20240528Final_Order_No_36193.pdf

Office of the Secretary
Service Date
May 28,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN ) CASE NO. PAC-E-24-02
POWER'S APPLICATION FOR APPROVAL )
OF ADJUSTMENTS TO THE IRRIGATION )
LOAD CONTROL PROGRAM ) ORDER NO. 36193
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.
On February 21, 2024, the Commission issued a Notice of Application, Notice of
Intervention Deadline, and Notice of Suspension of Proposed Effective Date, setting an
intervention deadline of March 13, 2024, and suspending the Company's proposed effective date
until May 31, 2024. Order No. 36095. Only the Idaho Irrigation Pumpers Association, Inc.
("IIPA") intervened. Order No. 36081.
On April 8, 2024, the Commission issued a Notice of Modified Procedure, establishing
public comment and Applicant reply deadlines. Order No. 36128. Staff and the IIPA submitted
comments to which the Company replied.
Having reviewed the record, the Commission issues this Order approving the Company's
Application as follows.
THE APPLICATION
The Company seeks to modify the ILC through approval of a new contract with Enel X
(the third-party administrator of the ILC) ("Agreement") to replace the current contract, which
ends on April 1, 2024. The Agreement is composed of two parts—a Master Professional Services
Contract Agreement ("MSA") and a Task Order Release Agreement ("TOA"). The TOA, which
defines service and pricing for the ILC, has an initial five-year term with an option to extend it an
additional five years.
According to the Company, the Agreement retains the existing incentive components,
calculation methods, mandatory and voluntary event windows of the ILC, essentially leaving the
overall pay-for-performance structure intact. However, the Agreement provides for increased
ORDER NO. 36193 1

monetary incentives and different participant notice options. Specifically,the Agreement increases
the monetary incentives for ILC participants by 30%, with subsequent annual increases of 2.5%
and allows for two-hour notices or"more real-time scenarios to allow flexibility for a faster acting
resource."Application at 9. The Company believes the monetary increases are necessary to avert,
and possibly reverse, the declining participation in the ILC experienced during the last decade.
STAFF COMMENTS
After reviewing the Application, supporting materials, and the Company's responses to
production requests, Staff recommended approving the Agreement for its initial five-year term
with certain modifications described below. Despite believing the ILC remains a cost-effective
Demand Response ("DR") resource, Staff identified potential improvements to the monetary
incentive structure of the ILC. Specifically,Staff recommended instituting a flat incentive structure
for the ILC based on the proposed 2024 Base and Bonus Incentive Rates and directing the
Company to submit a tariff schedule for the ILC as a compliance filing. Additionally, if the
Company wishes to extend the Agreement beyond the initial five-year term, Staff recommended
directing the Company to seek Commission approval of such an extension in a separate case prior
to expiration of the initial term.
1. Incentive Structure
Staff indicated that the primary change to the ILC described in the Application relates to
the monetary incentive available to participants, increasing the current incentive by 30% with
subsequent annual increases of 2.5%to account for inflation. Staff believed the proposed one-time
30%increase would be sufficient to foster the desired growth in ILC participation. Staff comments
contain the following Table 1, which breaks down the proposed ILC incentive structure:
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
2026 $34.15 $40.97
2027 1 $35.00 $42.00
2028 $35.87 $43.05
2029 $36.77 $44.13 $0.075/kWh $0.38/kWh
2030 $37.69 $45.23
2031 $38.63 $46.36
2032 $39.60 $47.52
2033 $40.59 $48.71
ORDER NO. 36193 2

Staff noted that the Company's responses to production requests described a proposed
increase in the Voluntary Event Energy Reduction Payment ("VEERP) rate while leaving the
Mandatory Event Energy Reduction Payment ("MEERP") rate unchanged. Specifically, Staff
observed that the Company proposes doubling the VEERP incentive from$0.19 per kilowatt-hour
("kWh") to $0.38/kWh to encourage participation and account for inflation over the entire ten-
year term of the Agreement. Although Staff disagreed with the proposed increase as a means of
addressing future inflation, Staff believed the resulting five-fold difference between the VEERP
and MEERP rates may increase the lower participation levels for voluntary events.
Staff s primary concern with the proposed incentive increases arose from the incorporation
of the forecasted inflation into general rate structure. Staff acknowledged that increasing the
monetary incentive for ILC participants in the future may be necessary to encourage participation.
However, Staff was concerned that building annual inflation adjustments into the incentive
structure(something the Commission has not allowed in the general rates of other programs)could
result in the Company overpaying for the DR resource. Staff believed that instituting an incentive
structure with annually increasing costs while the resource provides declining avoided costs (as
Company forecasts the ILC will) may appreciably degrade the cost-effectiveness of the ILC.
In sum, Staff recommended 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 would remain at the existing 2024 levels of$39.00/kW. Staff also recommended approval of
the proposed increase to the VEERP rate to foster additional participation in voluntary events—
not as a means of addressing future inflation.
2. Program Management
Despite the lack of significant changes to the ILC for the last ten years, Staff recognized
that the Company may need to adjust the ILC in the future. Staff noted that the Agreement allows
for two-hour or a real-time notification of called events to be provided to participants, instead of
the four-hour notification currently provided. The Application indicated that the Company intends
to provide four-hour notice throughout the 2024 season, but will discuss changing to two-hour or
real-time notice with participants if it determines such adjustments are necessary. However, Staff
noted that the ILC does not currently operate under a tariff and no process exists for the
Commission to otherwise review changes to the ILC.
ORDER NO. 36193 3

Although the Company advocates for managing changes to the ILC via the Flexible Tariff
process applicable to the Company's Wattsmart Battery and Wattsmart Business DR programs,
Staff had several concerns with this proposal.' First, the Flexible Tariff process is uncommon for
DR programs in Idaho. Generally, other utilities must apply to the Commission for approval of
proposed changes to DR programs. The few programs operating under the Flexible Tariff process
are relatively new and frequent adjustments to them are expected. The ILC program is more than
a decade old and has seen few changes over that time. Additionally, Staff was concerned that the
Flexible Tariff process is not sufficiently transparent for proposed changes to be effectively
scrutinized, noting that the Company's website did not even provide complete information about
the ILC incentive rates as the Flexible Tariff process would require.
Instead of applying the Flexible Tariff process, Staff recommended directing the Company
to draft a new schedule with all provisions used in existing Company tariffs and program
parameters defining the ILC. Future changes to the ILC would be processed as Tariff Advices or
via separate applications. Staff has been working informally with the Company to create a tariff
schedule for the ILC, but anticipated additional necessary changes to the schedule depending on
the precise contents of the final order. Thus, Staff recommended directing the Company to file the
new tariff schedule for the ILC, along with the updated contract with Enel X, as a compliance
filing reflecting the contents of the Commission's final decision.
IIPA COMMENTS
Despite generally supporting the Company's proposed changes to the monetary incentive
structure,the IIPA believed that the proposed 2.5% annual increase was insufficient. According to
the IIPA, inflation increases the benefit of the ILC to the Company while reducing the benefit
participants receive. In support of this contention, the IIPA noted that inflation results in not only
increased costs for irrigators,but also greater economic losses due to reduced yields of high valued
crops due to suboptimal irrigating.The IIPA acknowledged that the proposed 2.5%annual increase
represents a reasonable estimate of inflation over the next five years, but was concerned that
inflation could exceed the forecasted rate. Accordingly, the IIPA recommended annual updates to
the incentive rates pegged to the Consumer Price Index for the prior 12 months. The IIPA believed
1 The Flexible Tariff process facilitates updates to the terms and conditions of certain DR rebate programs via informal
communications with Staff. After notifying Staff of the proposed changes and resolving any concerns,the company
notifies customers through its website and updates the rebates after 45 days.
ORDER NO. 36193 4

this method will adequately balance the costs and benefits of the ILC with a minimal administrative
burden.
COMPANY REPLY COMMENTS
The Company agreed with Staff s recommendation to approve the ILC for an initial five-
year term and require an application prior to expiration of the initial term seeking approval to
extend it for an additional five years. The Company also agreed to submit a new tariff schedule for
the ILC as a compliance filing.
However,the Company disagreed with both Staff and the IIPA's recommendations related
to the annual increase in the monetary incentive structure. The Company believed its proposed
incentive structure will encourage participation, account for participation costs, maintain cost-
effectiveness, and ensure continuity for Idaho and Utah irrigators. The Company also noted that
its contract with Enel X tied administrative costs to the proposed incentive structure. Thus,
imposing an alternative incentive structure would necessitate a potentially months-long
renegotiation of that contract that may increase contract costs.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over the Company's application and the issues in this
case under Title 61 of the Idaho Code including, Idaho Code §§ 61-501, 502, and -503. The
Commission is empowered to investigate rates, charges,rules,regulations,practices, and contracts
of public utilities and to determine whether they are just, reasonable,preferential, discriminatory,
or in violation of any provision of law, and to fix the same by order. Idaho Code §§ 61-502 and -
503. The Commission may enter any final order consistent with its authority under Title 61.
Based on our review of the record,we find it reasonable to approve the Agreement and the
adjustments to the ILC described therein with some modifications described below. The ILC has
provided the Company with a cost-effective DR resource. However, declining participation can
threaten the continued viability of the ILC. Increasing the monetary incentive offered to ILC
participants is a reasonable means of addressing declining ILC participation. However,
incorporating annual increases into the general incentive rate structure to address inflation is not
only something we have not authorized for other programs,but also creates a risk of the Company
overpaying for this DR resource in the future. Accordingly, we approve the Company's request to
increase the monetary incentive provided to ILC participants,but only to the proposed 2024 levels
of $32.50/kW for the Base Incentive Rate, $39.00/kW for the Bonus Incentive Rate, and
ORDER NO. 36193 5

$0.38/kWh for the VEERP.No additional future increases to the incentive rates to address inflation
are authorized. Although this may result in some additional immediate expense to the Company
from renegotiating the contract with the third-parry administrator of the ILC, approving future
increases to the incentive structure could result in the Company overpaying for this DR resources
for multiple years and possibly offering a DR program that is not cost-effective.
Furthermore, considering the ILC's history of declining participation and forecasted
decrease in avoided costs, we find it reasonable to approve only the first five years of the
Company's contract with the ILC's third-party administrator. If the Company wishes to exercise
the option to extend the contract for an additional five years,the Company must apply for approval
before the initial five-year term expires. The results of the increased monetary incentives and
overall cost-effectiveness of the ILC can be evaluated at that time and additional adjustments
made, if necessary.
To facilitate greater transparency and scrutiny of future proposed adjustments to the ILC,
we find it reasonable to require the Company to work with Staff to create a tariff schedule for the
ILC. This new tariff schedule should be submitted as a compliance filing within 30 days of the
issuance of this final order.After submission and approval of this new schedule,future adjustments
to the ILC will be pursued via Tariff Advices or applications filed with the Commission.
ORDER
IT IS HEREBY ORDERED that the Company's new contract with Enel X is approved for
five years, contingent upon implementation of the provisions of this Order.
IT IS FURTHER ORDERED that the Company's request to increase the monetary
incentives provided to participants in the ILC is approved. However,this increase is limited to the
proposed 2024 levels of $32.50/kW for the Base Incentive Rate, $39.00/kW for the Bonus
Incentive Rate, and$0.38/kWh for the VEERP. No additional increases are approved.
IT IS FURTHER ORDERED that, if the Company wishes to extend the contract with Enel
X for an additional five years, the Company must apply to the Commission for approval of such
extension before the initial five-year term expires.
IT IS FURTHER ORDERED that the Company work with Staff to create and submit a
tariff schedule for the ILC within 30 days of the issuance of this final order.
IT IS FURTHER ORDERED that all future modifications to the ILC shall be pursued via
Tariff Advice or application filed with the Commission.
ORDER NO. 36193 6

THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 28th day of
May 2024.
ERIC ANDERSON, PRESIDENT
gs�
?HN R. HAMMOND JR., COMMISSIONER
G
EDWARD LODGE, C' 60j ISSIONER
ATTEST:
MAWarriKa-SAkez
Commission Secretary
I:\Legal\ELECTRIC\PAC-E-24-02_Irrigation Load\orders\PACE2402_final_at.docx
ORDER NO. 36193 7