WSR 05-18-088

PROPOSED RULES

UTILITIES AND TRANSPORTATION

COMMISSION

[ Filed September 7, 2005, 10:07 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 03-09-068 and 03-09-069.

Title of Rule and Other Identifying Information: WAC 480-100-238 and 480-90-238, Least cost planning. These rules state requirements that electric and natural gas companies must follow when developing integrated resource plans every two years, Dockets UE-030311 and UG-030312.

Hearing Location(s): Commission Hearing Room, Second Floor, Chandler Plaza, 1300 South Evergreen Park Drive S.W.,

Olympia, WA 98504-7250, on November 9, 2005, at 9:30 a.m.

Date of Intended Adoption: November 9, 2005.

Submit Written Comments to: Carole J. Washburn, Washington Utilities and Transportation Commission, P.O. Box 47250, Olympia, WA 98504-7250, e-mail records@wutc.wa.gov, fax (360) 586-1150, by September 28, 2005. Please include: "Dockets UE-030311 and UG-030312" in your comments.

Assistance for Persons with Disabilities: Contact Mary De Young by November 7, 2005, TTY (360) 586-8203 or (360) 664-1133.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposal incorporates changes to the existing rules, including new definitions and a schedule for plan submissions, and highlights the importance of public participation in the planning process. Titles of the sections are changed from "Least Cost Planning" to "Integrated Resource Planning."

Affected WACs are WAC 480-100-238 and 480-90-238.

Reasons Supporting Proposal: The proposed rule revisions reflect current and foreseeable needs of utilities, customers, and the broader public, and support the rule's intended purpose to serve the public and to promote the well-being of the citizens of the state.

Statutory Authority for Adoption: RCW 80.01.040 and 80.04.160.

Statute Being Implemented: Not applicable.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: Washington Utilities and Transportation Commission, governmental.

Name of Agency Personnel Responsible for Drafting: Graciela Etchart, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, (360) 664-1310; Implementation and Enforcement: Carole Washburn, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, (360) 664-1174.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed corrections and changes to rules will not result in or impose an increase in costs. Because there will not be any increase in costs resulting from the proposed rule changes, a small business economic impact statement is not required under RCW 19.85.030(1).

A cost-benefit analysis is not required under RCW 34.05.328. The proposed rules are not significant legislative rules of the sort referenced in RCW 34.05.328(5).

September 7, 2005

Carole J. Washburn

Executive Secretary

OTS-8278.1


AMENDATORY SECTION(Amending Docket No. UE-990473, General Order No. R-482, filed 5/3/01, effective 6/3/01)

WAC 480-100-238   ((Least cost)) Integrated resource planning.   (1) Purpose ((and process)). Each electric utility regulated by the commission has the responsibility to meet its ((load)) system demand with a least cost mix of generating resources and ((improvements in the efficient use of electricity. Therefore, a "least cost plan" must be developed by each electric utility in consultation with commission staff. Provision for involvement in the preparation of the plan by the public will be required. Each planning cycle must begin with a letter to the utility from the commission secretary. The content and timing of and reporting for the least cost plan and the public involvement strategy must be outlined in a work plan developed by the utility after consulting with commission staff.)) conservation. In furtherance of that responsibility, each electric utility must develop an "integrated resource plan."

(2) Definitions.

(("Least cost plan")) (a) "Integrated resource plan" or "plan" means a plan describing the mix of generating resources and ((improvements in the efficient use of electricity)) conservation that will meet current and future needs at the lowest reasonable cost to the utility and its ratepayers.

(b) "Lowest reasonable cost" means the lowest cost mix of resources determined through a detailed analysis of a wide range of commercially available sources. At a minimum, this analysis must consider resource cost, market-volatility risks, demand-side resource uncertainties, resource dispatchability, resource effect on system operation, the risks imposed on ratepayers, public policies regarding resource preference adopted by Washington state or the federal government and the cost of risks associated with environmental effects including emissions of carbon dioxide.

(c) "Conservation" means any reduction in electric power consumption that results from increases in the efficiency of energy use, production, or distribution.

(3) ((Each electric utility must submit to the commission on a biennial basis a least cost plan that)) Content. At a minimum, integrated resource plans must include:

(a) A range of forecasts of future demand using methods that examine the ((impact)) effect of economic forces on the consumption of electricity and that address changes in the number, type((,)) and efficiency of electrical end-uses.

(b) An assessment of ((technically feasible improvements in the efficient use of electricity,)) commercially available conservation, including load management, as well as an assessment of currently employed and new policies and programs needed to obtain the ((efficiency)) conservation improvements.

(c) An assessment of ((technically feasible)) a wide range of commercially available generating technologies ((including renewable resources, cogeneration, power purchases from other utilities, and thermal resources (including the use of combustion turbines to utilize better the existing hydro system))).

(d) An assessment of transmission system capability and reliability.

(e) A comparative evaluation of the cost of generating resources (including transmission and distribution) and improvements in ((the efficient use of electricity based on))

conservation using a consistent method((, developed in consultation with commission staff, for calculating)) to calculate cost-effectiveness.

(((e) The)) (f) Integration of the demand forecasts and resource evaluations into a long-range (e.g., ((twenty-year) least cost)) at least ten years; longer if appropriate to the life of the resources considered) integrated resource plan describing the mix of resources that will meet current and future needs at the lowest reasonable cost to the utility and its ratepayers.

(((f))) (g) A short-term (((e.g., two-year))), two-year plan outlining the specific actions ((to be taken by)) the utility ((in implementing the long-range least cost)) will take to implement its integrated resource plan.

(h) A report on the utility's progress towards implementing the recommendations contained in its previously filed plan.

(4) ((All plans subsequent to the initial least cost plan must include a progress report that relates the new plan to the previously filed plan.

(5))) Timing. Unless otherwise ordered by the commission, each electric utility must submit a plan within two years after the date on which the previous plan was filed with the commission. Not later than twelve months prior to the due date of a plan, the utility must provide a work plan for informal commission review. The work plan must outline the content of the integrated resource plan to be developed by the utility and the method for assessing potential resources.

(5) Public participation. Consultations with commission staff and public participation are essential to the development of an effective plan. The work plan must outline the timing and extent of public participation. In addition, the commission will hear comment on the plan at a public hearing scheduled after the utility submits its plan for commission review.

(6) The ((least cost)) commission will consider the information reported in the integrated resource plan((, considered with other available information, will be used to)) when it evaluates the performance of the utility in rate and other proceedings((, including the review of avoided cost determinations, before the commission)).

[Statutory Authority: RCW 80.01.040 and 80.04.160. 01-11-004 (Docket No. UE-990473, General Order No. R-482), 480-100-238, filed 5/3/01, effective 6/3/01.]

OTS-8277.1


AMENDATORY SECTION(Amending Docket No. UG-990294, General Order No. R-484, filed 5/3/01, effective 6/3/01)

WAC 480-90-238   ((Least cost)) Integrated resource planning.   (1) Purpose ((and process)). Each natural gas utility regulated by the commission has the responsibility to meet system demand ((at the least cost to the utility and its ratepayers. Therefore, a "least cost plan" must be developed by each gas utility in consultation with commission staff. Provision for involvement in the preparation of the plan by the public is required. Each planning cycle will begin with a letter to the company from the commission secretary. The content and timing of and reporting for the least cost plan and the public involvement strategy must be outlined in a work plan developed by the utility after consulting with commission staff.)) with the least cost mix of natural gas supply and conservation. In furtherance of that responsibility, each natural gas utility must develop an "integrated resource plan."

(2) Definitions.

(("Least cost plan")) (a) "Integrated resource plan" or "plan" means a plan describing the mix of resources and strategies for purchasing, transporting, storing and delivering natural gas and ((improving the efficiencies of gas use)) conservation that will meet current and future needs at the lowest reasonable cost to the utility and its ratepayers ((consistent with needs for security of supply)).

(b) "Lowest reasonable cost" means the lowest cost mix of resources determined through a detailed analysis of a wide range of commercially available sources. At a minimum, this analysis must consider resource costs, market-volatility risks, demand-side resource uncertainties, the risks imposed on ratepayers, resource effect on system operations, public policies regarding resource preference adopted by Washington state or the federal government, the cost of risks associated with environmental effects including emissions of carbon dioxide, and the need for security of supply.

(c) "Conservation" means any reduction in natural gas consumption that results from increases in the efficiency of energy use, production, or distribution.

(3) ((Each gas utility must submit to the commission on a biennial basis a least cost plan that)) Content. At a minimum, integrated resource plans must include:

(a) A range of forecasts of future natural gas demand in firm and interruptible markets for each customer class ((for one, five, and twenty years using methods)) that examine the ((impact)) effect of economic forces on the consumption of natural gas and that address changes in the number, type((,)) and efficiency of natural gas end-uses.

(b) An assessment ((for each customer class)) of ((the technically feasible improvements in the efficient use of gas,)) commercially available conservation, including load management, as well as ((the)) an assessment of currently employed and new policies and programs needed to obtain the ((efficiency)) conservation improvements.

(c) An ((analysis for each customer class of gas supply options, including:

(i) A projection of spot market versus long-term purchases for both firm and interruptible markets;

(ii))) assessment of commercially available gas manufacturing (as in coal to gas) and production technologies.

(d) An ((evaluation)) assessment of ((the)) opportunities for using company-owned or contracted storage or production((;)).

(((iii) An analysis of prospects for company participation in a gas futures market; and

(iv))) (e) An assessment of ((opportunities for access to multiple)) pipeline ((suppliers or direct purchases from producers)) transmission capability and reliability and opportunities for additional pipeline transmission resources.

(((d))) (f) A comparative evaluation of the cost of natural gas purchasing strategies, storage options and improvements in ((the efficient use of gas based on)) conservation using a consistent method((, developed in consultation with commission staff, for calculating)) to calculate cost-effectiveness.

(((e))) (g) The integration of the demand forecasts and resource evaluations into a long-range (e.g., ((twenty-year) least cost)) at least ten years; longer if appropriate to the life of the resources considered) integrated resource plan describing the ((strategies designed to)) mix of resources that will meet current and future needs at the lowest reasonable cost to the utility and its ratepayers.

(((f))) (h) A short-term (((e.g., two-year))), two-year plan outlining the specific actions ((to be taken by)) the utility ((in implementing the long-range least cost)) will take to implement its integrated resource plan.

(i) A report on the utility's progress towards implementing the recommendations contained in its previously filed plan.

(4) ((All plans subsequent to the initial least cost plan must include a progress report that relates the new plan to the previously filed plan.

(5))) Timing. Unless otherwise ordered by the commission, each natural gas utility must submit a plan within two years after the date on which the previous plan was filed with the commission. Not later than twelve months prior to the due date of a plan, the utility must provide a work plan for informal commission review. The work plan must outline the content of the integrated resource plan to be developed by the utility and the method for assessing potential resources.

(5) Public participation. Consultations with commission staff and public participation are essential to the development of an effective plan. The work plan must outline the timing and extent of public participation. In addition, the commission will hear comment on the plan at a public hearing scheduled after the utility submits its plan for commission review.

(6) The ((least cost)) commission will consider the information reported in the integrated resource plan, ((considered with other available information, will be used to)) when it evaluates the performance of the utility in rate and other proceedings ((before the commission)).

[Statutory Authority: RCW 80.01.040 and 80.04.160. 01-11-003 (Docket No. UG-990294, General Order No. R-484), 480-90-238, filed 5/3/01, effective 6/3/01.]

Washington State Code Reviser's Office