20210729Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917
!'3 Fl{ 3: t+5
Street Address for Express Mail:
I I33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 837I4
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA CORPORATION
DBA AVISTA UTILITIES' 2021 NATURAL GAS
INTEGRATED RESOURCE PLAN
CASE NO. AVU-G.21-02
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the ldaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attomey General, submits the following comments.
BACKGROUND
On March 31,2021, Avista Corporation dba Avista Utilities ("Company") filed its202l
Natural Gas Integrated Resource Plan ("lRP"). 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 I ,2021r. The Company files a natural gas IRP every two years to describe the Company's
plans to meet its customers' future natural gas needs. The IRP must discuss the subjects required
by Commission Order Nos. 25342,27024, and27098, and Section 303(b)(3) of the Public Utility
Regulatory Policies Act ("PURPA"), 15 USC $ 3202.
I Per Commission Order No. 32233, Avista must file its Natural Gas IRP by August 3l of every even-numbered year
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ISTAFF COMMENTS JULY 29,2021
The Company's2021natural gas IRP contains an Executive Summary, and chapters on
Demand Forecasts; Demand-Side Resources; Supply-Side Resources; Carbon Reduction; the
Company's Integrated Resource Portfolio; Altemate Scenarios, Portfolios, and Stochastic
Analysis; Distribution Planning; and the Company's Action Plan.
The Company states its It{P identifies a strategic natural gas resource portfolio that meets
expected customer demand requirements over the next 20 years. The IRP involves input from
the Company's Technical Advisory Committee ("TAC"), which includes Commission Staff, peer
utilities, customers, and other stakeholders. Topics discussed with the TAC included natural gas
demand forecasts, supply-side resources, demand-side management ("DSM"), computer
modeling tools, carbon legislation, and distribution planning. The Company states that it
addresses uncertainties surrounding supply and demand by evaluating multiple scenarios with
wide-ranging possible outcomes. The Company states the IRP planning strategy produced an
IRP that effectively analyzes risks and resource options, which sufficiently ensures customers
will receive safe and reliable energy delivery services with the best-risk, lease-cost, long-term
solutions.
STAFF REVIEW
Staff reviewed the Company's 2021 natural gas IRP to affirm that it complies with
requirements specified by previous Commission orders. Based on its review, Staff believes that
the202l IRP contains the required information. Staff examined the Company's: (1) natural gas
demand forecasts; (2) supply-side resources; (3) DSM, resource and distribution planning; and
(4) action plans. Staff discusses each of the aforementioned subjects in detailed sections below.
Based on its review, Staff recommends that the Commission acknowledge the Company's IRP as
timely filed and in compliance with its previous orders.
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 are based on reasonable
assumptions using historical data over the planning horizon and provide a range of demand
projections to test the sensitivity of future resource investments. The demand forecasts used in
development of the 2021 IRP are like past IRPs.
2STAFF COMMENTS JULY 29,2021
The Company developed a reference case forecast based on use-per-customer, customer
growth, and weather using historical data. From the reference case forecast, the Company
developed five alternative demand scenarios: an average case, an expected case, a high
growth/low price case, a low growth/high price case, and a carbon reduction case. For each
scenario, two primary types of forecasts were developed including an annual average demand
forecast and a peak-day forecast. The annual average demand forecast is used in budgeting,
procurement, and purchased gas adjustment ("PGA";2 filings. The peak-day demand forecast is
used to determine resource adequacy for meeting customer needs in extreme weather conditions.
For the expected case scenario, the Company forecasts its system-wide average annual
daily demand to increase from 95,126 dekatherms per day (Dth/day) in202l to 102,054 Dth/day
in2040, or 7.28o/o. The Company forecasts a l2Yo system-wide peak-day demand increase from
363,586 Dth/day in202l to 407 ,216 Dth/day in 2040. System-wide, the number of customers is
projected to increase at an average annual rate of 1.0% which is slightly lower than the 201 8
projection of l.2Yo. Staff believes these rates are based on reasonable groMh and consumption
projections for the Company's service area.
The high growth/low price, low growth/high price, and carbon reduction scenarios were
developed to account for variations in customer growth, usage, and carbon regulation. The
additional demand scenarios create a more robust analysis by allowing the Company to evaluate
the risks of potential resource plans given a range of possible demand outcomes.
Using the expected case scenario, the Company's analysis shows that it will not be
resource deficient during the 20-year planning horizon. However, a resource deficiency is
projected to occur in2035 for the high growth/low-price scenario using existing resources. The
Company has not recommended resource options to meet the 2035 deficiency because it occurs
well into the future. Staff believes that this a reasonable approach because the deficiency occurs
past the five-year planning horizon, which gives the Company sufficient lead time to perform
additional analysis and explore alternatives as needed.
Under the carbon reduction scenario, an energy deficiency does not exist, but instead will
require the Company to plan for carbon reducing, or neutral resources in2022, due to expected
carbon legislation in 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
2 The Company files a PGA annually to adjust gas costs.
STAFF COMMENTS aJ JULY 29,2021
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.
Natural Gas Supply Resources and Options
The IRP describes both existing and potential natural gas supply resources. The
Company's portfolio of gas supply resources includes contracts to purchase gas, stored gas, and
firm pipeline capacity rights.
The Company developed high, expected, and low-price forecasts to represent a
reasonable range of Henry Hub natural gas pricing possibilities over the next 20 years. Each of
the forecasts start in2020-2021 at under $3.00 per dekatherm. The high price scenario peaks at
approximately $17.00 per dekatherm in2045 and the expected case to peak at approximately
$7.00 per dekatherm in 2045. The low-price scenario shows natural gas at under $5.00 per
dekatherm over the 2021-2045 planning horizon.
The expected case scenario shows a gradual price increase over the twenty-year planning
horizon. Staff believes it is 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.
Both Oregon and Washington State have put legislation in place supporting the
development of Renewable Natural Gas ("RNG") and the recovery of investments in RNG
resources and infrastructure. The Company evaluated RNG as a resource in its IRP and has been
preparing for its potential use by hiring an RNG Manager. The Company has also assembled a
cross functional RNG team that meets routinely to coordinate efforts as well as address program
and project updates.
Demand Side Management
In2020, the Company contracted with Applied Energy Group ("AEG") to complete a
Conservation Potential Assessment ("CPA") of its DSM programs for the 2021-2040 planning
horizon. AEG determined energy efficiency ("EE") potential for Idaho using three analyses:
(l) Technical Potential which is the theoretical upper limit of EE potential; (2) Achievable
Technical Potential; and (3) Utility Cost Test ("UCT") Achievable Economic Potential. The
Company primarily focuses on the UCT Achievable Economic Potential which uses the
4STAFF COMMENTS JULY 29,2021
Achievable Technical Potential results and screens each measure for cost effectiveness using the
UCT, the primary cost-effectiveness measure used in Idaho. If benefits are greater than costs for
a given measure, the UCT will be 1.0 or greater. Only measures with a UCT ratio of 1.0 or
greater were included in AEG's cumulative UCT Achievable Economic Potential, as shown in
the following table:
Table No. 1: Idaho Cumulative UCT Achievable Economic Potential by Sector (dekatherms)3
Sector 2021 2022 2025 2030 2040
Residential 17,529 44,289 77,379 339,502 7,256,282
Commercial
& lndustrial
18,287 43,706 151,904 398,207 769,118
Total 35,816 87,995 229,283 737,710 2,036,410
Recent trends with the Company's IRP have shown a decline in cumulative residential
savings and a steady increase in EE savings in the Commercial and Industrial sectors. In the
current filing, AEG's 2}-year cumulative UCT Achievable Economic Potential for Commercial
and Industrial sectors increased 56%o from the 2O-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%o of their savings target from the 20 1 8 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
believes 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 to
ensure the Company is attaining targeted DSM goals.
Modeling DSM
In its 2016 IRP, the Company planned to use a new DSM modeling method known as
Dynamic DSM in the 2018 IRP. The Dynamic DSM Model examines individual measures and
3 See 2021Natural Gas tRP Appendix page 193
STAFF COMMENTS 5 JULY 29,2021
combinations of measures from the CPA to optimize conservation potential and minimize costs
in the future portfolio. This model is intended to mirror a similar modeling structure used in the
Company's electric IRP, where DSM measures are modeled simultaneously with supply-side
resources to determine which resource options are least-cost. The Company's previous natural
gas DSM modeling used a deterministic method based on the Expected Case assumptions,
examining DSM measures grouped by dollar or savings values rather than by individual
measures
In April20l8, the Company shared with Staff that SENDOUTa was not able to provide
dynamic DSM modeling. However, the Company confirmed that it is developing an Excel-
based add-on function for SENDOUT that will be able to provide Dynamic DSM modeling in
the 2020 IRP. tn the 20 I 8 IRP action plan, the Company stated that "Avist a' s 2020 IRP will
contain an individual measure level for dynamic DSM program structure in its analytics." The
Company decided to use the Energy Trust of Oregon CPA modeling protocols in Oregon. The
Company asserts that these protocols work well with their software used in other IRP modeling
applications. For these reasons, the Company decided to not pursue dynamic DSM modeling in
its analytics.
Resource Evaluation
The Company evaluated its ability to obtain adequate natural gas supply and ensure
sufficient pipeline transportation capacity to its city gates to meet demand. The Company must
also ensure that its distribution system is sufficient to meet demand and projected load growth
requirements.
Distri Plannine
The Company's Idaho distribution system contains approximately 3,300 miles of service
and main pipelines. Transportation-only customers are excluded in long-term capacity planning
exercises but are included in distribution planning because they use the Company's distribution
system. The Company uses a modeling tool to assess distribution system growth and needs.s
4 SENOOUT is a linear programming-based model used to solve natural gas supply, storage, and transportation
optimization problems.
5 GL Noble Denton Synergi modeling tools.
6STAFF COMMENTS JULY 29,2021
The tool provides a graphic representation of the Company's system, which behaves similarly to
its actual system allowing users to simulate and model alternatives.
The Company states, "[s]ecuring adequate natural gas supply and ensuring sufficient
pipeline transportation capacity to Avista's city gates becomes a secondary issue if distribution
system growth behind the city gates increases faster than expected and the system becomes
severely constrained." Id. at 161. Additionally, the Company monitors integrity of its
distribution system because of load growth and the ability to maintain its system.
In its 2018 [RP, 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 provided
updates on each enhancement project in response to Staff s Production Request No. 8. The
Coeur d'Alene High Pressure Reinforcement - Post Falls Phase enhancement went into service
November 30,2018, at a final cost of approximately $2,491,087 or just over 60% of the
estimated cost of $4,000,000 provided in the 2018 IRP. Construction of the Schweitzer
Mountain Road project was deferred due to cancellation of expansion plans by large customers.
The Company will reassess this project annually. The Warden High Pressure enhancement
projected spend is $2,950,000 in both 2022 and 2023 which is consistent with 2018 IRP project
cost projection of $6,000,000.
In this IRP, Staff observed that no distribution system enhancements were included for
Idaho. The Company confirmed that the distribution system serving Idaho customers does not
require any additional reinforcements at this time.6 Staff appreciates the Company keeping the
Commission informed and its commitment to frequently assess the need for enhancement
projects to achieve sufficient capacity to meet demand.
Action Plans and Progress
2019 - 2020 Action Plan Status:
The 2019-2020 IRP Action Plan listed in the 2018 IRP included the following
components:
6 Email response from Avista regarding reinforcement projects dated June l,2O2l. "Due to the Idaho
reinforcement projects that Avista completed in the last 5-10 years, the gas distribution system does not require any
additional reinforcements in the near future. Thus, there are no planned ldaho reinforcement projects at this time."
7STAFF COMMENTS JULY 29,2021
l. Adopt an individual measure level for Dynamic DSM program structure in its
analytics for individual portfolios;
2. Work with Staff to clariff distribution system analysis for the 2020 IRP;
3. Work with Staff to clariff types of distribution costs for possible inclusion in
avoided cost calculation;
4. Revisit coldest on record planning standard and discuss with the TAC for
prudency; and
5. Provide additional information on resource optimization risks and benefits.
Staff believes the Company adequately completed the aforementioned action
items and provided reasonable discussions of the issues and decisions.
2021 - 2022 ActionPlan
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.
Improvements to IRP planning for the next IRP include:
l. Investigating new resource plan modeling software and integrating the
Company's system to run parallel with current modeling software;
2. Exploring the feasibility of using projected future weather conditions in the
design day methods; and
3. Performing high pressure distribution or city gate station capital work as needed.
Staff believes these action items are 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 in an interactive manner to include feedback and input from TAC team
members and stakeholders. Topics presented and discussed were made available on the
Company's website.
8STAFF COMMENTS ruLY 29,2021
In addition to TAC meetings, the Company conducted an electronic natural gas IRP
public outreach meeting and a virtual meeting with the Washington UTC where interested Idaho
parties could participate.
STAFF RECOMMENDATION
Staff believes that the Company's2021Natural Gas IRP satisfies the requirements for a
natural gas IRP set forth in Commission Order Nos. 25342 ,27024,27098, 32233, and 32698.
Staff recommends the Company's 2021 Natural Gas IRP be acknowledged and accepted for
filing.
Respecttully submitted this Zq+\ day of July 2021
Deputy Attorney General
Technical Staff: Kevin Keyt
Michael Eldred
Kathy Stockton
Taylor Thomas
i:umisc/comments/avug2 l.2dhkkmeklstnc comments
9STAFF COMMENTS JULY 29,2021
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 29th DAY OF ruLY 2021,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF, IN
CASE NO. AVU -G-21-02, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
SHAWN BONFIELD
DAVID J MEYER
AVISTA CORPORATION
PO BOX 3727
SPoKANE WA99220-3727
E-MAIL: [e-mail]
davi d. rneyer@ avi stacorp.com
CERTIFICATE OF SERVICE