20240418Staff Comments.pdf

RECEIVED
Thursday,April 18,2024 10:02 AM
IDAHO PUBLIC
UTILITIES COMMISSION
ADAM TRIPLETT
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10221
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN )
POWER'S APPLICATION FOR APPROVAL ) CASE NO. PAC-E-24-02
OF ADJUSTMENTS TO THE IRRIGATION )
LOAD CONTROL PROGRAM )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Adam Triplett, Deputy Attorney General, submits the following
comments.
BACKGROUND
On January 24, 2024, Rocky Mountain Power, a division of PacifiCorp ("Company"),
applied for approval of certain adjustments to its Irrigation Load Control Program("ILC").
Participants in the ILC earn cash incentives for reducing their electric consumption during peak
demand periods. The Company requested this matter be processed by Modified Procedure with
an effective date of April 1, 2024. The Company represents that its contract with Enel X (the
third-party administrator of the ILC) is ending, necessitating the formation of a new, updated
contract.
STAFF COMMENTS 1 APRIL 18, 2024

The Company represents that the proposed new,updated contract defines not only the
specific services Enel X will perform in connection with the ILC, but also the pricing for the
ILC.
The Company represents that the ILC has changed little over the last decade and
anticipates few changes going forward.
The Company represents that the new, updated contract with Enel X will increase the
monetary incentives for ILC participants by 30%, with subsequent annual increases of 2.5%.
The Company believes these increases are necessary to avert, and possibly reverse, the declining
participation in the ILC experienced during the last decade.
In its Notice of Application, Order No. 36095, the Commission suspended the requested
effective date until May 31", 2024.
STAFF ANALYSIS
In its Application, the Company states that the updated contract maintains the overall
pay-for-performance structure of the previous contract. The Company's contract consists of a
Master Professional Services Contract Agreement ("MSA") and a Task Order Release
Agreement ("TOA"). The TOA has an initial five-year term, with the option to extend it an
additional five years. Application at 3. The proposed contract includes the same mandatory
event window, voluntary event window, incentive components, and calculation methodologies as
the previous program. In addition, the Company describes two adjustments to the existing ILC
program. These adjustments are described by the Company as increased incentives and contract
changes that allow for the addition of different notification options. Application at 7 and 9. In
addition to these changes, Staff reviewed the program's contract, forecasted cost-effectiveness,
forecast assumptions, and program management practices.
In general, Staff believes that the ILC program will continue to provide a valuable and
cost-effective Demand Response ("DR") resource for the Company's system. However, Staff s
review suggests several areas of the ILC program where additional improvements could be made
for the continued program. Staff recommends that the Commission approve the initial five-year
contract pending an update to the contract that reflects Staffs proposed incentive structures for
the Base Incentive Rate. The Company stated in its Application that it can make necessary
adjustments to the TOA contract for incentives, dispatch parameters, and other program design
STAFF COMMENTS 2 APRIL 18, 2024

elements; therefore, Staff does not anticipate issues with updates to the contract. Application at
7. Pending the Commission's final order, Staff recommends the Company provide the updated
contract and a new tariff schedule in a compliance filing.
Additionally, if the Company intends to extend the contract beyond the five-year term,
Staff recommends that the Commission order the Company to file a case for approval to extend
the contract. The filing should be accompanied by supporting data and analysis for any
adjustments the Company may propose.
Incentive Structure
While the majority of the program remains unchanged, the Company's Application
describes changes to the incentive structure. The primary difference between the existing
program and proposed program is a change from a flat incentive to a structure that increases
annually by 2.5%. The Company states that the annual increase is based on inflation affecting
irrigator participation and negotiations with the program administrator.I Response to Production
Request No. 1. Additionally, in response to Staff discovery, the Company described an increase
to the Voluntary Event Energy Reduction Payment("VEERP") Rate with a similar basis. The
Company did not propose any increase to the equivalent Mandatory Event Energy Reduction
Payment("MEERP"). A summary of all the Company's proposed incentive components and the
associated rates is provided in Table No. 1 below.
Table 1: Proposed ILC Incentive Components
Program Base Incentive Bonus Incentive Rate MEERP VEERP
Year Rate ($/kW) ($/kW) *if Customer
Participates in all
Mandatory Events
2024 $32.50 $39.00
2025 $33.31 $39.98 $0.075/kWh $0.38/kWh
2026 $34.15 $40.97
' The pay-for-performance structure of the program extends to the contract with Enel X. Program administration
cost is a function of incentives paid to program participants. Response to Production Request No. 1.
STAFF COMMENTS 3 APRIL 18, 2024

2027 $35.00 $42.00
2028 $35.87 $43.05
2029 $36.77 $44.13
2030 $37.69 $45.23
2031 $38.63 $46.36
2032 $39.60 $47.52
2033 $40.59 $48.71
Staff is concerned with the Company's proposed incentive adjustments intended to
account for the effects of inflation. These adjustments are present in the Base Incentive Rate
annual increase and the 100% increase to the VEERP. Generally, the Commission has not
allowed forecasted inflation to be included in general rates or other programs. Staff believes that
by including these forecasted increases in its proposed incentive adjustments, the Company may
overpay for the performance of its Demand Response resource.
Annual Incentive Increase
For the Base Incentive Rate, the Company is proposing a 30% increase over the current
program offering. Staff believes that this increase is significant and may result in the desired
increase in participation. The proposed annual increase of 2.5% applied each year could lead to
increases in incentives even if they are not needed. Staff recommends that the Company
maintain the flat incentive structure at the proposed 2024 levels of$32.50/kw for the Base
Incentive Rate. As a result, the Bonus Incentive Rate will be maintained at the existing 2024
levels of$39.00/kw.
It may still be necessary for the Company to periodically make adjustments to its
incentives to maintain or encourage participation. The Company should actively monitor the
program participation and performance to make necessary changes as required. These changes
may include, but should not be limited to, increased incentives. Staff expects this
recommendation will increase the cost-effectiveness of the program in later years.
Additionally, Staff is concerned with declining avoided costs used in the Company's
forecast. Annually increasing costs and declining avoided costs could significantly degrade the
cost-effectiveness of the program over time. Avoided costs are also regularly updated as part of
STAFF COMMENTS 4 APRIL 18, 2024

the Company's Integrated Resource Planning process. Potential future avoided cost updates
could further affect the cost-effectiveness of the program.
VEERP Rate Increase
The Company states that the doubled incentive, or 100% increase, from $0.19/kWh to the
VEERP rate of$0.38/kWh, is intended to further encourage participation in voluntary events and
to account for inflation across the 10 years of the total contract period. See Response to
Production Request Nos. 1 and 6. Staff disagrees with the stated basis for the increase of
accounting for inflation; however, Staff agrees that an increase is necessary to increase
participation in Voluntary events. Staff analysis of 2022 ILC program DR events suggests that
participation is much lower than mandatory events. The proposed increase to the VEERP rate
results in a VEERP rate about five times greater than the equivalent MEERP of$0.075/kWh.
Staff believes that this is a reasonable differential between the two rates and should sufficiently
encourage participation in voluntary events and system emergencies. Staff recommends that the
Company monitor the participation of voluntary events and consider alternative adjustments if
additional participation is needed.
Program Management
In its Application, the Company describes that while the ILC program hasn't seen
significant change in the past 10 years, the Company may still need to make adjustments over the
course of the contract. Notably, the Company explains that it has modified the contract to allow
for a two-hour notification or a real-time structure option in future years but is still evaluating
these options. Currently, there is no tariff for the ILC program or process for the Commission to
review changes to the program. In its response to Production Request No. 18, the Company
advocates for the use of its Flexible Tariff process. Staff has identified several concerns with the
proposed method detailed below.
The Company's Flexible Tariff is primarily used for the Company's energy efficiency
rebates. These project specific rebates are expected to change often at the Company's sole
discretion. The Flexible Tariff format allows the Company to update program details such as
qualifying equipment and services, incentive amounts, dates for incentive availability and other
terms and conditions through a streamlined process with Staff. The Company provides notice to
STAFF COMMENTS 5 APRIL 18, 2024

Staff and resolves any concerns through informal communications. The Company then provides
notice on the Company's website and updates the rebates after 45 days. Because of the long
term-nature of the contract, interrupt ability to customers service, and the ongoing nature of
participant engagement, Staff believes that the ILC program does not demonstrate the same need
for a Flexible Tariff as an energy efficiency offering. Additionally, the ILC Program has
remained relatively unchanged over the course of the program history and has not demonstrated
the need for frequent changes.
While the Company currently manages the Wattsmart Battery and Wattsmart Business
demand response programs with a similar Flexible Tariff, this practice is uncommon for Idaho
utility DR programs. All other utilities must file an application with the Commission to change
their DR programs. Additionally, the two existing DR programs currently managed through a
Flexible Tariff have notable differences from the ILC program. The Wattsmart Business
Program was recently approved and the Wattsmart Battery program is currently offered as a pilot
and both are expected to make frequent changes as the program develops. Staff believes that the
Flexible Tariff process for making adjustments to its ILC program does not allow for sufficient
transparency or scrutiny of proposed changes.
Additionally, Staffs discovery suggests several inconsistencies between the Company's
website and the current program offerings. In response to Production Request Nos. 3, 4, and 6,
the Company provides details and clarification of the Bonus Incentive Rate, MEERP, and
VEERP incentive components that are present in both the current and proposed program but are
not detailed on the website as of April 15, 2024. Table No. 2 below reflects the Compensation
information available to customers on the Company's ILC program webpage. It is important for
customers to have access to accurate and up-to-date information regarding compensation for
their participation in the Company's programs.
STAFF COMMENTS 6 APRIL 18, 2024

Table 2: Current ILC Compensation Information Displayed on Company Webm
Average Base Incentive Rate ($/kW) Bonus Incentive Rate ($/kW) * if
Expected kW per program is>125 MW
Pump
Utah Idaho Utah Idaho
Over 100 kW $25 $23 $27 $25
Under 100kW $21 $l 9 $23 $21
For the reasons described above, Staff recommends that the Commission direct the
Company to create a new schedule for its ILC program. This schedule should contain all
necessary sections used in existing Company tariff schedules2 and all program parameters
necessary to completely define the program.3 Any necessary changes to the ILC program,
including any changes to the event notification time, should be pursued according to IDAPA
31.01.01 Rule 134 Tariff Advices or by filing an application with the Commission. Staff
believes that the tariff advice process will allow for proper transparency of changes to the
program by establishing a record with the Commission for public review, allow for changes to be
elevated to cases if additional scrutiny is needed, and still allow the Company to make minor
adjustments in a timely manner. By creating a new tariff schedule, customers will have access to
multiple sources of information.
In discussions with the Company, Staff discussed adding the ILC program to a new tariff
schedule and the Company was amendable. Staff has been working with the Company
informally to create a new tariff schedule for the ILC control program; however, a final tariff has
yet to be agreed upon. Additionally, Staff anticipates that additional changes will need to be
incorporated into the tariff schedule depending upon the Commission's final order on Staff s
recommendations. Therefore, Staff recommends the Company file the new tariff schedule in a
compliance filing, along with the updated contract, that reflects the Commission's final decision.
2 I.e.,applicability,purpose,program description,customer participation,provisions of service,and electric service
regulation statements.
3 Le.,definitions of all relevant terms,details of all relevant incentive calculations,table of all incentive component
rates,event notification parameters,mandatory and voluntary season timeframes,and any other information needed
to define the program.
STAFF COMMENTS 7 APRIL 18, 2024

STAFF RECOMMENDATIONS
Based on its analysis of the Company's Application, supporting material, and discovery
requests, Staff recommends the Commission issue an order:
1. Approving the contract for continuing the ILC program for the first five years of the
contract pending an update implementing Staffs other recommendations;
2. Ordering the Company to file a case before the end of the initial five-year term for
Commission approval if the Company intends to extend the contract beyond the five-
year term;
3. Directing the Company to maintain a flat incentive structure based on the proposed
2024 Base Incentive Rate and Bonus Incentive Rate; and
4. Directing the Company to create a new schedule for ILC program and file it in a
compliance filing.
Respectfully submitted this 18th day of April 2024.
Adam Triplett
Deputy Attorney General
Technical Staff: Jason Talford
I:\Utility\UMISC\COMMENTS\PAC-E-24-02 Comments.doex
STAFF COMMENTS 8 APRIL 18, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 18th DAY OF APRIL 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E-24-02, BY &MAILING A COPY THEREOF, TO THE
FOLLOWING:
MARK ALDER JOE DALLAS
MICHAEL SNOW ROCKY MOUNTAIN POWER
ROCKY MOUNTAIN POWER 825 NE MULTNOMAH ST
1407 WEST NORTH TEMPLE STE 330 STE 2000
SALT LAKE CITY UT 84116 PORTLAND OR 97232
E-MAIL: mark.alder(@,pacificoM.com E-MAIL: joseph.dallas ,�pacificorp.com
[e-mail]
DATA REQUEST RESPONSE CENTER
E-MAIL ONLY:
[e-mail]
ERIC L OLSEN LANCE KAUFMAN PhD
ECHO HAWK& OLSEN PLLC 2623 NW BLUEBELL PLACE
PO BOX 6119 CORVALLIS OR 97330
POCATELLO ID 83205 E-MAIL: lance(o,aegisinsi t.com
E-MAIL: elo(iDechohawk.com
PATRICIA JORDAN, SECRETARY
CERTIFICATE OF SERVICE