20220623Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03t2
IDAHO BAR NO. 9917
Street Address for Express Mail:
I 133I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, TD 83714
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA
CORPORATION'S PROPOSED TARIFF
SCHEDULE l95-OPTIONAL RENEWABLE
NATURAL GAS
CASE NO. AVU.G-22-OI
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On March 1,2022, Avista Corporation dba Avista Utilities ("Company") applied for
authority to implement a new tariff Schedule l95-Optional Renewable Gas ("Schedule 195").
The Company proposes to implement a voluntary Renewable Natural Gas ("RNG") program
(RNG Program) that provides customers an opportunity to purchase RNG as part of their regular
monthly service.
In May 2019, the Washington legislature enacted RCW 80.28.390 into law, whereby
utilities "must offer by tariff a voluntary renewable natural gas service available to all customers
to replace any portion of the natural gas that would otherwise be provided by the gas company."
ln response to the passage of RCW 80.28.390, the Company was prompted to develop a voluntary
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STAFF COMMENTS JUNE 23,2022
program to be made available to all of its Washington natural gas customers, which the Company
has enrolled 69 customers to date.
The Company conducted a commercial customer research project in2019 focused
exclusively on energy and the environment plus internal research geared at residential customers'
RNG programs in 2020. 1d With ample RNG supply available to support a voluntary RNG
program for its natural gas customers, positive customer sentiment towards an RNG program,
and uptick in customer enrollments amongst its Washington natural gas customers, the Company
believes offering a voluntary RNG Program in Idaho is a valuable option for its interested
customers.
STAFF REVIEW
Staff evaluated the Company's filing to determine if the proposed RNG Program
provides benefits to Idaho customers and that non-participants will not bear the cost of the
voluntary RNG Program. Additionally, Staff submitted multiple Production Requests to which
the Company responded. Based on Staff s analysis of the record, there appears to be some
interest in the proposed RNG Program from the Company's Idaho customers. Given that the
proposed RNG Program is voluntary, funded by participants, and will not harm non-participants,
Staff recommends approval of the Company's Application.
Proposed RNG Program
The Company proposed to offer its natural gas customers the opportunity to purchase
blocks of RNG, at a price of $5.00 per block, where each block includes the environmental
attributes represented by the equivalent to 1.5 therms of RNG. These charges will appear on the
customers' regular monthly bill as a separate line item and include appropriate taxes. Id at3.
Staff reviewed sample customer bills and believes charges for the RNG Program are clearly
delineated and easy to understand.
Staff reviewed the Company's forecasted budget and verified that program costs will be
covered by program participants and contained within the RNG Program. Staff confirmed that
costs of participation in the RNG Program will be tracked separately to avoid cost shifts to non-
participants.
2STAFF COMMENTS JUNE 23,2022
The Company will purchase 1.5 therms of RNG for each program block purchased by a
customer. The Company will then unbundle the RNG, meaning it separates the commodity or
energy from the thermal certificate associated with the RNG. The unbundled cost of the energy
will not be included in the RNG Program costs and the thermal certificate is then held to be
retired on behalf of RNG Program participants. As such, a customer's total energy charges for
natural gas is not reduced or credited as the customer is paying an incremental cost in addition to
these charges for the environmental attributes of the RNG.
The environmental attribute associated with RNG-Renewable Thermal Certificate
("RTC")-is the environmental value component of the RNG. Without the RTC, the RNG
would be valued at the current natural gas commodity cost. The impact to the $5.00 block of the
environmental attributes considering the cost of RNG per Dekatherm ("Dth") is $3. 1 I . The
energy cost of this gas is equal to $0.489 per 1.5 therms.
The Company stated that it will use the Midwest Renewable Energy Tracking System
("M-RETS") for the proposed RNG Program. M-RETS is an online platform that provides
certificate management similar to Renewable Energy Certificate (" REC";t tracking systems.
RECs represent the environmental and non-power attributes of renewable electricity. For
thermal technologies, the M-RETS system issues one RTC for every Dth of Renewable Thermal
generation.2
RNG Supply
To provide RNG for the RNG Program, the Company signed an agreement with Puget
Sound Energy ("PSE") to acquire the necessary volumes to support the proposed program. PSE
has a signed contract for RNG with Klickitat Public Utility District ("PUD") to acquire an
estimated 550,000 Dth per year for the first three years with significantly more RNG in the years
following. Id. at3. Staff reviewed the contract and believes that it provides away for the
Company to mitigate supply risk by structuring procurement of RNG proportional to RNG
program enrollment. Staff believes that the RNG producer (Klickitat PUD) is currently selling a
majority of the RNG it produces to the market and is utilizing Renewable Identification Numbers
rhttps:i/www.epa.gov/sites/default/files/2016-03/docunrents/backeround_paperj.pdf
2 https://www.mrets.org/ur-rets-renervable-thertnal-trackinq-svstenr/
aJSTAFF COMMENTS JUNE 23,2022
("RINs").3 The remainder of RNG produced is sold to PSE and RNs do not appear to be
utilized. Given thatamajority of RNG Klickitat PUD produces is sold into the market, Staff
encourages the Company to monitor availability of RNG from Klickitat PUD into the future.
StaffConcerns
Staff is concerned about the adoption of the MRETs trading platform and use of RTCs.
During Staff s review of the proposed RNG Program, Staff questioned what RNG related
financial incentives and tracking methods in addition to M-RETS the Company explored.
Currently, RNG producers within Idaho are utilizing RINs. RINs provide RNG producers an
opportunity for a revenue stream in addition to the gas itself. The market for RlNs is enabled by
the Environmental Protection Agency ("EPA"). RINs function like RECs and are tradeable
commodities; each RN is proof that the equivalent of a gallon of renewable natural gas has been
injected into a shared pipeline. The Company stated that "RlNs and RTCs are both terms used
for the process of tracking renewable thermal resources [and] they are technically the same term
but utilized in two separate tracking platforms" in response to Production Request No. 20. Staff
believes that use of RTCs for the RNG Program was unnecessary and the Company could have
achieved the same result through federally standardized RINs. However, because the Company
currently operates with RTCs in its voluntary RNG program in Oregon and Washington, Staff
believes it makes economic sense to leverage the same tracking platform for ldaho.
The RNG will be verified through a certification of the fuel source and tracked until
combustion. If the Company were to sell the thermal certificate for purposes of the RIN, the
RTC and value of the RNG is no longer held, meaning the RNG cannot be used for purposes of
the Company's program. As such, selling the RTCs instead of retiring them for purposes of the
program would make the program no longer valid.
The MRET's tracking system will veriff that the RTC's the Company is purchasing from
PSE have not been sold to any other party or used for any other program prior to their transfer to
the Company. The supply contract the Company signed with PSE also states that the RTC's
must not be sold to a third party or recognized under any other greenhouse gas reduction
program. The MRETS tracking system requires the Klickitat PUD RNG facility to meet the
3 http://www.klickitatpud.com/),ourPUD/projects/rng#:-:texrThe%20remainderozi,20ofllo2Otheo,'o20RNG,
Energy%2 Ostafi i ngo,o20.l ulyo/o20 I 9 o2Co o2A).0)0.
4STAFF COMMENTS JUNE 23,2022
certification requirements to assign RTC's for the gas produced at their facility. PSE certifies the
facility with MRETS such that RTC's are created in the MRETS system as RNG is produced.
When the Company purchases RNG from PSE, the associated RTC's are transferred from PSE to
Avista's account. Avista will then retire the RTC's as the customers in the program consume the
RNG.
Staff believes the Company should implement processes to validate RTC data provided
by PSE and Klickitat PUD, as well as information within MRETS.
Custome r P art icipati on
The Company asserts that customers will be able to enroll in the RNG Program online or
over the phone. The RNG Program provides customers with the opportunity to participate
without a contract and they will have the option to enroll and/or cancel participation at any time.
The Company states that; "the ease of enrollment and no contractual obligations have been
validated as a customer satisfier in recent surveys and customer feedback sessions." Application
at 4.
Program Measurement
To measure program performance, the Company stated that it will establish metrics to
track customer satisfaction, customer awareness, and customer participation. Customer
satisfaction will be measured by an annual Net Promoter Score ("NPS") survey on an annual
basis, which measures customer experience and customers' overall satisfaction with the
Company's products or services. The Company will monitor customer awareness through
external web traffic to the program page. Finally, customer participation will be measured by the
number of customers enrolling and retention within the RNG program. All three of these metrics
will be important as the program strives for higher levels of customer satisfaction and improved
sentiment, ultimately driving broader awareness and interest in support of renewable energy.
Staff recommends that the Company file annual RNG Program reports with Idaho
specific details regarding the aforementioned metrics. The annual report should also include (1)
the budget from the previous year, (2) operating expenses, (3) RNG Program participation by
month, (4) all RTC purchases made and retired for Idaho customers, and (5) where those RTCs
5STAFF COMMENTS JI.INE 23,2022
were produced. The report should provide RNG Program revenues and expenses, including RTC
costs, marketing, and administration.
Tarffs
Staff reviewed the Company's proposed tariff and discovered a number of discrepancies.
The tariff as filed incorrectly states: "The renewable natural gas sourced shall be recognized via
the M-RETs tracking system or another tracking system as required by the Idaho State
legislature." Idaho does not have any legislative requirements for RNG or associated tracking
systems. Staff questioned use of this language in Production Request No. 7. In response, the
Company agreed to file a substitute tariff page with the above quoted language removed.
The proposed tariff also includes language regarding renewable hydrogens: "Low carbon
energy program options available to customers will utilize the types of Renewable natural gas
and renewable hydrogen." The Company did not propose a renewable hydrogen program and
does not have a definitive timeline to offer one. Additionally, the Company did not add the new
tariff to its tariff index page. The Company has agreed to delete the aforementioned renewable
hydrogen language and provide revised draft tariffs for Staff review. If the Company's proposed
RNG Program is approved, Staff recommends that the Company file a conforming tariff that
deletes the language described above and a revised tariff index page to include Schedule 195.
STAFF RECOMMENDATION
The Company's RNG Program, if approved, will provide Idaho natural gas customers
with an opportunity to participate in carbon reduction efforts at minimal cost. Staff recommends
the Commission approve the Company's proposed RNG Program and require the Company to:
l) File conforming tariffs consistent with changes outlined above;
2) Prepare and distribute public notification and materials with specific information for
Idaho customers including an effective date; and
3) File annual RNG reports with Idaho specific details outlined above.
6STAFF COMMENTS JI.INE 23,2022
-rrJ-'Respectfully submitted this Z,t7 day of Jrme 2022.
Dayn
Deputy Attorney General
Teehnical Staff: Kevin Keyt
Jolene Bossard
Lawa Conilogue
Taylor Thomas
i:umisc/commontdavug22. ldhkskttlcjb oornmerits
7STAFF COMMENTS JI.JNE 23,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 23RD DAY OF JUNE 2022,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF', IN
CASE NO. AW.G-Z2-OI, BY E.MAILING A COPY THEREOF, TO TIIE
FOLLOWING:
SHAWN BONFIELD
SR MGR REGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-MAIL : [e-mail]
AMANDA GHERING
AVISTA CORPORATION
PO BOX3727
SPOKANE W499220-3727
E-mail: [e-mail]
-Lr r4rbr\
sECRETARY//
CERTIFICATE OF SERVICE