The Idaho Public Utilities Commission, in a July 20 notice, said that persons wishing to state a position on Avista Corporation’s application seeking approval for an accounting and ratemaking treatment of costs associated with the company’s Wildfire Resiliency Plan (WF Plan) may file written comments — including to request a hearing on the matter — by Aug. 26.
As noted in the company’s May application, Avista d/b/a Avista Utilities said that it is requesting commission approval to defer, for later rate-making treatment, the return on, and of, certain incremental capital and expenses related to the WF Plan efforts, until such time the annual costs and capital investment are included in base rates.
The wildfire resiliency program includes a capital investment of about $269m over a 10-year period (2020-2029) with corollary operating expenses of about $59.6m (all electric system numbers), Avista said, adding that comprehensive risk analysis indicates a 10-year inherent potential risk exposure of at least $8bn.
The single largest capital investment is associated with electric distribution grid hardening, the company said, noting that that accounts for $193.2m invested in distribution systems located in elevated fire risk areas, with another $44m invested to convert wood poles to steel on the transmission system. The company added that those two plan elements account for 88% of total capital spend, over the 10-year period.
Avista noted that as “the number of large wildland fires in the Pacific Northwest continue to trend upward,” the company in June 2019 held a series of wildfire workshops to evaluate opportunities to reduce the risk of wildfires associated with its electric transmission and distribution systems in its Idaho and Washington service territories.
The company said that data from Climate Central’s “2016 Western Wildfire Report” suggests a 300% increase in large fires, and a 600% increase in the number of acres burned, since 1970, and is particularly acute in several states, including Idaho, Wyoming, and Montana, where a 10-fold increase has occurred.
Avista noted that it operates 2,270 miles of transmission in portions of western Montana, northern Idaho, and eastern Washington.
Avista said that it adopted in 2006 tubular steel poles as the “standard installation” for 115-kV and 230-kV power lines, and that since then, the company has worked to replace its aging wooden structures with steel; all new construction is exclusively steel. The company said that the combination of system hardening and well-maintained rights of way (ROWs) has increased the fire resiliency of its transmission system.
Noting that transmission fire ignition events are relatively rare, Avista said that from 2014 to 2018, there were 611 sustained outages, but only 252 between May and September, or the fire season. However, the company said, there were more than 3,000 momentary outages and nearly half of those — 1,500 — occurred during fire season. Avista said that 80% of transmission line faults are momentary, or less than five minutes, and are generally the result of lightning, wind, and planned switching operations.
Conversely, the impact of fire to transmission structures can be significant, Avista said, adding that the replacement cost of a single wood transmission structure, for instance, ranges from $7,500 to more than $25,000, and damages to conductor can escalate into the millions of dollars.
The company said that the WF Plan includes information on 28 “Plan Recommendations,” grouped into four categories:
- Grid hardening — Replacing infrastructure in fire prone areas
- Enhanced vegetation management — Identifying potential conflicts on an annual basis and prioritizing those risks from highest to lowest
- Situational awareness — Adding line and monitoring equipment, system operators can respond quickly to variable weather and fire threat conditions
- Operations and emergency response — Through training and simulation, Avista personnel will be better prepared to work with fire professionals during an event
Discussing its proposed accounting treatment, Avista said that the deferral of the revenue requirement for plant investment would begin in the month that the investment transfers to plant in 2020 and would continue monthly until such plant is included in retail rates in a future proceeding. In a future proceeding, Avista said, the company would address the prudence of the costs incurred and request recovery of the deferred costs, including a carrying charge on the deferral at the authorized rate of return. At that time, the company would also propose an amortization period to recover the costs from Idaho customers over a future period.
Among other things, the company added that if its proposal is approved, then the commission would have the opportunity to review the costs after-the-fact and make a prudence determination prior to Avista receiving recovery of the prudently incurred costs through retail rates.