and modification Commission Update •Semi-Annual Update •New Procurement Plan is communicated semi- annually in the fall and spring •Intra-year changes communicated to staff on an ad-hoc basis • Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 337 5858 Comprehensive Annual Review of Previous Plan Review conducted with SOG includes: •Mission statement and approach •Current and future market dynamics •Hedge percentage •Operative Boundary •Resources available (i.e. storage and transportation) •Hedge windows and quantity (how many, how long) •Storage utilization •Analysis (volatility, past performance, scenarios, risk) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 338 5959 Risk Assessment Load Volatility •Seasonal Swings Price •Cash vs. Forward Market Liquidity •Is there enough? Counterparty •Who can we transact with? Foreign Currency •What’s our exposure? Legislation •Does it impact our plan? A Thorough Evaluation of Risks Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 339 6060 AECO Daily Volatility $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $ p e r D T h Max-Min Actual Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 340 6161 - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Dt h / D a y Natural Gas Procurement Plan vs. System Demand November 2019 through October 2020 Average Load (includes fuel)Hedges Index Max Load Min Load Peak Day *As of 10/9/2019 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 341 6262 Plan Overview Dynamic Window Hedge (DWH) Plan –Manages hedges based on average volumetric load –Firm local distribution customers only –Delivery Periods: Hedges up to 3 years out into the future from the prompt month in monthly and/or seasonal timeframes –Supply Basins:Windows will use VAR as a way to determine the best basin for a hedge. (AECO, Rockies, Sumas). Risk Responsive Hedging Tool (RRHT) –Manages all hedges in the portfolio based on a financial position •Transport optimization hedges •Storage optimization hedges •LDC hedges from the DWH program –Incorporates the financial value at risk (VaR) as a daily position based on current firm supply side assets combined with price volatility at each futures market basin Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 342 6363 Dynamic Window Hedging Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 343 6464 Risk Responsive Hedging Tool Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 344 6565 Optimization Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 345 6666 Avista Gas Supply Asset Optimization •Storage Optimization. o Utilize Avista owned portion of Jackson Prairie storage facility o Maintain a peak day capability in order to serve needed demand from the facility during a peak event. o Optimize excess capacity through arbitrage between daily prices and forward months as well as between different forward months. •Transport Optimization. o Avista owns transport capacity sufficient to serve peak day load.Unused capacity is optimized by purchasing/selling gas at different hubs to capture locational price spreads. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 346 6767 Storage Optimization Examples •Day ahead market arbitrage with forward month Purchase: daily sumas 75,000 dth for $1.45/dth. Sale: 75,000 dth October 2020 Sumas for $2.48/dth. Realized arbitrage value:$1.03*75,000 = $77,250 •Arbitrage between different forward months Purchase: Q3 2020 sumas 225,000 dth for $1.81 Sale: Q1 2021 sumas 225,000 dth for $3.47 Realized arbitrage value : $1.66*225,000 = $373,500 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 347 6868 Transport Optimization •Transport Capacity in excess of Avista core load can be optimized to reduce customer costs. •Optimization can be done in either the daily or forward markets Example: Purchase: 30,000 dth AECO for $2.00/dth Sale: 30,000 dth Malin for $2.30/dth Realized cost reduction to customers: $0.30*30,000 = $9,000 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 348 6969 Risks •Operational Flow Orders: o NW Pipeline may require the use of JP storage gas to satisfy OFO’s. o May require additional purchases from market to replace storage inventory. •Unplanned maintenance: o Unexpected reductions to pipeline capacity or reduced access to storage may limit optimization activity •Damage or failure of infrastructure Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 349 7070 2020 Natural Gas IRP Energy Efficiency Ryan Finesilver –Energy Efficiency Planning and Analytics Manager First Technical Advisory Committee Meeting Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 350 7171 Team Roles Planning & Analytics Team Applied Energy Group (AEG)Gas Supply Oregon DSM Programs ACP CPA IRP Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 351 7272 Alphabet Soup •CPA: Conservation Potential Assessment •IRP: Integrated Resource Plan •AEG: Applied Energy Group •IPUC: Idaho Public Utility Commission •TRC: Total Resource Cost Test •UCT: Utility Cost Test •UTC: Utilities and Transportation Commission The CPA within the IRP is done by AEG and as per the UTC, is according to the TRC but the IPUC requires the UCT. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 352 7373 Who Energy Efficiency Serves •Washington •Idaho •Oregon (ETO except for Low-Income) Three Jurisdictions •Residential •Industrial/Commercial •Low-Income Residential Multiple Customer Segments •Aids in reducing overall capacity •Defers capital investments The Company’s Infrastructure Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 353 7474 Energy Efficiency Funding –Natural Gas $8.4 Million Annual Funding (2019) Tariff percentage of customer bill by state: 2.6% 3.7% 4.3% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 354 7575 WA Gas Targets to Actual Savings 2014 2015 2016 2017 2018 2019 2020 Business Plan Target 637,042 602,010 567,653 620,310 719,451 726,128 937,402 IRP Target 1,310,000 1,287,000 737,000 489,110 612,830 725,180 936,350 Actual 615,418 919,892 548,756 1,046,356 736,985 504,113 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 Th e r m S a v i n g s Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 355 7676 ID Gas Targets to Actual Savings 2014 2015 2016 2017 2018 2019 2020 Business Plan Target 0 0 232,737 219,272 252,712 321,120 436,405 IRP Target 456,000 228,000 114,000 197,640 246,440 320,830 421,270 Actual 0 0 189,295 245,747 247,756 278,922 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Th e r m S a v i n g s Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 356 7777 OR Energy Trust Gas Targets to Actual Savings 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 Th e r m S a v i n g s Savings Goal IRP Target Actual -Energy Trust did not deliver programs for Avista in 2014-2015 -Energy Trust began providing savings projections for Avista's IRP in 2017 2014 2015 2016 2017 2018 2019 Savings Goal 31,574 318,332 349,520 360,682 IRP Target 318,332 349,520 294,720 Actual 34,708 340,738 409,128 384,599 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 357 7878 Energy Efficiency Business Planning CPA Target Business Plan Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 358 7979 Conservation Potential Assessment (CPA) •Primary Objectives –Meet legislative and regulatory requirements –Support integrated resource planning –Identify opportunities for savings; key measures in target segments •Key Deliverables –20-year conservation potential –Individual measures –IRP target Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 359 8080 Conservation Potential Assessment •Theoretical upper limit of conservation •All efficiency measures are phased in regardless of cost Technical Potential •Realistically achievable, accounting for adoption rates and how quickly programs can be implemented •Does not consider cost-effectiveness of measures Achievable Technical Potential •Includes economic screening of measures (cost effectiveness) •Sets our conservation target Achievable Potential Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 360 8181 Business Planning Process Business Planning Annual Conservation Plan EM&V Annual Conservation Report Conservation Potential Assessment Adaptive Management Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 361 8282 Business Planning Process CPA •Sets overall Savings Goal •Identifies Measures Avista Programs •Consult with our existing programs •Add new measures to existing programs Update and Evaluate •Update existing savings values •Test for Cost- Effectiveness (TRC/UCT) Feedback and Modify •DSM Program Managers •Engineers •Industry Trends •Other Parties Energy Efficiency Advisory Group Business Planning Process Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 362 8383 Incentive Setting Decide Incentive Level $3 per Therm 70% of CIC CE Impact Portfolio Alignment Cost-Effective Test Utility Cost Test (UCT) Total Resource Cost (TRC) Must have a B/E ratio of 1.0 or Higher Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 363 8484 Significant Costs and Benefits From Cost-effectiveness training (3/6/15) Powerpoint http://www.cpuc.ca.gov/General.aspx?id=5267 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 364 8585 Energy Trust’s Resource Assessment Model •What is a resource assessment model? o Energy Trust’s version of a Conservation Potential Assessment o Model that provides an estimate of energy efficiency resource potential achievable over a 20-year period o ‘Bottom-up’ approach to estimate potential starting at the measure level and scaling to a service territory •Energy Trust uses a Model that calculates Technical, Achievable and Cost-Effective Achievable Energy Efficiency Potential o Final program/IRP targets are established via a deployment forecast in a separate tool •We provide a 20-year energy efficiency forecast for utility IRPs about every two years. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 365 8686 Energy Trust’s Resource Assessment Model is “Living Model” •Energy Trust makes continuous improvements to the model •Measures in the model are updated on an ongoing basis to reflect changing market conditions and savings estimates •Emerging technologies are added to the model as data availability and product viability allows •Cost-effective potential may be realized through programs, market transformation and/or codes and standards •Under discussion: use of a “large project adder” to account for large, unexpected projects Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 366 8787 Energy Trust Resource Assessment Model Inputs Measure Level Inputs Measure Definition and Application: •Baseline/Efficient equip. definition •Applicable customer segments •Installation type (RET/ROB/NEW)* •Measure Life Measure Savings Measure Cost •Incremental cost for ROB/NEW measures •Full cost for retrofit measures Market Data (for scaling) •Units per site •Baseline/efficient equipment saturations •Suitability Utility ‘Global’ Inputs Customer and Load Forecasts •Used to scale measure level savings to a service territory •Residential Stocks: # of homes •Commercial Stocks: 1000s of Sq.Ft. •Industrial Stocks: Customer load Avoided Costs Customer Stock Demographics: •Heating fuel splits •Water heat fuel splits * RET = Retrofit; ROB = Replace on Burnout; NEW = New Construction Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 367 8888 Energy Trust 20-Year IRP EE Forecast Flow Chart Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 368 8989 Energy Trust Forecasted Potential Types Not Technically Feasible Technical Potential Calculated within RA Model Market Barriers Achievable Potential (85%of Technical Potential) Not Cost- Effective Cost-Effective Achiev. Potential Program Design & Market Penetration Final Program Savings Potential Developed with Programs & Market Information Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 369 9090 Energy Trust Cost-Effectiveness Screen For RA Modeling •Energy Trust utilizes the Total Resource Cost (TRC) test to screen measures in the model for cost effectiveness •If TRC is > 1.0, it is cost-effective and the resources is included in cost-effective achievable potential •Measure Benefits: o Avoided Costs ▪Annual measure savings x NPV avoided costs per therm or kWh o Quantifiable Non-Energy Benefits ▪Water savings, etc. •Total Measure Costs: o The customer cost of installing an EE measure (full cost if retrofit, incremental over baseline if replacement) •Some gas measures are forced into the model if they have exceptions from the OPUC under the criteria established via UM 551 TRC = Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 370 9191 Energy Trust Deployment •The RA model results represent the maximum savings potential in a given year. •Ramp rates are an estimate of how much of that available potential will come off Avista’s system in a given year. •Energy Trust ramp rates are based on NWPCC methods and ramp rates, but calibrated to be specific to Energy Trust. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 371 9292 Energy Trust Final Savings Projection Methodology Years 1-2 •Program forecasts – they know what is happening short term best Years 3-5 •Planning and Programs work together to create forecast Years 6-20 •Planning forecasts long- term acquisition rate to generally align NWPCC Energy Trust calibrates the first five years of energy efficiency acquisition ramp rates to program performance and budget goals. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 372 9393 Energy Trust Ramp Rate Overview •Total RA Model cost-effective potential is different depending on the measure type. –Retrofit measure savings are 100% of all potential in every year, therefore must be distributed in a curve that adds to 100% over the forecast timeframe (bell curve) –Lost opportunity measure savings are the savings available in that year only and deployment rates are what % of that available potential rate can be achieved –results in an s-curve •Generally follows the NWPCC deployment methodology –100% cumulative penetration for retrofit measures over 20-year forecast –100% annual penetration for lost opportunity by end of 20-year forecast (program or code achieved) –Hard to reach measures or emerging technologies do not ramp to 100% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 373 9494 Energy Trust Ramp Rate Examples 0% 20% 40% 60% 80% 100% 120% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Lo s t o p p o r t u n i t y % a d o p t i o n s Re t r o f i t C u r v e % a d o p t i o n s Year Retrofit Curve Lost Opportunity Curve Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 374 9595 Avista’s OR IRP Savings Targets Influence Annual Energy Trust Savings Goals and Budgets •The savings forecasts that Avista incorporates into their IRPs is a reference point for setting annual Energy Trust savings goals and budgets •Likewise, the Energy Trust savings goals from the last budget cycle inform the early years of the next IRP forecast •This results in a cycle of iterative updates to savings projections based on the most recent market intelligence •In addition, Energy Trust’s measure development process uses the Utility Cost Test to screen measures for cost-effectiveness –This test sets an upper bound on the incentive that can be offered and this factors into the budget process Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 375 9696 Questions? Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 376 9797 2020 Natural Gas IRP schedule •TAC 1: Wednesday, June 17, 2020: TAC meeting expectations, 2020 IRP process and schedule, actions from 2018 IRP, and a Winter of 2018-2019 review. Procurement Plan and Resource Optimization benefits, Demand, Weather Analysis and a Weather Planning Standard, and an energy efficiency update. •TAC 2: Thursday, August 6, 2020:Market Analysis, Price Forecasts, Cost Of Carbon, demand forecasts and CPA results from AEG, Environmental Policies, fugitive emissions •TAC 3: Wednesday, September 30, 2020:Distribution, Avista’s current supply-side resources overview, supply side resource options, renewable resources, overview of the major interstate pipelines and projects, and sensitivities and portfolio selection modeling. •TAC 4: Wednesday, November 18, 2020:Review assumptions and action items, final modeling results, portfolio risk analysis and 2020 Action Plan. •TAC 5: February 2021:TAC final review meeting (if necessary) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 377 2021 Electric Integrated Resource Plan Technical Advisory Committee Meeting No. 2 Agenda Thursday, August 6, 2020 Virtual Meeting- 9:00 AM PST Topic Time Staff Introductions & IRP Process Updates 9:00 Lyons Natural Gas & RNG Market Overview 9:30 Pardee Break 10:45 Natural Gas Price Forecast 11:00 Brutocao Lunch 11:30 Upstream Natural Gas Emissions 12:30 Pardee Break 1:30 Regional Energy Policy Update 1:45 Lyons Natural Gas and Electric Coordinated 2:15 Gall/Pardee Study Highly Impacted & Vulnerable Populations 3:00 Gall Baseline Analysis Adjourn 3:45 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 378 2021 Electric and Natural Gas IRPs TAC Introductions and IRP Process Updates John Lyons, Ph.D. Second Technical Advisory Committee Meeting August 6, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 379 Updated Meeting Guidelines •Gas and electric IRP teams working remotely, but still available by email and phone for questions and comments •Some processes are taking longer remotely •Virtual IRP meetings until back in the office and able to hold large group meetings •TAC presentations, notes, work plans and past IRPs are posted on joint IRP page for gas and electric: https://www.myavista.com/about-us/integrated-resource- planning 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 380 Virtual TAC Meeting Reminders •Please mute mics unless speaking or asking a question •Use the Skype chat box to write questions or comments or let us know you would like to say something •Respect the pause •Please try not to speak over the presenter or a speaker who is voicing a question or thought •Remember to state your name before speaking for the note taker •This is a public advisory meeting –presentations and comments will be recorded and documented 3 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 381 Integrated Resource Planning •Required by Idaho, Oregon and Washington* every other year •Guides resource strategy over the next twenty + years •Current and projected load & resource position •Resource strategies under different future policies –Resource choices –Conservation measures and programs –Transmission and distribution integration for electric –Gas distribution planning –Gas and electric market price forecasts •Scenarios for uncertain future events and issues •Key dates for modeling and IRP development are available in the Work Plans 4 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 382 Technical Advisory Committee •The public process piece of the IRP –input on what to study, how to study, and review of assumptions and results •Wide range of participants involved in all or parts of the process –Ask questions –Help with soliciting new members •Open forum while balancing need to get through all of the topics •Welcome requests for studies or different assumptions. –Time or resources may limit the number or type of studies –Earlier study requests allow us to be more accommodating –August 1, 2020 was the electric study request deadline •Planning teams are available by email or phone for questions or comments between the TAC meetings 5 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 383 2020 Electric IRP Meetings – IPUC •AVU-E-19-01 https://puc.idaho.gov/case/Details/3633 •Telephonic public hearing on August 5, 2020 •August 19, 2020 comment deadline, September 2, 2020 response •Overview of topics discussed at July 9, 2020 virtual public workshop: –Moving away from coal –Cost impacts for Idaho customers from Washington laws –IRP procedural questions about acknowledgment of the IRP –Climate change questions and timing of actions –Colstrip: decommissioning, other owners, cost sharing with Washington –Consideration of social costs/externalities and public health –Support for clean energy and Commission authority to require it –Resource timing –Risks considered in the IRP: economic, qualitative and climate –Idaho versus Montana wind locations –Maintaining Idaho RECs –Climate change law applicability and lawsuits6Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 384 2021 Natural Gas IRP TAC Schedule •TAC 1: Wednesday, June 17, 2020 •TAC 2: Thursday, August 6, 2020 (Joint with Electric TAC) •TAC 3: Wednesday, September 30, 2020 •TAC 4: Wednesday, November 18, 2020 •TAC 5: February 2021 –TAC final review meeting if necessary •Natural Gas TAC agendas, presentations and meeting minutes available at: https://myavista.com/about-us/integrated-resource- planning 7 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 385 2021 Electric IRP TAC Schedule •TAC 1: Thursday, June 18, 2020 •TAC 2: Thursday, August 6, 2020 (Joint with Natural Gas TAC) •Economic and Load Forecast, August 2020 •TAC 3: Tuesday, September 29, 2020 •TAC 4: Tuesday, November 17, 2020 •TAC 5: Thursday, January 21, 2021 •Public Outreach Meeting: February 2021 •TAC agendas, presentations and meeting minutes available at: https://myavista.com/about-us/integrated-resource-planning 8 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 386 Process Updates Economic and load forecast delay •Special meeting 1:00 –3:30 pm PST on Tuesday, August 18 or Wednesday, August 19, 2020 to cover the forecasts AEG Conservation Potential Assessment and Demand Response Studies –delayed from TAC 2 •AEG has developed baseline assumptions, market profiles and energy/gas use per customer •Market data has been collected and compiled •Measure Assumption development is complete •Compiled 2021 Power Plan Assumptions •Measure List is in-process and is expected to be available mid- September •CPA discussion with TAC –September TAC meeting. 9 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 387 Today’s TAC Agenda 9:00 –Introductions & IRP Process Updates, Lyons 9:30 –Natural Gas & RNG Market Overview, Pardee 10:45 –Break 11:00 –Natural Gas Price Forecast, Brutocao 11:30 –Lunch 12:30 –Upstream Natural Gas Emissions, Pardee 1:30 –Break 1:45 –Regional Energy Policy Update, Lyons 2:15 –Natural Gas and Electric Coordinated Study, Gall/Pardee 3:00 –Highly Impacted & Vulnerable Populations Baseline Analysis, Gall 3:45 –Adjourn 10 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 388 Natural Gas Market Overview Tom Pardee, Natural Gas Planning Manager Second Technical Advisory Committee Meeting August 6, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 389 Units Common Gas Units 1 Bcf 1 Dth 1 Therm kWh 302,062,888 293.001 29.300 MWh 302,063 0.293 0.029 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 390 Avista Electric Territory Avista Natural Gas Territory Station 2 AECO Sumas Malin Electric Power Plants Northwest Pipeline Gas Transmission NetworkKingsgate Receipt Point Jackson Prairie Storage (LDC Owned) Stanfield NGTL System (Production and Gathering Systems) 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 391 Avista’s Supply •Natural Gas LDC Side –10% contracted from US supply basins –90% contracted from Canadian supply basins •Electric Side –100% contracted from Canadian supply basins 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 392 US Demand 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 % o f D e m a n d % US Gas Demand Residential Commercial Industrial Power LNG Exports Net Mexican Exports Transport Other 0 20 40 60 80 100 120 140 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 bc f d US Gas Demand Residential Commercial Industrial Power LNG Exports Net Mexican Exports Transport Other Source: Wood Mackenzie2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 393 US Supply 0 20 40 60 80 100 120 140 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 bc f d US Gas Supply Production Canadian Net Imports LNG Imports 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% bc f d Rockies San Juan Gulf Coast Gulf of Mexico Permian Fort Worth Northeast West Coast Alaska Mid-Continent Source: Wood Mackenzie2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 394 Canadian Supply and Demand 0 5 10 15 20 25 30 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 bc f d Canadian Gas Demand Residential Commercial Industrial Power LNG Exports Piped exports Transport Other 88% 90% 92% 94% 96% 98% 100% 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 bc f d Canadian Supply WCSB Eastern Canada Source: Wood Mackenzie2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 395 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 396 - 5 10 15 20 25 30 35 Bc f pe r D a y North American LNG Exports Cove Point Elba Island Sabine Pass Cameron Freeport Corpus Christi Golden Pass Calcasieu Pass Kenai Woodfibre LNG LNG ELA Generic LNG ETX Generic LNG WLA Generic Costa Azul LNG Canada LNG Western Canada Generic9 *WM does not assume Jordan Cove will enter service within forecasted period Source: Wood Mackenzie Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 397 West 2020 H1 Census Region Map Note: Pacific does not include Alaska or Hawaii - 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 Bc f pe r D a y Total Demand by Census Region Mountain Pacific Source: Wood Mackenzie2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 398 - 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 Bc f p e r D a y Transport Mountain Pacific - 0.50 1.00 1.50 2.00 2.50 3.00 Bc f pe r D a y Power Generation Mountain Pacific Power Generation and Transport demand Source: Wood Mackenzie2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 399 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 Bc f p e r D a y Residential Pacific Mountain - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Bc f p e r D a y Industrial Pacific Mountain West demand of Res-Com-Ind - 0.20 0.40 0.60 0.80 1.00 1.20 Bc f p e r D a y Commercial Pacific Mountain Port of Kalama –NW Innovation Works Source: Wood Mackenzie Source: Wood Mackenzie 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 400 Wood Mackenzie Disclaimer •The foregoing [chart/graph/table/information] was obtained from the [North America Gas Service]™, a product of Wood Mackenzie.” •Any information disclosed pursuant to this agreement shall further include the following disclaimer: "The data and information provided by Wood Mackenzie should not be interpreted as advice and •you should not rely on it for any purpose. You may not copy or use this data and information except as expressly permitted by Wood Mackenzie in writing. To the fullest extent permitted by law, •Wood Mackenzie accepts no responsibility for your use of this data and information except as specified in a written agreement you have entered into with Wood Mackenzie for the provision of such of such data and information 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 401 Us Natural Gas Storage 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 402 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 # o f R i g s US Rig Count History Oil Gas Misc15 0 100 200 300 400 500 600 700 # o f R i g s Canadian Rig Count History OIL GAS MISC Rig Counts Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 403 Production and Drilling efficiency 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 404 Historic Cash prices (Jan. 1997 –July 2020) $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $ p e r M M B t u 17Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 405 Upstream Emissions Tom Pardee Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 406 Upstream Emissions •Use based greenhouse gas emissions at the point of combustion and include upstream methane emissions •Link for Natural Gas Advisory Committee information on upstream methane: https://www.nwcouncil.org/energy/energy-advisory- committees/natural-gas-advisory-committee 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 407 Global warming potential (GWP) factors for conversion to CO2 equivalents (CO2e) 5th Assessment of the Intergovernmental Panel on Climate Change Greenhouse Gas GWP –100 Year GWP –20 Year CO2 1 1 CH4 34 86 N2O 298 268 https://www.c2es.org/content/ipcc-fifth-assessment-report/ Global Warming Potential 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 408 Upstream Emissions Sources and Estimates •Rockies emissions –The EPA estimates all leakage through a bottoms up analysis. It will estimate leaks based on equipment operated as designed and combines these values to determine an overall rate of 1%. The emissions and sinks study is published yearly and will capture emissions as they change. •Canadian emissions (British Columbia and Alberta) –A value of 0.77% was developed from data pertaining to the recent environmental impact studies for the PSE Tacoma LNG plant, Kalama Manufacturing and Export Facility and the 2019 Puget Sound Energy IRP. 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 409 WSU Natural Gas Methane Study •Sponsored by EDF and utilities to estimate the leakage of distribution systems •National project and estimated a loss of 0.1 –0.2 percent of the methane delivered nationwide •Western region contributes much less as compared to the East •“Out of 230 measurements, three large leaks accounted for 50%of the total measured emissions from pipeline leaks. In these types of emission studies, a few leaks accounting for a large fraction of total emissions are not unusual.” 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 410 LDC Upstream Emissions *Avista gas purchases An average of the total volume purchased over the past 5 years by emissions location2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 411 Electric Upstream Emissions *Avista Purchases All firm transportation to supply gas is located in Canada2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 412 Renewable Natural Gas (RNG) 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 413 What is Renewable Natural Gas (RNG)? Renewable Natural Gas = Natural Gas 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 414 Why does RNG matter? Climate Change Solution •Natural gas plays critical role for meeting aggressive green house gas (GHG) reductions goals, RNG even more so! •Utilizes existing infrastructure •Advantages of RNG –“De-carbonizes” gas stream –Gives customers another renewable choice 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 415 Carbon Intensity 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 416 RFS and LCFS Effect on RNG Value RIN = renewable identification number Source: CARB Source: EPA2Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 417 What are the challenges & barriers? •California RNG market ($30+/Dth v. $2/Dth) –Vehicle emission incentives shut-out other potential end users –Producers see the pot of gold in California •Financing for producers –RIN market is volatile –No forward pricing for RNG RINs in carbon market –Vehicle market may be approaching saturation in CA –Producer/LDC partnerships may make sense 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 418 WA RNG Report (HB 2580) *Released December 1, 2018 WSU Energy Program, Harnessing Renewable Natural Gas for Low-Carbon Fuel: A Roadmap for Washington State 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Cedar Hills Landfill (King County) Roosevelt Landfill (Republic Services) Klickitat County PUD South Treatment Plant (King County) Puget Sound Energy Landfills Wastewater treatment plants Dairy digesters Municipal food waste digesters Food processing residuals Food processed at compost facilities Landfills Wastewater treatment plants Dairy digesters Municipal food waste digesters Dth Existing Projects Near Term Projects Medium Term Projects 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 419 Total Potential Annual Production = 32 Bcf ID RNG NREL Estimates Source -Anaerobic MMBtu per Year Landfills 3,712,221 6,196,531 20,220,571 -Separated Organics (Solid Waste)2,311,354 Total 32,440,676 National Renewable Energy Laboratory, NREL Biofuels Atlas 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 420 RNG $ per Dth/MMBtu Source: Promoting RNG in WA State Avista Owned and Operated ID -WA 2035 Premium Estimate ($ / Dth) RNG -Landfills $7 -$10 RNG -Waste Water Treatment Plants (WWTP)$12 -$22 RNG -Agriculture Manure $28 -$53 RNG -Food Waste $29 -$53 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 421 Natural Gas IRP A detailed level of RNG understanding and evaluation process will be included in the Natural Gas IRP TAC #3 meeting on September 30, 2020 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 422 Natural Gas Price Forecast Michael Brutocao, Natural Gas Analyst Second Technical Advisory Committee Meeting August 6, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 423 Henry Hub Expected Price Methodology •Expected Henry Hub prices derived from a blend of forward market prices on the NYMEX (as of 6/30/2020) and forecasted prices from the 2020 Annual Energy Outlook (EIA) and two consultants 2020 – 2022 2023 2024 2025 2026 – 2045 NYMEX 100%75%50%25%- EIA/AEO -8.33%16.66%25%33.33% Consultant 1 -8.33%16.66%25%33.33% Consultant 2 -8.33%16.66%25%33.33% 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 424 Henry Hub Expected Price and Forecast Blending 3 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 425 Henry Hub Expected Price and Average Annual Forecasts 4 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 426 Stochastic Price Forecasting Methodology •Evaluate a set of potential future outcomes based on the probability of occurrence –Expected Price used as the input –At each period, random price adjustments follow a lognormal distribution based on the Expected Price •It is common practice to use lognormal distributions in forecasting prices as they have no upward bound and should not fall below zero •A single “draw” contains a set of unique price movements •500 (electric) and 1000 (gas) draws were evaluated 5 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 427 Sample Stochastic Price Draws 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 428 Stochastic Price Draws 7 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 429 Stochastic Prices (Results from 500 Draws) 8 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 430 Levelized Stochastic Prices (Results from 500 Draws) 9 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 431 Stochastic Prices (Results from 1000 Draws) 10 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 432 Levelized Stochastic Prices (Results from 1000 Draws) 11 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 433 Prices by Gas Hub (Henry Hub Expected Price + Basis) 12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 434 Levelized Prices 2022-2041 13 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 435 Levelized Prices 2022-2045 14 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 436 2021 Electric IRP Regional Energy Policy Update John Lyons, Ph.D. Second Technical Advisory Committee Meeting August 6, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 437 Production and Investment Tax Credits •Production tax credit $15/MWh adjusted for inflation ($25/MWh for 2019) for 10 years for wind construction started by 12/31/20 •Investment tax credit for new solar construction drops from 30% in 2019 –26% in 2020 –22% in 2021 –10% from 2022 onward •Will be watching for any possible extensions with all of the COVID-19 proposals 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 438 State and Provincial Policies State/Province No Coal RPS Clean Energy/Carbon Goal Alberta Yes Yes Yes Arizona No Yes No British Columbia Yes Yes Yes California Yes Yes Yes Colorado No Yes Yes Idaho No No No Montana No Yes No Nevada No Yes Goal New Mexico No Yes No Oregon Yes Yes Yes Utah No Goal No Washington Yes Yes Yes Wyoming No No No 3 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 439 Washington •Clean Energy Transformation Act (CETA) SB 5116: –No coal serving Washington customers by end of 2025 –Greenhouse gas neutral by 2030, up to 20% alternative compliance –2% cost cap over four-year compliance period –100% non-emitting by January 1, 2045 –Social cost of carbon for new resources –Additional reporting and planning requirements –Highly impacted and vulnerable community identification and resource planning implications –Ongoing rulemaking in various stages for planning and reporting 4 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 440 Washington •HB 1257: Clean Buildings for Washington Act –Develop energy performance standards for commercial buildings over 50,000 square feet (2020 –2028) “… to maximize reductions of greenhouse gas emissions from the building sector” –By 2022, natural gas utilities must identify and acquire all available cost- effective conservation including a social cost of carbon at the 2.5% discount rate.(Section 11 and 15) –Natural gas utilities may propose renewable natural gas (RNG) programs for their customers and offer a voluntary RNG tariff –Building code updates to improve efficiency and develop electric vehicle charging infrastructure 5 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 441 Oregon Executive Order 20-04 •New GHG reduction goal –45% below 1990 levels by 2035 –80% below 1990 levels by 2050 •Directs 16 Oregon agencies to “exercise any and all authority and discretion” to reach GHG reduction goals and “prioritize and expedite” action on GHG reductions “to the full extent allowed by law.” •Agencies are working on rulemaking and implementation SB 98 •Development of utility renewable natural gas programs 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 442 2021 Electric and Natural Gas IRPs Natural Gas & Electric Coordinated Scenario James Gall/Tom Pardee Second Technical Advisory Committee Meeting August 6, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 443 Scenario Goal •Understand impact to electric resource planning if customers switch from natural gas to electric service •Scenario Proposal: –By 2030: 50% of Washington Residential & Commercial customers –By 2045: 80% of Washington Residential & Commercial customers •Potential Scenarios: –Hybrid natural gas/electric heat pumps –Highly efficient technology allows for cold temperature space heating 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 444 Converting Natural Gas Load to Electric Load Natural Gas (therms)TemperatureEnd Use Efficiency Electric Service Provider Electric (kWh) 3 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 445 WA Res/Com Natural Gas Load Forecast 4 MD t h Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 446 Customer Penetration Forecast 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 20 2 0 20 2 0 20 2 1 20 2 1 20 2 2 20 2 2 20 2 3 20 2 3 20 2 4 20 2 4 20 2 5 20 2 5 20 2 6 20 2 6 20 2 7 20 2 7 20 2 8 20 2 8 20 2 9 20 2 9 20 3 0 20 3 0 20 3 1 20 3 1 20 3 2 20 3 2 20 3 3 20 3 3 20 3 4 20 3 4 20 3 5 20 3 5 20 3 6 20 3 6 20 3 7 20 3 7 20 3 8 20 3 8 20 3 9 20 3 9 20 4 0 20 4 0 20 4 1 20 4 1 20 4 2 20 4 2 20 4 3 20 4 3 20 4 4 20 4 4 20 4 5 20 4 5 % Natural Gas Customer Reduction (WA Only) 5 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 447 End Use Efficiency 0% 20% 40% 60% 80% 100% 120% 140% 160% Water Heat Space Heat Process Efficiency @ 5 Degrees 0% 20% 40% 60% 80% 100% 120% 140% 160% Water Heat Space Heat Process Efficiency @ 35 Degrees Water Heat, 10.0% Space Heat, 85.0% Process, 5.0% Water Heat, 30.0% Space Heat, 60.0% Process, 10.0% Note: All efficiency conversion use a 10% efficiency benefit to electric 6 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 448 Energy Conversion Factor y = -3E-06x4 + 0.0007x3 -0.0438x2 -0.7097x + 259.49 R² = 0.9775 0 50 100 150 200 250 300 -20 0 20 40 60 80 100 Use temperature point estimates for conversion efficiency Curve fit to smooth out steps 7 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 449 WA Res/Com Natural Gas Load Forecast 8 MD t h Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 450 Electric Peak Estimation Methodology •Natural gas is typically daily nominations, while electric is instantaneous. –Hourly flow metering is available for some areas •Sampled large gate-station hourly instantaneous natural gas flow data •Use sample data to estimate hourly natural gas load from 2015-2019 •Estimate Peak-to-Energy load factor for each historical month •Use average monthly load factor for the peak adjustment 9 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 451 Estimated Load Factors (2015-19) 10 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 452 Hourly Electric Load History - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Me g a w a t t s 2015-2019 Control Area Load + WA LDC as Electric CA Load + NG Control Area Load 11 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 453 Eastern Washington Electric Service Providers EIA reported retail sales for 2018 Scenario assumes Avista will receive 75 percent of electric conversions 12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 454 Annual Conversion Load Forecast - 100 200 300 400 500 600 700 800 900 1,000 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Annual Avg Peak 13 2020 IRP Forecast for 2030 absent fuel conversion: Peak: 1,762 MW Energy: 1,209 aMWAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 455 2030 Monthly Load Forecast - 50 100 150 200 250 300 350 400 450 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Energy Peak 14 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 456 Scenario Analysis-Conversion Rates 0 50 100 150 200 250 300 -20 0 20 40 60 80 100 Current Technology Hybrid Future High Efficiency Future 15 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 457 Scenario Analysis- Electric Energy 16 Av e r a g e M e g a w a t t s Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 458 Scenario Analysis: Electric December Peak Load 17 Me g a w a t t s Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 459 Scenario Analysis: Natural Gas Demand 18 MD t h Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 460 Next Steps •Input into PRiSM model to determine resource selection and cost –Estimate cost meeting CETA requirements –Estimate cost using least cost methodology –Estimate emissions savings –Estimate $/tonne •Conduct electric resource adequacy study if time permits 19 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 461 2021 Electric IRP Washington Vulnerable Populations & Highly Impacted Communities James Gall, IRP Manager Second Technical Advisory Committee Meeting August 6, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 462 Identifying Communities or “Customers” Highly Impacted Communities –Cumulative Impact Analysis –Tribal lands •Spokane •Colville –Locations should be available by end of 2020 •State held workshops in August & September 2019 Vulnerable Populations –Use Washington State Health Disparities map •What is disproportionate on a scale of 1 to 10? •Avista proposes areas with a score 8 or higher in either Socioeconomic factors or Sensitive population metrics –Should we include other metrics to identify these communities? 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 463 Environmental Health Disparities Map https://fortress.wa.gov/doh/wtn/wtnibl/ Department of Health data is divided up by Federal Information Processing Standards (FIPS) Code 3 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 464 Environmental Health Scoring From WA Department of Health Circle areas match definition of vulnerable population, although access to food & health care, higher rates of hospitalization are not expressively included but are an indication of poverty 4 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 465 Selected Vulnerable Populations 5 Data is shown by combined score “Large” Resource Legend Natural Gas Biomass Hydro Wind Solar Kettle Falls CT Kettle Falls Little Falls Long Lake Nine Mile Palouse Rattlesnake Flat Adams Neilson Northeast Boulder ParkMonroe St Upper Falls Post Falls Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 466 Spokane Area “Avista” Vulnerable Populations 6 Data is shown by combined score Resource Legend Natural Gas Biomass/Other Hydro Wind Solar Waste-to-Energy (QF) Upriver (QF)Boulder Park BP Community Solar Northeast Monroe Street Upper Falls Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 467 IRP Metrics (From Last TAC Meeting) Metric IRP Relationship Energy Usage per Customer •Expected change taking into account selected energy efficiency then compare to remaining population. •EE includes low income programs and TRC based analysis which includes non-economic benefits. Cost per Customer •Estimate cost per customer then compare to remaining population. •How do IRP results compare to above 6% of income? Preference •Should the IRP have a monetary preference? •For example-should all customers pay more to locate assets (or programs) in areas with vulnerable populations or highly impacted communities? •If so, how much more? 7 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 468 IRP Metrics (From Last TAC Meeting) Metric IRP Relationship Reliability •SAIFI: System Average Interruption Frequency Index •MAIFI: Momentary Average Interruption Frequency Index •Calculate baseline for each distribution feeder and match with communities •Estimate benefits for area with potential IRP distribution projects •Compare to other communities as baseline •May be more appropriate in Distribution plan rather than IRP Resiliency: •SAIDI: System Average Interruption Duration Index •CAIDI: Customer Average Interruption Duration Index •CELID: Customer’s Experiencing Long Duration Outages Resource Analysis •Estimate emissions (NOX,SO2, PM2.5, Hg) from power projects located in/near identified communities •Identify new resource or infrastructure project candidates with benefit to communities; i.e. economic benefit, reliability benefit •Identify how resource can benefit energy security 8 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 469 Energy Use Analysis Results •Uses five years of customer billing data •Median income over the same period is used to estimate affordability •Separated electric only vs electric/gas customers –Future enhancement include single/multi family homes, and manufactured homes 9 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 470 Energy/Cost Analysis Electric Only Customers Natural Gas/Electric Customers Note: Combined natural gas/electric homes have higher energy burden due to fewer multifamily homes included in the population or all electric home including homes with alternative heat such as wood, propane, oil, pellets. Future analysis needed to validate this hypothesis.10 Area Fuel Type Energy Use Avg Bill Income % Income Vulnerable Population Areas Electric 820 KWh $80 Other Areas Electric 875 KWh $84 Vulnerable Population Areas Gas 52 Therms $47 $44,889 3.4% Other Areas Gas 62 Therms $56 $68,250 2.5% Area Fuel Type Energy Use Avg Bill Income % Income Vulnerable Population Areas Electric 998 KWh $98 $42,730 2.8% Other Areas Electric 1,010 KWh $100 $58,834 2.0% Note: Mean energy use is statistically significantly different when removing energy use data below 100 kWh per month (1,049 kWh vs 1,082 kWh) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 471 Vulnerable Populations Electric Only Customers-Energy % of Income 11 Spokane Area Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 472 Vulnerable Populations Gas/Electric Only Customers-Energy % of Income 12 Spokane Area Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 473 Reliability Data- CAIDI Measure of resilience-minutes of outages per event Excludes Major Event Days (MED) 13 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 474 Reliability Data-CEMI Measure of reliability-Events per Customer 14 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 475 Vulnerable Area vs Non Vulnerable Areas Vulnerable Areas Non-Vulnerable Areas CAIDI CEMI 15 Note: 5 yr Average differences are statistically significantly differentAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 476 CAIDI- By Feeder Type Note: Avista has no vulnerable areas with urban feeders 16 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 477 CEMI- By Feeder Type Mixed Feeders Vulnerable Areas Non-Vulnerable Areas Rural Feeders Vulnerable Areas Non-Vulnerable Areas Note: Avista has no vulnerable areas with urban feeders 17 0.0 1.0 2.0 3.0 4.0 5.0 2015 2016 2017 2018 2019 5 yr Avg Ev e n t s Suburban Feeders Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 478 Avista’s Washington Power Plant Air Emissions - 0.5 1.0 1.5 2.0 2.5 3.0 2015 2016 2017 2018 2019 Washington NOx Emissions - 0.005 0.010 0.015 0.020 0.025 0.030 2015 2016 2017 2018 2019 Washington SO2 Emissions - 0.00001 0.00001 0.00002 0.00002 0.00003 0.00003 0.00004 0.00004 0.00005 0.00005 2015 2016 2017 2018 2019 Washington Hg Emissions - 0.050 0.100 0.150 0.200 0.250 0.300 2015 2016 2017 2018 2019 Washington VOC Emissions 18 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 479 TAC Input •What other metrics can we provide in an IRP to show vulnerable populations and highly impacted communities are not harmed by the transition to clean energy 19 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 480 Economic, Load, and Customer Forecasts Grant D. Forsyth, Ph.D. Chief Economist Technical Advisory Committee Meeting August 18, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 481 Main Topic Areas •Service Area Economy •Long-run Energy Forecast •Peak Load Forecast •Long-run Gas Customer Forecast 2 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 482 Service Area Economy Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 3 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 483 Distribution of Employment, 2019 Source: BLS and author’s calculations.4 Private Goods 14% Private Services 70% Government 16% Avista WA-ID-OR MSA Private Goods 14% Private Services 71% Government 15% U.S. Federal 11% State 20% Local 69% Avista WA-ID-OR MSA Government Federal 12% State 23% Local 65% U.S. Government Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 484 Non-Farm Employment Growth, 2009-2020 Source: BLS, WA ESD, OR ED and author’s calculations.5 -16% -14% -12% -10% -8% -6% -4% -2% 0% 2% 4% De c - 0 7 Ap r - 0 8 Au g - 0 8 De c - 0 8 Ap r - 0 9 Au g - 0 9 De c - 0 9 Ap r - 1 0 Au g - 1 0 De c - 1 0 Ap r - 1 1 Au g - 1 1 De c - 1 1 Ap r - 1 2 Au g - 1 2 De c - 1 2 Ap r - 1 3 Au g - 1 3 De c - 1 3 Ap r - 1 4 Au g - 1 4 De c - 1 4 Ap r - 1 5 Au g - 1 5 De c - 1 5 Ap r - 1 6 Au g - 1 6 De c - 1 6 Ap r - 1 7 Au g - 1 7 De c - 1 7 Ap r - 1 8 Au g - 1 8 De c - 1 8 Ap r - 1 9 Au g - 1 9 De c - 1 9 Ap r - 2 0 Ye a r -ov e r -Ye a r , S a m e M o n t h S e a s o n a l l y A d j . Non-Farm Employment Growth (Dashed Shaded Box = Recession Period) Avista WA-ID-OR MSAs U.S. Service Area employment level same as 2013/14 period. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 485 MSA Population Growth, 2007-2019 Source: BEA, U.S. Census, and author’s calculations.6 1.6% 1.2% 0.9% 0.7% 0.5%0.4% 0.7% 1.0% 1.2% 1.6%1.6% 1.5%1.5% 1.0%0.9%0.9%0.8% 0.7%0.7%0.7%0.7%0.7%0.7%0.6%0.5%0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 An n u a l G r o w t h Population Growth in Avista WA-ID-OR MSAs Total WA-ID-OR MSA Pop. Growth U.S. Growth 2008-2012: Employment Growth Slowing = Slowing In-migration 2013-2019: Employment Growth Increasing = Increasing In-migration Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 486 GDP Growth Assumptions: 2021 IRP vs. 2020 IRP 7 Source: Various and author’s calculations. -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 2020 2021 2022 2023 2024 2025 An n u a l G r o w t h Average June 2019 Forecast Current Forecast Average Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 487 Long-Term Energy Load Forecast Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 8 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 488 Basic Forecast Approach 2020 Time 2025 20452026 1)Monthly econometric model by schedule for each class. 2)Customer and UPC forecasts. 3)20-year moving average for “normal weather.” 4)Economic drivers: GDP, industrial production, employment growth, population, price, natural gas penetration, and ARIMA error correction. 5)Native load (energy) forecast derived from retail load forecast. 6)Current forecast is the “Summer/Fall Forecast” done in June. 1)Boot strap off medium term forecast. 2)Apply long-run load growth relationships to develop simulation model for high/low scenarios. 3)Include different scenarios for renewable penetration with controls for price elasticity, EV/PHEVs, and natural gas penetration. Medium Term Long Term 9 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 489 The Long-Term Relationship, 2021-2045 Load = Customers Χ Use Per Customer (UPC) Load Growth ≈ Customer Growth + UPC Growth Assumed to be same as population growth for residential after 2025, commercial growth will follow residential, and slow decline in industrial. Assumed to be a function of multiple factors including renewable penetration, gas penetration, and EVs/PHEVs. 10 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 490 Residential Customer Growth, 2020-2045 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% 1.20% 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Annual Residential Customer Growth Rates 2021 IRP Residential Customer Growth 2020 IRP Residential Customer Growth Medium Term Long Term Average annual growth rate from 2021-2045 = 0.8%. Shape of time-path mimics a combination of IHS (ID) and OFM (WA) population forecasts. 11 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 491 Residential Solar Penetration, 2008-2019 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 305,000 310,000 315,000 320,000 325,000 330,000 335,000 340,000 345,000 350,000 Sh a r e o f R e s i d e n t i a l S o l a r C u s t o m e r s t o T o t a l R e s i d e n t i a l Cu s t o m e r s Customers Customer Penetration vs. Customers Since 2008 12 2014 2015 2016 2017 2018 2008 2019 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 492 Residential Solar Penetration, 2021-2045 0 2,000 4,000 6,000 8,000 10,000 12,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 To t a l P V C u s t o m e r s Projected Base-Line Residental Solar Customers 2021 IRP Base-Line Residential Solar Customers 2020 IRP Base-Line Residential Solar Customers13 Current penetration is 0.3% and typical size is 7,800 watts. By 2045, penetration will be near 2.6% of residential customers and average size of installed systems will be over 10,000 watts. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 493 Residential EVs/PHEVs, 2021-2045 0 20,000 40,000 60,000 80,000 100,000 120,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 To t a l E V s / P H E V s Projected Residental EVs/PHEVs 2020 IRP Projected EV/PHEV 2021 IRP Projected EV/PHEV 2020 ≈ 2,000 14 2045 ≈ 107,000 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 494 Net Solar and EV/PHEV Impact, 2021-2045 -5 0 5 10 15 20 25 30 35 40 45 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Av e r a g e M e g a w a t t s Average Megawatt Impact of Solar and EV/PHEV 2021 IRP Solar aMW (Load Reduction)2021 IRP EV/PHEV aMW (Load Addition)2021 Net IRP Solar and EV/PHEV Impacts aMW15 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 495 Native Load Forecast, 2021-2045 1,000 1,050 1,100 1,150 1,200 1,250 1,300 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Av e r a g e M e g a w a t t s Total Native Load Forecast, Average Megawatts 2021 IRP Base-Line Native Load 2020 IRP Base-Line Native Load EV/PHEV “Bend” IRP Avg. Annual Growth 2020 IRP 0.3% 2021 IRP 0.3% Medium Term Long Term 16 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 496 Climate Change: A Trended 20-year Moving Average (Preliminary!) 17 5,000 5,500 6,000 6,500 7,000 7,500 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017 2021 2025 2029 2033 2037 2041 2045 HD D 20-yr MA HDD Annual 20-yr MA, Avista Trend Annual 20-yr MA, NWCC Trend Current 20-yr MA 0 100 200 300 400 500 600 700 800 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017 2021 2025 2029 2033 2037 2041 2045 CD D 20-yr MA CDD Annual 20-yr MA, Avista Trend Annual 20-yr MA, NWCC Trend Current 20-yr MA Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 497 Annual Native Load Forecast with Climate Change, 2026-2045 (Preliminary!) 1,090 1,100 1,110 1,120 1,130 1,140 1,150 1,160 1,170 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Av e r a g e M e g a w a t t s 2021 IRP Base-Line Native Load 2021 IRP Base-Line Native Load, Avista Trend 2021 IRP Base-Line Native Load, NWCC Trend18 IRP Avg. Annual Growth 2021 IRP, No Trend Base-Line 0.23% 2021 IRP, NWCC Trend 0.13% 2021 IRP, Avista Trend 0.21% 0.3% Lower than Non-Trend Base- Line 2% Lower than Non-Trend Base- Line Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 498 Native Load Growth Forecast, 2021-2045 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 An n u a l G r o w t h Native Load Growth 2021 IRP Base-Line Native Load Growth 2020 IRP Base-Line Native Load Growth19 EV/PHEV “Bend” Load Recovery from Recession Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 499 Residential UPC Growth: 2021-2045 20 -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Base-Line Scenario: Residential UPC Growth Rate EIA Refrence Case Use Per Household Growth 2021 IRP Residential Base-Line UPC Growth Source Avg. Annual Growth 2021 IRP -0.24% EIA 0.03% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 500 Long-Run Load Forecast: Conservation Adjustment Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 21 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 501 Comparison of Native Load Forecasts, 2021-2045 900 1,000 1,100 1,200 1,300 1,400 1,500 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Av e r a g e M e g a w a t t s Average Megawatts Load Comparision with Conservation Adjustment Base-Line Native Load Base-Line Native Load with Conservation Added Back 22 Source Avg. Annual Growth 2021 IRP 0.3% No Conservation 1.0% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 502 Peak Load Forecast Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 23 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 503 The Basic Model •Monthly time-series regression model that initially excludes certain industrial loads and EVs (but those are added back in for the final forecast). •Based on monthly peak MW loads since 2004. The peak is pulled from hourly load data for each day for each month. •Explanatory variables include HDD-CDD and monthly and day-of-week dummy variables. The level of real U.S. GDP is the primary economic driver in the model—the higher GDP, the higher peak loads. Model allows GDP impact to differ between winter and summer. •The coefficients of the model are used to generate a distribution of peak loads by month based on historical max/min temperatures since 1890, holding GDP constant. A starting expected peak load is then calculated using the average peak load simulated for that month going back to 1890. Model shows Avista is a winter peaking utility for the forecast period; however, the summer peak is growing at a faster than the winter peak. •For comparison in the 2021 IRP, peak load is also calculated by averaging simulated peak loads over the last 30 years and 20 years. •The model is also used to calculate the long-run growth rate of peak loads for summer and winter using a forecast of GDP growth under the “ceteris paribus” assumption for weather and other factors. 24 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 504 Peak Forecasts for Winter and Summer, 2021-2045 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 19 9 7 19 9 9 20 0 1 20 0 3 20 0 5 20 0 7 20 0 9 20 1 1 20 1 3 20 1 5 20 1 7 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Me g a w a t t s Winter Peak Summer Peak Peak Avg. Growth 2021-45 Winter 0.37% Summer 0.44% 25 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 505 Load Forecasts for Winter Peak, 2011-2043 1,500 1,750 2,000 2,250 2,500 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Me g a w a t t s Winter Peak Forecast: Current and Past 2009 IRP 2011 IRP 2013 IRP 2015 IRP 2017 IRP 2020 IRP 2021 IRP 26 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 506 Load Forecasts for Summer Peak, 2011-2045 1,500 1,750 2,000 2,250 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Me g a w a t t s Summer Peak Forecast: Current and Past 2009 IRP 2011 IRP 2013 IRP 2015 IRP 2017 IRP 2020 IRP 2021 IRP27 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 507 Peak Forecasts for Winter and Summer 30-Year Average Weather, 2021-2045 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 19 9 7 19 9 9 20 0 1 20 0 3 20 0 5 20 0 7 20 0 9 20 1 1 20 1 3 20 1 5 20 1 7 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Me g a w a t t s Winter Peak Summer Peak28 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 508 Peak Forecasts for Winter and Summer 20-Year Average Weather, 2021-2045 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 19 9 7 19 9 9 20 0 1 20 0 3 20 0 5 20 0 7 20 0 9 20 1 1 20 1 3 20 1 5 20 1 7 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Me g a w a t t s Winter Peak Summer Peak29 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 509 Long-Run Customer Forecast: Natural Gas Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 30 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 510 Firm Customers (Meters) by State and Class, 2019 31 WA 47% ID 24% OR 29% Firm Customers by State Residential 90% Commercial 10% Industrial 0.1% Firm Customers by Class Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 511 System All Types of Industrial Customers, 1997-2020 200 210 220 230 240 250 260 270 280 290 300 0 5 10 15 20 25 30 35 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 E s t WA -ID F i r m I n d u s t r i a l OR F i r m I n d u s t r i a l OR Firm Industrial WA-ID Firm Industrial32 291 31 216 24 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 512 Customer Forecast Models •Forecast models are structured around each schedule, in each class, by jurisdiction. In the case of OR, this is done individually for each of Avista’s service islands. •Time series transfer function models (models with regressions drivers and ARIMA error terms). •Simple time series smoothing models (for schedules with little customer variation). •Same models used for the bi-annual revenue model forecast pushed out to 2045. The forecasts for this IRP were generated from the “Summer/Fall 2020” forecast completed in June. •Customer forecasts are sent to Gas Supply for inclusion in the SENDOUT model. •Example of transfer function model: WA sch. 101 residential customers… 33 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 513 Transfer Function Model Example 34 𝐶𝑡,𝑦,𝑊𝐴101.𝑟=𝛼0 +𝜏𝑃𝑂𝑃𝑡,𝑦,𝑆𝑃𝐾+𝝎𝑺𝑫𝑫𝒕,𝒚+𝜔𝑂𝐿𝐷𝑂𝑐𝑡2015=1 +𝜔𝑂𝐿𝐷𝐹𝑒𝑏2016=1 +𝜔𝑂𝐿𝐷𝑀𝑎𝑟2018=1 +𝜔𝑂𝐿𝐷𝑁𝑜𝑣2018=1 +𝐴𝑅𝐼𝑀𝐴𝜖𝑡,𝑦12,1,0 0,0,0 12 Monthly Customer (Meter Count) Monthly Interpolated Population for Spokane MSA Seasonal Dummies Outlier Dummies (Interventions) Error Correction Component Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 514 Getting to Population as a Driver, 2020-2025 & 2026-2045 Average GDP Growth Forecasts: •WSJ, FOMC, Bloomberg, etc. •Average forecasts out 5 full calendar years. Non-farm Employment Growth Model: •Model links year y, y-1, and y-2 GDP growth to year y regional employment growth. •Forecast out 5 full calendar years. •Averaged with IHS employment growth forecasts. Regional Population Growth Models: •Model links regional, U.S., and CA year y-1 employment growth to year y county population growth. •Forecast out 5 full calendar years for Spokane, WA; Kootenai, ID; and Jackson+Josephine, OR. •Averaged with IHS growth forecasts. •Growth rates used to generate population forecasts for use in regression models—important driver for main residential and commercial schedules. EMPGDP 2020-2025 For Spokane, WA; Kootenai, ID, and Jackson+Josephine, OR OR Douglas, Klamath, and Union counties: IHS population growth forecasts for 2020-2045 Kootenai and Jackson: IHS population growth forecasts for 2026-2045 Spokane: OFM population growth forecasts for 2026-2045 Monlthly Interpolation assumes: PN = P0erN Deviation in the most recent forecast! 35 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 515 WA-ID Region Firm Customers, 2021-2040 (2018 IRP) 220,000 240,000 260,000 280,000 300,000 320,000 340,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 WA-ID Base-line 2018 WA-ID Base-line 2021 IRP Avg.Annual Growth 2021-2040 2021 1.1% 2018 1.2% ≈ +1,400 36 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 516 OR Region Firm Customers, 2021-2040 (2018 IRP) 95,000 100,000 105,000 110,000 115,000 120,000 125,000 130,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 OR Base-line 2018 OR Base-line 2021 ≈ -2,800 IRP Avg.Annual Growth 2021-2040 2021 0.8% 2018 0.9% 37 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 517 Medford, OR Region Firm Customers, 2021-2040 (2018 IRP) 55,000 60,000 65,000 70,000 75,000 80,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 Medford Base-line 2018 Medford Base-line 2021 IRP Avg.Annual Growth 2021-2037 2021 0.9% 2018 0.9%≈ +310 38 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 518 Roseburg, OR Region Firm Customers, 2021-2040 (2018 IRP) 14,000 15,000 16,000 17,000 18,000 19,000 20,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 Roseburg Base-line 2018 Roseburg Base-line 2021 ≈ -1,900 IRP Avg.Annual Growth 2021-2040 2021 0.4% 2018 0.9% 39 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 519 Klamath, OR Region Firm Customers, 2021-2040 (2018 IRP) 15,000 16,000 17,000 18,000 19,000 20,000 21,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 Klamath Base-line 2018 Klamath Base-line 2021 IRP Avg.Annual Growth 2021-2040 2021 0.7% 2018 1.0% ≈ -1,200 40 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 520 La Grande, OR Region Firm Customers, 2021-2040 (2018 IRP) 7,400 7,600 7,800 8,000 8,200 8,400 8,600 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 La Grande Base-line 2018 La Grande Base-line 2021 IRP Avg.Annual Growth 2021-2040 2021 0.5% 2018 0.5% ≈ +30 41 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 521 System Firm Customers, 2021-2040 (2018 IRP) 320,000 340,000 360,000 380,000 400,000 420,000 440,000 460,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 WA-ID-OR Base 2018 WA-ID-OR Base 2021 ≈ -1,400 IRP Avg.Annual Growth 2021-2040 2021 1.0% 2018 1.1% 42 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 522 WA-ID Region Firm Customer Range, 2021-2045 220,000 240,000 260,000 280,000 300,000 320,000 340,000 360,000 380,000 400,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 WAIDFIRMCUS Base WAIDFIRMCUS High WAIDFIRMCUS Low Variable Low Growth Base Growth High Growth WA-ID Customers 0.7%1.1%1.5% WA Population 0.4%0.7%1.0% ID Population 0.8%1.4%2.0% WA-ID Population 0.5%0.8%1.2% 43 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 523 OR Region Firm Customer Range, 2021-2045 95,000 100,000 105,000 110,000 115,000 120,000 125,000 130,000 135,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 ORFIRMCUS Base ORFIRMCUS High ORFIRMCUS Low Variable Low Growth Base Growth High Growth Customers 0.5%0.7%0.9% Population 0.3%0.5%0.7% 44 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 524 System Firm Customer Range, 2021-2045 300,000 350,000 400,000 450,000 500,000 550,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 SYSTEMCUS.syf Base SYSTEMCUS.syf High SYSTEMCUS.syf Low Variable Low Growth Base Growth High Growth Customers 0.6%1.0%1.3% Population 0.4%0.8%1.1% 45 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 525 Summary of Growth Rates System Base-Case High Low Residential 1.0%1.4%0.7% Commercial 0.5%0.8%0.1% Industrial -0.8%2.2%-3.8% Total 1.0%1.3%0.6% WA Base-Case High Low Residential 1.0%1.3%0.7% Commercial 0.4%0.7%0.1% Industrial -0.8%1.9%-3.6% Total 1.0%1.3%0.7% ID Base-Case High Low Residential 1.4%2.0%0.8% Commercial 0.4%1.0%-0.2% Industrial -1.0%1.8%-3.4% Total 1.3%1.9%0.7% OR Base-Case High Low Residential 0.7%0.9%0.5% Commercial 0.6%0.8%0.4% Industrial 0.0%4.5%-10.6% Total 0.7%0.9%0.5% 46 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 526 1 Avista –2020 Natural Gas Integrated Resource Plan Technical Advisory Committee # 3 September 30, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 527 2 2020 Natural Gas IRP Schedule TAC 3: Wednesday, September 30, 2020: Distribution, Avista’s current supply-side resources overview, supply side resource options, renewable resources, Carbon cost, price elasticity, sensitivities and portfolio selection modeling. TAC 2 (Dual Meeting with Power side): Thursday, August 6, 2020: Market Analysis, Price Forecasts, Cost Of Carbon, Environmental Policies •Demand Results and Forecasting –August 18, 2020 TAC 1: Wednesday, June 17, 2020: TAC meeting expectations, 2020 IRP process and schedule, energy efficiency update, actions from 2018 IRP, and a Winter of 2018-2019 review. Procurement Plan and Resource Optimization benefits. fugitive Emissions, Weather Analysis, Weather Planning Standard TAC 4: Wednesday, November 18, 2020: CPA results from AEG & ETO, review assumptions and action items, final modeling results, portfolio risk analysis and 2020 Action Plan. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 528 3 Agenda •Introductions/Agenda 30 minutes 9:00 AM –9:30 AM •Avista and Carbon Reduction 15 minutes 9:30 AM –9:45 AM •Current Supply Side Resources 30 minutes 9:45 AM –10:15 AM •BREAK 15 minutes 10:15 AM –10:30 AM •Renewable Natural Gas 60 minutes 10:30 AM –11:30 AM •Hydrogen 30 minutes 11:30 AM –12:00 PM •LUNCH BREAK 60 minutes 12:00 PM –1:00 PM •Distribution 60 minutes 1:00 PM –2:00 PM •Supply Side Resource Options 30 minutes 2:00 PM –2:30 PM •Carbon Costs/Price Elasticity 30 minutes 2:30 PM –3:00 PM •Sensitivities 30 minutes 3:00 PM –3:30 PM Topic Length Start Time –End Time Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 529 4 Avista and Carbon Reduction Jody Morehouse Director –Natural Gas Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 530 5 Planning for a Deeply Decarbonized Future Active Energy Policy Environment •Washington –Carbon reduction goal House Bill 2311 –RNG/EE House Bill 1257 •Oregon: –RNG Senate Bill-98 –Cap and Reduce Executive Order 20-04 *Focus on solutions that balance carbon reduction, affordability, and reliability* Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 531 6 Avista's Environmental Objectives •Build further recognition of Avista’s continued commitment to environmental stewardship •Acquire renewable supplies based on the demand of our customer base and/or policy direction •Fully account for all costs of natural gas including carbon attributed to upstream emissions •Continue to engage with state and local governments on all existing and future climate policy •Increase understanding of how natural gas currently works as part of the energy ecosystem, ensuring that customers have choices for their energy needs that include access to reliable energy at affordable prices •Demonstrate Avista’s leadership in responsibly managing a transition to a cleaner energy mix while being sensitive to customers’ and other stakeholders’ interests Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 532 7 Natural Gas is an Important Part of a Clean Energy Future •In the right applications, direct use of natural gas is best use •Natural gas generation provides critical capacity as renewables expand until utility-scale storage is cost effective and reliable •Full electrification can lead to unintended consequences: o Creates new generation needs that may increase carbon footprint o Drives new investment in electric distribution, generation, and transmission infrastructure, causing bill pressure o Home and business conversion costs borne by customers •Customers have paid for a vast pipeline infrastructure that can utilized for a cleaner future by transitioning the fuel and keeping the pipe •A comprehensive view of the energy ecosystem leads to a diversified approach to energy supply that includes natural gas Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 533 8 Benefits of Natural Gas •For Customers. Natural gas is affordable, resilient, and reliable. •For Society. Natural gas is an abundant energy resource produced in North America, which helps lessen our dependency on foreign oil. •For Innovation.Natural gas can play a supporting role in expanding the use of renewable energy sources. •For Environment.Natural gas is the cleanest burning fossil fuel, so it helps reduce smog and greenhouse gas emissions. •For Economy.Natural gas provides nearly a fourth of North America's energy today. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 534 9 Current Supply Side Resources Justin Dorr Resource Manager, Natural Gas Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 535 101010 Interstate Pipeline Resources •The Integrated Resource Plan (IRP) brings together the various components necessary to ensure proper resource planning for reliable service to utility customers. •One of the key components for natural gas service is interstate pipeline transportation.Low prices, firm supply and storage resources are meaningless to a utility customer without the ability to transport the gas reliably during cold weather events. •Acquiring firm interstate pipeline transportation provides the most reliable delivery of supply. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 536 111111 Pipeline Contracting Simply stated: The right to move (transport) a specified amount of gas from Point A to Point B A B Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 537 121212 •Firm transport –Point A to Point B •Alternate firm –Point C to Point D •Seasonal firm –Point A to Point B but only in winter •Interruptible –Maybe it flows, maybe it doesn’t Contract Types Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 538 1313 Avista's Transportation Contract Portfolio Avista holds firm transportation capacity on 6 interstate pipelines: Pipeline Expirations Base Capacity Dth Williams NWP 2025 –2042 (2035)290,000 Westcoast (Enbridge) 2026 10,000 TransCanada - NGTL 2024-2046 208,000 TransCanada - Foothills 2024-2046 204,000 TransCanada - GTN 2023-2028 210,000 164,000 TransCanada- Tuscarora 2023 200 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 539 14 Pipeline Overview Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 540 1515 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 541 161616 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 542 1717 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 543 1818 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 544 191919 Storage –A valuable asset •Peaking resource •Improves reliability •Enables capture of price spreads between time periods •Enables efficient counter cyclical utilization of transportation (i.e. summer injections) •May require transportation to service territory •In-service territory storage offers most flexibility Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 545 2020 Washington and Idaho Owned Jackson Prairie •7.7 Bcf of Capacity with approximately 346,000 Dth/d of deliverability Oregon Owned Jackson Prairie •823,000 Dth of Capacity with approximately 52,000 Dth/d of deliverability Leased Jackson Prairie •95,565 Dth of Capacity with approximately 2,654 Dth/d of deliverability Avista's Storage Resources Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 546 2121 The Facility •Jackson Prairie is a series of deep, underground reservoirs –basically thick, porous sandstone deposits. •The sand layers lie approximately 1,000 to 3,000 feet below the ground surface. •Large compressors and pipelines are employed to both inject and withdraw natural gas at 54 wells spread across the 3,200 acre facility. 21 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 547 2222 Renewable Natural Gas (RNG) Michael Whitby, RNG Manager Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 548 232323 Advancing RNG at Avista Avista has been actively preparing to participate in RNG. The following topics covered in this section of the presentation are as follows: ▪Renewable Natural Gas (RNG) Explained ▪RNG –A Climate Change Solution ▪Policy & Regulation ▪Industry Reports ▪Avista’s Commitment to Carbon Reduction ▪Avista’s RNG Program & Team ▪Program Considerations ▪RNG Market Studies & Voluntary Customer Program ▪Pipeline Safety & Interconnection Requirements ▪Environmental Attribute Tracking & Banking ▪RNG Production Technologies & Project Types ▪RNG Opportunities and Challenges ▪Cost Effectiveness Evaluation Methodology Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 549 242424 Renewable Natural Gas (RNG) Explained Natural Gas is Critical to a Clean Energy Future Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 550 2525 RNG –A Climate Change Solution Natural gas plays critical role for meeting aggressive green house gas (GHG) reductions goals, RNG even more so! ▪Advantages of RNG ▪“De-carbonizes” gas stream ▪Gives customers another renewable choice ▪RNG is a strong pathway option for decarbonizing the thermal market ▪RNG utilizes existing infrastructure as it is fully interchangeable with conventional natural gas with no end user equipment modifications or replacement ▪RNG is a more economical solution than electrification which requires the procurement of added renewable electric resources, distribution system upgrades, and has a significant impact to end users due to the necessary replacement of building equipment and systems ▪In the right applications, direct use of natural gas is best use ▪Natural gas generation provides critical capacity as renewables expand until utility-scale storage is cost effective and reliable Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 551 262626 Washington HB 2580 ▪RNG study requested by legislature from WA Department of Commerce & WSU Energy Program Washington HB 1257 ▪Building efficiency bill that includes RNG ▪Requires utilities to offer voluntary RNG programs/products to customers ▪Allows utilities to invest in RNG projects and recover the costs Oregon SB 334 ▪Directs the Oregon Department of Energy to conduct a biogas and renewable natural gas inventory and prepare a report Oregon SB 98 & AR 632 Rule Making ▪Final rules effective on July 17th 2020 ▪Allows investment recovery, percent of revenue requirement per year to be determined based on potential project costs & timing, pending petition to participate ▪Allows investment in gas conditioning equipment without RFP process Policy & Regulation: Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 552 272727 Avista is familiar with these relevant industry reports and has utilized them to understand the RNG industry in general as well as the potential in Washington & Oregon Industry Reports: Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 553 282828 RNG is a Pathway to Decarbonizing the Natural Gas System ▪By utilizing waste streams to create green fuel, RNG can play an important role in supporting Avista’s environmental strategy ▪RNG provides Avista’s customers with a new environmentally friendly, low carbon fuel choice, delivered seamlessly via Avista’s existing natural gas system Avista’s Commitment to Carbon Reduction Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 554 292929 Avista’s RNG Program & Team Avista has been assessing and planning for RNG ▪Program Manager in place ▪Program Charter in place ▪Program Execution Plan drafted ▪Participation in the regulatory and rule making process in OR & WA, informal and formal ▪Business Development efforts in pursuit of multiple RNG projects continues ▪Business Cases developed for consideration in Avista’s five year capital planning cycle ▪RNG Project accounting established ▪Cross-functional team in place to support RNG: ▪Gas Engineering ▪Gas Supply ▪Legal ▪Governmental Affairs ▪Regulatory Affairs ▪Products & ServicesAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 555 303030 Program Considerations ▪Evaluate available RNG procurement options ▪Pursue potential RNG development opportunities from local RNG feedstock resources under new legislation (Washington HB 1257 & Oregon SB 98) ▪Develop an understanding of RNG development cost, cost recovery impacts to customers, resulting supply volumes and RNG costs ▪Evaluate potential RNG customer market demands vs. supply ▪Participation in rule making and policy: ▪Participation in HB 1257 Policy development ▪Participation in SB 98 Policy Rulemaking via AR 632 informal and formal ▪Cost recovery proposal led by NWGA with input from all four Washington LDC’s ▪Collaborative RNG Gas Quality Framework established across four WA LDC’s Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 556 313131 RNG Market Studies & Voluntary Customer Program ▪RNG Commercial Market Study completed in 2019 ▪RNG Residential Market Survey concluded in September 2020 ▪Customers lack understanding of RNG since it is a new concept ▪Customers like the environmental aspects of RNG ▪Customers like to choose their level of participation to manage costs predictably ▪Voluntary customer RNG program design will advance based on the studies above ▪Estimate voluntary customer program demands ▪RNG to be added to Avista’s renewables portfolio Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 557 323232 Pipeline Safety & Interconnection Requirements ▪Avista Gas Quality Specification developed ▪Collaborative RNG Gas Quality Framework established across (4) WA LDC’s ▪Avista Interconnection Agreement template developed ▪Avista Study Agreement and RNG Producer review process template developed Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 558 333333 Environmental Attribute Tracking & Banking Under OR SB 98 the M-RETS system has been selected to track RNG environmental attributes. Other jurisdictions including Washington may also select this system ▪1 Renewable Thermal Certificate (RTC) = 1 Dekatherm (Dth) of RNG ▪Transparent electronic certificate tracking ▪Not a certification entity Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 559 343434 RNG Production Technologies & Project Types Avista is actively evaluating a handful of potential Anaerobic Digestion Projects throughout Washington and Oregon. RNG Technologies : ▪Conventional RNG: Amine scrub, membrane separation, water wash, PSA ▪Hydrogen blendingAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 560 353535 RNG Opportunities & Challenges California RNG market ($30+/Dth v. $2/Dth) ▪Vehicle emission incentives shut-out other potential end users ▪Producers see the pot of gold in Federal RIN & California LCFS markets ▪RNG supplier cost volatility Financing for producers ▪RIN market is volatile ▪No forward pricing for RNG RTC’s in carbon market ▪Vehicle market may be approaching saturation in CA ▪Environmental attribute value for local markets is undefined Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 561 363636 RNG Opportunities & Challenges Utility RNG Projects ▪Feedstock owners can now partner with LDC’s to cultivate new RNG projects ▪Feedstock owners wiliness to partner with the utility’s cost of service model. This is a foreign concept to feedstock owners that seek highest value for their biogas ▪LDC’s are credit worthy partners offering long term off-take contracts to feedstock owners ▪Each RNG project is unique with respect to capital development costs & resulting RNG costs ▪Each RNG project will vary in size, location and distance to interconnection pipeline, feedstock type, gas conditioning equipment and requirements and operating costs ▪Economies of scale –Low volume biogas opportunities face economic challenges ▪New RNG Projects can take 2-3 years to develop ▪Customers have paid for a vast pipeline infrastructure that can be utilized for a cleaner future by transitioning the fuel and keeping the pipe Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 562 373737 RNG Opportunities & Challenges Source: Promoting RNG in WA State Avista Owned and Operated ID -WA 2035 Premium Estimate ($ / Dth) RNG -Landfills $7 -$10 RNG -Waste Water Treatment Plants (WWTP)$12 -$22 RNG -Agriculture Manure $28 -$53 RNG -Food Waste $29 -$53 RNG $ per Dth/MMBtu Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 563 383838 Carbon Intensity will pay a role in how the environmental attributes / Renewable Thermal Certificate (RTC) values will be determined RNG Opportunities & Challenges Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 564 393939 RNG RTC values within the utility construct cannot compete with the RNG values driven by the RFS RIN & LCFS markets RIN = renewable identification number Source: CARB Source: EPA RNG Opportunities & Challenges Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 565 4040 WA RNG Report (HB 2580) –Utility’s have the opportunity to leverage the remaining RNG opportunities to decarbonize the natural gas system *Released December 1, 2018 WSU Energy Program, Harnessing Renewable Natural Gas for Low-Carbon Fuel: A Roadmap for Washington State 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Cedar Hills Landfill (King County) Roosevelt Landfill (Republic Services) Klickitat County PUD South Treatment Plant (King County) Puget Sound Energy Landfills Wastewater treatment plants Dairy digesters Municipal food waste digesters Food processing residuals Food processed at compost facilities Landfills Wastewater treatment plants Dairy digesters Municipal food waste digesters Dth Existing Projects Near Term Projects Medium Term Projects RNG Opportunities & Challenges Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 566 414141 Cost Effectiveness Evaluation Methodology Developing the Methodology….a work in process ▪Avista is creating a cost effectiveness evaluation methodology for evaluating RNG projects. The following slides are a snapshot of Avista’s work in progress. ▪The methodology shown is derived from OPUC UM2030, also referenced in the OPUC SB 98 AR 632 Rulemaking ▪The evaluation method shown herein is subject to input, refinement and reconsideration. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 567 42 Hydrogen Tom Pardee Planning Manager, Natural Gas Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 568 43 Hydrogen •The energy factor of H2 Low Heating Value (LHV) is roughly equivalent to a gallon of gasoline or 114,000btu –This equates to 8.78 kg of H2LHV per Dth •Most H2 is currently made from reforming natural gas –The energy can come from Nuclear (Pink), Renewables (Green) or Fossil fuels (Grey) •High cost (currently) when compared to energy in a Dth combined with current prices of natural gas •Hydrogen can only be stored in the pipeline as a % of gas or combined with a carbon source to produce methane. •Hydrogen is lighter than air and diffuses rapidly (3.8x faster than natural gas) making it more difficult to contain Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 569 44 PtG Process Source: http://www.europeanpowertogas.com/about/power-to-gas Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 570 45 Power to Gas •Power to Gas (PtG) is a process using power to separate water into hydrogen and oxygen •Hydrogen can be stored, as a % of gas, in the existing gas grid or used in the mobility sector (blend up to 20%) •PtG can help to balance excess power from intermittent sources like wind and solar •PtG can decarbonize the direct use of natural gas •PtG economics will advance as more renewables are added and the technology matures •Short term and seasonal energy storage •Stored in the existing gas pipeline Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 571 46 PtG Benefits Benefits •Cleans up the grid using excess power •Stores the energy for future use in the natural gas pipelines/infrastructure utilizing customer owned resources and are currently available •Hydrogen is relatively safe as if it is released it quickly dilutes into a non- flammable concentration Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 572 47 Current Renewable Hydrogen Price estimates $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $ p e r M M B t u Average –System Hydrogen costs *Assumes Avista owned resourcesAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 573 48 Distribution Overview Terrence Browne Sr. Gas Planning Engineer, Gas Engineering Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 574 49 Mission •Using technology to plan and design a safe, reliable, and economical distribution system Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 575 50 Gas Distribution Planning •Service Territory and Customers •Scope of Gas Distribution Planning •SynerGi Load Study Tool •Planning Criteria •Interpreting Results •Long-term Planning Objectives •Monitoring Our System •Communicating Solutions •Gate Station Capacity Review •Project Examples Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 576 51 –Population of service area 1.5 million 385,000 electric customers 360,000 natural gas customers Service Territory and Customer Overview •Serves electric and natural gas customers in eastern Washington and northern Idaho, and natural gas customers in southern and eastern Oregon Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 577 52 Seasonal Demand Profiles Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 578 53 Our Planning Models •120 cities •40 load study models Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 579 54 __ Pup Pdown Q L || D __ 5 Variables for Any Given Pipe Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 580 55 Scope of Gas Distribution Planning Supplier Pipeline High Pressure Main Reg. Distribution Main and Services Reg.Reg. Gate Sta. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 581 56 Scope of Gas Distrib. Planning cont. Gate Sta. Reg.Reg.Reg. Reg.Reg. Gate Sta. Gate Sta. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 582 57 SynerGi (SynerGEE, Stoner) Load Study •Simulate distribution behavior •Identify low pressure areas •Coordinate reinforcements with expansions •Measure reliability Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 583 58 35 DD 30’ F Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 584 59 Preparing a Load Study •Estimating Customer Usage •Creating a Pipeline Network •Join Customer Loads to Pipes •Convert to Load Study Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 585 60 Estimating Customer Usage •Gathering Data –Days of service –Degree Days –Usage –Name, Address, Revenue Class, Rate Schedule… Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 586 61 Estimating Customer Usage cont. •Degree Days –Heating (HDD) –Cooling (CDD) •Temperature -Usage Relationship –Load vs. HDD’s –Base Load (constant) –Heat Load (variable) –High correlation with residential Avg. Daily Heating Cooling Temperature Degree Days Degree Days ('Fahrenheit) (HDD) (CDD) 85 20 80 15 75 10 70 5 65 0 0 60 5 55 10 50 15 45 20 40 25 35 30 30 35 25 40 20 45 15 50 10 55 5 60 4 61 0 65 -5 70 -10 75 -15 80 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 587 62 Heat Base Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 588 63 Creating a Pipeline Model •Elements –Pipes, regulators, valves –Attributes: Length, internal diameter, roughness •Nodes –Sources, usage points, pipe ends –Attributes: Flow, pressure Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 589 64 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 590 65 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 591 66 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 592 67 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 593 68 Balancing Model •Simulate system for any temperature –HDD’s •Solve for pressure at all nodes Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 594 69 35 DD 30˚F Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 595 70 Validating Model Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 596 71 Validating Model cont. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 597 72 •Simulate recorded condition •Electronic Pressure Recorders –Do calculated results match field data? •Gate Station Telemetry –Do calculated results match source data? •Possible Errors –Missing pipe –Source pressure changed –Industrial loads Validating Model cont. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 598 73 •Reliability during design HDD –Spokane 77 HDD (avg. daily temp. -12’ F) –Medford 54 HDD (avg. daily temp. 11’ F) –Klamath Falls 74 HDD (avg. daily temp. -9’ F) –La Grande 76 HDD (avg. daily temp. -11’ F) –Roseburg 51 HDD (avg. daily temp. 14’ F) •Maintain minimum of 15 psig in system at all times –5 psig in lower MAOP areas Planning Criteria Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 599 74 35 DD 30˚F Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 600 75 50 DD 15˚F Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 601 76 65 DD 0˚F Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 602 77 Interpreting Results •Identify Low Pressure Areas –Number of feeds –Proximity to source •Looking for Most Economical Solution –Length (minimize) –Construction obstacles (minimize) –Customer growth (maximize) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 603 78 65 DD 0’ F Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 604 79 65 DD 0’ F R Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 605 80 80 DD -15’ F R Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 606 81 Long-term Planning Objectives •Future Growth/Expansion •Design Day Conditions •Facilitate Customer Installation Targets Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 607 82 Monitoring Our System •Electronic Pressure Recorders •Daily Feedback •Real time if necessary •Validates our Load Studies Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 608 83 Real-time Pressure & Flow Monitoring Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 609 84 ERX #007 West Medford 6 psig System Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 610 85 ERX #007: West Medford 6 psig System, OR 12/18/2016 12/26/2016 01/06/2017 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 611 86 2019-2020 Winter Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 612 87 2013-2014 Winter Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 613 88 1)Notify service area manager 2)Show where and at what temperature we think we’ll have low pressure 3)Identify possible solutions like: •Curtailing interruptible customers •Ask schools & businesses to voluntarily lower thermostats •Bring out CNG trailers 4)Continue to monitor forecast to see if temperatures improve or get worse 5)Share plan with Gas Controllers 6)Pray for warmer weather… What I do when “things” look bad? Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 614 89 Communicating Solutions Add 4” Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 615 90 Gas Planning AOI Low pressure Future Growth Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 616 91 Solutions: long-term reinforcements Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 617 92 Gate Station Capacity Review Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 618 93 y = 0.1278x + 3.5481 R² = 0.64840 5 10 15 20 25 30 35 0 10 20 30 40 50 60 70 80 90 100 Fl o w ( m c f h ) HDDCity Gate Station # X Daily Peak Flow (mcfh) GTN Physical Capacity (31 mcfh) Design Day Peak Flow (14.0 mcfh; 82 HDD) Contractual Amount (21.9 mcfh, Diversity Factor = 1.5) Linear (Daily Peak Flow (mcfh)) 77 HDD Gate Station Capacity Review (example) 77 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 619 94 y = 2.1146x + 65.605 R² = 0.63080 50 100 150 200 250 300 0 10 20 30 40 50 60 70 80 90 100 Fl o w ( m c f h ) HDD City Gate Station # Y Daily Peak Flow (mcfh) NWP Physical Capacity (206.0 mcfh, Diversity Factor = 1.44) Design Day Peak Flow (239.0 mcfh; 82 HDD) Contractual Amount (121.8 mcfh, Diversity Factor = 1.44) Linear (Daily Peak Flow (mcfh)) 77 77 HDD Gate Station Capacity Review (example) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 620 95 Recent Projects and Examples Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 621 96 New Agri-Industrial Customer Service Request Roseburg, OR Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 622 97 0.01 –15.00 Facilities Color By: Pressure (psig) 15.01 –30.00 30.01 –45.00 45.01 –60.00 > 60.01 0.00 Agri-Industrial Customer Service Request Conditions: •21 Mcfh •15 psig •year-round •51 HDD Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 623 98 Agri-Industrial Customer Service Request 0.01 –15.00 Facilities Color By: Pressure (psig) 15.01 –30.00 30.01 –45.00 45.01 –60.00 > 60.01 0.00 Conditions: •21 Mcfh •15 psig •year-round •51 HDD 47 HDD 18 Mcfh Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 624 99 Residential Development Service Request Deer Park, WA Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 625 100 Residential Development Study Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 626 101 Residential Development Study 0.01 –15.00 Facilities Color By: Pressure (psig) 15.01 –30.00 30.01 –45.00 45.01 –60.00 > 60.01 0.00 Inadequate Pressure (less than 15 psig) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 627 102 Residential Development Study 0.01 –15.00 Facilities Color By: Pressure (psig) 15.01 –30.00 30.01 –45.00 45.01 –60.00 > 60.01 0.00Recommend: 250-300 2” PE Acceptable Pressure (>15 psig) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 628 103 Medford, OR Enbridge Pipeline Rupture Effect on distribution Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 629 104 Enbridge Pipeline Rupture effect Roseburg Grants Pass Klamath Falls Medford Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 630 105 Grants Pass Ashland Medford 450 280 White City Eagle Point Shady Cove Enbridge Pipeline Rupture effect Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 631 106 Grants Pass Ashland Medford 450 0 Firm & Transport loads (100%) >> 45 HDD Firm loads only (79%) >> 51 HDD White City Eagle Point Shady Cove Enbridge Pipeline Rupture effect Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 632 107 Questions and Discussion Mission Using technology to plan and design a safe, reliable, and economical distribution system Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 633 108 Unserved Demand and Supply Side Resource Options Tom Pardee Planning Manager, Natural Gas Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 634 109 When unserved demand does show up…… There are a few questions we need to ask: 1.Why is the demand unserved? 2.What is the magnitude of the short? (i.e Are we 1 Dth or 1000 Dth’s short?) 3.What are my options to meet it? Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 635 110 When current resources don’t meet demand what could we consider? •Transport capacity release recalls •“Firm” backhauls •Contract for existing available transportation •Expansions of current pipelines •Peaking arrangements with other utilities (swaps/mutual assistance agreements) or marketers •In-service territory storage •Satellite/Micro LNG (storage inside service territory) •Large scale LNG with corresponding pipeline build into our service territory •Structured products/exchange agreements delivered to city gates •Biogas (assume it’s inside Avista’s distribution) •Hydrogen blend (assume it’s inside Avista’s distribution) •Avista distribution system enhancements •Demand side management Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 636 111 New Resource Risk Considerations •Does is get supply to the gate? •Is it reliable/firm? •Does it have a long lead time? •How much does it cost? •New build vs. depreciated cost •The rate pancake •Is it a base load resource or peaking? •How many dekatherms do I need? •What is the “shape” of resource? •Is it tried and true technology, new technology, or yet to be discovered? •Who else will be competing for the resource? Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 637 112 Potential New Supply Resources Considerations •Availability –By Region –which region(s) can the resource be utilized? –Lead time considerations –when will it be available? •Type of Resource –Peak vs. Base load –Firm or Non-Firm –“Lumpiness” •Usefulness –Does it get the gas where we need it to be? –Last mile issues •Cost Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 638 113 Regional Infrastructure –Potential Projects NWGA –2020 Outlook Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 639 114 Supply Resources -Modeled Additional Resource Size Availability Notes Unsubscribed GTN Capacity Up to 50,000 Dth Now Currently available unsubscribed capacity from Kingsgate to Spokane Medford Lateral Exp 50,000 Dth / Day 2022 Additional compression to facilitate more gas to flow from mainline GTN to Medford WA ID OR $48 / Dth $40 / Dth $46 / Dth WA ID OR $13 / Dth $13 / Dth $13 / Dth WA ID OR $11 / Dth $11 / Dth $12 / Dth WA ID OR $34 / Dth $39 / Dth $33 / Dth WA ID OR $19 / Dth $18 / Dth $19 / Dth WA ID OR $38 / Dth $39 / Dth $38 / Dth Plymouth LNG 241,700 Dth w/70,500 Dth deliverability Now Provides for peaking services and alleviates the need for costly pipeline expansions Pair with excess pipeline MDDO’s to create firm transport Hydrogen 166 Dth / Day Varies Cost estimates obtained from a consultant; levelized cost includes revenue requirements, expected carbon adder and assumed retail power rate Renewable Natural Gas – Distributed Landfill 635 Dth / Day NWP Rate Varies Costs estimates obtained from a consultant for each specific type of RNG; levelized costs include revenue requirements, distribution costs, and projected carbon intensity adder/(savings). This cost also includes any incentives from bills such as Washington House Bill 2580 or Oregon Senate Bill 334 VariesRenewable Natural Gas – Dairy 635 Dth / Day Renewable Natural Gas – Waste Water 513 Dth / Day Varies Varies298 Dth / DayRenewable Natural Gas – Food Waste to (RNG) Renewable Natural Gas – Centralized Landfill 1,814 Dth / Day Cost/Rates GTN Rate $35M capital + GTN Rate Varies Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 640 115 Future Supply Resources –Not Modeled Other Resources to Consider Additional Resource Size Cost/Rates Availability Notes Co. Owned LNG 600,000 Dth w/ 150,000 of deliverability $75 Million plus $2 Million annual O&M 2024 On site, in service territory liquefaction and vaporization facility Various pipelines –Pacific Connector, Trails West, NWP Expansion, GTN Expansion, etc. Varies Precedent Agreement Rates 2022 Requires additional mainline capacity on NWPL or GTN to get to service territory Large Scale LNG Varies Commodity less Fuel 2024 Speculative, needs pipeline transport In Ground Storage Varies Varies Varies Requires additional mainline transport to get to service territory Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 641 116 Carbon Costs Tom Pardee Planning Manager, Natural Gas Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 642 117 Cost of Carbon and Sendout •Monthly costs are loaded into SENDOUT •These costs will differ based on the requirements or an expected program type by state •These costs are input at the transportation level in order to correctly account for the cost of carbon in each area regardless of supply basin Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 643 118 Social Cost of Carbon •Social cost of carbon dioxide in 2007 dollars using the 2.5% discount rate, listed in table 2, technical support document: Technical update of the social cost of carbon for regulatory impact analysis under Executive Order No. 12866, published by the interagency working group on social cost of greenhouse gases of the United States government, August 2016. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 644 119 Washington –Carbon adder •Social cost of carbon dioxide in 2007 dollars using the 2.5% discount rate, listed in table 2, technical support document: Technical update of the social cost of carbon for regulatory impact analysis under Executive Order No. 12866, published by the interagency working group on social cost of greenhouse gases of the United States government, August 2016. •Adjust to 2019$ using Bureau of Economics GDP •Adjust to Nominal $ using 2.11% annual inflation rate Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 645 120 Oregon –Carbon adder $0 $20 $40 $60 $80 $100 $120 $140 $160 2019$nominal Levelized Cost: $44.91 per Metric Ton Source: Wood Mackenzie North America gas markets long-term outlook –H1 2020 *Modeled as an expected cost of California’s cap and trade programAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 646 121 All jurisdictions -Carbon adder High sensitivity $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 2007 $SCC (2019$)Nominal $ High Carbon Scenario -SCC @ 95% @ 3% Levelized Cost: $234.45 per Metric Ton •EPA –Social Cost of Carbon •Adjust to 2019$ using Bureau of Economics GDP •Adjust to Nominal $ using 2.11% annual inflation rate Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 647 122 Carbon Costs $- $50 $100 $150 $200 $250 $300 $350 $400 $450 OR Cap and Trade WA SCC High Carbon Price Low Carbon Price $44.92 $113.75 $234.45 $0Levelized Cost per MTCO2e Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 648 123 Expected Case Cost of Carbon by State -Summary •Washington -Social cost of carbon @ 2.5% discount rate; –upstream emissions associated with natural gas drilling and transportation of natural gas to its end use. •Oregon is based off a Wood Mackenzie estimate for Cap and Trade •Idaho -carbon prices will not be included Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 649 124 Price Elasticity Tom Pardee Planning Manager, Natural Gas Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 650 125 Price Elasticity Quantity Price Demand $7 $6 150 300 Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price Price elasticity is a method used by economists to measure how supply or demand changes based on changes in price. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 651 126 Price Elasticity Factors Defined •Price elasticity is usually expressed as a numerical factor that defines the relationship of a consumer’s consumption change in response to price change. •Typically, the factor is a negative number as consumers normally reduce their consumption in response to higher prices or will increase their consumption in response to lower prices. •For example, a price elasticity factor of -0.081 means: •A 10% price increase will prompt a 0.81% consumption decrease •A 10% price decrease will prompt a 0.81% •consumption increase Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 652 127 Summary •The elasticity as measured in the Medford and Roseburg areas will be used for the entire system as estimated elasticity. •0.81% decrease only for each price rise of 10% •This elasticity is measured through heat coefficients and annual price changes Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 653 128 Sensitivities Michael Brutocao Analyst, Natural Gas Supply Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 654 129 Sensitivities Summary Influence Type Sensitivity Customer Growth Rate Use per Customer Weather Demand Side Management Prices Elasticity First Year System Unserved Location Unserved DEMAND INFLUENCING - DIRECT Reference Reference 3 Year Historical 20 Year Average None Expected None -- Reference Plus Peak Planning Standard 2035 Washington Low Cust Low Growth -- High Cust High Growth 2029 Washington Alternate Weather Standard Reference Coldest in 20yrs 2035 Washington DSM 20 Year Average Expected -- Peak plus DSM Planning Standard 2039 Idaho 80% below 1990 emissions –OR/WA only None -- 2 Year use per customer Alternate 2 Year Historical 2035 Washington 5 Year use per customer Alternate 5 Year Historical 2035 Washington JP Outage Only (0% capacity) 3 Year Historical 2021 Washington AECO Outage Only (0% capacity)2020 WA, ID Sumas Outage Only (0% capacity)2020 Medford Rockies Outage Only (0% capacity)2020 La Grande JP Outage Only (50% capacity)2021 Washington AECO Outage Only (50% capacity)2026 Washington Sumas Outage Only (50% capacity)2025 Washington Rockies Outage Only (50% capacity)2025 La Grande NWP Outage (0% capacity)2020 WA, ID, La Grande GTN Outage (0% capacity)2020 WA, ID, Klamath Falls NWP Outage (50% capacity)2020 WA, La Grande GTN Outage (50% capacity)2026 WashingtonAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 655 130 Sensitivities Summary (Continued) Influence Type Sensitivity Customer Growth Rate Use per Customer Weather Demand Side Management Prices Elasticity First Year System Unserved Location Unserved PRICE INFLUENCING - INDIRECT Expected Prices Reference 3 Year Historical Planning Standard None Expected Expected -- Low Prices Low -- High Prices High -- Carbon Cost -High (SCC 95% at 3%) Expected -- Carbon Cost -Expected (SCC 2.5% (WA) & Cap&Red (OR))-- Carbon Cost -Low $0 -- EMISSIONS INFLUENCING High Upstream Emissions 2.47% leakage (EDF study)-- Expected Upstream Emissions (0.79% leakage)-- No Upstream Emissions -- Expected Global Warming Potential (20 Years)-- Expected Global Warming Potential (100 Years)-- Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 656 131 First Year Peak Demand Unserved (11/1/2020 –10/31/2040) *Sensitivities not listed above have no unserved demand.Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 657 132 Demand Sensitivities: Weather Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 658 133 Demand Sensitivities: 80% Below 1990 Emissions Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 659 134 Demand Sensitivities: Demand Side Management Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 660 135 Demand Sensitivities: Use Per Customer Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 661 136 Demand Sensitivities: Customer Growth Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 662 137 Demand Sensitivities: Price and Carbon Elasticities Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 663 138 Demand Sensitivities: Price (with Elasticities) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 664 139 Demand Sensitivities: Carbon (with Elasticities) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 665 140 Demand Sensitivities: Upstream Emissions (with Elasticities) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 666 141 Demand Sensitivities: GWP (with Elasticities) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 667 142 Demand (11/1/2020 –10/31/2040) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 668 143 Demand and Supply Side Sensitivities Optimize Resource Portfolios Stochastic Cost/Risk Analysis By Resource Highest Performing Portfolios selection Preferred Resource Strategy Core Cases Price Forecast Sensitivities, Scenarios, Portfolios Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 669 144 Proposed Scenarios *1,000 Draws per scenario will be run stochastically Proposed Scenarios Expected Average Low Growth High Growth INPUT ASSUMPTIONS Case Case & High Prices & Low Prices Customer Growth Rate Low Growth Rate Reference Case Cust Growth Rates High Growth Rate Demand Side Management High Prices DSM Weather Planning Standard 99% probability of coldest in 30 years 20 year average GWP Prices Price curve SCC @ 2.5% WA; Cap and Trade forecast - OR; NO Carbon adder in ID RESULTS First Gas Year Unserved Washington Idaho Medford Roseburg Klamath La Grande Scenario Summary Most aggressive peak planning case utilizing Average Case assumptions as a starting point and layering in peak day 99% probability. The likelihood of occurrence is low. Case most representative of our average (budget, PGA, rate case) planning criteria. Stagnant growth assumptions in order to evaluate if a shortage does occur. Not likely to occur. Reduction of the use of natural gas to 80% below 1990 targets in OR and WA by 2050. The case assumes the overall reduction is an average goal before applying figures like elasticity and DSM. Aggressive growth assumptions in order to evaluate when our earliest resource shortage could occur. Not likely to occur. Carbon Reduction Carbon Cost - High (SCC 95% at 3%) SCC @ 2.5% WA; Cap and Trade forecast - OR; Reference Case Cust Growth Rates LowExpectedHigh Carbon Legislation ($/Metric Ton) Use per Customer 100-Year GWP NO Carbon adder in ID 3 yr + Price Elasticity 99% probability of coldest in 30 years $0 Expected Case CPA Low Prices DSM Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 670 145 2020 Natural Gas IRP Schedule TAC 3: Wednesday, September 30, 2020: Distribution, Avista’s current supply-side resources overview, supply side resource options, renewable resources, Carbon cost, price elasticity, sensitivities and portfolio selection modeling. TAC 2 (Dual Meeting with Power side): Thursday, August 6, 2020: Market Analysis, Price Forecasts, Cost Of Carbon, Environmental Policies •Demand Results and Forecasting –August 18, 2020 TAC 1: Wednesday, June 17, 2020: TAC meeting expectations, 2020 IRP process and schedule, energy efficiency update, actions from 2018 IRP, and a Winter of 2018-2019 review. Procurement Plan and Resource Optimization benefits. fugitive Emissions, Weather Analysis, Weather Planning Standard TAC 4: Wednesday, November 18, 2020: CPA results from AEG & ETO, review assumptions and action items, final modeling results, portfolio risk analysis and 2020 Action Plan. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 671 11 Natural Gas Integrated Resource Plan TAC #4 November 18, 2020 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 672 2222 Agenda 1.CPA results from AEG (60 minutes) –Ken Walter 2.CPA results from ETO (60 minutes) –Spencer Moersfelder, Ted Light 3.Break (15 minutes) 4.Sendout Model (15 minutes) –Tom Pardee 5.Review assumptions (30 minutes) –Tom Pardee 6.Lunch break (60 minutes) 7.Final modeling results for Expected Case (60 minutes) –Tom Pardee 8.Final modeling results for Other Scenarios (60 minutes) –Tom Pardee 9.Action Plan and Next Steps (30 minutes) –Tom Pardee Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 673 3333 2020 Natural Gas IRP Schedule TAC 3: Wednesday, September 30, 2020: Distribution, Avista’s current supply-side resources overview, supply side resource options, renewable resources, Carbon cost, price elasticity, sensitivities and portfolio selection modeling. TAC 2 (Dual Meeting with Power side): Thursday, August 6, 2020: Market Analysis, Price Forecasts, Cost Of Carbon, Environmental Policies •Demand Results and Forecasting –August 18, 2020 TAC 1: Wednesday, June 17, 2020: TAC meeting expectations, 2020 IRP process and schedule, energy efficiency update, actions from 2018 IRP, and a Winter of 2018-2019 review. Procurement Plan and Resource Optimization benefits. fugitive Emissions, Weather Analysis, Weather Planning Standard TAC 4: Wednesday, November 18, 2020: CPA results from AEG & ETO, review assumptions and action items, final modeling results, portfolio risk analysis and 2020 Action Plan. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 674 Energy solutions. Delivered. 2020 CONSERVATION POTENTIAL ASSESSMENT –UPDATE Prepared for the Avista Technical Advisory Committee November 18, 2020Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 675 | 5Applied Energy Group · www.appliedenergygroup.com AVISTA 2020 NATURAL GAS CPA CPA Methodology Overview •Review of AEG Approach •Levels of Potential •Economic Screening and IRP Integration •Retained enhancements from 2018 Action Plan Summary of Results •Summary of Potential ▪High level potential ▪Technical Achievable compared to Economic potential •Comparison to previous CPA Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 676 | 6Applied Energy Group · www.appliedenergygroup.com ABOUT AEG Planning Baseline studies Market assessment studies Program design & action plans End-use forecasting EM&V EE portfolio & targeted programs Demand response programs & dynamic pricing Pilot design & experimental design Behavioral programs Implementation & Technical Services Engineering review, due- diligence, QA/QC M&V, modeling & simulation, onsite assessments Technology R&D and data tools (DEEM) Program admin, marketing, implementation, application processing Market Research Program / service pricing optimization Process evaluations Market assessment / saturation surveys Customer satisfaction / customer engagement Market segmentation VISION DSMTM Platform Full DSM lifecycle tracking & reporting Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 677 | 7Applied Energy Group · www.appliedenergygroup.com Including Potential Studies and End-Use Forecasting AEG has conducted more than 60 planning studies for more than 40 utilities / organizations in the past five years. AEG has a team of 11 experienced Planning staff plus support from AEG’s Technical Services and Program Evaluation groups AEG EXPERIENCE IN PLANNING Northwest & Mountain:Avista*BPA*Cascade Natural GasChelan PUDCheyenne LFPColorado Electric*Cowlitz PUD* Inland P&L*Oregon Trail ECPacifiCorp*PNGCPGE*Seattle City Light*Tacoma Power* Southwest:HECOLADWPNV Energy*Public Service New Mexico* State of HawaiiState of New MexicoXcel/SPS Midwest: Ameren Illinois*Ameren Missouri*Citizens EnergyEmpire District ElectricIndianapolis P&L*Indiana & Michigan Utilities Kansas City Power & Light MERCNIPSCO*Omaha Public Power DistrictState of MichiganVectren Energy* Northeast & Mid Atlantic:Central Hudson G&E*Con Edison of NY*New Jersey BPUPECO EnergyPSEG Long IslandState of Maryland (BG&E, DelMarva, PEPCO, Potomac Edison, SMECO) Regional & National:Midcontinent ISO*EEI/IEE*EPRI FERC* Two or more studies South:OG&EKentucky PowerSouthern Company (APC,GPC, Gulf Power, MPC)TVA Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 678 AEG CPA Methodology Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 679 | 9Applied Energy Group · www.appliedenergygroup.com The Avista Conservation Potential Assessment (CPA) supports the Company’s regulatory filing and other demand-side management (DSM) planning efforts and initiatives. The two primary research objectives for the 2020 CPA are: •Program Planning:insights into the market for natural gas energy efficiency (EE) measures in Avista’s Washington and Idaho service territories ▪For example, CPAs provide insight into changes to existing program measures as well as new measures to consider •IRP: long-term forecast of future EE potential for use in the IRP ▪Economic Achievable Potential (EAP) for natural gas AEG utilizes its comprehensive LoadMAP analytical models that are customized to Avista’s service territory. CPA OBJECTIVES Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 680 | 10Applied Energy Group · www.appliedenergygroup.com Overview –Natural Gas CPA OVERVIEW OF AEG’S APPROACH Market Characterization •Avista control totals•Customer account data •Secondary data •Avista market research Identify Demand-Side Resources •EE technologies•EE measures•Emerging measures and technologies Baseline Projection •Avista Load Forecast•Customer growth •Standards and building codes•Efficiency options •Purchase Shares Potential Estimation •Technical•Technical Achievable •Economic Screen (TRC and UCT) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 681 | 11Applied Energy Group · www.appliedenergygroup.com Prioritization of Avista Data Data from Avista was prioritized when available, followed by regional data, and finally well-vetted national data. Avista sources include: •2013 Residential GenPop Survey •Forecast data and load research •Recent-year accomplishments and plans Regional sources include: •NEEA studies (RBSA 2016, CBSA 2019, IFSA) •RTF and Power Council methodologies, ramp rates, and measure assumptions Additional sources include: •U.S. DOE’s Annual Energy Outlook •Technical Reference Manuals and California DEER •AEG Research KEY SOURCES OF DATA Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 682 | 12Applied Energy Group · www.appliedenergygroup.com Overview “How much energy would customers use in the future if Avista stopped running programs now and in the absence of naturally occurring efficiency?” •The baseline projection answers this question The baseline projection is an independent end-use forecast of natural gas consumption at the same level of detail as the market profile The baseline projection: BASELINE PROJECTION Includes •To the extent possible, the same forecast drivers used in the official load forecast, particularly customer growth, natural gas prices, normal weather, income growth, etc. •Trends in appliance saturations, including distinctions for new construction. •Efficiency options available for each technology , with share of purchases reflecting codes and standards (current and finalized future standards) •Expected impact of appliance standards that are “on the books” •Expected impact of building codes, as reflected in market profiles for new construction •Market baselines when present in regional planning assumptions Excludes •Expected impact of naturally occurring efficiency (except market baselines) •Impacts of current and future demand-side management programs Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 683 | 13Applied Energy Group · www.appliedenergygroup.com LEVELS OF POTENTIAL Technical Achievable Technical UCT and TRC Economic Achievable We estimate three levels of potential. These are standard practice for CPAs in the Northwest: •Technical: everyone chooses the most efficient option when equipment fails regardless of cost •Achievable Technical is a subset of technical that accounts for achievable participation within utility programs as well as non-utility mechanisms, such as regional initiatives and market transformation •Achievable Economic is a subset of achievable technical potential that includes only cost-effectivemeasures. Tests considered within this study include UCT, and TRC. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 684 | 14Applied Energy Group · www.appliedenergygroup.com Two Cost-Effectiveness Tests ECONOMIC SCREENING In assessing cost-effective, achievable potential within Avista’s Washington and Idaho territories, AEG utilized two cost tests: •Utility Cost Test (UCT): Assesses cost-effectiveness from a utility or program administrator’s perspective. •Total Resource Cost Test (TRC): Assesses cost-effectiveness from the utility’s and participant’s perspectives. Includes non-energy impacts if they can be quantified and monetized. Component UCT TRC Avoided Energy Benefit Benefit Non-Energy Benefits*Benefit Incremental Cost Cost Incentive Cost Administrative Cost Cost Cost Non-Energy Costs* (e.g. O&M)Cost *Council methodology includes monetized impacts on other fuels within these categories Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 685 | 15Applied Energy Group · www.appliedenergygroup.com •The Measure Assumptions appendix is again available, containing UES data and other key assumptions and their sources •Fully Balanced TRC. Using the same process developed in the 2018 CPA, the balanced TRC test includes an expanded scope of documentable and quantifiable impacts, including: 1.10% Conservation Credit in Washington 2.Quantified and monetized non-energy impacts (e.g. water, detergent, wood) 3.Projected cost of carbon in Washington 4.Heating calibration credit for secondary fuels (12% for space heating, 6% for secondary heating) 5.Electric benefits for applicable measures (e.g. cooling savings for smart thermostats, lighting and refrigeration savings for retrocommissioning) ENHANCEMENTS RETAINED FROM 2018 CPA Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 686 | 16Applied Energy Group · www.appliedenergygroup.com Potential Summary –WA & ID All Sectors GAS ENERGY EFFICIENCY POTENTIAL Projections indicate that gas savings of 1.5% of baseline consumption per year are Technically Achievable, and 0.8% per year is cost effective under the UCT test. •TAP savings are 643,198 Dth in 2022, and 4,906,228 Dth in 2030 •UCT savings are 261,833 Dth in 2022 and 2,124,189 Dth in 2030 •Across the study period, ~46% of TAP savings are UCT cost-effective - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 Dth Annual Energy Projections Baseline Projection Achievable Economic UCT Potential Achievable Technical Potential Technical Potential 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Annual Incremental Potential Achievable Economic TRC Potential Achievable Economic UCT Potential Achievable Technical Potential Technical Potential Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 687 | 17Applied Energy Group · www.appliedenergygroup.com GAS EE POTENTIAL, CONTINUED Potential Summary –WA & ID, All Sectors - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 2019 2022 2025 2028 2031 2034 2037 2040 2043 Cumulative UCT Gas Savings (Dth) by Sector Residential Commercial Industrial 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 2021 2022 2025 2030 2040 2045 % of Baseline Cumulative Gas Savings, Selected Years Achievable Economic TRC Potential Achievable Economic UCT Potential Achievable Technical Potential Technical Potential Summary of Energy Savings (Dth), Selected Years 2021 2022 2025 2030 2040 2045 Reference Baseline 29,137,671 29,434,469 30,325,189 31,617,083 33,626,695 34,510,725 Cumulative Savings (Dth) Achievable Economic TRC Potential 68,091 163,156 364,805 1,125,806 3,188,178 4,257,057 Achievable Economic UCT Potential 111,637 261,833 686,706 2,124,189 5,585,922 6,625,682 Achievable Technical Potential 290,015 643,198 1,879,807 4,906,228 9,853,874 10,970,898 Technical Potential 662,737 1,387,924 3,587,536 7,862,508 13,922,189 15,068,864 Energy Savings (% of Baseline) Achievable Economic TRC Potential 0.2%0.6%1.2%3.6%9.5%12.3% Achievable Economic UCT Potential 0.4%0.9%2.3%6.7%16.6%19.2% Achievable Technical Potential 1.0%2.2%6.2%15.5%29.3%31.8% Technical Potential 2.3%4.7%11.8%24.9%41.4%43.7% Incremental Savings (Dth) Achievable Economic TRC Potential 68,091 95,046 117,484 165,797 218,288 49,635 Achievable Economic UCT Potential 111,637 150,478 202,477 345,896 343,741 56,935 Achievable Technical Potential 290,015 355,639 522,562 701,742 483,964 58,801 Technical Potential 662,737 730,524 845,047 950,617 611,563 98,433Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 688 | 18Applied Energy Group · www.appliedenergygroup.com Achievable Economic UCT Potential Rank Measure / Technology (Ranked by 1st year potential) Achievable Economic UCT Potential (Dth)% of Total2021202220232030 1 Residential -Furnace 35,602 81,473 134,334 136,211 6.4% 2 Residential -Gas Furnace -Maintenance 13,403 30,912 48,232 177,842 8.4% 3 Commercial -Water Heater 8,854 25,070 46,662 292,125 13.8% 4 Commercial -Space Heating -Heat Recovery Ventilator 7,569 15,162 22,499 65,615 3.1% 5 Commercial -Boiler 6,643 17,112 30,155 131,730 6.2% 6 Residential -Insulation -Ceiling, Installation 5,253 11,641 19,390 99,329 4.7% 7 Residential -ENERGY STAR Connected Thermostat 4,435 9,925 16,719 114,399 5.4% 8 Commercial -HVAC -Duct Repair and Sealing 3,777 7,461 11,046 33,252 1.6% 9 Commercial -Insulation -Wall Cavity 3,337 9,043 17,710 123,408 5.8% 10 Residential -Water Heater 2,954 9,266 19,112 162,884 7.7% 11 Industrial -Process Heat Recovery 2,849 5,670 8,461 21,943 1.0% 12 Commercial -Gas Boiler -Insulate Steam Lines/Condensate Tank 2,517 4,965 7,337 21,733 1.0% 13 Commercial -Insulation -Roof/Ceiling 2,507 6,823 13,348 89,849 4.2% 14 Commercial -Water Heater -Central Controls 1,901 3,766 5,585 13,155 0.6% 15 Commercial -Gas Boiler -Hot Water Reset 1,822 4,002 6,598 30,638 1.4% 16 Commercial -Gas Boiler -High Turndown 1,230 2,424 3,578 8,452 0.4% 17 Commercial -Fryer 1,210 2,946 5,199 29,424 1.4% 18 Commercial -Building Automation System 590 1,735 3,703 61,280 2.9% 19 Commercial -Water Heater -Faucet Aerator 581 1,269 2,079 9,046 0.4% 20 Commercial -Kitchen Hood -DCV/MUA 529 1,055 1,577 5,057 0.2% Total of Top 20 Measures 107,565 251,718 423,324 1,627,371 76.6% Total Cumulative Savings 111,637 261,833 445,437 2,124,189 100.0% GAS EE TOP MEASURES Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 689 | 19Applied Energy Group · www.appliedenergygroup.com UCT & TRC Potential vs Technical Achievable GAS EE TOP MEASURES Rank Measure / Technology (Ranked by 10-year TAP) 2030 Savings (Dth)% of TAP TAP UCT TRC UCT TRC 1 Residential -Windows -High Efficiency 670,667 905 0 0.1%0.0% 2 Residential -Combined Boiler + DHW System (Storage Tank)410,862 0 0 0.0%0.0% 3 Residential -Combined Boiler + DHW System (Tankless)338,983 0 0 0.0%0.0% 4 Commercial -Water Heater 292,125 292,125 292,125 100.0%100.0% 5 Residential -ENERGY STAR Homes 198,515 198,833 0 100.2%0.0% 6 Residential -Gas Furnace -Maintenance 191,846 177,842 0 92.7%0.0% 7 Residential -Water Heater 163,124 162,884 0 99.9%0.0% 8 Residential -Insulation -Wall Cavity, Installation 162,690 8,840 0 5.4%0.0% 9 Residential -Insulation -Ceiling, Installation 145,717 99,329 0 68.2%0.0% 10 Residential -Furnace 136,211 136,211 136,211 100.0%100.0% 11 Residential -ENERGY STAR Connected Thermostat 136,197 114,399 0 84.0%0.0% 12 Commercial -Boiler 131,730 131,730 131,730 100.0%100.0% 13 Residential -Insulation -Floor/Crawlspace 128,866 56,643 0 44.0%0.0% 14 Commercial -Insulation -Wall Cavity 123,131 123,408 115,763 100.2%94.0% 15 Commercial -Water Heater -Solar System 112,885 0 0 0.0%0.0% 16 Residential -Windows -Low-e Storm Addition 108,983 0 121,262 0.0%111.3% 17 Commercial -Insulation -Roof/Ceiling 97,447 89,849 31,527 92.2%32.4% 18 Residential -Insulation -Ceiling, Upgrade 83,492 0 0 0.0%0.0% 19 Residential -Insulation -Basement Sidewall 81,620 0 0 0.0%0.0% 20 Commercial -Building Automation System 74,305 61,280 0 82.5%0.0% Total of Top 20 Measures 3,789,395 1,654,278 828,619 Total Cumulative Savings 4,906,228 2,124,189 1,125,806 43.3%22.9% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 690 | 20Applied Energy Group · www.appliedenergygroup.com Comparison with Prior Potential Study (2021-2038 TAP) •The previous CPA included potential for 2018-2020, which is removed here •For the 2021-2038 period, the current study shows quite a bit more Technical Achievablepotential •However, UCT Cost Effectivepotential is lower for this period. ▪Largest drop is in Residential water heating, due to a combination of factors: •Lower Water Heater unit savings •Removal or reduction in WA of HB-1444 affected water saving measures •New potential from measures like combination DHW+Boiler systems is expensive ACHIEVABLE POTENTIAL COMPARISON Sector End Use 2038 TAP Savings (Dth)Diff. (All States)Prior CPA Current Study Residential Space Heating 2,879,487 4,019,918 1,140,431 Secondary Heating 62,068 37,249 -24,819 Water Heating 2,264,651 2,382,341 117,690 Appliances 3,455 21,880 18,425 Miscellaneous 2,682 3,172 490 Commercial Space Heating 1,328,855 1,523,386 194,530 Water Heating 268,621 903,545 634,924 Food Preparation 136,388 139,204 2,816 Miscellaneous 51 173 122 Industrial Space Heating 7,145 8,125 980 Process 15,435 40,310 24,875 Miscellaneous 369 0 -369 Grant Total 6,969,208 9,079,303 2,110,095 Sector End Use 2038 UCTSavings (Dth)Diff. (All States)Prior CPA Current Study Residential Space Heating 2,274,729 2,071,662 -203,067 Secondary Heating 0 0 0 Water Heating 2,223,975 943,071 -1,280,904 Appliances 1,258 0 -1,258 Miscellaneous 0 0 0 Commercial Space Heating 1,131,121 1,088,143 -42,978 Water Heating 135,582 638,616 503,033 Food Preparation 136,388 139,204 2,816 Miscellaneous 45 148 103 Industrial Space Heating 1,747 6,906 5,159 Process 14,367 34,395 20,028 Miscellaneous 369 0 -369 Grant Total 5,919,582 4,922,145 -997,437Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 691 | 21Applied Energy Group · www.appliedenergygroup.com 2030 Savings (TAP) by UCT Cost Bundle –WA + ID All Sectors 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Dth UCT $/therm 2030 TAP Savings by Cost Bundle ACHIEVABLE POTENTIAL UCT $/Therm 2030 TAP Savings (Dth) $0.00 -$0.10 616,956 $0.10 -$0.20 213,315 $0.20 -$0.30 371,273 $0.30 -$0.40 146,027 $0.40 -$0.50 431,922 $0.50 -$0.60 219,860 $0.60 -$0.70 132,429 $0.70 -$0.80 222,526 $0.80 -$0.90 184,609 $0.90 -$1.00 55,730 $1.00 -$1.10 94,636 $1.10 -$1.20 91,213 $1.20 -$1.30 140,536 $1.30 -$1.40 215,089 $1.40 -$1.50 111,421 $1.50 -$1.60 109,370 $1.60 -$1.70 228,011 $1.70 -$1.80 158,836 $1.80 -$1.90 625,317 $1.90 -$2.00 54,020 $2 or more 483,133 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 692 THANK YOU! Ingrid Rohmund, Sr. Vice President, Consulting irohmund@appliedenergygroup.com Ken Walter, Project Managerkwalter@appliedenergygroup.com Kelly Marrin, Managing Director kmarrin@appliedenergygroup.com Tommy Williams, Lead Analyst twilliams@appliedenergygroup.com Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 693 Energy Trust of Oregon Energy Efficiency Resource Assessment Study November 18, 2020Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 694 Agenda •About Energy Trust •2019 Achieved Savings •Resource Assessment Overview and Background •Methodology •Results •Questions/Discussion 28 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 695 Independent nonprofit Providing access to affordable energy Generating homegrown, renewable power Serving 1.6 million customers of Portland General Electric, Pacific Power, NW Natural, Cascade Natural Gas and Avista Building a stronger Oregon and SW Washington About us 29 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 696 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 697 Nearly 660,000 sites transformed into energy efficient, healthy, comfortable and productive homes and businesses From Energy Trust’s investment of $1.5 billion in utility customer funds: 10,000 clean energy systems generating renewable power from the sun, wind, water, geothermal heat and biopower $6.9 billion in savings over time on participant utility bills from their energy- efficiency and solar investments 20 million tons of carbon dioxide emissions kept out of our air, equal to removing 3.5 million cars from our roads for a year 15 years of affordable energy 31 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 698 607 average megawatts saved 121 aMW generated 52 million annual therms saved Enough energy to power 564,000 homes and heat 100,000 homes for a year Avoided 20 million tons of carbon dioxide A clean energy power plant 32 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 699 Energy Trust’s 2019 Achievements for Avista Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 700 Energy Trust Savings Achievements –2019 •Energy Trust began serving Avista customers in Oregon in 2016. •Overall achieved 107% of goal •Goal 360k Therms •Achieved 384k Therms •Anticipate continued success as we solidify trade ally and customers relationships. Energy Trust achieved 107% of goal in Avista service territory 8 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 701 Resource Assessment: Purpose, Overview and Background Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 702 Resource Assessment (RA) Purpose •Provides estimates of energy efficiency potential that will result in a reduction of load on Avista’s system for use in Avista’s Integrated Resource Plan (IRP). •The purpose is to help Avista strategically plan future investment in both supply side and demand side resources. 36 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 703 Resource Assessment Overview •What is a resource assessment? •Model that provides an estimate of energy efficiency resource potential achievable over a 20-year period •‘Bottom-up’ approach to estimate potential starting at the measure level and scaling to a service territory •Energy Trust uses a model in Analytica that was developed by Navigant Consulting •The Analytica model calculates Technical, Achievable and Cost-Effective Achievable Energy Efficiency Potential. •Final program/IRP targets are established via ramp rates that are applied outside of the model. •Data inputs and assumptions in the model are updated in conjunction with IRP about every two years. 37 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 704 Additional Resource Assessment Background 38 •Informs utility IRP work & Energy Trust strategic and program planning. •Does not specify mechanism of savings acquisition (e.g. programs, market transformation, codes & standards) •Does not dictate source or measure mix of annual energy savings acquired by programs •Does not set incentive levels Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 705 20-Year Forecast Methodology Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 706 40 Not Technically Feasible Technical Potential Calculated within RA Model Market Barriers Achievable Potential Not Cost- Effective Cost-Effective Achievable Potential Program Design & Market Penetration Final Program Savings Potential Developed with Programs & Market Information Forecasted Potential Types Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 707 41 20-Year IRP EE Forecast Flow Chart Technical potential is reduced due to market barriers Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 708 RA Model inputs 42 Measure Inputs Measure Definition: •Baseline & Efficient equipment •Applicable customer segments •Installation type* •Measure Life Measure Savings Measure Cost •Incremental cost for lost opportunity measures •Full cost for retrofit measures Market Data •Density •Saturation of baseline equipment •Technical suitability Utility Inputs Customer and Load Forecasts Used to scale measure level savings to a service territory •Residential Stock: Count of homes •Commercial Stock: Floor Area •Industrial Stock: Customer load Avoided Costs Customer Stock Demographics: •Heating fuel splits •Water heat fuel splits *Retrofit, Replace on Burnout, or New ConstructionAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 709 Model Updates •The RA Model is a ‘living’ model and Energy Trust makes continuous improvements to it. •Measure updates, new measures and new emerging technologies updated in model •Alignment with high-level NW Power Council Power Plan deployment methodologies to obtain cost-effective achievable savings within market sectors and replacement types. 43Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 710 Key Measure Inputs: •Baseline: 0.60 EF gas water heater •Replacement Type: Replacement on Burnout / New •Measure Incremental Cost: $218 •Conventional (not emerging, no risk adjustment) •Lifetime:13 years •Savings: 31.6 therms (annual) •Non-Energy Benefits: $5.34 per year •Customer Segments: SF, MF, MH •Density, Saturation, Suitability •Competing Measures: All efficient gas water heaters Example Measure: Residential Gas Tank Water Heater (>0.70 EF) 44 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 711 Incremental Measure Savings Approach (Competition group: Gas water heaters) 19 En e r g y S a v i n g s ( T h e r m s ) EF = 0.67 EF > 0.70 En e r g y S a v i n g s ( T h e r m s ) EF = 0.67 EF > 0.70 TRC 1.5 (Numbers are for illustrative purposes only)TRC 1.1 Inc. SavingsAll Savings Savings potential for competing technologies are incremental to one another based on relative TRCs Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 712 •Energy Trust utilizes the Total Resource Cost (TRC) test to screen measures for cost effectiveness •If TRC is > 1.0, it is cost-effective •Measure Benefits: •Avoided Costs (provided by Avista) •Annual measure savings x NPV avoided costs per therm •Quantifiable Non-Energy Benefits •Water savings, etc. Total Measure Cost: •The total cost of the EE measure (full cost if retrofit, incremental over baseline if replacement) Cost-Effectiveness Screen 46 TRC =𝑴𝒆𝒂𝒔𝒖𝒓𝒆𝑩𝒆𝒏𝒆𝒇𝒊𝒕𝒔 𝑻𝒐𝒕𝒂𝒍𝑴𝒆𝒂𝒔𝒖𝒓𝒆𝑪𝒐𝒔𝒕 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 713 Cost-Effectiveness Override Energy Trust applied this to measures found to be NOT Cost-Effective in the model but are offered through Energy Trust programs. Reasons: 1.Blended avoided costs may produce different results than utility specific avoided costs 2.Measures offered under an OPUC exception per UM 551 criteria. The following measures had the CE override applied (all under OPUC exception): •Com Clothes Washers •Res Insulation (ceiling, floor, wall) •Res Clothes Dryers •Res New Homes Packages 47 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 714 Emerging Technologies 48 •Model includes savings potential from emerging technologies •Factors in changing performance, cost over time •Use risk factors to hedge against uncertainty Residential Commercial Industrial • Path 5 Emerging Super Efficient Whole Home • DOAS/HRV -GAS Space Heat • Gas-fired HP Water Heater • Window Replacement (U<.20), Gas SF • Gas-fired HP HW • Wall Insulation-VIP, R0-R35 • Absorption Gas Heat Pump Water Heaters • Gas-fired HP, Heating • Advanced Insulation • Advanced Windows Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 715 49 Risk Factors for Emerging Technologies Risk Category 10%30%50%70%90% Market Risk (25% weighting) Requires new/changed business model Start-up, or small manufacturer Significant changes to infrastructure Requires training of contractors. Consumer acceptance barriers exist. Training for contractors available. Multiple products in the market. Trained contractors Established business models Already in U.S. Market Manufacturer committed to commercialization Technical Risk (25% weighting) Prototype in first field tests. A single or unknown approach Low volume manufacturer. Limited experience New product with broad commercial appeal Proven technology in different application or different region Proven technology in target application. Multiple potentially viable approaches. Data Source Risk (50% weighting) Based only on manufacturer claims Manufacturer case studies Engineering assessment or lab test Third party case study (real world installation) Evaluation results or multiple third party case studiesAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 716 Results Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 717 51 Not Technically Feasible Technical Potential Calculated within RA Model Market Barriers Achievable Potential Not Cost- Effective Cost-Effective Achievable Potential Program Design & Market Penetration Final Program Savings Potential Developed with Programs & Other Market Information The RA Model estimates the in Technical, Achievable and Cost-Effective Achievable potential Final Program Savings Potential is deployed exogenously of the model using the Cost-Effective Achievable potential from the RA model in combination with program expertise on what can be achieved Outputs of Potential Type Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 718 Overall Cumulative Savings Results 52 0 5 10 15 20 25 30 Technical Potential Achievable Potential Cost-Effective Achievable Potential Energy Trust Savings Projection Mi l l i o n s o f T h e r m s Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 719 RA Model Results Technical, Achievable, and Cost-Effective Achievable Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 720 Cumulative Potential by Type and Year 54 0 5 10 15 20 25 30 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Mi l l i o n s o f T h e r m s Technical Achievable Cost-Effective AchievableAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 721 Contribution of Emerging Technology 55 24% 23% 20% 0 5 10 15 20 25 30 Technical Achievable Cost-effective Achievable 20 -Ye a r P o t e n t i a l ( M i l l i o n s o f T h e r m s ) Conventional EmergingAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 722 Cumulative Potential by Sector and Type 56 - 2 4 6 8 10 12 14 16 18 Residential Commercial Industrial Mi l l i o n s o f T h e r m s Technical Achievable Cost-effective AchievableAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 723 Cost-effective Achievable Potential by End Use 57 0.03 0.04 0.16 0.33 0.42 0.56 0.71 4.80 5.14 5.78 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 724 Cost-Effective Override Effect –(Millions of Therms) 58 Sector Potential with Override Potential without Override Difference Residential 12.1 10.9 1.2 Commercial 5.7 5.7 0.0 Industrial 0.2 0.2 0.0 Total 18.0 16.8 1.2 Measures with CE Override in Model: •Res Insulation (ceiling, floor, wall) •Res Clothes Dryers •Res New Homes Packages •Com Clothes WashersAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 725 Top-20 Measures 59 - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Res 0.7 EF Tank Water Heater Com Wifi Thermostat Com DHW Pipe Insulation Res Window Replacement (U=0.3) Com Gas Absorption HPWH Res Attic Insulation Res Floor Insulation Res Wall Insulation Com Demand Control Ventillation Com DOAS/HRV Com New Construction Com Strategic Energy Management Res Path 3 New Home Res Path 4 New Home Res Gas Furnace New Home Market Transformation Res Window Replacement (U<0.2) Res Path 2 New Home Res Gas Absorption HPWH Res Smart Thermostat Cumulative Cost-Effective Achievable Potential (Millions of Therms)Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 726 Final Savings Projections - Deployed Results Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 727 61 Energy Trust sets the first five years of energy efficiency acquisition to program performance and budget goals. Final Savings Projection Methodology Years 1-2 •Program forecasts – they know what is happening short term best Years 3-5 •Planning and Programs work together to create forecast Years 6-20 •Planning forecasts long-term acquisition rate to generally align NWPCC Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 728 Cumulative Potential by Type –Millions of Therms 62 Technical Potential Achievable Potential Cost- Effective Achievable Potential Energy Trust Savings Projection Residential 16.9 15.2 12.1 8.2 Commercial 7.8 6.8 5.7 6.1 Industrial 0.3 0.2 0.2 0.5 All Sectors 24.9 22.2 18.0 14.8 Not all Cost-Effective Potential is projected to be achieved because: •Lost opportunity with ‘Replacement’ and ‘New Constr.’ measures •Hard to reach measures (e.g. insulation) •Other market barriers identified by programs & new service territoryAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 729 Cost-Effective Savings 63 Heating Water Heating Weatherization - 0.2 0.4 0.6 0.8 1.0 1.2 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Mi l l i o n s o f T h e r m s Large Project Adder Weatherization Water Heating Ventilation Process Heating Other Heating Cooking Behavioral Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 730 Projected Savings as Percent of Annual Load 64 0% 2% 4% 6% 8% 10% 12% 14% 16% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% Cu m u l a t i v e S a v i n g s a s % o f L o a d An n u a l S a v i n g s a s % o f A n n u a l L o a d Annual Cumulative Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 731 Levelized Cost Supply Curve 65 - 5 10 15 20 25 -$5 -$3 -$1 $1 $3 $5 $7 $9 Cu m u l a t i v e 2 0 -Ye a r P o t e n t i a l ( M i l l i o n s o f T h e r m s ) Levelived Cost ($/therm) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 732 Benefit Cost Ratio Supply Curve 66 - 5 10 15 20 25 - 1 2 3 4 5 6 7 8 9 10 Cu m u l a t i v e 2 0 -Ye a r P o t e n t i a l ( M i l l i o n s o f T h e r m s ) Total Resource Cost Benefit-Cost Ratio Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 733 Thank you Spencer Moersfelder, Planning Manager spencer.moersfelder@energytrust.org 503.548.1596 Ted Light, Lighthouse Energy Consulting ted@lighthouseenergynw.com 503.395.5310 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 734 6868 Sendout Model Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 735 69696969 Modeling Transportation In SENDOUT® •Start with a point-in-time look at each jurisdiction’s resources •Contracts –Receipt and Delivery Points •Rates •Contractual vs. Operational •Contractual can be overly restrictive •Operational can be overly flexible •Incorporating operational realities into our modeling can defer the need to acquire new resources •Gas Supply’s job is to get gas from the supply basin to the pipeline citygate •Gas Engineering/Distribution’s job is to take gas from the pipeline citygate to our customers •The major limiting factor is receipt quantity –how much can you bring into the system? Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 736 707070 Modeling Challenges •Supply needs to get gas to the gate •Contracts were created years ago, based on demand projections at that point in time •Stuff happens (i.e. growth differs from forecast) •Sum of receipt quantity and aggregated delivery quantity don’t identify resource deficiency for quite some time however….. •The aggregated look can mask individual city gate issues, and the disaggregated look can create deficiencies where they don’t exist •In many cases, operational capacity is greater than contracted •Transportation resources are interconnected (two pipes can serve one area) •WARNING –we need to be mindful of the modeling limitations Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 737 71717171 What is in SENDOUT®? Inside: •Demand forecasts at an aggregated level •Existing firm transportation resources and current rates •Receipt point to aggregated delivery points/“zone” •Jurisdictional considerations •Long term capacity releases •Potential resources, both supply and demand side Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 738 72727272 What is outside SENDOUT®? Outside: •Gate station analysis •Forecasted demand behind the gate •Growth rates consistent with IRP assumptions •Actual hourly/daily city gate flow data •Gate station MDDO’s •Gate station operational capacities Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 739 737373 Supply Interconnect Demand Transport Storage Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 740 74747474 New Planning Software •Avista is looking for a new software solution to model our natural gas system and the increasingly complex system with carbon reduction goals •We hope to have this software available for the next round of Integrated Resource Planning (IRP) and to model it in parallel with Sendout Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 741 7575 Assumptions Review Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 742 76767676 Firm Customers (Meters) by State and Class, 2019 WA 47% ID 24% OR 29% Firm Customers by State Residential 90% Commercial 10% Industrial 0.1% Firm Customers by Class Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 743 77777777 WA-ID Region Firm Customer Range, 2021-2045 220,000 240,000 260,000 280,000 300,000 320,000 340,000 360,000 380,000 400,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 WAIDFIRMCUS Base WAIDFIRMCUS High WAIDFIRMCUS Low Variable Low Growth Base Growth High Growth WA-ID Customers 0.7%1.1%1.5% WA Population 0.4%0.7%1.0% ID Population 0.8%1.4%2.0% WA-ID Population 0.5%0.8%1.2% 77 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 744 78787878 OR Region Firm Customer Range, 2021-2045 95,000 100,000 105,000 110,000 115,000 120,000 125,000 130,000 135,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 ORFIRMCUS Base ORFIRMCUS High ORFIRMCUS Low Variable Low Growth Base Growth High Growth Customers 0.5%0.7%0.9% Population 0.3%0.5%0.7% 78 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 745 79797979 System Firm Customer Range, 2021-2045 300,000 350,000 400,000 450,000 500,000 550,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 SYSTEMCUS.syf Base SYSTEMCUS.syf High SYSTEMCUS.syf Low Variable Low Growth Base Growth High Growth Customers 0.6%1.0%1.3% Population 0.4%0.8%1.1% 79 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 746 80808080 Summary of Growth Rates System Base-Case High Low Residential 1.0%1.4%0.7% Commercial 0.5%0.8%0.1% Industrial -0.8%2.2%-3.8% Total 1.0%1.3%0.6% WA Base-Case High Low Residential 1.0%1.3%0.7% Commercial 0.4%0.7%0.1% Industrial -0.8%1.9%-3.6% Total 1.0%1.3%0.7% ID Base-Case High Low Residential 1.4%2.0%0.8% Commercial 0.4%1.0%-0.2% Industrial -1.0%1.8%-3.4% Total 1.3%1.9%0.7% OR Base-Case High Low Residential 0.7%0.9%0.5% Commercial 0.6%0.8%0.4% Industrial 0.0%4.5%-10.6% Total 0.7%0.9%0.5% Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 747 818181 Base Coefficients (July and August Averaged) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 748 828282 Heat Coefficients Planning Area -Residential Class 2 Year 3 Year 5 Year Roseburg (Oregon)0.008829 0.008046 0.00699 Medford (Oregon)0.00639 0.0065 0.006068 La Grande (Oregon)0.006223 0.007297 0.00665 Klamath Falls (Oregon)0.005284 0.005268 0.004902 Idaho 0.006445 0.006344 0.005896 Washington 0.006307 0.006313 0.005957 *Avg. of monthly heat coefficient *Historic Data –adjusted by price elasticity and DSMAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 749 83838383 Price Elasticity •The elasticity as measured in the Medford and Roseburg areas will be used for the entire system as estimated elasticity. •0.81% decrease only for each price rise of 10% •This elasticity is measured through heat coefficients and annual price changes Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 750 84848484 Avista Weather Planning Standard •Utilize coldest day for each of the past 30 years with a 99% probability supply can be fulfilled Area 99% Probability Avg. Temp La Grande -11 Klamath Falls -9 Medford 11 Roseburg 14 Spokane -12 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 751 85858585 Henry Hub Expected Price and Average Annual Price Forecasts Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 752 86868686 Stochastic Prices (Results from 1000 Draws) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 753 878787 2020 Henry Hub Prices -Nominal Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 754 88888888 Prices by Gas Hub (Henry Hub Expected Price + Basis Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 755 89898989 Expected Case Cost of Carbon by State -Summary •Washington -Social cost of carbon @ 2.5% discount rate; –upstream emissions associated with natural gas drilling and transportation of natural gas to its end use. •Oregon is based off a Wood Mackenzie estimate for Cap and Trade •Idaho -carbon prices will not be included Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 756 90909090 Carbon Costs $- $50 $100 $150 $200 $250 $300 $350 $400 $450 OR Cap and Trade WA SCC High Carbon Price Low Carbon Price $44.92 $113.75 $234.45 $0Levelized Cost per MTCO2e Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 757 91919191 Carbon Costs Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 758 92929292 LDC Upstream Emissions *Avista gas purchases An average of the total volume purchased over the past 5 years by emissions location Combustion Lbs. GHG/MMBtu Lbs. CO2e/Mmbtu CO2 116.88 116.88 CH4 0.0022 0.0748 N2O 0.0022 0.6556 Total Combustion 117.61 Upstream CH4 0.313406851 10.66 Total 128.27 Upstream Emissions Avista's Purchases Emissions Location 0.77 89.72% Canada 1.00 10.28% Rockies 0.79 Avista Specific Natural Gas 34 GWP Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 759 939393 Avoided Cost Comparison Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 760 949494 DSM Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 761 9595 Expected Case Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 762 969696 Safe Harbor Statement This document contains forward-looking statements.Such statements are subject to a variety of risks,uncertainties and other factors,most of which are beyond the Company’s control,and many of which could have a significant impact on the Company’s operations,results of operations and financial condition,and could cause actual results to differ materially from those anticipated. For a further discussion of these factors and other important factors,please refer to the Company’s reports filed with the Securities and Exchange Commission.The forward-looking statements contained in this document speak only as of the date hereof.The Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which such statement is made or to reflect the occurrence of unanticipated events.New risks,uncertainties and other factors emerge from time to time,and it is not possible for management to predict all of such factors,nor can it assess the impact of each such factor on the Company’s business or the extent to which any such factor,or combination of factors,may cause actual results to differ materially from those contained in any forward-looking statement. Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 763 97979797 Proposed Scenarios *1,000 Draws per scenario will be run stochastically Proposed Scenarios Expected Average Low Growth High Growth INPUT ASSUMPTIONS Case Case & High Prices & Low Prices Customer Growth Rate Low Growth Rate Reference Case Cust Growth Rates High Growth Rate Demand Side Management High Prices DSM Weather Planning Standard 99% probability of coldest in 30 years 20 year average GWP Prices Price curve SCC @ 2.5% WA; Cap and Trade forecast - OR; NO Carbon adder in ID RESULTS First Gas Year Unserved Washington Idaho Medford Roseburg Klamath La Grande Scenario Summary Most aggressive peak planning case utilizing Average Case assumptions as a starting point and layering in peak day 99% probability. The likelihood of occurrence is low. Case most representative of our average (budget, PGA, rate case) planning criteria. Stagnant growth assumptions in order to evaluate if a shortage does occur. Not likely to occur. Reduction of the use of natural gas to 80% below 1990 targets in OR and WA by 2050. The case assumes the overall reduction is an average goal before applying figures like elasticity and DSM. Aggressive growth assumptions in order to evaluate when our earliest resource shortage could occur. Not likely to occur. Carbon Reduction Carbon Cost - High (SCC 95% at 3%) SCC @ 2.5% WA; Cap and Trade forecast - OR; Reference Case Cust Growth Rates LowExpectedHigh Carbon Legislation ($/Metric Ton) Use per Customer 100-Year GWP NO Carbon adder in ID 3 yr + Price Elasticity 99% probability of coldest in 30 years $0 Expected Case CPA Low Prices DSM Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 764 98989898 Existing Resources vs. Peak Day Demand Expected Case –Washington/Idaho (DRAFT) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 765 99999999 Existing Resources vs. Peak Day Demand Expected Case –Medford/Roseburg (DRAFT) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 766 100100100100 Existing Resources vs. Peak Day Demand Expected Case –Klamath Falls (DRAFT) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 767 101101101101 Existing Resources vs. Peak Day Demand Expected Case –La Grande (DRAFT) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 768 102102102102 Expected Case -Emissions 0 5 10 15 20 25 30 35 40 45 1.95 2.00 2.05 2.10 2.15 2.20 2.25 2.30 2.35 2.40 2.45 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Mi l l i o n D t h Mi l l i o n M e t r i c T o n s o f C O 2 e ID WA OR System Emissions Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 769 103103103 Expected Case Costs 33 34 35 36 37 38 39 40 41 42 43 $- $100 $200 $300 $400 $500 $600 Mi l l o n s of Dt h Mi l l i o n s All Other Costs System Demand $3B$3.9B Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 770 104104104 Expected Case distribution *1000 Simulations Average $ 6.876 Std Dev $ 1.610 Min $ 4.482 Max $ 17.713 Median $ 6.455 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 771 105105105 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 Mi l l i o n s Std Dev 95th 10th Deterministic Expected Case 1,000 Draws Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 772 106106 Other Scenarios Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 773 107107107107 Energy Demand 0 5 10 15 20 25 30 35 40 45 50 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 En e r g y D e m a n d Million Dth Carbon Reduction Average Case Expected Case Low Growth High Growth Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 774 108108108108 Emissions *Emissions assume carbon intensity of the supply resources 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Carbon Reduction 1,966 1,895 1,918 1,894 1,842 1,784 1,729 1,701 1,709 1,669 1,629 1,600 1,549 1,509 1,468 1,440 1,446 1,406 1,366 1,338 Average Case 2,011 1,868 1,883 1,913 1,921 1,929 1,938 1,961 1,968 1,984 1,999 2,023 2,030 2,045 2,061 2,086 2,093 2,109 2,124 2,149 Expected Case 2,132 2,117 2,138 2,181 2,178 2,178 2,178 2,214 2,214 2,232 2,249 2,284 2,283 2,301 2,319 2,356 2,355 2,372 2,389 2,426 Low Growth 1,820 1,237 1,237 1,251 1,249 1,255 1,260 1,274 1,271 1,276 1,282 1,295 1,292 1,297 1,301 1,315 1,311 1,316 1,321 1,334 High Growth 2,175 2,207 2,243 2,301 2,313 2,326 2,338 2,389 2,400 2,430 2,459 2,509 2,512 2,530 2,559 2,609 2,616 2,644 2,672 2,723 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 Mi l l i o n M T C O 2 e Carbon Reduction Average Case Expected Case Low Growth High Growth Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 775 109109109109 Average Case Average 5.69$ Min 5.50$ Max 6.12$ Std Dev 0.05$ Median 5.69$ *Billions ($) Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 776 110110110110 Low Growth and High Prices Average 9.80$ Min 9.60$ Max 10.01$ Std Dev 0.06$ Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 777 111111111 # o f 2 0 y e a r f u t u r e s Solve - No Unserved Average Stdev Median Max Min RNG Resources Only 2.683$ 0.043$ 2.681$ 2.861$ 2.542$ Plymouth, RNG in La Grande 2.721$ 0.043$ 2.719$ 2.901$ 2.580$ GTN - RNG in La Grande 2.734$ 0.042$ 2.675$ 2.855$ 2.540$ Medford Lateral Expansion, RNG in La Grande 2.734$ 0.044$ 2.731$ 2.915$ 2.600$ *$ in Billions **1,000 draws each scenario High Growth & Low Prices Least Cost/Risk -RNG solve Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 778 112112112112 Carbon Reduction Scenario Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 779 113113113113 Carbon Reduction scenario •Carbon reduction goals to meet 2035 targets of 45% below 1990 emissions and criteria are not known •Any actual availability of physical RNG resources and rate impact by year can be further studied in future Integrated Resource Plans •Actual projects will be considered on an ad-hoc basis to determine costs and environmental attributes which may make different RNG types a least cost solution •Exact 1990 emissions are not known and are estimated based on prior 10k’s •Many of the rules from EO 20-04 will be coming out after this IRP is submitted •Allowances are not considered Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 780 114114114114 Resources Considered *Prices include carbon intensity, carbon costs, capital and overhead, and electricity and are considered Avista owned and operated **Estimates are from a Black and Veach study Resource Dth per year Levelized Cost Per Dth (Year 1) Distributed Renewable Hydrogen Production -WA 60,509 $47.25 Distributed Renewable Hydrogen Production -OR 60,509 $48.01 Distributed LFG to RNG Production -WA 231,790 $15.90 Centralized LFG to RNG Production -WA 662,256 $14.11 Dairy Manure to RNG Production -WA 231,790 $14.30 Wastewater Sludge to RNG Production -WA 187,245 $23.34 Food Waste to RNG Production -WA 108,799 $33.14 Distributed LFG to RNG Production -OR 231,790 $14.34 Centralized LFG to RNG Production -OR 662,256 $12.54 Dairy Manure to RNG Production -OR 231,790 $30.59 Wastewater Sludge to RNG Production -OR 187,245 $20.36 Food Waste to RNG Production -OR 108,799 $37.46 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 781 115115115 Carbon Intensity Source Current Carbon Intensity (g CO2e/MJ) Percent of estimated Carbon reduction as compared to natural gas (as base value) lbs. per Dth Natural Gas 78.37 128.27 Landfill 46.42 41%75.98 Dairy -276.24 -452%(580.40) WWT 19.34 75%31.65 Solid Waste -22.93 -129%(165.80) *Green H2 is considered to have no carbon or -128.27 lbs. per Dth as compared to Natural Gas Source: California Air Resources Board Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 782 116116116 Climate Goals - 0.50 1.00 1.50 2.00 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 Mi l l i o n s o f M T C O 2 e WA and OR Emissions Only Expected Emissions MTCO2e Emissions with Climate Goals and EO - 5 10 15 20 25 30 35 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 Mi l l i o n s o f Dt h WA and OR only Dairy Fossil FuelsAvista Corp.2021 Natural Gas Integrated Resource Plan Appendices 783 117117117 $0 $10 $20 $30 $40 $50 $60 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 Mi l l i o n s Estimated Dairy Costs Resources Needed Levelized Cost of $29M per year - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 Dt h Dairy #1 Dairy #2 Dairy #3 Dairy #4 Dairy #5 Dairy #6 Dairy #7 Dairy #8 Dairy #9 Dairy #10 Dairy #11 Dairy #12 Dairy #13 Dairy #14 Dairy #15 Dairy #16 Dairy #17 Dairy #18 Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 784 118118118 Carbon Reduction Average 5.695$ Min 5.857$ Max 5.542$ Std Dev 0.048$ Median 5.695$ Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 785 119119119119 Carbon Reduction Summary •Dairy –With a high carbon intensity and it’s ability to reduce emissions dairy becomes the preferred resource in this IRP to reduce carbon –As the cost of carbon gets higher dairy becomes more economic as the carbon intensity combined with the SCC creates a low price –Unlike some other RNG resources a dairy farm has the potential to be reproduced unlike a landfill or waste water treatment plants •Hydrogen –If the high carbon offset of dairy can be mitigated with a lower price of H2 this is both the primary and viable path –Green H2 has a large potential to offset emissions and provide the amount of energy demand forecasted •Carbon offsets through allowances and the associated costs need to be considered to fully understand least cost and least risk •Other RNG type programs will be modeled at a detailed level as projects are available and depending on costs and offsets could change least cost and least risk solution Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 786 120120120120 Action Plan •Further model carbon reduction •Investigate new resource plan modeling software and integrate Avista’s system into software to run in parallel with Sendout •Model all requirements as directed in Executive Order 20-04 •Avista will ensure Energy Trust (ETO) has sufficient funding to acquire therm savings of the amount identified and approved by the Energy Trust Board Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 787 121121121121 Next Steps 2020 Natural Gas IRP Draft Timeline The following is Avista’s tentative 2020 Natural Gas IRP timeline: •June -November 2020 –Technical Advisory Committee meetings •December 2020 –Prepare draft of IRP •January 4, 2021 –Draft of IRP document sent to TAC •February 1, 2021 –Comments on draft due back to Avista •February 2021 –TAC final review meeting (if necessary) •March 2021 –Final editing and printing of IRP •April 1, 2021 –File IRP submission to Commissions and TAC Avista Corp.2021 Natural Gas Integrated Resource Plan Appendices 788