Case No. AVU-E-07-08

March 25, 2008

Contact: Gene Fadness (208) 334-0339, 890-2712




Avista counts on natural gas, not coal, to meet future resource needs


The Idaho Public Utilities Commission has accepted a long-range plan for Avista Utilities that depends more on natural gas for its future energy resources, rather than coal.


The Integrated Resource Plan (IRP) outlines how Avista intends to meet the demands of its growing customer base over the next decade. Avista, which serves about 115,000 customers in northern Idaho, says it will need 350 megawatts from natural gas sources to meet customer demand. It plans on getting most of that – 275 MW – from the Lancaster Generation Facility near Rathdrum. Avista also plans on adding 300 megawatts from wind sources, 35 MW from other renewable resources and 87 MW from energy savings due to conservation measures.


Without the additional generation, the company states it would face generation shortfalls of about 83 average-megawatts in 2011 and 272 aMW by 2017.


Avista decided to drop plans outlined in an earlier 2005 IRP for coal-fired generation for several reasons including legislation in Washington state where the utility has most of its customers. Washington enacted a greenhouse gas emissions standard that precludes Avista from acquiring a new pulverized coal plant or entering into a long-term contract with an existing plant.


Several utilities have dropped coal sources from their long-range planning due to new emissions standards and higher costs associated with the potential for carbon taxes, making coal less competitive with other generation alternatives.


Avista’s 2007 plan also includes fewer renewables – from 500 megawatts to 350 MW – than it had hoped for in its 2005 plan. Avista said the cost of wind resources has increased by more than 100 percent over the last six years. Legislation in Oregon, Washington and other states that mandates a certain percentage of generation from renewable sources has increased the demand for wind turbines. That demand reduces their availability and increases their price.


“Ironically, Idaho presently has neither carbon emission standards nor renewable portfolio standards, yet the new legislation in other states has effectively limited the new generation choices for serving Idaho loads,” commission staff said. Utilities in Idaho that serve several states must meet the requirements in all the states they serve. It is “impractical to develop new generation projects devoted solely to serve Idaho loads,” commission staff said.


Avista moved away from natural gas-fired sources in 2005 because of the price volatility in natural gas markets that drastically increased prices between 2003 and 2005. But with the elimination of coal-fired generation and the higher cost of renewables, the utility returns to natural gas to meet some of its future demand.


Commission staff urged Avista to develop new and innovative methods to counteract natural gas price volatility and to maximize the use of cost-effective load control programs. Further, staff said utilities should “dutifully consider the potential for integrating nuclear energy into their long-term resource planning.”


Avista is planning an additional 87 MW from conservation measures, an 85 percent increase in conservation since Avista’s 2003 IRP and a 25 percent increase over the 2005 IRP.


Acceptance of Avista’s IRP does not mean the commission endorses all the anticipated projects in the plan. It means only that the utility has complied with a requirement to file an IRP every two years. The commission recognizes that assumptions and projections can change over time. “It is the ongoing planning process that we acknowledge, not the conclusion or results,” the commission said.


A copy of Avista’s plan, along with other documents related to this case, is available on the commission’s Web site at Click on “File Room” and then on “Electric Cases” and scroll down to Case Number AVU-E-07-08.