2007 IRP Document
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2007 Electric Integrated Resource Plan August 31, 2007 PHOTO CREDITS - Avista’s investment in transmission infrastructure crosses the wheat fi elds of Washington state’s Palouse region. Photo by Hugh Imhof, Avista. - Three key components of Avista’s renewable energy and DSM plans include the Noxon Rapids Hydro Facility on the Clark Fork River in Montana, education about energy effi cient compact fl ourescent bulbs, and including power generated at the Stateline Wind Farm on the Southeast border of Washington and Oregon. SPECIAL THANKS TO OUR TALENTED VENDORS FROM THE SPOKANE AREA WHO PRODUCED THIS IRP: Ross Printing Company Thinking Cap Design Printed on recycled paper. TABLE OF CONTENTS Executive Summary i Introduction and Stakeholder Involvement 1-1 Loads and Resources 2-1 Demand Side Management 3-1 Environmental Issues 4-1 Transmission Planning 5-1 Modeling Approach 6-1 Market Modeling Results 7-1 Preferred Resource Strategy 8-1 Action Items 9-1 SAFE HARBOR STATEMENT This document contains forward-looking statements. Such statements are subject to a variety of risks, uncertainties and other factors, most of which are beyond the company’s control, and many of which could have a signifi cant impact on the company’s operations, results of operations and fi nancial condition, and could cause actual results to differ materially from those anticipated. For a further discussion of these factors and other important factors, please refer to our reports fi led with the Securities and Exchange Commission which are available on our website at www.avistacorp. com. The company undertakes no obligation to update any forward- looking statement or statements to refl ect events or circumstances that occur after the date on which such statement is made or to refl ect the occurrence of unanticipated events. TABLE OF TABLES Table 1: Net Position Forecast ______________________________________________________________ i Table 2: 2007 Preferred Resource Strategy Selections (Nameplate MW) ____________________________ vi Table 3: Net Position Forecast with Lancaster _________________________________________________ ix Table 1.1: TAC Participants _______________________________________________________________ 1-2 Table 1.2: TAC Meeting Dates and Agenda Items ______________________________________________ 1-3 Table 2.1: Global Insights National Forecast Assumptions ________________________________________ 2-4 Table 2.2: Company-Owned Hydro Resources _______________________________________________ 2-14 Table 2.3: Company-Owned Thermal Resources _____________________________________________ 2-14 Table 2.4: Mid-Columbia Contract Summary ________________________________________________ 2-17 Table 2.5: Signifi cant Contractual Rights and Obligations _______________________________________2-17 Table 2.6: Capacity L&R Versus Sustained Capacity ___________________________________________ 2-18 Table 2.7: Loads & Resources Capacity Forecast (MW)_________________________________________ 2-19 Table 2.8: Loads & Resources Energy Forecast (aMW) _________________________________________ 2-20 Table 3.1: Current Energy Effi ciency Programs ________________________________________________ 3-2 Table 3.2: Proposed New Energy Effi ciency Program ___________________________________________ 3-3 Table 3.3: Current Avista Energy Effi ciency Programs (kWh) ____________________________________ 3-10 Table 3.4: Recent Hydro Effi ciency Upgrade Studies __________________________________________ 3-13 Table 5.1: Estimated Integration Costs Inside Avista’s System ($Millions) ____________________________ 5-9 Table 6.1: AURORAxmp Pools and Zones ___________________________________________________ 6-3 Table 6.2: Seasonal Natural Gas Price Factors _________________________________________________ 6-5 Table 6.3: Natural Gas Basin Prices as % of Henry Hub _________________________________________ 6-6 Table 6.4: New RPS Resources Added to Existing System (aMW) _________________________________6-9 Table 6.5: Annual Average Peak Load Growth _________________________________________________ 6-9 Table 6.6: Annual Average Energy Load Growth ______________________________________________ 6-10 Table 6.7: Coeffi cient of Variation of Forward Sumas Natural Gas Prices ___________________________ 6-11 Table 6.8: Selected Zone’s Load Correlations to Eastern Washington (Jan-June) _____________________ 6-14 Table 6.9: Selected Zone’s Load Correlations to Eastern Washington (July-Dec) _____________________ 6-14 Table 6.10: Selected Zone’s Load Coeffi cient of Variation (Jan-Jun %) ______________________________ 6-15 Table 6.11: Selected Zone’s Load Coeffi cient of Variation (July-Dec %) _____________________________ 6-15 Table 6.12: Simulated Average Annual Wind Capacity Factors _____________________________________ 6-17 Table 6.13: Probability Matrix of Carbon “Taxes” ______________________________________________ 6-18 Table 6.14: Real 2007 Levelized Costs for 2013 CCCT (Full Availability) ___________________________ 6-19 Table 6.15: Real 2007 Levelized Costs for 2013 SCCT (Full Availability) ____________________________ 6-20 Table 6.16: Coal Plant Technology Characteristics and Assumed Costs ______________________________ 6-20 Table 6.17: Regional Coal Transmission Capital Costs ___________________________________________6-21 Table 6.18: Real 2007 Levelized Costs for 2013 NW Coal Plants (Full Availability $/MWh) _____________ 6-21 Table 6.19: Wind Location Capacity Factors (excludes losses) _____________________________________ 6-22 Table 6.20: Wind Integration Costs _________________________________________________________ 6-22 TABLE OF TABLES (continued) Table 6.21: Real 2007 Levelized Costs for 2013 Wind Plants (Full Availability)________________________ 6-22 Table 6.22: Real 2007 Levelized Costs for 2013 Alberta Oil Sands Project (Full Availability) _____________ 6-23 Table 6.23: Real 2007 Levelized Costs for 2008 Other Resources (Full Availability) ___________________ 6-24 Table 7.1: Base Case Key Assumptions _______________________________________________________ 7-2 Table 7.2: Cumulative Western Interconnect Resource Additions (nameplate MW) ____________________ 7-2 Table 7.3: Oregon, Washington and Northern Idaho Cumulative Resource Selection (MW) _____________ 7-3 Table 7.4: Unconstrained Carbon Future Cumulative Resource Selection (MW) ______________________7-5 Table 7.5: CSA Carbon Charge Future, Cumulative Resource Selection (MW) _______________________ 7-6 Table 7.6: Comparative Levelized Mid-Columbia Prices and Risk (Real 2007 Dollars) _________________ 7-8 Table 7.7: Comparative Levelized Mid-Columbia Prices and Risk (Nominal 2007 Dollars) ______________7-8 Table 7.8: Multiple Regression Coeffi cient Results _____________________________________________ 7-9 Table 7.9: Constant Gas Growth Scenario, Cumulative Resource Selection (MW) ____________________7-10 Table 7.10: High Natural Gas Price Scenario: Cumulative Resource Selection (MW) __________________ 7-11 Table 7.11: Low Natural Gas Price Scenario: Cumulative Resource Selection (MW) ___________________7-11 Table 7.12: Western Interconnect Average Demand (aGW) _______________________________________7-11 Table 7.13: High Load Escalation Scenario: Cumulative Resource Selection (MW) ____________________ 7-12 Table 7.14: High Load Escalation Scenario: % Change Cumulative Resources (%) _____________________ 7-12 Table 7.15: Low Load Escalation Scenario: Cumulative Resource Selection (MW) ____________________ 7-12 Table 7.16: Low Load Escalation Scenario: % Change Cumulative Resources (%) _____________________ 7-12 Table 7.17: Nuclear Plants Scenario: Cumulative Resource Selection (MW) _________________________ 7-13 Table 7.18: Electric Car Scenario Costs ($Billions) _____________________________________________ 7-17 Table 7.19: Future and Scenario Market Price Comparisons ($/MWh) _____________________________ 7-18 Table 8.1: Resource Options Available to Avista for the 2005 and 2007 IRP, fi rst 10 years _______________ 8-2 Table 8.2: 2007 IRP Preferred Resource Strategy Selection (Nameplate MW)________________________ 8-7 Table 8.3: 2005 IRP Preferred Resource Strategy Selection (Nameplate MW)________________________ 8-7 Table 8.4: Loads & Resources Energy Forecast with PRS (aMW) __________________________________ 8-9 Table 8.5: Loads & Resource Capacity Forecast with PRS (MW) __________________________________ 8-9 Table 8.6: Company Resource Capital Requirements ($Millions) _________________________________ 8-12 Table 8.7: Impacts to Wind & Green Tag Selection (2008-2017) __________________________________ 8-18 Table 8.8: Impact to Wind Selection with Idaho RPS (MW) ____________________________________ 8-18 Table 8.9: 2008-17 Resources for Each Portfolio (Capability MW) _______________________________ 8-19 Table 8.10: Capital Cost Sensitivities ($2007/kW) ______________________________________________ 8-22 Table 8.11: Wind Capacity Selected for 25% Risk Reduction (MW) _______________________________ 8-23 Table 8.12: Resource Selection Comparison (MW) ____________________________________________ 8-23 Table 8.13: Loads & Resources Energy Forecast with PRS (aMW) _________________________________ 8-28 Table 8.14: Loads & Resource Capacity Forecast with PRS (MW) _________________________________ 8-29 TABLE OF FIGURES Figure 1: Load Resource Balance—Capacity (MW) ______________________________________________ii Figure 2: Load Resource Balance—Energy (aMW) ______________________________________________ii Figure 3: Effi cient Frontier and Traditional Resource