Capacity Modeling and IRPsUsing the Avista Decision Support System (ADSS)

Clint Kalich

Avista Utilities

clint.kalich@avistacorp.com

509.495.4532

Valuing Assets in an IRP

• Input load requirements

• Describe resource options

– acquisition and fixed O&M costs

– contributions to RPS/emission

– on-peak capacity contribution(s)

– net operating values (i.e., revenue less fuel and variable O&M)

– ancillary service values

• Let optimization routine do its work

– quantities and timing of resource additions/retirements

2

Challenge of Quantifying Ancillaries

• Need to value portfolio at highly granular level

– unit-level commitment and dispatch

– engineering/physics of system

– actual market conditions (prices)

– With representation of transmission and market hubs

• Especially important for storage since most (all) value is

arbitrage and ancillary services

• No commercially-available software

3

Avista Decision Support System (ADSS)

• Built in-house and used since 2012

• Mixed-integer linear program

• Full emulation of power portfolio

• “Schedule-ready” solutions

4

ADSS Applications

• Integrated resource planning

– long-term (20+ years) valuations

– loss of load probability studies

– portfolio structuring

• Asset valuation/management

– investing/divesting of resources

– plant upgrade opportunities

– mark-to-market, profit and loss

calculations

– forced outage assessments

• Risk management/stress testing

• Environmental compliance

• Rate case support

• Stochastic optimization

– portfolio valuation

– reserve obligations analysis

5

• Hydro facility licensing/re-licensing

• Trading support

– full portfolio operations

– origination pricing

– trade recommendations

– open position identification and valuation

– fuel procurement

• Portfolio-coordinated

outage/maintenance management

– quantification of maintenance and forced

outages costs

• Transmission contracting

– congestion/locational marginal pricing

– contract procurement analysis

• Energy imbalance market (EIM)

modeling

A Case Study Using ADSS

Operations staff desire to hold Cabinet Gorge reservoir elevation constant to

perform a maintenance task, affecting the operations of this plant, its

upstream storage project, and Avista’s overall portfolio.

Questions to Answer

1. What is the cost of the maintenance

2. Should maintenance be performed now or in future

3. Might expense justify the use of crews on overtime

Study Approach

1. Run ADSS in a “Base Case” where no maintenance is assumed

2. Run ADSS with Cabinet Gorge held flat at 2,174 starting late

Tuesday through the end of the week

3. Calculate delta

Base Case Run 1-31 thru 2-08 — Portfolio

7

Base Case Run 1-31 thru 2-08 — Plant

8

Base Case Run 1-31 thru 2-08 — Results

Non-

Capacity Energy Spin Spin Up Down Up Down Revenue Cost Net(MW) (aMW) (aMW) (aMW) (aMW) (aMW) (aMW) (aMW) ($Mil) ($Mil) ($Mil)

Balance Area Load (1,825) (44) (41) (20) (20) (36) (31) - (13.44) (13.44)

Clark Fork Hydro 886 254 17 9 6 6 7 7 1.96 - 1.96

Spokane River Hydro 170 110 6 - - - 1 8 0.82 - 0.82

Mid-C Hydro 196 84 20 - 11 11 23 - 0.64 - 0.64

Coyote Springs 2 CCCT 301 287 1 - 3 3 2 15 2.11 (1.64) 0.47

Lancaster CCCT 279 280 - - - - 3 1 2.05 (1.60) 0.45

Colstrip 222 221 - - - - - 1 1.62 (0.46) 1.15

Kettle Falls 47 45 - - - - - - 0.33 (0.16) 0.17

Peakers 278 10 - 32 - - - - 0.07 (0.07) 0.01

Palouse Wind 105 29 - - - - - - 0.22 (0.28) (0.06)

Other Contracts 474 - - - - - - 3.43 0.04 3.46

Short-Term Market 28 - - - - - - 0.45 (0.27) 0.18

Total System 13.69 (17.87) (4.18)

Regulation Following Portfolio

9

2,174 Feet 1-31 thru 2-08 — Portfolio

10

2,174 Feet 1-31 thru 2-08 — Plant

11

2,174 Feet 1-31 thru 2-08 — Results

Non-

Capacity Energy Spin Spin Up Down Up Down Revenue Cost Net Diff(MW) (aMW) (aMW) (aMW) (aMW) (aMW) (aMW) (aMW) ($Mil) ($Mil) ($Mil) ($000)

Balance Area Load (1,826) (43) (42) (20) (20) (36) (31) - (13.45) (13.45) (9.43)

Clark Fork Hydro 886 251 17 11 9 9 7 11 1.91 - 1.91 (49.14)

Spokane River Hydro 170 109 7 - - - 1 24 0.80 - 0.80 (16.17)

Mid-C Hydro 196 84 18 - 8 8 22 0 0.63 - 0.63 (2.30)

Coyote Springs 2 CCCT 301 287 1 - 3 3 2 (5) 2.11 (1.63) 0.47 0.73

Lancaster CCCT 279 278 - - - - 3 0 2.04 (1.59) 0.45 (2.31)

Colstrip 222 221 - - - - - 1 1.62 (0.46) 1.15 (1.44)

Kettle Falls 47 45 - - - - - - 0.33 (0.16) 0.17 0.53

Peakers 278 10 - 31 - - - - 0.08 (0.07) 0.01 0.21

Palouse Wind 105 29 - - - - - - 0.22 (0.28) (0.06) (0.18)

Other Contracts 474 - - - - - - 3.43 (0.06) 3.37 (93.25)

Short-Term Market 36 - - - - - - 0.49 (0.22) 0.27 89.26

Total System 13.65 (17.92) (4.27) (83.49)

Regulation Following Portfolio

12

Non-

Capacity Energy Spin Spin Up Down Up Down Revenue Cost Net Diff(MW) (aMW) (aMW) (aMW) (aMW) (aMW) (aMW) (aMW) ($Mil) ($Mil) ($Mil) ($000)

Balance Area Load (1,826) (43) (42) (20) (20) (36) (31) - (13.45) (13.45) (9.43)

Clark Fork Hydro 886 251 17 11 9 9 7 11 1.91 - 1.91 (49.14)

Spokane River Hydro 170 109 7 - - - 1 24 0.80 - 0.80 (16.17)

Mid-C Hydro 196 84 18 - 8 8 22 0 0.63 - 0.63 (2.30)

Coyote Springs 2 CCCT 301 287 1 - 3 3 2 (5) 2.11 (1.63) 0.47 0.73

Lancaster CCCT 279 278 - - - - 3 0 2.04 (1.59) 0.45 (2.31)

Colstrip 222 221 - - - - - 1 1.62 (0.46) 1.15 (1.44)

Kettle Falls 47 45 - - - - - - 0.33 (0.16) 0.17 0.53

Peakers 278 10 - 31 - - - - 0.08 (0.07) 0.01 0.21

Palouse Wind 105 29 - - - - - - 0.22 (0.28) (0.06) (0.18)

Other Contracts 474 - - - - - - 3.43 (0.06) 3.37 (93.25)

Short-Term Market 36 - - - - - - 0.49 (0.22) 0.27 89.26

Total System 13.65 (17.92) (4.27) (83.49)

Regulation Following Portfolio

Cases Delta

Thank You!

For more information on the today’s presentation, or the Avista Decision Support System generally,

please contact:

Clint Kalich

Avista Utilities

clint.kalich@avistacorp.com

509.495.4532