20070730_2000.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:LYNN ANDERSON
DATE:JULY 26, 2007
RE:ROCKY MOUNTAIN POWER TARIFF ADVICE NO. 07-
BACKGROUND
On June 22 2007, Rocky Mountain Power (Rocky Mountain; Company) electronically
filed Advice No. 07-09 to reduce the customer incentive from $40 to $30 per recycled appliance
in its Schedule 117 Residential Refrigerator Recycling Program ("See ya later refrigerator ) and
to remove the program s August 1 2007 expiration date. Finally, additional wording in the
ptoposed tariff limits program participation to funding availability.
ST AFF ANAL YSIS
Rocky Mountain implemented its refrigerator recycling program in April 2006 through a
contract with the same 3rd party vendor who is operating the program in the Company s Utah
service area. According to the Company s Idaho Annual Report of Demand Side Management
(DSM) Activities, through the first 12 months of this program 874 refrigerators and freezers
were recycled. That number is 34% of the 2 600 units the Company estimated it would recycle if
the program were in place for two full years, as projected in an attachment to the Application
filed in 2005 in PAC-05-10. Thus, considering program start-up requirements, the number of
recycled units appears to be on-track.
However, based on a recent draft evaluation ofthe program, the kilowatt-hour savings
per unit are significantly less than originally estimated. Recycled refrigerators were originally
estimated to save 849 kWh per year per unit, while a draft program evaluation apparently
DECISION MEMORANDUM - 1 -JULY 26 , 2007
suggests 383 kWh savings is more accurate. Similarly, recycled freezers were originally
estimated to save 1 310 kWh per year per unit, but the actual savings appears to be closer to 924
kWh. Even the energy savings kit, which includes two compact fluorescent light bulbs, saw its
estimated savings reduced from 64 kWh to 59 kWh per year. The Company s explanation for
the reduced appliance savings has two components. First, the original filing s higher savings
estimates were based on results from the Utah program that began in 2003 and the appliances
being recycled more recently are a different vintage. Second, an increasing number of customers
are indicating that they would not be using their old appliances in the absence of the Company
program or, in other words, using DSM evaluation jargon
, "
free ridership" is increasing. Both of
these explanations for declining savings are indicative of prudent DSM program management
and evaluation.
Given the reduced energy savings estimates, Rocky Mountain is proposing a $10
reduction to the incentive paid to participants from the current $40 to $30 per appliance. The
Company said it has also renegotiated the vendor s contract costs downward by 13 percent.
With those combinations of reduced costs, the Company said that the program s cost-
effectiveness will be improved. Based on experience in other states, the Company is confident
that re-deployment of marketing efforts will ensure adequate participation in the program in spite
ofthe reduced incentive level, which is consistent with its Utah proposal.
Staff notes that the cost-effectiveness ofthis program as stated in the Company s annual
DSM report filed in May ofthis year did not include the revised kilowatt-hour savings per unit
estimates from the draft evaluation of this program. Staff does not have a copy of this draft
preliminary evaluation and has not attempted to evaluate either the program or the Company
draft evaluation of it. Staffhas notified the Company of some minor questions regarding its
cost-effectiveness calculations, but we have no reason to suggest that this program has not been
cost-effective, nor do we suggest that it will not be cost-effective with the proposed changes and
indefinite extension.
However, Staff has a general concern about limiting participation in cost-effective
demand-side management (DSM) programs due to "funding availability." Instead of placing
limits on such resources, utilities should identify the cost of acquiring all cost-effective DSM
resources and request appropriate recovery through the Commission.
DECISION MEMORANDUM - 2 -JULY 26, 2007
STAFF RECOMMENDATION
Staff recommends approval of the proposed tariff changes, including the $10 reduction to
the incentive paid per recycled appliance, the removal of the August 31 , 2007 expiration date
and limiting the participation to available funds.
COMMISSION DECISION
Does the Commission approve the proposed tariff changes:
1) Reduction of the incentive paid to participants from $40 to $30 per appliance?
2) Removal of the August 31 , 2007 expiration date?
3) Limiting program participation to available funds?
;;I~
L Ynrl Anderson
i:dmemos/rocky mountain tariff advice 07.09 dec memo
DECISION MEMORANDUM - 3 -JULY 26, 2007