Claiming aggressive energy efficiency results, Spokane, WA-based Avista Utilities doesn't think it will need added natural gas supplies for its three-state Pacific Northwest utility operations until at least 2018-19. This was one of the bottom line conclusions of the combination utility's 2009 gas Integrated Resource Plan (IRP) released Dec. 31, but it also includes a number of action steps as a hedge against complacency regarding both price and supply.
Avista said it has filed copies of the gas IRP with state regulators in Idaho, Oregon and Washington, and will incorporate feedback from each of the state regulatory commissions. Slowed demand due to a combination of economic factors and efficiency programs is found in all of its jurisdictions, compared to the gas IRP forecast two years ago, Avista said.
"These reductions are driven mainly by lower growth rates in our service territories than originally anticipated as a result of the severe economic downturn during this IRP cycle," Avista's IRP said. "Additional resource needs do not occur until well into the future."
In Oregon Avista sees the 2018-19 period being the change point, but for Washington and Idaho, the utility does not see that happening until the 2022-23 time frame. Annual demand growth in Oregon and the other two states is forecast to average 1.4% and 1%, respectively, while new customer accounts are projected to grow annually at an average 2.5% pace, Avista said.
Apparently rejecting the need for a liquefied natural gas terminal in the region, Avista's IRP said its data "indicated incremental pipeline transportation capacity is the preferred resource to meet the identified needs."
Nevertheless, Avista acknowledges there is a wide array of risks that could alter its current IRP conclusions involving demand, energy prices, economic recovery and various public policy issues centered on global climate change. "This IRP was developed during a two-year period in which an international credit crisis severely disrupted the United States and global economy, and long-term effects on the natural gas industry are uncertain, prompting us to consider a wider range of scenarios to evaluate and prepare for a broad spectrum of potential outcomes."
One of its proposed "actions" in the IRP is for Avista to continue what it called "cost-effective demand-side solutions." In Washington and Idaho, the utility targeted 2.19 million therms of reduced demand in 2010, and another 303,000 therms in Oregon, representing a 25% increase in the utility's goals in each state.
Along with more closely monitoring actual demand against forecasted levels and analyzing customer use data and demand-side management results, Avista committed in the IRP action plan listing to retain a conservation consultant, continue to closely monitor trends in Canadian gas imports -- its largest supply source -- and to explore alternative and additional forecasting methods.
"Although we are satisfied with the planning, analysis and conclusions reached in this IRP, we recognize widespread uncertainty results in a heightened risk environment requiring diligent monitoring" of various issues and challenges, including economic uncertainty, climate change legislation, and abrupt supply shifts.
On natural gas wholesale prices, Avista said the outlook has "changed dramatically" over its past two-year planning cycle. It said one of the major impacts on gas pricing was the global credit crisis and economic recession, along with the heightened expectations for production of U.S. shale gas, and corresponding increased gas-fired electric generation to back out more coal-fired power in response to greenhouse gas emission mandates.
"We do not believe we can accurately predict future prices for the 20-year horizon of this IRP," said Avista, preferring instead to develop "high, medium and low" scenarios based on what the utility said were "several price forecasts from credible sources."
Avista's expectations turn out to be mostly between $10 and $14 in 18 of the next 20 years for the high range; $6 to $10 for the medium-range scenario throughout the 20 years; and $4 to $6 for the low range with prices steadily falling from the $6 level throughout the 20 years.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.