Avista’s Flexibility Overview

James Gall

Senior Power Supply Analyst

Contact:

James.gall@avistacorp.com

509.495.2189

1

Overview

System & Resource Overview

Off system sales

Palouse Wind

IRP Planning

Future Studies

2

2,764 megawatts, 54 turbines Two cascading hydro systems, 8 dams Multiple 3rd party sales and purchases contracts

Avista Balancing Authority

Resource Mix (megawatts)

Biomass 47 MW

Coal 222 MW

Hydroelectricity 1,162 MW

Natural Gas 858 MW

Wind 140 MW

Other Contracts 335 MW

Flexible Resource Overview

Hydro: Noxon Rapids: AGC, load following, contingency reserves Cabinet Gorge: load following, contingency reserves Long Lake: load following, contingency reserves

Thermal Coyote Springs 2: load following, AGC capable Colstrip: load following Northeast: supplemental reserves Rathdrum CT: supplemental reserves

Contracts Mid-Columbia: AGC, contingency reserves

4

Dynamic Capacity Sales

First in nation market based rate authority for Ancillary Services Sales (Tariff 9)

Current Sales Provide Dynamic Capacity (imbalance services) to local

PUD and aluminum rolling mill- 3rd Party Schedule hourly product, Avista serves within

hour variation 5 MW dynamic sale and spin reserves to neighboring control

area Iberdrola imbalance market

Past Sales Up to 21 MW up and 20 MW down for 41 MW range Up to 50 MW up and 50 MW down for 100 MW range

Palouse Wind

Background

Developed by First Wind, owned by Palouse Wind LLC

30-year Purchase Power Agreement

Began Commercial Operation in December 13, 2012

105 MW (58- 1.8 Vestas V100 turbines)

Connected to Avista’s 230 kV Benewah-to-Shawnee Transmission Line

Expected capacity factor of 40 percent

Added to Avista’s portfolio to meet Washington State’s Energy Independence Act

Flexibility Implications

Contractual rights to curtail wind output with a cost

Limit ramp ups to 10 MW per minute

Typically hold 10 MW of capacity for wind following, during high winds hold 40 MW

and depend on operating reserves for high speed cutouts

Palouse Wind Output April 7th, 2013

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10

20

30

40

50

60

70

80

90

100

7:1

2 A

M

9:3

6 A

M

12

:00

PM

2:2

4 P

M

4:4

8 P

M

7:1

2 P

M

9:3

6 P

M

12

:00

AM

Me

ga

wa

tts

How Avista Met April 7th Palouse Wind Variation

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100

200

300

400

500

600

7007:

12 A

M

9:36

AM

12:0

0 P

M

2:24

PM

4:48

PM

7:12

PM

9:36

PM

12:0

0 A

M

2:24

AM

Me

ga

wa

tts

Clark Fork River Avista Total MW

Palouse Wind MW

IRP Planning

Avista Wind Integration Study (2007)

2013 IRP Capacity Planning

Long-term L&R balance accounts for operating reserves, regulation, and load and wind following needs

Add integration costs for variable renewable options (wind/solar)

Add integration benefits for certain resources (CTs, batteries, hydro)

Wind LocationsWind

CapacitySystem

PenetrationForecast

Error

Base Mrkt Price

Forecast ($/MWh)

Low Mrkt Price

Forecast ($/MWh)

High Mrkt Price

Forecast ($/MWh)

Columbia Basin 100 5% 15% 2.75 1.32 2.9950/50 Mix of CB & MT 200 10% 10% 6.99 2.67 8.53Diversified Mix 400 20% 8% 6.65 3.88 7.54Diversified Mix 600 30% 8% 8.84 3.98 10.45

Future Studies

Avista is developing operations model to optimize generation for day ahead and real-time dispatch, the model will help traders with decision making.

The model will suggest how to optimize generating units to hold reserves, set dispatch levels, make day ahead commitment decisions, and market transactions.

Patent pending hydro algorithms are used to real-time dispatch hydro facilities based on unit level engineering level representation, including operating constraints.

The model can also be used for resource planning, such as wind/solar integration costs and valuation of flexible resources (battery/LMS100).