20090713_2639.pdf

DECISION MEMORANDUM
TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
DATE: JULY 10,2009
SUBJECT: CASE NOS. AVU-E-09-06/AVU-G-09-04 (Avista)
TARIFF SCHEDULES 91/191 - ENERGY EFFICIENCY RIDER
ADJUSTMENT.
On June 30, 2009, Avista Corporation dba Avista Utilties (Avista; Company) filed
and Application with the Idaho Public Utilities Commissioi( (Commission) requesting approval
of an increase to taiff Schedules 91 and 191 rates, Energy Efficiency Rider Adjustment.
Schedules 91 and 191 are designed to recover the costs incured by the Company associated with
providing electric and natural gas energy efficiency services to customers. The proposed
increase in Schedules 91 and 191 rates, the Company contends, is necessar to continue to fud
ongoing electric and natural gas efficiency programs consistent with the Company's most recent
electric and natural gas integrated resource plans (IRPs). It wil also serve to amortize a
deficiency balance within the electric and natural gas effciency tariff riders resulting from the
Company's response to higher than expected customer demand for services. Also included in
the Company's filing are proposed procedural modifications to reduce the likelihood of
significant positive or negative balances in the future.
Electric Schedule 91
The proposed net increase above current rates by service schedule for electric
customers is as follows:
Residential Service-Schedule 1
General Service-Schedules 11 & 12
Large General Service-Schedules 21 & 22
Extra Large General Service-Schedule 25
Potlatch-Schedule 25P
Pumping Service-Schedules 31 & 32
2.73%
2.73%
2.73%
2.73%
2.73%
2.73%
DECISION MEMORANDUM 1
The proposed 2.73% increase in the existing energy effciency tarff is equivalent to a $1.77 a
month increase for a customer using an average i 000 kilowatt hours per month.
Natural Gas 191
The proposed net increase above current rates by service schedule for natural gas
customers is as follows:
General Service-Firm-Schedule 101
(Residential & Small Commercial)
Large General Service Firm-Schedules 111 & 112
Interrptible Service-Schedules 131 & 132
1.01%
1.01%
1.01%
The proposed 1.01 % increase in the existing energy efficiency tariff for natual gas customers is
equivalent to a 0.90 per month increase for natural gas customers using 65 therms per month.
As reflected in the Company's Application, customers continue to look to Avista's
DSM programs for assistance in responding to increased retail electric and natural gas prices.
Existing and planed programatic expenditures are exceeding taiff rider revenues. As of the
close of May 2009, A vista's electric DSM taiff rider balance for Idaho is a negative $2,361,178
and the natural gas DSM tariff rider balance for Idaho is a negative $1,036,753. The proposed
tariff rider increase is estimated to eliminate this curent negative balance by the end of 20 1 0 and
to fud estimated future expenditures. The proposed increase in the DSM surcharge is
approximately 2.73% at present electric rates and 1.01% at present natual gas rates.
Schedules 91 and 191 funds support DSM programs described in Schedules 90 and
190. These programs include but are not limited to the following measures:
. Appliance Measures
. Compressed Air Measures
. HV AC Measures
. Industrial Measures
. Lighting Measures
. Maintenance Measures
. Motors Measures
. Renewable Technologies
. Nortwest Energy Efficiency Allance Paricipation
. Shell Measures
. Sustainable Building Measures
DECISION MEMORANDUM 2
The Company's DSM programs are based on providing financial incentives, or
"rebates," for cost-effective efficiency measures installed by customers with a simple payback of
greater than one year. This includes over 300 measures that are packaged into over 30 programs
for customer convenience.
A vista has long encouraged the direct-use of natural gas by its electric customers.
The Company is continuing this effort with residential rebates for the conversion of electric-to-
natural gas space and water heat loads as well as a broad program for any non-residential
electric-to-natural gas conversions meeting specified criteria for relative British Thermal Unit
(BTU) effciency. The cost-effective potential for these measures have been incorporated into
Avista's IRP effort and are contained within the identified acquisition goal. Avista's residential
programs include high effciency equipment, electric-to-natural gas conversions, compact
florescent lights (CFLs), "second" refrigerator recycling, weatherization, rooftop dampers, as
well as providing educational assistance through various community events.
For non-residential customers, in addition to prescriptive programs, Avista offers
"site-specific" programs. Site-specific programs are customized to the customer premise. The
site-specific offering provides incentives on commercial and industrial energy efficiency
measures with a simple financial payback exceeding one year. This is implemented through site
analysis, customized diagnosis, and incentives determined for savings generated by the
customers' premise or process. Commercial and industrial programs available to Avista
customers include:
. Energy Smar Commercial Refrigeration
. Lighting and Controls
· Commercial Food Service Equipment
. Building Retro-commissioning
. Premium Effciency Motors
· Power Management for Personal Computer (PC) Networks
· LEED Certification, Commercial HVAC Variable Frequency Drives (VFDs)
. Refrigerated Warehouses
. Vending Machine Controllers
. Demand Controlled Ventilation
. Side-stream Filtration
. Steam Trap Replacement and Repair
. Multi-family Development
. LED Traffc Signals
. Electric to Natual Gas Water Heater Conversions
. Commercial Clothes Washers
DECISION MEMORANDUM 3
In addition to Avista's prescriptive and site-specific programs, the Company funds,
and paricipates in the activities of the Northwest Energy Efficiency Allance (NEEA). NEEA
focuses on using a regional approach to obtain electric efficiency through the transformation of
markets for efficiency measures and services. An example of NEEA-sponsored programs that
benefit A vista customers is decreasing the cost of CFLs and high effciency appliances by
working through manufacturers. For some measures, a large scale, cross-utilty approach is the
most cost effective means to achieve energy efficiency savings. This approach is paricularly
effective for markets composed of large numbers of smaller usage homogenous consumers, such
as the residential and small commercial markets. The results from NEEA programs are reported
in March of the following year. Historically, A vista has received approximately 1.5 aMW of
savings in its service area from NEEA programs. For 2008, Avista's portion of the original
savings amounted to 2.1 aMW watts or over 18 milion kWh.
Effective October 1, 2008, in Order No. 30647 in Docket Nos. AVU-E-08-01 and
AVU-G-08-01, $465,000 was directed to Idaho electric and natural gas low-income customers
and $25,000 was provided to Idaho (CAP) agencies for the purose of underwiting agency
personnel assisting in low income outreach and conservation education. The low income
weatherization portfolio represents approximately 8% of the Company's total energy effciency
budget.
Avista also actively paricipated in the energy affordabilty workshops in Case No.
GNR-U-08-01. In that case, workshop paricipants are exploring ways to address energy
affordabilty and the diffculties some customers experience in paying their energy bils. A vista
supports the Commission's Order No. 30724 in that case and favors legislation that favors
legislation that would allow utilties to propose "programs, policies and rates" that may assist
low-income customers in their efforts to pay energy bils. The Commission specifically
identified Avista's Low Income Rate Assistance Program (LIRAP), as a means to provide fuds
to help low income residents in Washington and Oregon pay their energy bils. The LIRAP
program (if implemented in Idaho) would allow A vista to collect through a small monthly charge
to all customers, additional dollars that would be directed to customers least able to pay their
energy bils. The local community action agencies that are already in place would administer
these dollars. The Company is committed to working with the Commission Staff and interested
paries to support this legislation in 2010.
DECISION MEMORADUM 4
Stakeholder Enrollments/Revised Procedures
The Company has regularly convened a stakeholders' foru known as the External
Energy Efficiency Board (Triple E). These meetings have included customer representatives,
Commission Staff members, and individuals from the environmental communities. These
stakeholder meetings review the Company's program offerings as well as the underlying cost-
effectiveness tests and results. The programs have been cost-effective from both a Total
Resource Cost (TRC) and Program Administrator Cost Test (PACT) (formally known as the
utilty cost test) (UCT)) perspective. The increased fuding requested in the Company's filing
will continue to be subject to the cost-effectiveness test prescribed by the Commission.
To reduce the likelihood of significant positive or negative balances in the future,
A vista proposes that a schedule be established for the revision of the DSM components of
Schedules 91 and 191. A vista proposes to fie on or before February 15th of each year to revise
the DSM portions of the Schedule 91 and 191 tariff rider mechanisms to establish tariff riders
that are suffcient to fud the following twelve months of DSM as well as amortizing any tariff
rider imbalance. It is understood that discussions with interested paries may, from time to time,
lead to modifications of this prócess in the event that the projected change to the taiff rider is
very small or when changes to the period of time that an imbalance is to be recovered or deemed
appropriate.
Furher, A vista commits to circulate drafts of any tariff revision affecting the
Company's DSM portfolio to its Triple E board at least 30 days prior to filing said revision.
Avista also proposes to provide the Triple E board with a quarterly report on the Schedule 91 and
191 taiff rider balances. Triple E board members will receive an e-mail alert if either of these
balances exceeds 20% of the forecasted anual revenue, either positive or negative, at any
month-end. A vista has not and does not currently ear any interest upon any positive (customer
owes shareholder) balance in the tariff rider. Avista wil complete and circulate an analysis of
the results in the prior calendar year to the board by March 31 st of each year.
The protocols described above, the Company contends, wil manage the balances of
the taiff rider mechanism and ensure that sufficient fuding is available for the completion of
programatic measures. The reasons that the taiff rider balances have been negative are
because A vista has acquired, and will continue to acquire, cost-effective energy-efficiency
resources as an importt component of its overall resource portfolio. This includes meeting
customer demand for energy effciency financial rebates in advance of tarff rider recovery.
DECISION MEMORANDUM 5
The estimated anual revenue change associated with the Company's filing is
approximately $5.4 milion for electric and $1 milion for natual gas, or an increase of2.73%
and 1.0% respectively. An increase in the energy effciency tariff has no impact on Company
earings.
A vista requests that the Commission issue its Order finding the proposed rates and
charges in Schedules 91 and 191 to be fair, just and reasonable and non discriminatory, and
effective for electric and natural gas service rendered on and after August 1, 2009. The
Company requests that its Application be processed under Modified Procedure, i.e., by written
submission rather than by hearing. Reference Commission Rules of Procedure IDAP A
31.01.01.201-204.
COMMISSION DECISION
A vista proposes increased fuding of its electric and gas energy efficiency riders for
DSM programs (tariff Schedules 91 and 191). The Company also proposes procedural
modifications to address imbalances in fuding and program expenditures. The Company
requests an August 1 effective date. Staff recommends that the proposed effective date be
suspended, that the Company's Application be noticed. Does the Commission agree with the
procedure recommended by Staff?
~-=~
Scott Woodbur
Deputy Attorney General
gdk/:A VUE0906_A VU-G-09-04_sw
DECISION MEMORANDUM 6