20240627Final_Order_No_36245.pdf

Office of the Secretary
Service Date
June 27,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN ) CASE NO. INT-G-23-06
GAS COMPANY'S APPLICATION FOR A )
DETERMINATION OF 2022 ENERGY )
EFFICIENCY EXPENSES AS PRUDENTLY ) ORDER NO. 36245
INCURRED )
On October 6, 2023, Intermountain Gas Company ("Company"), applied for an order
designating$3,364,641 of 2022 Energy Efficiency("EE")expenditures as prudently incurred. The
Company filed its 2022 Energy Efficiency Annual Report concurrently with its Application.
On November 15, 2023, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 36002. Boise City intervened. Order No. 36032.
On January 12, 2024,the Commission issued a Notice of Modified Procedure establishing
dates for public comments and the Company's reply. Order No. 36058. Staff and Boise City
commented. The Company replied.
Having reviewed the record in this case, we now issue this Order finding the Company's
2022 Energy Efficiency expenditures were prudently incurred.
BACKGROUND
In Case No. INT-G-16-02, the Commission authorized the Company to establish the
Energy Efficiency Program (`BE Program") for its residential customers. Order No. 33757. The
purpose of the EE Program "is to encourage upgrades to, or use of, high efficiency natural gas
equipment."See Rate Schedule EE.Later in 2017,the Company requested authority to implement
a funding mechanism for the EE Program in Case No. INT-G-17-03. The Commission approved
the Company's requested funding mechanism of an Energy Efficiency Charge ("EEC"), and
ultimately approved Rate Schedule EE, Rate Schedule EEC, and Rate Schedule EEC-RS. Order
No. 33888.
In Case No. INT-G-19-04, the Commission required the Company to conduct a third-
parry Evaluation, Measurement, and Verification ("EM&V") study. This was meant to "review
and update the avoided cost calculation with the Energy Efficiency Stakeholder Committee"
("EESC"). Application at 4. It was also meant to regularly monitor and update the EE Program
measures. See Order No. 34536.
ORDER NO. 36245 1

In Case No. INT-G-20-04, the Commission granted permission for the Company to
implement a Commercial EE Program. This established a way to fund EE upgrades under Rate
Schedule EEC-GS ("EEC-GS"). The Commission instructed the Company to create an EM&V
plan. Additionally, the Company was instructed to submit an Annual Commercial EE Program
Report. This report must include representatives from the GS-1 rate class in its EESC. Finally,
the Commercial EE program was to be regularly monitored and updated.
In Case No. INT-G-20-06, the Commission authorized modifications to the EE Program
including to the Furnace and Whole Home tiers I and II measures. Order No. 34980.
THE APPLICATION
The Company represented that the EE Program expenditures are funded through
collections from customers via the EEC. The Company stated that the EEC-RS rate of$0.01564
per therm funds the Residential EE Program and the total Residential EE Program revenues for
calendar year 2022 were$5,738,001. The Company represented that the EEC-GS rate of$0.00320
per therm funds the Commercial EE Program which had revenues of$472,346 in 2022.
The Company represented that the combined expenditures for the Residential and
Commercial EE Programs for January 1, 2022, through December 31, 2022, were $3,364,641.
Approximately $2,608,536 accounts for EE rebates paid out to residential and commercial
customers. Additionally, EE Program administration and labor in 2022 accounted for $756,105
and $650,675 of expenditures, respectively. Administration expenses increased 4% and labor
expenses increased 2% over 2021 expenses. The Company stated that it has assigned EE costs to
each respective EE Program where possible and offered explanations where costs were not
assigned in compliance with Order No. 35663. The Company further stated that employees
working on both Residential and Commercial EE Programs remained the most cost-effective
option until the programs each grow in size.
The Company represented that the Residential EE Program began 2022 over-funded by
$2,834,164 and experienced growth of the over-funded balance to $4,893,882 by June of 2022.
Due to measures taken in compliance with Order No. 35539 in Case No. INT-G-22-05
(transferring$4.85 million in over-collected funds to the PGA for refund of residential customers),
the overfunded rider balance was reduced to $450,521 by the end of 2022.
The Company represented that the Commercial EE Program began 2022 over-funded by
$84,589 which increased to $463,938 by the end of 2022.
ORDER NO. 36245 2

The Company represented that in 2022 the Residential and Commercial EE Programs
saved an estimated 615,806 and 36,844 therms, respectively.
The Company represented that it used the 2021 IRP's Avoided Costs as calculated in Case
No. INT-G-21-06.
The Company stated that it has hosted two meetings to address and discuss the parameters
of the EESC.
THE COMMENTS
A. Staffs Comments
After reviewing the Company's Application and supporting documents plus responses to
discovery, Staff recommended the Commission approve$2,657,836 in 2022 EE Program expenses
as prudently incurred. Staff s primary recommendation included a $706,805 disallowance due to
Staff s perception that the Company failed to comply with past Commission orders which directed
the Company to revisit certain measures offered in its EE Program. Staffs comments included a
financial review of the EE Program, discussion regarding Demand Side Management ("DSM")
cost-effectiveness, specific evaluations, market transformation efforts, smart thermostats, and
commercial energy savings kits.
a. Financial Review
In Staffs review of the Company's EE Program, including the EE Program measures,
marketing expenses, administration expenses, and labor expenses, Staff learned the incentives can
be paid without receipt of proper documentation. Additionally, Staff cited concerns with the
internal control process relied on by the Company.
After discussing the funds collected through the EEC-RS—$5,738,001—and EEC-GS—
$472,346tariffs, Staff noted the increase in residential and commercial participation in 2022.
Participation in the residential program increased by 43% in 2022 compared to 2021, and the
Company paid almost 8,000 rebates. The Smart Thermostat measure was the most popular
residential measure,making up about 35% of the total rebates issued(by number not amount). On
the commercial side, participation also increased, but the Commercial EE Program only paid out
about 20% of the funds it collected. Staff hypothesized that the reason for the lower than
anticipated expenditures could be that measures do not align with the needs of the light commercial
sector. Staff noted the Company is still learning the needs of its commercial customers.
ORDER NO. 36245 3

The Company's labor cost related to its EE Programs increased by 2% over 2021, to
$650,675. Staff noted that in 2022 labor costs represented 19.3% of the total EE Program
expenses—which is a greater percentage of EE Program expenditures than any year in the EE
Program's existence. Staff s concern was that the labor cost increased despite the total EE Program
expenditures decreasing from$4.0 million in 2021 to $3.4 million in 2022. Staff referenced a new
rebate application the Company developed in 2023, which it expects to help reduce inefficiencies
with the rebate process,in turn reducing labor costs.Ultimately, Staff recommended the Company
reduce labor costs wherever possible. Staff also recommends the Company perform an internal
audit on how the EE Program is operating.
Staff discussed the tariff rider balances for EEC-RS and EEC-GS, which were both
overfunded at the end of 2022 by $450,521 and $463,938, respectively. Staff noted the ending
balance of the EEC-RS tariff rider would be $1,157,326 if the Commission agrees with Staff that
a significant disallowance is appropriate.
Staff noted its concern that the Company has never done an internal audit of its EE Program
and that it does not plan to. Staff s audit revealed that the Company does not have specific controls
for verifying proof of purchase and installation prior to paying rebates. Therefore, Staff
recommended the Company develop a schedule for regular internal audits of its EE programs.
b. DSM Cost Effectiveness
Staff argued the Company is noncompliant with prior Commission orders directing the
Company to use specific analysis for several of its measures. For this reason, Staff recommended
the Commission disallow$706,805 associated with the Company's Furnace and Whole Home Tier
I and Whole Home Tier II ("tiered Whole Home") measures. To support this recommendation,
Staff discussed the regulatory history of the Commission's orders that direct the Company to
complete a Billing Analysis of these measures.
Staff argued that since the Company last filed a Billing Analysis in the EM&V in Case No.
INT-G-20-06,the Company has made no reasonable efforts to utilize those results. To support this
argument, Staff noted that the Company used the simulated savings estimates despite the
Commission's directive to use a Billing Analysis for the Furnace and tiered Whole Home
measures. Staff believed, as it has argued in the past and here again, that simulation lacks the
accuracy the Commission has explicitly required for evaluations. Staff s primary concern is that
this method of analysis causes the Company to overvalue the therm savings actually achieved by
ORDER NO. 36245 4

these measures and in turn leads to overvaluing the rebates paid to participants. The inflation of
these savings can lead to the Company continuing to offer measures that are not cost effective, and
the subsequent recovery of expenses related to potentially non-cost-effective measures.
Staff noted the 2020 EM&V contained the most up-to-date analysis of actual savings for
the tiered Whole Home and Furnace measures, and that no current billing data is available to
confirm whether the measures are cost-effective. Relying on the therm savings per unit used in the
Billing Analysis from the 2020 EM&V (Furnace 56 therms and Whole Home 58 therms), Staff
calculated the revised benefits for each measure in its current form. To account for the changes
made to the Whole Home program in 2021,1 Staff recalculated the 58 therm savings into a 67
therm savings for tier I and 53 therm savings for tier II measures.Using the updated therm savings,
Staff input the updated savings into the Company's workpaper spreadsheet which recalculated the
proxy benefits it relied on. With the updated benefits using Staff s savings, Staff compared the
individual program costs claimed by the Company to the value of the revised benefits calculated
by Staff. When accounting for the changes in benefits from the Furnace and tiered Whole Home
measures, Staff concluded the actual costs for these programs was$706,805 more than the benefits.
Therefore, Staff recommended $706,805 of Residential EE Program costs were not prudently
incurred and asked the Commission to disallow certain expenditures.
Using Staff s proxy savings for the three measures(Furnace and tiered Whole Home), Staff
updated the Utility Cost Test ("UCT") ratios for the three offerings. The updated Furnace UCT
was 0.8 and Whole Home Tier I and Tier II were 0.53. None of these measures are cost effective
using Staffs proxy savings. Staff expressed confidence the Company could make minor
adjustments to the Furnace measure to achieve cost-effectiveness going forward. For the tiered
Whole Home measures, Staff reasoned more significant changes were necessary to achieve cost-
effectiveness. Staff offered that the impact evaluation expected with the next prudency filing
should include information that can aid the Company in making changes required for cost-
effectiveness in the tiered Whole Home offerings. Overall, Staff recommended the Company
should provide a completed evaluation, including an overview of each evaluation plus details and
explanations of the actions the Company plans to take that will lead to the cost-effectiveness of
the Whole Homes and Furnace measures reflecting actual therm savings in its next prudence filing.
1 In 2021,the Company split the Whole Home measure into two tiers,Whole Home Tier I and Whole Home Tier 11.
ORDER NO. 36245 5

Alternatively, Staff recommended that if the Company does not believe it can maintain or achieve
cost-effectiveness for the tiered Whole Home measures, it should be sunset.
c. Evaluations
Staff shifted its focus to several evaluations that have been directed or recommended for
the Company to do. In Case No. INT-G-22-03 the Company was directed to submit a Request for
Proposal ("RFP") for an impact evaluation that includes a Billing Analysis for the tiered Whole
Home and Furnace measures that would be included in the 2023 prudency docket. The Company
included a draft RFP with its Application, but had not issued it yet. There was apparent confusion
between the Company's understanding and Staff s expectations regarding the timeline of this RFP.
Staff believed the Company was non-compliant with Order No. 35663 but did not recommend any
punitive actions due to the misunderstanding. Staff noted the Company issued the RFP after
conversations with Staff and anticipated having the evaluation complete for the 2023 prudence
filing. In addition to including the Furnace and tiered Whole Home measures, the Company
anticipated the evaluation including the Smart Thermostat measure too. Staff recommended the
Commission direct the Company to delay its 2023 prudency filing until the impact evaluation that
the RFP was issued for is completed.
In Case No. INT-G-22-03, Staff recommended the Company consider the necessity of
impact evaluations for measures with low participation rates which may not justify the cost of the
evaluation. With its filing in this case, Staff noted the Company included an evaluation schedule
for each of its EE Program measures. Specifically, Staff had concerns with inclusion of the
Combination Boiler, Boiler, and Tankless Water Heater Tier II measures that have low
participation rates being included in the Company's evaluation schedule. Staff reiterated its
recommendation for the Company to conduct evaluations of measures that have sufficient
participation to justify the expense associated with the evaluations. However, Staff supported the
Company's research into small-scale EM&V studies it is exploring with the Idaho Integrated
Design Lab. Staff recommended the Company continue to engage the EESC as this opportunity is
explored.
d. Market Transformation, Smart Thermostats, and Commercial Kits
Staff registered concern with the Company's market transformation efforts. Specifically,
Staff cited the North American Natural Gas Heat Pump Collaborative ("Collaborative") which is
funded through the EE Rider. The Collaborative currently has no market transformation product
ORDER NO. 36245 6

that is commercially available. Staff worried that since the Collaborative has no product there is
no way to quantify impacts or benefits of the efforts to transform the market. Staff recommended
the Company and stakeholders develop criteria wherein the benefits of the Company's market
transformation efforts for Idaho customers can be quantified.
In 2022, the Company's rebates issued for smart thermostats increased by 465%,to 2,769,
compared to 2021. Staff mentioned the vast differences in the Expected Useful Life ("EUL") for
smart thermostats where the Company used 11 years and other estimates have been about 8 years.
Staff noted that as recently as 2019 the Company's CPA stated the life expectancy of a smart
thermostat was 8 years. Staff s concern rested in the overestimation of the EUL leading to
overstated benefits for the Smart Thermostat measure. Staff expected the EM&V Billing Analysis
submitted with the Company's next prudency filing would provide insight into the EUL of smart
thermostats.
Staff also recommended the Company monitor its commercial programs and explore
alternative ways to market its offerings. Staff cited the Commercial Energy Savings Kits which
were distributed to increase awareness of its commercial offerings. Staff referenced the Company's
method for tracking the success of its marketing strategy using the Commercial Energy Savings
Kits where the Company reported only one recipient participated in another commercial offering.
Staff believed this is inefficient marketing and should be monitored for delayed response.
B. Boise City's Comments
Boise City filed comments commending the Company's EE efforts, especially its effort to
reach commercial customers. Boise City recommended the Commission direct the Company to:
(1)revise its RFP for the 2024 EM&V to also analyze 95%AFUE rebates paid for residential new
construction separate from retrofit and replacement projects; and(2)direct the Company to include
an evaluation of its tiered Whole Home and Furnace measures using a Billing Analysis with its
2023 prudency case.
Boise City noted the tiered Whole Home and Furnace measures account for 73% of the
claimed residential savings in the Company's Residential EE Program.Because of this,Boise City
opined that it is imperative the Company complete a Billing Analysis for these measures. Like
Staff, Boise City argued the Billing Analysis has a significant impact on the assumptions that
determine the therm savings and incentive levels for the Company's EE Program measures. Boise
City registered concern that new construction is claiming a significant share of the residential
ORDER NO. 36245 7

rebates, where about 2/3 of the residential UCT costs support new construction. Of primary
concern to Boise City, the current incentives may be misaligned and over incentivizing new
construction.
Boise City understood savings assumptions can vary and used an example of the Northwest
Power and Conservation Council's Regional Technical Forum's("RTF")analysis of therm savings
in Idaho where it identifies the 90%AFUE gas furnace as the baseline. Comparing this baseline to
the 95% AFUE rated furnace using the RTF's analysis yields a savings of 33 therms compared
with the Company's claimed savings of 87 therms. This, Boise City implied,possibly contributed
to the significant increase in furnace rebates going to new residential construction (7% in 2018,
17% in 2019, and 50% in 2022). To ensure claimed savings from new construction reflect the
actual savings provided, Boise City recommended the Company be directed to revise its RFP to
"separate new construction from replacement, conversion, or early retirement 95%AFUE furnace
rebate...."Boise City Comments at 4.Boise City further recommended that if the EM&V's Billing
Analysis suggests it is appropriate, the Company should seek to modify its rebates mid-year for
the tiered Whole Home and Furnace measures.
Lastly, Boise City recommended the Company seek to design and implement a behavioral
energy efficiency program which could lead to significant energy savings with lower overhead
expenses and customer costs compared to traditional offerings.
C. Company Reply Comments
The Company responded to Staffs recommendations, describing in detail the process that
is undertaken before an EM&V can be completed and the lack of a foundation for Staffs request
to disallow the recovery of$706,805.
The Company strongly disagreed that it has failed to comply with past Commission orders.
The Company noted its awareness of the Commission's past directives and is in the process of
complying with those requirements. To complete an EM&V with a Billing Analysis as the
Commission has ordered,the Company represented it must have actual,not simulated or projected,
data. The actual data can only be gathered by offering the measures to be evaluated, and sufficient
data must be available to avoid the influence of any number of factors that could bias the data.
Specifically, the Company stated there must be at least two years of complete data for a Billing
Analysis.
ORDER NO. 36245 8

Because the tiered Whole Home and Furnace measures are in the implementation phase, it
would have been premature to begin an EM&V according to the Company. The Company argued
that these measures were approved in their current state in March 2021 by Order No. 34980 which
were offered to customers beginning on April 1, 2021. Accordingly, the three measures Staff
argued the Company is non-compliant in evaluating, only recently (April 2023) had enough data
collected to perform a Billing Analysis.2
In February 2022,the Commission, in its Final Order in Case No. INT-G-21-03, instructed
the Company to evaluate the measures it was currently offering"when the Company has sufficient
data to fully evaluate portfolio-wide and individual measures." Company Reply at 3 (quoting
Order No. 35313).
In July 2022, the Company filed Case No. INT-G-22-03 with evaluations of its offering
using both Simulation Analysis and Billing Analysis. The reason for using simulated data was the
newness (updated or modified) of some measures, including the Furnace and tiered Whole Home
measures. The Company noted that it filed a supplement in that case which included a schedule
for evaluations where it described the next EM&V being conducted using year-end 2023 data. In
January 2023,the Commission issued Order No. 3 56633,where it directed the Company to submit
an RFP for third-party evaluation using specific billing data, including of the tiered Whole Home
and Furnace measures, in the 2023 prudency filing. The Company argued that it complied with
this requirement by submitting the draft RFP with this filing and subsequently issuing it after
discussions with Staff.
The Company noted that while some iteration of the Furnace and tiered Whole Home
measures may have existed in the past, the Commission authorized modifications in 2021 which
is the appropriate time to begin data collection for future evaluation. Relying on data from past
iterations would be contrary to the requirements of the Commission's requirement to use the best
available data for evaluations, since this aged or less relevant data would not necessarily be
accurate to evaluate the current offerings' savings.
The Company shifted its arguments for rejecting Staffs recommendations to the
misapplied foundation it contends Staff relied on. The Company argued that the expenditures it
made for the Furnace and tiered Whole Home measures were made consistent with the
z The Company filed its Application in this case on October 6,2023.
s The Company's reply Comments incorrectly states January 2022.The actual issuance date was January 13,2023.
ORDER NO. 36245 9

Commission-approved tariff—a fact the Company notes Staff did not dispute. The Company
explained that Staff relied on data from the 2020 EM&V, before the Company's Whole Home
measures were separated into tier I and tier II. According to the Company, Staff then "assumes
that an EM&V Study on the new offerings with data through the end of the year 2022 would result
in the same ratio of estimated savings when compared to savings measured using billing data, and
then applies that ratio to the estimated therm savings in the Commission-approve tariffs."Id. at 7
(emphasis in original). The Company argued this treatment lacked the accuracy the Commission
directed the Company to include in its EM&V and the Company paid the rebates pursuant to a
Commission-approved tariff.
Noting the past iterations of the measures Staff takes issue with the Company stated those
measures were revised because they were not cost-effective. Using the billing data from the 2020
EM&V therefore would require a reliance on data that does not reflect the best available or most
accurate data. The Company argued this is arbitrary and inconsistent with the Commission's
directive since the data needed for the Billing Analysis was not available.
The Company also disagreed with Staff s position on disallowance because the rebates
subject to disallowance were paid consistent with the Commission-approved tariff. The Company
argued that this means that when the expenditures were made, they were already Commission-
approved, and it was obligated to make those payments. Despite Staffs position, the Company
argued that Staff s recommendation would punish its past, prudently incurred expenditures based
on its mandatory conduct. The Company argued that any disallowance would need to be made on
a prospective basis using revised tariffs and Staffs position is more akin to a fine.
The Company stated it is administering the EE Program consistent with the Commission's
directive, but that it is open to altering portions of or even sunsetting the EE Program. The
Company warned of the difficulty that will occur in administering the EE Program if there is a
constant threat of disallowance on expenditures it makes consistent with the approved tariffs.
Regarding Staffs concern with the Company's internal process controls, the Company
disagreed that these controls are lacking. Specifically, the Company mentioned past cases where
Staff indicated the internal controls were adequate and noted that nothing has changed since those
comments were filed. The Company warned that altering the internal control processes could
increase labor expenses,which would be contrary to Staffs recommendation to reduce labor costs
where possible. However, the Company is open to developing additional capacity for internal
ORDER NO. 36245 10

controls, despite the likely increase in labor costs. The Company explained that its 2024 EM&V
will contain a process analysis, in addition to the impact analysis. The process analysis will review
the Company's internal controls among other things.
The Company concluded its comments with a discussion of the EESC and its purpose.
Noting that the Commission has supported the EESC in past Orders, the Company asks the
Commission to confirm the scope of EESC meetings and whether it is the appropriate forum to
discuss concerns with the EE Program and proposed changes participants may wish to see. The
Company noted that Staff has participated in the EESC but did not bring the concerns addressed
in comments to the attention of the EESC before filing comments.
COMMISSION DECISION AND FINDINGS
The Company is a gas corporation under Idaho Code § 61-117, and a public utility under
Idaho Code § 61-129. The Commission has jurisdiction over the issues in this case under Title 61
of the Idaho Code, including Idaho Code §§ 61-301, 501, 502, and 503. The Commission has
reviewed the record and finds the Company prudently incurred $3,364,641 in EE Program
expenses in 2022.
Having reviewed the record and all submitted materials, the Commission encourages the
Company and its EESC to continue exploring all cost-effective energy efficiency measures. It is
important that measures and incentives are properly aligned with the needs of customers. It is
equally important that the costs of offering those measures accurately reflect the energy savings
derived from the measure. Regarding the purpose of the EESC, we intend the group to evaluate,
explore, and discuss cost-effective energy efficiency measures the Company offers to customers.
The EESC should provide critical feedback and guidance for the Company's EE Program. Like
our direction in Case No. IPC-E-01-13, Order No. 28894 (authorizing certain DSM offerings by
Idaho Power), the scope of the EESC can include evaluation, discussion, and recommendation for
measures that are or are not working as intended,possible new measures,adjustments to measures,
or the termination of measures. We intend for the EESC to actively discuss how to improve the
Company's EE Program to ensure that the Company is offering cost-effective EE measures that
customers demand. The Company should facilitate open discussions with the EESC about the EE
Program and its offerings and adjust them accordingly.
A significant component of any successful EE program is the opportunity to review the
measures and adjust them when necessary. While we encourage the Company to adjust incentives
ORDER NO. 36245 11

anytime it becomes clear they no longer are aligned with the stated savings, analysis based on
actual data is the preferred way to determine the proper adjustments. Staff and this Commission
have been adamant that results from an EM&V present the information necessary for the Company
to accurately review, adjust, add, or discontinue EE measures. We share the same concerns that
have been raised by Boise City and Staff. without a Billing Analysis the Company may be
overestimating the savings from its EE Program and therefore the Company's true therm savings
from its EE Program may be overstated. The lack of analysis supported by actual data potentially
allows the Company to recover expenses for non-cost-effective measures or over-incentivize
certain measures. This is troubling and can be remedied by including a Billing Analysis in the
EM&V.We therefore direct the Company to file an EM&V with its next prudency filing.This must
include a Billing Analysis for the Whole Home Tier I and Whole Home Tier II,Furnace, and Smart
Thermostat measures.The EM&V must also seek to separate savings for new construction,retrofit,
and replacement for the 95%AFUE rebates. This will provide better granularity into the actual
savings provided for each type of furnace installation and guide the Company and EESC in their
determination of the proper incentive levels for furnaces and other measures.
Staff discussed the difference in EUL for smart thermostats used by the Company and
industry over time. We understand that based on the number of rebates issued, the Smart
Thermostat measure is increasingly popular with customers. We support the Smart Thermostat
measure but direct the Company to explain the discrepancy in the EUL of smart thermostats in the
Company's next prudency filing. Determination of the correct EUL will ensure the therm savings
for smart thermostats are not overstated. The Company's EM&V analysis should include a review
and analysis of a proper EUL for the Smart Thermostat measure.
We share Staff s concern that the Company does not conduct internal audits of its EE
Program. We note the importance of regularly reviewing EE Program measures and the
mechanisms involved in verifying that rebates are correctly issued to customers and measures are
operating as intended. Notably the Company has an opportunity to catch redundancies and
inefficiencies through regular internal audits. This creates the ability to more efficiently administer
the EE Program and ensure that rebates are paid as intended. We direct the Company to develop
and follow a schedule for regular internal audits for its EE Program while remaining mindful of
the costs associated.
ORDER NO. 36245 12

As with all utilities regulated by this Commission that offer DSM programs, we implore
the Company to reduce its labor costs. In 2022, labor represented almost $1 of every $5 spent on
offering the Company's EE Programs. Nearly 20% of EE Program expenditures being spent on
labor is significant enough to justify the Company monitoring and adjusting its labor inputs. We
direct the Company to continuously explore ways to reduce labor costs.
We understand market transformation efforts can be an important part of EE programs,we
also understand Staff s concern that the Collaborative the Company has been funding through the
EE Rider does not offer any products by which results can be quantified. As we have previously
discussed, measurement is critical to any healthy EE program. This rings true for the Company's
market transformation efforts. We direct the Company to work with Staff and stakeholders to
develop criteria to measure the benefits to Idaho customers from the Company's market
transformation activities.
Lastly, we designate $3,364,641 in 2022 Energy Efficiency expenditures incurred as
prudently incurred. We recognize and share Staff s frustration with the lack of a Billing Analysis
to provide a complete view of the actual savings provided by the Company's tiered Whole Home
and Furnace measures. Staffs comments along with Boise City's comments demonstrate the need
for the Company to provide more analysis and data to justify its EE expenditures. While we hoped
this Billing Analysis would be available, the Company justified its timeline and understanding
regarding the Commission's expectations for its next EM&V.Again,we remind the Company that
its next prudency filing should not be made until it has completed the EM&V. The EM&V should
include a Billing Analysis on the Whole Home Tier I, Whole Home Tier II, Furnace, and Smart
Thermostat measures. Our desire is that the Billing Analysis will provide the Company useful data
to inform the measures ultimately offered to customers. Failure to include the aforementioned
EM&V complete with Billing Analysis will likely result in disallowance of EE expenditures.
ORDER
IT IS HEREBY ORDERED that the Company's Application is approved. The Company
prudently incurred$3,364,641 in 2022 Energy Efficiency expenditures.
IT IS FURTHER ORDERED that the Company's next prudency filing shall include an
EM&V with a Billing Analysis covering Whole Home Tier I and Whole Home Tier II, Furnace,
and Smart Thermostat measures.
ORDER NO. 36245 13

IT IS FURTHER ORDERED that the Company shall provide sufficient information to
justify the EUL of its Smart Thermostat measure with its next prudency filing.
IT IS FURTHER ORDERED that the Company should explore ways to reduce labor
expenses related to offering the EE Programs.
IT IS FURTHER ORDERED that the Company must develop and follow a schedule for
regular internal audits.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 271h day of
June 2024.
ERIC ANDERSON, PRESIDENT
JO R. HAMMOND JR., COMMISSIONER
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EDWARD LODGE OMMISSIONER
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IALegal\GAS\INT-G-23-06_EEE\orders\INCG2306_final_dh.docx
ORDER NO. 36245 14