The 2013 Preferred Resource Strategy (PRS) of Avista, filed Aug. 29 at the Idaho Public Utilities Commission, describes a reasonable low-cost plan along the efficient frontier of potential resource portfolios accounting for fuel supply and price risks.
Major changes from the 2011 plan include reduced energy efficiency, wind, and natural gas-fired resources and, for the first time, a modest contribution from demand response, Avista noted. The plan no longer calls for new renewable resources due to the recent acquisition of the 105-MW Palouse Wind Project and the recent law change allowing the Kettle Falls Generation Station to qualify for Washington’s Energy Independence Act (EIA) beginning in 2016.
The strategy’s lower energy efficiency level is due to lower avoided costs, increased codes and standards supplanting the need for utility-sponsored acquisition, and rising implementation and verification costs associated with utility-sponsored energy efficiency programs. The reduction in natural gas-fired resources results primarily from a lower retail load forecast. Demand response is included because lower energy prices increase the value of resources providing on-peak capacity.
In the plan are:
- Avista’s first anticipated resource acquisition is a natural gas-fired peaker by the end of 2019 to replace expiring contracts and growing loads;
- a combined-cycle combustion turbine replaces the gas-fired Lancaster Facility when its contract ends in 2026;
- the selection of natural gas-fired peaking units is due primarily to their smaller size better fitting Avista’s resource deficits;
- the 2013 PRS includes demand response programs for the first time;
- energy efficiency offsets projected load growth by 42% through the 20-year integrated resource plan (IRP) timeframe; and
- the coal-fired Colstrip Units 3 and 4 in Montana remain viable and cost-effective throughout the planning horizon, even under scenarios most adverse to the plant.
Transition away from coal stops at Colstrip
Avista began its shift away from coal-fired resources with the sale of its 210 MW share of the Centralia coal plant in Washington state in 2000, and its replacement with natural gas-fired generation projects. Since the Centralia sale, Avista has made several generation acquisitions and upgrades, including:
- 25 MW Boulder Park natural gas-fired reciprocating engines (2002);
- 7 MW Kettle Falls gas-fired combustion turbine (CT) (2002);
- 35 MW Stateline wind power purchase agreement (2004);
- 56 MW (total) hydroelectric upgrades (through 2012);
- 270 MW natural gas-fired Lancaster Generation Station power purchase agreement (2010); and
- 105 MW Palouse Wind power purchase agreement (2012).
Adding Palouse Wind to Avista’s resource mix in December 2012 satisfied the 2012 Northwest Wind component of the 2011 PRS. Changes in the Washington State Energy Independence Act (EIA) eliminated the need for a 2019/2020 wind resource.
An amendment under SB 5575 adds the Kettle Falls Generating Station, and other legacy biomass plants, as EIA qualifying resources beginning in 2016. The 2011 IRP forecast 1.6% annual load growth, while this IRP forecasts just over 1% growth. Lower expected load growth delays the first natural gas-fired resource need by one year and eliminates the need for a combined cycle combustion turbine in 2023.
Washington voters approved the EIA through Initiative 937 in the November 2006 general election. The EIA requires utilities with over 25,000 customers to meet 3% of retail load from qualified renewable resources by 2012, 9% by 2016, and 15% by 2020. The initiative also requires utilities to acquire all cost-effective conservation and energy efficiency measures.
Avista said it expects to meet or exceed its renewable energy requirements through the 20-year plan with a combination of qualifying hydroelectric upgrades, the Palouse Wind project, the Kettle Falls Generating Station and selective renewable energy certificate (REC) purchases. Avista relies on a diverse portfolio of generating assets to meet customer loads, including owning and operating eight hydroelectric developments located on the Spokane and Clark Fork rivers. Avista’s thermal assets include partial ownership of two Colstrip coal-fired units in Montana, five natural gas-fired projects, and a biomass plant located near Kettle Falls, Wash. In total, Avista’s hydroelectric plants have 1,065.4 MW of on-peak capacity.
Expansion is underway at one hydro facility. The Nine Mile facility’s four units have a 26.4 MW nameplate rating and 17.6 MW maximum capacity rating. A new hydraulic control system was installed in 2010, replacing the original flashboard system that maintained full pool conditions seasonally. Nine Mile is currently undergoing substantial multi-year upgrades. Nine Mile Units 1 and 2 upgrades to two 8 MW generators/turbines, replace both existing 3 MW units. Once operational in 2016, the new units will add 1.4 MW of energy beyond the original configuration and 6.4 MW of capacity above current generation levels.
In addition to these capacity upgrades, the Nine Mile facility will receive upgrades to the hydraulic governors, static excitation system, switchgear, station service, control and protection packages, ventilation upgrades, rehabilitation of intake gates and sediment bypass system, and other investments. The fall 2013 Unit 4 overhaul includes new turbine runners, thrust bearings, and operating system. Avista plans to overhaul Unit 3 in 2018-19.
Coyote Springs 2 gas plant undergoing changes
Avista owns seven thermal generation assets located across the Northwest. Avista expects each plant to continue operation through the 20-year IRP planning horizon.
The Colstrip plant, located in Eastern Montana, consists of four coal-fired steam plantsconnected to the double circuit 500-kV Bonneville Power Administration (BPA) transmission line under a long-term wheeling agreement. PPL Global operates the facilities on behalf of the six owners. Avista owns 15% of Units 3 and 4. Avista’s share of Colstrip Units 3 and 4 has a maximum net capacity of 111.0 MW, and a nameplate rating of 123.5 MW per unit. Avista has no ownership interests in Colstrip Units 1 and 2.
Up for changes is Coyote Springs 2, a natural gas-fired combined cycle combustion turbine located near Boardman, Ore. This plant connects to BPA’s 500-kV transmission system under a long-term transmission agreement. The plant began service in 2003. Its maximum capacity is 274 MW in the winter and 221 MW in the summer with a duct burner providing additional capacity of up to 28 MW. The plant’s nameplate rating is 287.3 MW.
Avista is in the process of upgrading Coyote Springs 2, including cooling optimization and cold day controls. The 2011 IRP process studied both of these updates. The cold day controls remove firing temperature suppression that occurs when ambient temperatures are below 60 degrees. The upgrade improves the heat rate by 0.5 percent and output by approximately 2.0 MW during cold temperature operations. The cooling optimization package improves compressor and natural gas turbine efficiency, resulting in an overall increase in plant output of 2.0 MW.
The 2013 IRP does not anticipate meeting summer capacity deficits with new resources, because of the significant regional surplus in the summer. Similar to the region, Avista’s generation additions to meet winter peaks will substantially eliminate summer deficits.
During winter peak periods, surplus capacity exists through 2019 after taking into account market purchases. Without these purchases, a capacity deficit would exist in 2012. Avista said it believes that the present market can meet these minor winter capacity shortfalls and therefore will optimize its portfolio to postpone new resource investments for winter capacity until 2020.
Many near-term deficits are from decreased hydroelectricity capacity during periods of planned maintenance and upgrades. Taking into account regional surpluses, the load and resource balance is 54 MW short only in 2016. After 2016, when the Portland General Electric capacity sale contract expires, the next capacity need is in 2019 at 98 MW.