20211112Final_Order_No_35218.pdf

ORDER NO. 35218 1

Office of the Secretary
Service Date
November 12, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA
CORPORATION DBA AVISTA UTILITIES’
2021 NATURAL GAS INTEGRATED
RESOURCE PLAN
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CASE NO. AVU-G-21-02

ORDER NO. 35218

On March 31, 2021, Avista Corporation dba Avista Utilities (“Company”) filed its
2021 Natural Gas Integrated Resource Plan (“IRP”). The Company filed its IRP by the deadline
set in Order No. 34697, which extended the Company’s typical, August 31, 2020, filing deadline
to April 1, 2021.1 The IRP must discuss the subjects required by Commission Order Nos. 25342,
27024, 27098, and 32698, and Section 303(b)(3) of the Public Utility Regulatory Policies Act
(“PURPA”), 15 USC § 3202.
On April 23, 2021, the Commission issued a Notice of Filing and Notice of Intervention
Deadline. Order No. 35021. No one intervened and on May 19, 2021, a Notice of Parties was
issued. On June 3, 2021, the Commission issued a Notice of Modified Procedure establishing
deadlines for public comments and the Company’s reply. Order No. 35059. Commission Staff
(“Staff”) filed comments to which the Company replied.
Having reviewed the record in this case, the Commission now issues this Order
acknowledging the Company’s IRP.
BACKGROUND
A natural gas IRP describes a company’s plans to meet its customers’ future natural
gas needs. As a result of amended Section 303 of PURPA, local gas distribution companies must
develop an IRP. See Order No. 25342. The Commission previously shortened the required
planning horizon in an IRP from 20 years to at least 5 years. See Order No. 27024. While there is
no requirement that companies formally evaluate potential demand-side management (“DSM”)
programs in their IRPs, the Commission previously directed companies to explain whether cost-
effective DSM opportunities exist. See Order No. 27098. In developing its IRP, the Company is
required to offer a Technical Advisory Committee (“TAC”) or other public outreach meeting that
is geographically convenient for Idaho customers. See Order No. 32698.

1 Per Commission Order No. 32233, Avista must file its IRP by August 31 of every even-numbered year.

ORDER NO. 35218 2
In sum, the above-referenced orders direct the Company to file an IRP every two years
that includes:
1. A forecast of future gas demand for each customer class, which includes the
number, type, and efficiency of gas end-users as well as effects from
economic forces on gas consumption;

2. An analysis of gas supply options for each customer class, which includes
a projection of spot market versus long-term purchases for both firm and
interruptible markets, an evaluation of the opportunities for using company-
owned or contracted storage or production, an analysis of prospects for
company participation in a gas futures market, and an assessment of
opportunities for access to multiple pipeline suppliers or direct purchases
from producers;

3. An explanation of whether or not there are cost-effective DSM
opportunities;

4. The integration of the demand forecast and resource evaluations into a long-
range (at least a five-year) plan describing the strategies designed to meet
current and future needs at the lowest cost to the utility and its ratepayers;

5. A short-term (e.g., two-year) plan outlining the specific actions to be taken
by the utility in implementing the IRP;

6. A progress report that relates the new plan to the previously filed plan; and

7. Public participation, including input from the TAC.

THE IRP FILING
The IRP contains an Executive Summary, and chapters on Demand Forecasts;
Demand-Side Resources; Supply-Side Resources; Carbon Reduction; the Company’s Integrated
Resource Portfolio; Alternate Scenarios, Portfolios, and Stochastic Analysis; Distribution
Planning; and the Company’s Action Plan. The following information is from the IRP’s Executive
Summary.2
In the IRP, the Company “identifies a strategic natural gas resource portfolio to meet
customer demand requirements over the next 20 years.” IRP at 1. The IRP was developed with
input from the Company’s TAC which includes Commission Staff, peer utilities, customers, and
other stakeholders. Topics discussed with the TAC included natural gas demand forecasts, DSM,

2 Further detail may be obtained in the IRP and its appendices.

ORDER NO. 35218 3
supply-side resources, modeling tools, distribution planning, and policy issues. The Company
stated that the IRP process resulted in an integrated resource portfolio designed to serve customers’
natural gas needs while balancing cost and risk. IRP at 1-2.
The Company stated the IRP addresses uncertainties surrounding supply and demand
by evaluating multiple scenarios with wide-ranging possible outcomes. Id. at 2.
The Company discussed its demand forecasts. The Company estimated average day,
system-wide core demand increasing from 95,126 dekatherms per day (“Dth/day”) in 2021 to
102,054 Dth/day in 2040. The Company forecasted that coincidental peak day, system-wide core
demand will increase from a peak of 363,586 Dth/day in 2021 to 407,216 Dth/day in 2040.
Forecasted non-coincidental peak day demand peaks at 349,210 Dth/day in 2020 and increases to
388,615 Dth/day in 2040. Id at 2-4.
The Company presented its natural gas price forecasts. The Company stated gas prices
are a significant part of the total cost of a resource option, which affects the avoided cost threshold
for determining cost-effectiveness of conservation measures and how customers consume natural
gas. The Company expects carbon legislation in Oregon and Washington and stated its current IRP
price forecast includes higher carbon adders in those states, but not in Idaho. The Company
combined forward prices with three fundamental price forecasts to develop high and low expected
price strips at the Henry Hub. The Company noted it used an expected elasticity response factor to
model how customers’ consumption of natural gas will respond to price changes. Id. at 5-6.
The Company discussed existing and potential natural gas supply resources. The
Company stated it has a diversified portfolio of gas supply resources, including contracts to buy
gas from several supply basins, owned and contracted storage providing supply source flexibility,
and firm capacity rights on six pipelines. The Company considered incremental pipeline
transportation, renewable natural gas, storage options, hydrogen, distribution enhancements, and
various forms of liquified natural gas (“LNG”) storage or services as potential resource additions.
Id. at 6.
The Company discussed projected resource needs. In the high growth and low-price
and carbon reduction (cost of carbon) scenarios, resource deficiencies were identified. The high
growth and low-price scenario observed an energy shortage which would require additional assets
to supply more energy. The carbon reduction scenario did not include an energy shortage, but a
need for carbon neutral or carbon reducing resources. However, the Company was not resource

ORDER NO. 35218 4
deficient in the expected case for the 20-year planning horizon. The Company indicated it would
integrate additional information on goals and legislation that come into focus. Id. at 7-9.
The Company stated that, even with the planning, analysis, and conclusions reached in
the IRP, uncertainty still exists. The Company stated it will diligently monitor issues and
challenges, including: (1) demand scenarios that will provide insight into how quickly resource
needs can change if demand varies from the expected case; (2) how natural gas demand in
international markets will affect regional gas infrastructure and natural gas pricing; (3) use of
natural gas to back up renewable resources and for replacement of retired coal plants; and (4) other
issues that might affect demand and pricing. Id. at 11-12.
The IRP contains a 2021-2022 Action Plan outlining activities identified by the IRP
team with input from Company management and TAC members. The Company indicated the
Action Plan positions the Company to provide the best cost/risk resource portfolio and to support
and improve IRP planning. The Company stated ongoing activities include:
• Monitoring supply and resource trends including the availability and price
of natural gas, LNG exports, methanol plants, supply and market dynamics,
and pipeline and storage infrastructure availability;

• Monitoring availability of resource options;

• Meeting regularly with Staff to provide information on market activities and
significant changes in assumptions and/or status of activities related to the
IRP or natural gas procurement; and

• Managing existing resources and optimizing underutilized resources.
Id. at 174-75

The Company stated new activities for the study, development, and preparation of the
2023 IRP include:
• Completing additional modeling on carbon reduction (Oregon and
Washington);

• Investigating new resource plan modeling software and integrating the
Company’s system to run parallel with current modeling software;

• Modeling all requirements from Executive Order 20-04 (Oregon);

• Ensuring the Energy Trust (“ETO”) has sufficient funding to acquire therm
savings of the amount identified and approved by the Energy Trust Board;

ORDER NO. 35218 5
• Exploring the feasibility of using projected future weather conditions in its
design day methods;

• Discuss integration of ETO and Conservation Potential Assessment data,
program experience, knowledge of current and development markets, and
future codes and standards; and

• Performing high pressure distribution or city gate station capital work as
needed.

Id. at 12-13, 174-75.
COMMENTS
1. Staff Comments
Staff reviewed the Company’s 2021 natural gas IRP and believed it generally complied
with Order Nos. 25342, 27024, 27098, and 32698. Staff thus recommended that the Commission
accept the IRP for filing. Staff’s review focused on the Company’s: (1) natural gas demand
forecasts; (2) supply-side resources; (3) DSM, resource and distribution planning; (4) Resource
Planning; and (5) action plans.
Natural Gas Demand Forecast
Staff reviewed the Company’s demand forecast assumptions, along with projections
for demand growth rates. Staff confirmed the Company’s demand forecasts were based on
reasonable assumptions using historical data over the planning horizon and provided a range of
demand projections to test the sensitivity of future resource investments. Staff noted the Company
developed five alternative demand scenarios from the reference case forecast: an average case, an
expected case, a high growth/low price case, a low growth/high price case, and a carbon reduction
case.
In the expected case scenario, the Company forecasted its system-wide average annual
daily demand would increase 7.28% between 2021 and 2040, to 102,054 Dth/day. The Company
forecasted a 12% system-wide peak-day demand increase of 407,216 Dth/day by 2040. System-
wide, the Company expected its customer base to increase at an average annual rate of 1.0% which
is slightly lower than the 2018 projection of 1.2%. Staff believed the above rates were based on
reasonable growth and consumption projections for the Company’s service area.
Using the expected case scenario, the Company’s analysis showed that it would not be
resource deficient during the 20-year planning horizon. However, a resource deficiency is
projected to occur in 2035 for the high growth/low-price scenario using existing resources. Staff

ORDER NO. 35218 6
noted the Company did not recommend resource options to meet the 2035 deficiency because it
occurs well into the future. Staff considered this a reasonable approach because the deficiency
occurs beyond the five-year planning horizon, giving the Company sufficient lead time to perform
additional analysis and explore alternatives.
Staff stated the high growth/low price, low growth/high price, and carbon reduction
scenarios were developed to account for potential variations in customer growth, market
conditions, usage, and carbon regulations. The additional demand scenarios help the Company
create a more robust analysis by allowing the Company to evaluate the risks of potential resource
plans given a range of possible demand outcomes.
Under the carbon reduction scenario, an energy deficiency does not exist, but instead
will require the Company to plan for carbon reducing—or carbon neutral resources—in 2022, due
to expected legislation from Oregon and Washington State. The Company expects Oregon to pass
cap-and-trade legislation, and for Washington to require utilities to include the social cost of
carbon to evaluate its resource plans. Because of these expectations, the Company plans to further
model carbon reduction as it develops its next natural gas IRP.
Supply and Resource Options
The Company developed high, expected, and low-price forecasts to represent a
reasonable range of Henry Hub natural gas pricing possibilities. Each forecast begins in 2020-2021
at under $3.00 per dekatherm (“Dth”). The high price scenario peaks at approximately $17.00 per
Dth in 2045 and the expected case peaks at about $7.00 per Dth in 2045. The low-price scenario
shows natural gas at under $5.00 per Dth over the 2021-2045 planning horizon.
The expected case scenario shows a gradual price increase over the planning horizon.
Staff believed it was reasonable because the Company’s Henry Hub forecasts are consistent with
forecasts generated by other utilities and the gas industry generally. The fundamentals reflect
availability with an abundance of natural gas and minimal price volatility.
Demand Side Management
In 2020, the Company completed a Conservation Potential Assessment (“CPA”) of its
DSM programs for the 2021-2040 planning horizon. Applied Energy Group (“AEG”) determined
energy efficiency (“EE”) potential for Idaho using three analyses: (1) Technical Potential which is
the theoretical upper limit of EE potential; (2) Achievable Technical Potential; and (3) Utility Cost
Test (“UCT”) Achievable Economic Potential.

ORDER NO. 35218 7
Recent trends with the Company’s IRP show a decline in cumulative Residential
savings and a steady increase in EE savings in the Commercial and Industrial sectors. In the Filing,
AEG’s 20-year cumulative UCT Achievable Economic Potential for Commercial and Industrial
sectors increased 56% from the 20-year forecast conducted in the Company’s 2018 natural gas
IRP. Despite the increase in the Company’s most recent natural gas DSM Prudency filing, AVU-
G-20-08, the Company reported 3,327 Dth of savings for Commercial and Industrial sectors in
2019, which is 36% of their savings target from the 2018 IRP. Most of the Company’s EE savings
in recent DSM prudency filings have been in the Residential sector. The Commercial and Industrial
Sectors have had marginal impacts on total EE savings. Staff believed that the Commercial and
Industrial savings potential may be overstated. Staff will continue to monitor the CPA analyses,
and the Company’s DSM goals in future IRP filings.
Resource Evaluation
The Company evaluated its ability to obtain adequate natural gas and ensure sufficient
pipeline transportation capacity to meet demand. Staff recommended that the Company also ensure
that its distribution system is sufficient to meet demand and projected load growth requirements.
In its 2018 IRP, the Company included three distribution system enhancements: the
Coeur d’Alene High Pressure Reinforcement—the Post Falls Phase; the Schweitzer Mountain
Road Reinforcement; and the Warden High Pressure Reinforcement. The Company updated Staff
on each enhancement project.
In this IRP Filing, Staff observed that no distribution system enhancements were
included for Idaho. The Company confirmed that the distribution system serving Idaho customers
does not currently require any additional reinforcements. Staff appreciated the Company’s
commitment to frequently assess the need to achieve sufficient capacity to meet demand and
keeping the Commission informed.
Action Plans and Progress
The 2019-2020 IRP Action Plan, listed in the 2018 IRP, included several items Staff
believed the Company completed and reasonably discussed in the current IRP.
2021 - 2022 Action Plan
Staff noted the Company’s IRP team, with input from Company management and TAC
members, identified the 2021-2022 Action Plan to provide the best cost/risk resource portfolio and
to support and improve future IRP planning. These specific items are addressed in greater detail

ORDER NO. 35218 8
in the “IRP Filing” section above. Staff believed these action items were appropriate and
reasonable. Staff looks forward to reviewing the specifics of these action items prior to the 2023
IRP cycle.
Public Participation
The Company conducted four virtual TAC meetings. During these meetings, the
Company provided details on the mechanics of its planning strategies, tools, and results. Meetings
were conducted to allow feedback and input from TAC members and stakeholders.
2. Company Reply Comments.
The Company replied that it appreciated Staff’s comments affirming the IRP complies
with previous Commission orders and recommending the Commission acknowledge the IRP
Filing. The Company stated that it would continue to work with Staff on the timing of its next IRP
and that it looks forward to Staff’s continued collaboration in the Company's resource planning
efforts.
COMMISSION FINDINGS AND DECISION
The Company is a natural gas corporation and public utility. See Idaho Code §§ 61-
116, -117, and -129. The Commission has jurisdiction over the Company and the issues in this
case under Title 61 of the Idaho Code, including Idaho Code § 61-501. The Commission has
reviewed the record, including the IRP and Staff and the Company’s comments. We appreciate
Staff’s thorough review and input in this matter. We find that the Company’s IRP contains the
required information and is appropriately formatted, consistent with Order Nos. 25342, 27024,
27098, and 32698, as well as Section 303(b)(3) of PURPA. We therefore acknowledge the
Company’s 2021 IRP and accept it for filing.
Our acceptance of the IRP should not be interpreted as an endorsement of, or judgment
of prudence as to any particular element of the Company’s plan, nor an approval of any resource
acquisition or proposed action included in the IRP. We recognize the Company’s ongoing efforts
to keep customers informed, including through TAC meetings and other forms of public outreach.
We encourage the Company to continue in its efforts to engage affected and interested persons.
We further encourage the Company to evaluate how it can obtain more value from the IRP process
to anticipate the dynamic nature of the energy environment. We anticipate the Company will
continue using the IRP to evaluate new resource scenarios that could benefit Idaho customers.

ORDER NO. 35218 9
O R D E R
IT IS ORDERED that the Company’s 2021 natural gas IRP is acknowledged.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code §§ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 12th day
of November 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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