Avista Corporation · NYSE:AVA
Avista — Technical Presentation (August 2019)
142 slides from Avista's technical presentation, Aug 6, 2019
Slide 1: 2020 Electric Integrated Resource Plan TAC Meeting No. 4 Agenda
2020 Electric Integrated Resource Plan Technical Advisory Committee Meeting No. 4 Agenda Tuesday, August 6, 2019 Conference Room 130 Topic Time Staff Introductions and TAC 3 Recap 9:00 Lyons Washington SB 5116 and IRP Updates 9:10 Lyons Energy and Peak Load Forecast Update 9:30 Forsyth Natural Gas P
Slide 2: TAC Meeting Introductions and Recap
2020 Electric IRP TAC Meeting Introductions and Recap John Lyons, Ph.D. Fourth Technical Advisory Committee Meeting August 6, 2019
Slide 3: Integrated Resource Planning
Integrated Resource Planning The Integrated Resource Plan (IRP): • Required by Idaho 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 – Generation resource choi
Slide 4: Technical Advisory Committee
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 in all or some of the process • Open forum while balancing need to get through all of the topics • Welcome requests for studie
Slide 5: TAC #3 Recap – April 16, 2019
TAC #3 Recap – April 16, 2019 • Introductions and TAC 2 Recap, Lyons • Regional Legislative Update, Lyons • IRP Transmission Planning Studies, Rolstad • Distribution Planning Within the IRP, Fisher • Conservation Potential Assessment, AEG • Demand Response Potential Assessment, AEG • Pullman Smart G
Slide 6: Today's Agenda
Today’s Agenda 9:00 – Introductions and TAC 3 Recap, Lyons 9:10 – Washington SB 5116 and IRP Updates, Lyons 9:30 – Energy and Peak Load Forecast Update, Forsyth 11:00 – Natural Gas Price Forecast, Pardee Noon – Lunch 1:00 – Electric Price Forecast, Gall 2:00 – Existing Resource Overview, Lyons 3:00
Slide 7: Future TAC Topics
Future TAC Topics • TAC 5: Tuesday, October 15, 2019 – Ancillary services and intermittent generation analysis – Energy Imbalance Market analysis – Review Preliminary PRS – Market scenario results – Preliminary Portfolio scenario results • TAC 6: Tuesday, November 19, 2019 – Review of final PRS – Ma
Slide 8: Washington SB 5116 and IRP Updates
Washington SB 5116 and IRP Updates John Lyons, Ph.D. Fourth Technical Advisory Committee Meeting August 6, 2019
Slide 9: Clean Energy Transformation Act (CETA)
Clean Energy Transformation Act (CETA) • E2SSB 5116 Clean Energy Transformation Act (CETA) • No coal serving Washington customers after 2025 or earlier • Carbon neutrality beginning in 2030 – 80% or greater clean energy requirement – Alternate compliance options for up to 20% – Penalties for non-com
Slide 10: Other CETA Provisions
Other CETA Provisions • A utility extending service to new customers through condemnation must comply with the clean energy standard and Energy Independence Act (EIA) • Utilities must assess and plan for obtaining enough funds to meet 60% of low-income energy assistance need by 2030 and 90% by 2050
Slide 11: CETA Rule Making
CETA Rule Making • WUTC opened Docket U-190485 for implementation of legislation passed in the 2019 legislative session • Phase 0: July 1, 2019 to August 30, 2019 – Initiate rulemaking processes – Docket U-190531: Inquiry into Valuation of Public Service Company Property Used and Useful after Rate E
Slide 12: Phase 1
Phase 1 • Publication of social cost of carbon with inflation rate • Issue policy statement for Valuation of Public Service Company Property Used and Useful after Rate Effective Date (U-190531) • Start four rulemakings and one policy statement • IRP Updates – IRP inputs, structure, public involvemen
Slide 13: Phase 2 and Additional Projects
Phase 2 and Additional Projects Start four rulemakings 1. Cumulative impact analysis 2. Carbon and electricity markets 3. Natural gas conservation 4. Natural gas IRP Additional projects without statutory deadlines • Interconnection standard • Capital budgeting • Distribution system planning • Reliab
Slide 14: Load and Economic Forecasts: Redux
Load and Economic Forecasts: Redux Grant D. Forsyth, Ph.D. Chief Economist Fourth Technical Advisory Committee Meeting August 6, 2019
Slide 15: Main Topic Areas
Main Topic Areas • Service Area Economy • Peak Load Forecast • Long-run Forecast Painting: Jan Steen, 1640, Netherlands. As the Old Sing, Pipe the Young. 2
Slide 16: Service Area Economy
Service Area Economy Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 3
Slide 17: Distribution of Employment: Services and Government are Dominant
Distribution of Employment: Services and Government are Dominant WA-ID MSA Employment, 2018 State Federal 4% (21%) 2% (9%) Private Services 66% Other 18% Local 11% (61%) Military 1% (8%) Private Goods 14% Farm 2% 4 Source: BLS, BEA and author’s calculations.
Slide 18: Non-Farm Employment Growth, 2009-2019
5 Year-over-Year, Same Month Seasonally Adj. -6% -4% -2% 0% 2% 4% 6% Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Avista WA-ID MSAs Jun-14 Sep-14 Dec-14 Source: BLS and author’s calculations. Mar-15 U.S. N
Slide 19: Non-Farm Employment: Finally Catching Up
6 Non-Farm Employment Dec 2007=100 100 105 110 115 90 95 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Avista WA-ID MSAs Dec-13 Apr-14 Source: BLS and author’s calculations. Aug-14 Dec-14 U.S. Apr-15 Aug-15 Dec-15 Non-Fa
Slide 20: Population Growth: Recovering with Employment Growth
Population Growth: Recovering with Employment Growth Proxy for Population Growth in Avista WA-ID MSAs Customer Growth 2.5% 2.0% 1.9% 1.9% 1.7% 1.8% 1.5% 1.4% Annual Growth 1.2% 1.2% 1.0% 1.0% 1.0% 1.0% 0.9% 0.8% 0.7% 0.7% 0.7% 0.8% 0.7% 0.7% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.0% 2007 2008 2009 201
Slide 21: Peak Load Forecast
Peak Load Forecast Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 8
Slide 22: The Basic Model
The Basic Model • Monthly time-series regression model that initially excludes certain industrial loads. • 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 variab
Slide 23: GDP Growth Assumptions: 2019 IRP vs. 2017 IRP
GDP Growth Assumptions: 2019 IRP vs. 2017 IRP 3.0% 2.5% 2.5% 2.1% 2.1% 2.1% 2.0% 1.9% Annual Growth 1.8% 1.9% 1.8% 1.5% 1.0% 0.5% 0.0% 2019 2020 2021 2022 2023 2019 GDP Growth 2017 GDP IRP Growth 10 Source: Various and author’s calculations.
Slide 24: Current Peak Load Forecasts for Winter and Summer, 2019-2045
Current Peak Load Forecasts for Winter and Summer, 2019-2045 2,000 1,900 1,800 1,700 Megawatts 1,600 1,500 Peak Avg. Growth 2019-45 Winter 0.34% 1,400 Summer 0.44% 1,300 1,200 1,100 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 204
Slide 25: Current and Past Peak Load Forecasts for Winter Peak
Current and Past Peak Load Forecasts for Winter Peak, 2011-2043 Winter Peak Forecast: Current and Past 2,500 2,250 Megawatts 2,000 1,750 1,500 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 20
Slide 26: Current and Past Peak Load Forecasts for Summer Peak
Current and Past Peak Load Forecasts for Summer Peak, 2011-2045 Summer Peak Forecast: Current and Past 2,500 2,250 2,000 Megawatts 1,750 1,500 1,250 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2
Slide 27: Long-Term Load Forecast
Long-Term Load Forecast Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 14
Slide 28: Basic Forecast Approach
Basic Forecast Approach Time 2019 2024 2025 2045 Medium Term Long Term 1) Monthly econometric model by 1) Boot strap off medium term forecast. schedule for each class. 2) Apply long-run load growth relationships to 2) Customer and UPC forecasts. develop simulation model for high/low 3) 20-year movin
Slide 29: The Long-Term Residential Relationship, 2020-2040
The Long-Term Residential Relationship, 2020- 2040 Load = Customers Χ Use Per Customer (UPC) Load Growth ≈ Customer Growth + UPC Growth Assumed to be same as Assumed to be a function of population growth, commercial multiple factors including growth will follow residential, renewable penetration, ga
Slide 30: Residential Customer Growth, 2020-2045
Residential Customer Growth, 2020-2045 Annual Residential Customer Growth Rates 1.20% Average annual growth rate from 1.10% 2020-2045 = 0.78%. Shape of time-path mimics a combination of IHS (ID) and OFM (WA) 1.00% population forecasts. 0.90% 0.80% 0.70% 0.60% 0.50% Medium Term Long Term 0.40% 2020 2
Slide 31: Residential Solar Penetration, 2008-2018
Residential Solar Penetration, 2008-2018 Customer Penetration vs. Customers Since 2008 0.25% Share of Residential Solar Customers to Total Residential 2018 0.20% 0.15% Customers 2017 0.10% 2016 2015 0.05% 2014 2008 0.00% 305,000 310,000 315,000 320,000 325,000 330,000 335,000 340,000 345,000 18 Cust
Slide 32: Residential Solar Penetration, 2020-2045
Residential Solar Penetration, 2020-2045 Projected Base-Line Residental Solar Customers 10,000 Current penetration is 0.25% and typical size is 7,800 watts. By 2045, penetration 9,000 will be near 2.2% of residential customers and average size of installed systems will 8,000 be 10,000+ watts. 7,000
Slide 33: Residential EVs/PHEVs, 2020-2045
Residential EVs/PHEVs, 2020-2045 Projected Residental EVs/PHEVs 120,000 Forecast By 2045 Prob. Low 45,000 50% 100,000 Middle 100,000 30% Weighted Average 103,000 High 250,000 20% 80,000 Total EVs/PHEVs 60,000 40,000 20,000 Current ≈ 800 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2
Slide 34: Residential EVs/PHEVs by Household Income
Residential EVs/PHEVs by Household Income Spokane + Kootenai 12% Spokane + Kootenai 7% 21 Source: EIA, Today in Energy, May 2018. Regional data from U.S. Census
Slide 35: EV/PHEV Gasoline CO2 Savings Avista Service Territory
EV/PHEV Gasoline CO2 Savings Avista Service Territory Estimated EV/PHEV Gasoline CO2 Reduction in Metric Tons 600,000 500,000 400,000 Estimated with DOE data. Assumes 5.18 300,000 metric tons of C02 per gasoline vehicle. Savings = Number of EV/PHEV x 5.18 200,000 100,000 0 2020 2021 2022 2023 2024 2
Slide 36: Native Load Forecast, 2020-2045
Native Load Forecast, 2020-2045 Native Load Forecast (no CWTR), Average Megawatts 1,250 1,200 1,150 1,100 Average Megawatts 1,050 1,000 950 Medium Term Long Term 900 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2019
Slide 37: Net Solar and EV/PHEV Impact, 2020-2045
Net Solar and EV/PHEV Impact, 2020-2045 aMW Impact of Solar and EV/PHEV 40 35 30 25 20 aMW 15 10 5 0 Medium Term Long Term -5 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2019 IRP Solar aMW (Load Reduction) 2019 IRP
Slide 38: Native Load Growth Forecast, 2020-2045
Native Load Growth Forecast, 2020-2045 Native Load Growth 1.2% IRP Avg. Annual Growth 1.0% 2019 IRP 0.3% 2017 IRP 0.5% 0.8% 0.6% Annual Growth 0.4% 0.2% 0.0% EV/PHEV “Bend” -0.2% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2
Slide 39: Residential UPC Growth: 2020-2045
Residential UPC Growth: 2020-2045 Base-Line Scenario: Residential UPC Growth Rate 1.00% 0.50% 0.00% -0.50% -1.00% EIA Refrence Case Use Per Household Growth -1.50% 2019 IRP Residential Base-Line UPC Growth -2.00% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 20
Slide 40: Long-Term Load Forecast: Conservation Adjustment
Long-Term Load Forecast: Conservation Adjustment Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com 27
Slide 41: Monthly Conservation as a Share of Total Actual Retail Load
Monthly Conservation as a Share of Total Actual Retail Load: Navigant Estimates 2.5% Increased Energy Crisis Conservation Activity 2.0% ARRA Ratio of Conservation to KWH Load 1.5% 1.0% 0.5% 0.0% Jan-99 Oct-00 Aug-99 May-01 Mar-00 Jan-06 Oct-07 Aug-06 May-08 Oct-14 Nov-04 Mar-07 Jan-13 May-15 Dec-01
Slide 42: Median Monthly Conservation as a Share of Total Actual Retail Load
Median Monthly Conservation as a Share of Total Actual Retail Load: Navigant Estimates 0.9% 0.856% 0.816% 0.800% 0.797% 0.779% 0.765% 0.8% 0.769% 0.730% 0.742% 0.722% 0.693% 0.7% 0.661% Median Conservation to Load Ratio 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov D
Slide 43: Comparison of Native Load Forecasts, 2020-2045
Comparison of Native Load Forecasts, 2020-2045 aMW Load Comparision with Conservation 1,500 1,400 1,300 aMW 1,200 1,100 1,000 900 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 30 Base-Line Native Load Base-Line Nativ
Slide 44: Natural Gas
Natural Gas Tom Pardee, Manager of Natural Gas Planning Fourth Technical Advisory Committee Meeting August 6, 2019
Slide 45: Agenda
Agenda • Market Dynamics • Pipeline Transportation • Renewable Natural Gas (RNG) 2
Slide 46: Avista Natural Gas Service Areas, Gas Fields, Trading Hubs and Major Pipelines
Avista Natural Gas Service Areas, Gas Fields, Trading Hubs and Major Pipelines WESTERN CANADIAN SEDIMENTARY BASIN KEY © Avista Service Territory — Williams Northwest Pipeline —= Spectra Energy = TransCanada — GTN — TransCanada — BC (Foothills} —= TransCanada — Alberts & Jackson Prairie Storage Proje
Slide 47: Canada
Canada 4
Slide 48: Canada Natural Gas Production
Canada Natural Gas Production British Columbia Alberta 15 0.5 Bcf per day Bcf per day 5
Slide 49: Years of resources at current levels
300 Years of resources at current levels 6
Slide 50: AECO cash vs. forwards
AECO cash vs. forwards $ per Dth $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $- s& a2 xe Oo no x) s me at ae ae a —Winter '19 - '20 — Winter '20 -'21 x) x) co x ——Winter '21 -'22 w\ fey a —Cash ae Q
Slide 51: Canadian Natural Gas Storage
Canadian Natural Gas Storage 8
Slide 52: LNG Canada
LNG Canada Daily liquefaction: 3.5 Bcf Or 1,025,749 MWh 9 Source: https://www.lngcanada.ca/about-lng-canada/
Slide 53: US
US 10
Slide 54: US Natural Gas Production
US Natural Gas Production 11 Source: EIA
Slide 55: Years of resources at current levels
80 Years of resources at current levels 12
Slide 56: Henry Hub cash vs. forwards
Henry Hub cash vs. forwards 13
Slide 57: US Natural Gas Storage
US Natural Gas Storage Historical Comparisons Stocks Year ago 5-year average billion cubic feet (Bcf) (07/26/18) (2014-18) Region 07/26/19 07/19/19 netchange implied flow Bef % change Bef % change East 597 575 22 22 548 8.9 625 4.5 Midwest 677 650 27 27 548 23.5 677 0.0 Mountain 156 151 5 5 146 6.8
Slide 58: U.S. net exports of natural gas continue to grow in the Reference case
U.S. net exports of natural gas continue to grow in the Reference case— Natural gas trade (Reference case) trillion cubic feet billion cubic feet per day 10 2018 28 liquefied natural history projections gas (LNG) 21 exports pipeline exports to 5 14 Mexico 7 Canada 0 0 pipeline imports from -7 Canada
Slide 59: 2020 IRP Henry Hub Natural Gas Price Forecast
2020 IRP Henry Hub Natural Gas Price Forecast: 2021-2040: $3.99 per Dth $ per Dth Consultant 1 Consultant 2 2013 IRP 2015 IRP 2017 IRP 2020 IRP Actuals Forwards (6/12/2019) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 20
Slide 60: Pipeline Transportation
Pipeline Transportation 17
Slide 61: Fugitive Emissions
Fugitive Emissions • Unintended emissions from facilities or activities (e.g., construction) that "could not reasonably pass through a stack, chimney, vent, or other functionally equivalent opening." Fugitive emissions estimated at 0.783% *This figure includes all emissions from production, transpor
Slide 62: GTN & NWP Fully Subscribed
GTN & NWP Fully Subscribed • Contractually both pipelines are now fully subscribed. • Canadian producers signed up for new contracts in order to get natural gas out of Canada and into more lucrative markets. GTN NWP 19
Slide 63: Avista Transport for Electric Generation
Avista Transport for Electric Generation 20
Slide 64: Current Transport & Gas Generation
Current Transport & Gas Generation AECO Pipeline Capacity 60,592 DTh/Day Lancaster 49,000 Rathdrum 43,600 Boulder 5,400 98,000 DTh/Day* Coyote Springs Boulder: 5,400 53,550 DTh/Day* Stanfield Coyote: 53,550 Lancaster: 49,000 Rathdrum: 43,600 Total: 151,550 Pipeline Capacity 26,388 DTh/Day Firm Right
Slide 65: Renewable Natural Gas (RNG)
Renewable Natural Gas (RNG) 22
Slide 66: RNG Process Overview
RNG Process Overview Source: Promoting RNG in WA State 23
Slide 67: WA RNG Report (HB 2580)
Existing Projects Near Term Projects WA RNG Report (HB 2580) Medium Term Projects Dth 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Cedar Hills Roosevelt South Landfills Wastewater Dairy Municipal Food Food Landfills Wastewater Dairy Municipal Landfill Landfill Treatment treatment digesters food
Slide 68: Renewable Natural Gas Comparison to Non-Renewable Natural Gas Reserves
Renewable Natural Gas Comparison to Non-Renewable Natural Gas Reserves WA RNG Potential Bcf dth dth/day Current 3.9 4,002,400 10,965 Near-Term 5.2 5,395,010 14,781 Mid-Term 5.6 5,729,010 15,696 Total 14.7 15,126,420 41,442 Avista Natural Gas Consumption Avista Power Load 2018 23.4 24,114,712 66,068
Slide 69: NREL Estimates – Idaho RNG
NREL Estimates – Idaho RNG Total Potential Annual Production = 32 Bcf Source – Anaerobic MMBtu per Year Landfills 3,712,221 Wastewater Treatment 6,196,531 Agriculture Manure 20,220,571 Source-Separated Organics (Solid Waste) 2,311,354 Total 32,440,676 National Renewable Energy Laboratory, NREL Biofu
Slide 70: RNG $ per Dth/MMBtu
RNG $ per Dth/MMBtu ID - WA 2035 Premium Avista Owned and Operated Estimate ($ / Dth) RNG - Landfills $7 - $10 RNG - Waste Water Treatment Plants (WWTP) $12 - $22 RNG - Agriculture Manure $28 - $53 RNG - Food Waste $29 - $53 Source: Promoting RNG in WA State 27
Slide 71: Slide 71
Slide 72: 2020 IRP Electric Market Price Forecast
2020 IRP Electric Market Price Forecast James Gall, IRP Manager Fourth Technical Advisory Committee Meeting August 6, 2019
Slide 73: Our Region
Our Region QUEBEC INTERCONNECTION WESTERN INTERCONNECTION 4 EASTERN ~ INTERCONNECTION ERCOT = 5 INTERCONNECTION Source: NERC
Slide 74: US Western Interconnect Generation
US Western Interconnect Generation 100,000 Coal Geothermal Hydroelectric Conventional Natural Gas Nuclear Other 90,000 Other Biomass Other Gases Petroleum Pumped Storage Solar Thermal and Photovoltaic Wind Wood and Wood Derived Fuels 80,000 Wind Solar Average Megawatts 70,000 60,000 Natural Gas Nucl
Slide 75: Mid-Columbia Flat Firm Price Index History
Mid-Columbia Flat Firm Price Index History $140 Energy Crisis 126 $120 117 $100 $ per MWh $80 Natural Gas Market Tightens 58 59 Forwards $60 as of July 51 Cheap Natural 45 Shale Development 29, 2019 42 Gas, good 38 36 $40 34 hydro 32 33 32 33 30 31 33 27 23 23 22 23 23 19 20 22 $20 13 $0 1997 1998 1
Slide 76: 2018 Fuel Mix Comparison (NW vs West)
2018 Fuel Mix Comparison (NW vs West) US Western Interconnect Northwest Four States 5 Source: EIA Data
Slide 77: Natural Gas vs. On-Peak Electric Prices (2003-19)
Natural Gas vs. On-Peak Electric Prices (2003-19) $70 $60 Mid-C $ per MWh $50 2018 & 2019 $40 y = 6.8131x + 9.9432 R² = 0.8886 $30 $20 $10 $0 $0 $2 $4 $6 $8 $10 Stanfield $ per DTh 6
Slide 78: Market Indicators
Market Indicators Spark Spread $20 18.52 Stanfield x 7 - Mid C $15 13.14 $10 7.95 7.71 7.24 6.13 7.02 6.92 5.16 Daily Price Standard Deviation 4.57 3.89 4.43 4.54 4.19 $90 $5 3.62 1.30 $80 Off Peak $0 $70 On Peak (2.45) $60 $ per MWh -$5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20
Slide 79: Western Greenhouse Gas Emissions Power Industry
Western Greenhouse Gas Emissions Power Industry 350 300 Million Metric Tons 250 200 150 100 50 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 WY 22 20 17 1
Slide 80: Northwest Greenhouse Gas Emissions
9 Million Metric Tons - 5 10 15 20 25 30 35 40 1980 45 1982 MT 1984 WA 1986 OR 1988 ID 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Northwest Greenhouse Gas Emissions
Slide 81: Electric Market Modeling
Electric Market Modeling 3rd party software- Aurora by Energy Exemplar Electric market fundamentals- production cost model Simulates generation dispatch to meet load Outputs: – Market prices (electric & emission) – Regional energy mix – Transmission usage – Greenhouse gas emissions – Power p
Slide 82: Stochastic Approach
Stochastic Approach Simulate Western Electric market hourly for next 25 years (2021-45) – That is 175,248 hours for each study Model 500 potential outcomes – Variables include fuel prices, loads, wind, hydro, outages, and inflation – Simulating 87.6 million hours Run time is about 14+ days on
Slide 83: Modeled Western Interconnect Topology
Modeled Western Interconnect Topology 12
Slide 84: How Aurora derives hourly prices
How Aurora derives hourly prices $350 $300 $250 Demand Fuel Prices/Variable O&M $200 $ per MWh $150 $100 Market Price Peakers $50 CCCT Nuclear/ Co-Gen/ Coal/ Other $0 Hydro (Must Run for Negative Pricing) Wind (Net PTC/REC) -$50 Hydro Availability Other Resource Availability -$100 0 10,000 20,000 30
Slide 85: Approach to New Resource Selection
Approach to New Resource Selection • Baseline – 3rd party consultant new resource outlook – known retirements • Policy Constraints – California, BC, and Alberta include CO2 price adder – OR: Emissions Cap (3.6 million tons) – WA: CETA: resources & social cost of carbon – ID: Clean Power Plan Emissio
Slide 86: New Resources Forecast- US West
DRAFT New Resources Forecast- US West 25,000 Natural Gas: 49 GW Megawatts of Capacity 20,000 Wind: 50 GW Solar: 110 GW Storage: 24 GW 15,000 Customer: 15 GW Other: 4 GW 10,000 5,000 - 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2
Slide 87: New Resources Forecast- Northwest States
DRAFT New Resources Forecast- Northwest States 5,000 4,500 Megawatts of Capacity Natural Gas: 5 GW 4,000 Wind: 13 GW 3,500 Solar: 27 GW 3,000 Storage: 3 GW Customer: 0.5 GW 2,500 Other: 2 GW 2,000 1,500 1,000 500 - 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Slide 88: Resource Type Mix Forecast (US Western Interconnect)
DRAFT Resource Type Mix Forecast (US Western Interconnect) 120,000 100,000 Other Hydro Nuclear Coal Wind Solar Natural Gas Fuel Type 2045 minus 2018 Average Megawatts aGW 80,000 Natural Gas -14.7 Hydro +1.4 Solar +28.7 60,000 Wind +14.9 Other +0.9 Coal -13.2 40,000 Nuclear -4.1 20,000 - 2001 2002 20
Slide 89: Resource Type Mix Forecast (NW States)
DRAFT Resource Type Mix Forecast (NW States) 30,000 Other Hydro Nuclear Coal Wind Solar Natural Gas Petroleum 25,000 Fuel Type 2045 minus 2018 Average Megawatts aGW 20,000 Natural Gas -2.8 Hydro* -1.1 15,000 Solar +2.8 Wind +3.6 Other +0.7 10,000 Coal --1.9 Nuclear -1.1 5,000 - 2001 2002 2003 2004 2
Slide 90: Stanfield Natural Gas Price Forecast
DRAFT Stanfield Natural Gas Price Forecast $14.00 Average 25th Percentile $12.00 50th Percentile 75th Percentile $10.00 95th Percentile $ per Dekatherm $8.00 $6.00 $4.00 $2.00 $0.00 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 204
Slide 91: Mid-Columbia Electric Price Forecast (Deterministic)
DRAFT Mid-Columbia Electric Price Forecast (Deterministic) $90 $80 Flat 7am-10pm $70 10pm-7am Super Peak Evening $60 $ per MWh $50 $40 $30 $20 $10 $0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Levelized Prices 20 year
Slide 92: Mid-Columbia Electric Price Forecast (Stochastic Flat Price Statistics)
DRAFT Mid-Columbia Electric Price Forecast (Stochastic Flat Price Statistics) $100 Average 10th percentile Median 95th percentile Deterministic $90 $80 $70 $ per MWh $60 $50 $40 $30 $20 $10 $0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 20
Slide 93: Historical IRP Price Forecasts
DRAFT Historical IRP Price Forecasts (Annual Flat Prices) $100 2005 IRP $90 2007 IRP 2007 IRP* $80 2009 IRP* 2013 IRP $70 2015 IRP $ per MWh 2017 IRP $60 2020 IRP Actual $50 $40 $30 $20 $10 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 20
Slide 94: Hourly Price Shape 2025
DRAFT Hourly Price Shape 2025 Mid Columbia Average Prices- Avg: $22.83 $250 Jan Feb Mar $200 Apr May Jun Jul Aug Sep Oct Nov Dec $150 $ per MWh $100 $50 $0 -$50 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Hour 23
Slide 95: Hourly Price Shape 2030
DRAFT Hourly Price Shape 2030 Mid Columbia Average Prices- Avg: $25.17 $250 Jan Feb Mar $200 Apr May Jun Jul Aug Sep Oct Nov Dec $150 $ per MWh $100 $50 $0 -$50 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Hour 24
Slide 96: Hourly Price Shape 2035
DRAFT Hourly Price Shape 2035 Mid Columbia Average Prices- Avg: $31.44 $250 Jan Feb Mar $200 Apr May Jun Jul Aug Sep Oct Nov Dec $150 $ per MWh $100 $50 $0 -$50 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Hour 25
Slide 97: Hourly Price Shape 2040
DRAFT Hourly Price Shape 2040 Mid Columbia Average Prices- Avg: $33.70 $250 Jan Feb Mar $200 Apr May Jun Jul Aug Sep Oct Nov Dec $150 $ per MWh $100 $50 $0 -$50 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Hour 26
Slide 98: Hourly Price Shape 2045
DRAFT Hourly Price Shape 2045 Mid Columbia Average Prices- Avg: $40.00 $350 Jan Feb Mar $300 Apr May Jun Jul Aug Sep $250 Oct Nov Dec $ per MWh $200 $150 $100 $50 $0 -$50 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Hour 27
Slide 99: Renewable Curtailments
Renewable Curtailments 40% 2030: 0% to 5% curtailment 35% 30% 2045: 14% to 17% curtailment Capacity Factor 25% 2030: 4% to 9% curtailment 20% 2045: 10% to 32% curtailment 15% 10% Wind: Deterministic Solar: Deterministic 5% Wind: Stochastic Solar: Stochastic 0% 2021 2022 2023 2024 2025 2026 2027 2028
Slide 100: Greenhouse Gas Emissions Forecast (US Western Interconnect Total)
29 Million Metric Tons - 50 100 150 200 250 300 1980 350 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 (US Western Interconnect Total) 2008 2010 2012 2014 2016 2018 2022 2024 2026 2028 AZ UT 2030 MT 2032 NV CA 2034 WA 2036 Greenhouse Gas Emissions Forecast 2038 CO NM WY 2040 ID OR
Slide 101: Greenhouse Gas Emissions Forecast (Northwest)
30 Million Metric Tons - 5 10 15 20 25 30 35 40 45 1980 1982 1984 MT 1986 1988 WA 1990 1992 OR 1994 1996 ID 1998 2000 (Northwest- WA,OR,ID,MT) 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 Greenhouse Gas Emissions Forecast 2042 2044 DRAFT
Slide 102: Regional Resource Adequacy
DRAFT Regional Resource Adequacy 18% 1.6 16% 2040 EUE: 1.4 743 MWh 14% 1.2 12% 2021 EUE: 2030 EUE: 1.0 392 MWh 51 MWh 10% LOLP LOLH 0.8 8% 0.6 6% 0.4 4% 2% 0.2 0% - 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Resource a
Slide 103: Electric Price Forecast Scenarios
Electric Price Forecast Scenarios • Social Cost of Carbon in Dispatch • No CETA resource build • Low Natural Gas Prices • High Natural Gas Prices 32
Slide 104: Social Cost of Carbon Price Forecast
Social Cost of Carbon Price Forecast $200 $180 2007 $ Nominal $160 $ per Metric Ton $140 $120 $100 $80 $60 $40 $20 $0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Note: Inflation from 2007 uses CPI between 2007 and 2018,
Slide 105: Scenario Price Forecast Results
DRAFT Scenario Price Forecast Results $70 $60 $50 $ per MWh $40 $30 $20 $10 Expected Case- Deterministic Scenario: No CETA Scenario: SCC Scenario: Low NG Prices Scenario: High NG Prices $0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2
Slide 106: Scenario Levelized Prices
DRAFT Scenario Levelized Prices $60 20 yr 25 yr $50.41 $50 $45.71 $39.81 $40 $36.10 $ per MWh $30.12 $30 $28.74 $27.32 $26.06 $20.15 $20 $18.27 $10 $0 Expected Case- Scenario: No CETA Scenario: SCC Scenario: Low NG Scenario: High NG Deterministic Prices Prices 35
Slide 107: Generation Mix Forecast by Scenario (2040)
US Western Interconnect DRAFT Generation Mix Forecast by Scenario (2040) 100.0 90.0 80.0 70.0 60.0 Average Gigawatts 50.0 40.0 30.0 20.0 10.0 - Expected Case- Scenario: Low NG Scenario: High NG Scenario: No CETA Scenario: SCC Deterministic Prices Prices Natural Gas 13.0 13.5 7.7 13.9 12.9 Solar 28.9
Slide 108: GHG Emission Forecast
DRAFT GHG Emission Forecast US Western Interconnect 200 Expected Case- Deterministic 180 Scenario: No CETA 160 Scenario: SCC Millions of Metric Tons Scenario: Low NG Prices 140 Scenario: High NG Prices 120 100 80 60 40 20 - 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2
Slide 109: Colstrip Dispatch
DRAFT Colstrip Dispatch Expected Case Scenario: No CETA Scenario: SCC Scenario: Low NG Prices Scenario: High NG Prices Capacity Factor 2021 2022 2023 2024 2025 38
Slide 110: Existing Thermal Resource Overview
Existing Thermal Resource Overview Darrell Soyars, Manager of Corporate Environmental Compliance John Lyons, Ph.D. Fourth Technical Advisory Committee Meeting August 6, 2019
Slide 111: Purpose
Purpose • Review major environmental regulatory programs that may impact current and future operations • This is not intended to be a discussion or debate about past practices or current approach to achieve compliance with these programs • Questions are welcome within the scope of this presentation
Slide 112: Colstrip Environmental Considerations
Colstrip Environmental Considerations 3
Slide 113: Colstrip Ownership Information
Colstrip Ownership Information Colstrip Basic Data Colstrip Ownership Percentages Colstrip Size Year Avista NorthWestern PacifiCorp Portland Talen Puget Unit # (MW) Online Energy, LLC General Energy, Sound Electric LLC Energy Unit #1 333 1975 0% 0% 0% 0% 50% 50% Unit #2 333 1976 0% 0% 0% 0% 50% 50%
Slide 114: Air Quality – Montana Mercury Rule
Air Quality – Montana Mercury Rule • Program established 2010, mercury site-wide annual average below 0.9 lb/Tbtu • Colstrip installed mercury oxidizer/sorbent injection system in 2010 • MDEQ recently concurred with our pollution equipment technology review • Units 3 & 4 operate in the 0.8 lb/Tbtu r
Slide 115: Air Quality – Mercury Air Toxics Rule
Air Quality – Mercury Air Toxics Rule Mercury Air Toxics (MATS) Rule: • Program established 2016 • Particulate Matter (PM) used as a surrogate for air toxics • PM site-wide 30-day rolling average below 0.030 lb/MMBtu • PM and mercury are controlled by existing wet scrubbing equipment with injection
Slide 116: Air Quality – Regional Haze Rule
Air Quality – Regional Haze Rule • Program established 1999, Improve visibility in Class 1 areas • Federal plan for Montana was vacated by courts in 2015 • NOx is controlled by LoNOx burners, Overfire air and Smartburn • MDEQ issued progress plan in 2017, now ready to take leadership of program • Re
Slide 117: Air Quality
Air Quality • Affordable Clean Energy (ACE) Rule – Program established 9/16/19, replacement for Clean Power Plan (CPP) • Reduce CO2 emissions by Heat Rate Improvements (HRI) • MDEQ will determine future limitations based on evaluation of HRI technologies • Cost and remaining useful life consideratio
Slide 118: Water Use
Water Use • Raw water is withdrawn from the Yellowstone River to Castle Rock Lake (a.k.a., the Surge Pond) via a 29-mile long pipeline. • From the Surge Pond, water is piped to holding tanks at the Plant Site for use in boilers, cooling towers and scrubber systems. • Fly ash from the scrubber system
Slide 119: Three Storage Areas
Three Storage Areas – The Plant Site contains Generating Units 1 through 4 and several associated ponds (Avista share) – The Units 3 & 4 EHP contains several ponds for the disposal of fly ash scrubber slurry/paste from Generating Units 3 and 4, and bottom ash from Generating Units 1 through 4, and i
Slide 120: SCALE mre 3,000
SCALE 9 mre 3,000 —— LEGEND PROPERTY BOUNDARY UNITS 1 & 2 SOEP AND STEP AOC AREA PLANT SITE AOC AREA UNITS 3 & 4 EHP AOC AREA. Revised May 8, 2017 ‘POSTE tive, 6:50 Au SBEREN\(BU 201 70508 \ LAND PROJECTS\TALEN\ 1207118\12071 169008.0N6 iydrometrics, Ine. ~A
Slide 121: Management Drivers
Management Drivers • Regulatory programs – The Site Certificate originally issued including the amended 12(d) stipulation under the Major Facility Siting Act in Montana, Nov. 1975. – Administrative Order on Consent (AOC) Regarding Impacts Related to Wastewater Facilities, MDEQ (July 2012), Settlemen
Slide 122: Strategic Water Planning
Strategic Water Planning • Master Plan originally developed in November 2015, Executive Summary (Sept. 2016) is available on MDEQ-AOC website: • http://deq.mt.gov/DEQAdmin/mfs/ColstripSteamElectricStation • AOC public process will select actions to be performed and requires Financial Assurance (FA)
Slide 123: Plant Site Ponds
Plant Site Ponds 14
Slide 124: Colstrip Units 3 & 4 Evaporative Ponds
Colstrip Units 3 & 4 Evaporative Ponds 15
Slide 125: Major Water Activities
Major Water Activities • Must remove Boron, Chloride and Sulfate in groundwater • Achieve source control – Close existing ash storage ponds – Build water treatment system – Dry ash storage • Install and operate groundwater treatment system • Achieve clean-up criteria • Must take place regardless of
Slide 126: Avista's Financial Assurance Share
Avista’s Financial Assurance Share • Plant Site area – Remedy Plan – $5,841,000 posted 12/21/18 – Closure Plan – $383,713 posted 2/1/19 • Units 3 & 4 – Remedy Plan – currently under review, expected late 2019 – Closure Plan – $6,793,050 posted 2/1/19 • Annual bond reconciliation required 17
Slide 127: Colstrip Fuel Contract
Colstrip Fuel Contract • Coal supplier has emerged from bankruptcy and agreed to honor the current contract, which ends 12/31/19 • New contract is being negotiated and results will be used to model Colstrip in this IRP 18
Slide 128: Modeled Colstrip Costs
Modeled Colstrip Costs 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Fixed O&M 10.3 9.4 9.7 10.1 11.2 Coal Combustion Residuals O&M 0.4 0.6 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Existing Capital Revenue Requirement – WA 12.1 11.3 10.5 9.8 9.1 0.4 Existing Capital Revenue Requirement – ID 5.9 5.5 5.1 4
Slide 129: Lancaster Power Purchase Agreement
Lancaster Power Purchase Agreement • Current PPA ends in October 2026 • Directly connect to either AVA or BPA transmission system • Avista controls firm GTN transportation rights • This IRP will evaluate an extension of this contract 20
Slide 130: Thermal Plant Book Value and Remaining Depreciation
Thermal Plant Book Value and Remaining Depreciation Thermal Plant Book Value Remaining Life (millions) (years) Boulder Park $ 17.4 20 Colstrip Units 3 and 4 $ 121.4 See Note Coyote Springs 2 $ 124.8 21 Kettle Falls CT $ 3.7 24 Northeast $ 0.6 <2 Rathdrum $ 36.5 14 • This table includes land, total g
Slide 131: 2020 Electric IRP Final Resource Need Assessment
2020 Electric IRP Final Resource Need Assessment John Lyons, Ph.D. Fourth Technical Advisory Committee Meeting August 6, 2019
Slide 132: Agenda
Agenda • 2020 IRP Load & Resource Balance • Avista’s Clean Energy Goals • Energy Independence Act Renewable Requirement Forecast • Clean Energy Transformation Act Forecast
Slide 133: Load & Resource Methodology Review
Load & Resource Methodology Review • Sum resource capabilities against loads • Resource plans are subject to 5% LOLP analysis – determines planning margins • Capacity – Planning Margin (14% Winter, 7% Summer) – Operating Reserves and Regulation (~8%) – Reduced by planned outages for maintenance – Pl
Slide 134: One Hour Peak Load & Resource Position
4 Megawatts 0 100 200 300 400 (600) (500) (400) (300) (200) (100) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 August January 2041 2042 2043 2044 2045 One Hour Peak Load & Resource Position
Slide 135: 18-Hour Sustained Peak L&R
5 Megawatts 0 100 200 300 400 (500) (400) (300) (200) (100) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 August 2038 January 18-Hour Sustained Peak L&R 2039 2040 2041 2042 2043 2044 2045
Slide 136: Load Variability (Temperature Variation)
Load Variability (Temperature Variation) 2,200 241 MW Planning Margin @ 14% 114 MW Planning Margin @ 7% 2,000 Winter Plan: 10 1,800 Summer Degrees Megawatts Plan: 80 Degrees 1,600 1,400 Winter Summer 90th Percentile 1,881 1,710 1,200 Mean 1,718 1,627 10th Percentile 1,565 1,542 90th - Mean 163 83 1,
Slide 137: Energy Load & Resource Position
7 Megawatts 0 100 200 300 400 (500) (400) (300) (200) (100) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 August Annual 2038 January 2039 2040 2041 Energy Load & Resource Position 2042 2043 2044 2045
Slide 138: Avista's Clean Energy Goal
Avista’s Clean Energy Goal Goals 2027 – 100% carbon-neutral 2045 – 100% clean electricity How we will get there It’s not just about generation – various solutions are necessary Maintain focus on reliability and affordability Natural gas plays an important part of a clean energy future Co
Slide 139: Avista Corporate Clean Energy Goals
Avista Corporate Clean Energy Goals 9
Slide 140: Washington State Clean Energy Goals
Washington State Clean Energy Goals • Energy Independence Act or Initiative 937 – 15% of Washington retail load after 2020 – Qualifying resources less any forward sales obligations – Banking provisions mitigate year-to-year variation – Addition of qualifying BPA and Wanapum, which are not included i
Slide 141: Washington Energy Independence Act
11 Dispatched Average Megawatts - 100 120 140 20 40 60 80 2021 2022 2023 Wind 2024 2025 2026 Solar 2027 2028 2029 Wood 2030 2031 2032 EIA Goal 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Washington Energy Independence Act
Slide 142: Avista's Washington CETA Goals
Avista’s Washington CETA Goals 12