20240725Comments.pdf

RECEIVED
Thursday, July 25, 2024
IDAHO PUBLIC
UTILITIES COMMISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ) CASE NO. IPC-E-24-11
APPLICATION OF IDAHO POWER )
COMPANY FOR A ) INITIAL COMMENTS
DETERMINATION OF 2023 )
DEMAND-SIDE EXPENSES AS ) NW ENERGY COALITION AND
PRUDENTLY INCURRED ) SOUTH CENTRAL COMMUNITY
ACTION PARTNERSHIP
COMES NOW the NW Energy Coalition("NWEC") and South Central Community
Action Partnership ("SCCAP,"together"NWEC/SCCAP")with the following comments
regarding Idaho Power's ("IPC" or"Company")request for a prudency determination of its 2023
demand-side expenses. The comments of NWEC/SCCAP focus on two main areas: 1) general
support for Idaho Power's energy efficiency and demand response expenses as cost-effective and
prudently incurred, along with suggestions for improvements in the future; and 2) specific
support for the Company's low-income weatherization funding, along with the need to provide
greater flexibility to contracted recipients of that funding in order to ensure maximum value is
being provided to Idaho Power customers.
I. Energy Efficiency and Demand Response Expenses as Prudently Incurred
Cost-effective energy efficiency and conservation is inherently the cheapest energy
resource. Generally, investments in demand-side resources are deemed prudent by Utility
Commissions because they reduce costs for participants in the efficiency programs as well as
non-participants. In Idaho, cost-effectiveness is determined utilizing primarily the Utility Cost
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Test (UCT)—in conjunction with other tests—though the Commission ultimately determines
prudency under a totality of the circumstances standard.I
In this case, Idaho Power seeks prudency determination for $30,323,272 of expended
Energy Efficiency Rider funds, and$8,455,107 of base-rate funded demand response incentives.2
For its efforts, the Company reports energy efficiency savings of 15.9 MW and non-coincident
demand reduction of 240 MW.3
As members of the Energy Efficiency Advisory Group (EEAG), as well as
representatives for residential and small commercial customers of Idaho Power, both NWEC and
SCCAP are supportive of the Company's demand-side management(DSM) efforts. Energy
efficiency programs provide numerous benefits to program participants and non-participants.
Only some of those benefits are captured through cost-effectiveness tests like the UCT. The
energy savings realized through these programs reduce utility system costs—which in turn leads
to lower rates - lower air emissions from power plants (which produce health related benefits),
provides for well-paying creating jobs, and improves system reliability. The programs also allow
for better control of customer bills, offering customers ways to save money and improve
comfort. Businesses also save money,which in turn contributes to better financial health and
allows for additional revenue to be spent on expanding the business instead of energy costs.
Furthermore, energy efficiency programs serve as a customer service function, allowing the
utility to further engage with its customers, which has been shown to improve overall customer
satisfaction with utilities. Demand-side efforts for electric utilities will become even more
11n the Matter of the Application of Idaho Power Company for a Determination of 2014 Demand-Side Management
Expenditures as Prudently Incurred, Docket No. W&E-15-06, Order No. 33365, p. 10(Aug. 28, 2015).
Z Application at p. 1.
s Id. at¶5.
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important as beneficial electrification further develops and peak loads increase due to extreme
volatility in weather.
According to Idaho Power's 2023 DSM Annual Report, the entirety of the Company's
energy efficiency efforts—excluding Weatherization Assistance for Qualified Customers
(WAQC)—had a UCT value of 2.06, meaning the efficiency efforts had double the value (2.06)
of supply side resources to the Company and its customers.' Including WAQC, the return was
similar at nearly double the value (1.97),5 demonstrating that customers are getting a significant
return on their investment.
As members of EEAG,NWEC and SCCAP can also attest to the Company's use of the
advisory committee in order to maximize value of demand-side programs. Under the totality of
the circumstances paradigm, given favorable cost test results and efforts to work with
stakeholders, the Commission should approve the Company's request and deem prudent its 2023
DSM expenditures.
NWEC/SCCAP note, however, that further attention should be paid to residential customers
with regard to DSM efforts. The inability to claim savings from lighting due to federal standards
means that expenditures for residential customers now make up only 7.7% of total expenditures.6
Of the 24,393,598 kwh of savings for the residential sector, 17,659,087 kwh (roughly 72%)
comes from the Home Energy Report Program (HER).'NWEC/SCCAP support the use of the
HERs program as a foundational method to encourage customer to conserve and invest in energy
efficiency. Indeed,NWEC/SCCAP support efforts by the utility to expand the use of HERs, and
adding additional test and control groups. Additionally, however, the utility should improve
4 Idaho Pwer Company 2023 DSM Annual Report, p. 19.
6 Id.
61d. at p. 14, Figure 7 (combining 6.2%for EE residential and 1.5%for EE DR).
Id. at p. 21,Table 7.
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efforts in identifying measures that reduce energy use regardless of customer participation in the
HERs program and that will reduce energy use in the dwelling even if the HER customer no
longer participates in the program or relocates. Specifically, the Company should work with
EEAG and its contractors to find ways to better reach the rental housing market, and encourage
landlords to make upgrades to their units for the benefit of their renters. Furthermore, as more
and more customers are taking advantage of beneficial electrification,the Company should
expect increased penetrations of electrically powered space and water heat. Idaho Power should
work to ensure that customers do not invest in inefficient appliances, locking in increased energy
usage for decades.
Similarly, Idaho Power is a national leader in its efforts to reduce energy use during peak
events through its demand response efforts. The vast majority of demand response is achieved in
the irrigation sector, followed by commercial/industrial. NWEC/SCAAP are aware that Idaho
Power is seeking ways to encourage customers with A/C switches to participate in the A/C Cool
Credit Program and support these efforts. Hot water heaters are also ripe for demand response
investment and can provide value in both summer and winter.
In sum,NWEC/SCCAP support Idaho Power's request for prudency determination for its
2023 DSM investments. NWEC/SCCAP also encourage Idaho Power to redouble its DSM
efforts in the residential sector in order to achieve maximum value for those customers.
II. Idaho Power's Low-Income Weatherization Programs
A. Traditional cost-effectiveness tests are incapable of capturing the full value of low-
income weatherization.
In addition to the request to deem prudent expenses for cost-effective energy efficiency
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and demand response programs, Idaho Power included in its application the request to deem
prudent programs that are not considered cost effective, namely Weatherization Assistance for
Qualified Customers ("WAQC") and Weatherization Solutions for Eligible Customers
("Solutions"). These two programs have long failed to pass traditional cost-effectiveness tests
despite their extreme benefits to society. As noted by the Company, "[w]hile the WAQC
program remains non-cost-effective from an economic perspective, it provides real savings to
customers that would otherwise likely be unable to afford to weatherize their homes and offers
health and safety benefits to customers in need that are not quantified through the economic
tests."'NWEC/SCCAP could not agree more and note that while the economic benefits may not
be captured in the prescriptive tests, the economic benefits are indeed notable.
For example, neither the total resource cost test(TRC)nor the utility cost test (UCT)
incorporate the economic benefit to customers, or to the utility, of reduced arrearages achieved
through low-income weatherization. Lowering bills for those who have the highest energy
burdens means more are able to pay those bills, reducing carrying costs and bad debt—both of
which are paid for by other customers.
Moreover, the health and safety benefits noted by Idaho Power do indeed equate to
economic benefits despite not being captured by traditional utility cost-effectiveness analysis. A
2015 evaluation conducted by the U.S. Department of Energy (US DOE) for the Weatherization
Assistance Program found that for every $1.00 invested in weatherization, a return of$2.78 was
realized, not inclusive of the value of energy saved(i.e. non-energy benefits).' Other economic
metrics include 28,000 jobs supported, $283 in annual energy savings which can be used in other
8 Thompson, Di at p. 20,lines 1-6.
9 See National Evaluation Summary of Results, https://www.energy.gov/scep/wap/articles/weatherization-
assista nce-progra m-national-eval uation-fact-sheet
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segments of the economy, $514 savings in out of pocket medical expenses, and an increase of
$583 of annual income due to fewer missed days of work.10 These numbers are derived from
benefits from federal funding and do not include upward movement associated with other
funding sources, like utility funding.
Yet, the rigidity of cost-effectiveness calculations—while useful in some instances—fail
to capture these benefits, leading to low ratios that do not fully capture the importance of
weatherization to low-income households or society at large. Because of this rigidity,
weatherization contractors—community action agencies such as SCAAP—utilize federal dollars
to pay for measures that may have energy savings but have greater health and safety benefits that
would not be accounted for if using utility dollars. It is important to recognize that all Idaho
Power customers benefit from these investments.
Furthermore, Idaho Power's contractual cap of$6,000 annual average cost'' limits
weatherization implementers ability to achieve maximum savings. Like many energy efficiency
projects, certain measures may have higher costs but also have greater savings,providing the
biggest bang for the buck. As can be seen in Table 18 of the Company's 2023 DSM Annual
Report, HVAC replacements far outweigh the production costs of all other WAQC measures.
This makes sense because HVAC units are costly, but also provide the greatest savings
opportunity. For this reason Idaho Power chose to fund installation of ductless heat pumps as
part of its re-weatherization program.
Lastly, it is important to note that cost-effectiveness results are negatively harmed due to
the inclusion of unspent funds in the equation. "The total amount of unspent funds carried into
2023 from the previous year was $11,517. Not including this amount in the cost-effective
io See id.See also https://www.energy.gov/scep/wap/about-weatherization-assistance-program.
11 Idaho Power DSM 2023 Annual Report, p. 91.
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calculation would understate expenses in 2023."12 This means that while expenses are allocated,
zero benefits are attached to those expenses, driving down the final cost/benefit ratio.
The totality of the circumstances warrants the continued funding of weatherization
services by Idaho Power. Attached as Exhibits A, B, C, D, and E are letters from Idaho
customers that have received weatherization services expressing the impact these upgrades to
their homes has had on their lives. As such, the Commission should continue to encourage Idaho
Power to fund low-income weatherization efforts despite WAQC and Solutions scoring low in
traditional cost-effective calculations.
B. An increase to the cap of$6,000 per home more accurately reflects the cost to
weatherize and would help alleviate the pool of unspent weatherization funds.
The accumulation of unspent weatherization dollars continues to be a concern for both
the utility and weatherization mangers. In its 2023 DSM Annual Report, Idaho Power identifies
$1,137,388 in unspent funding. These dollars were largely accrued during the COVID-19
pandemic when weatherization contractors were not able to safely enter homes in need of
weatherization. NWEC/SCAAP continue to support Idaho Power's re-weatherization efforts as
one method of utilizing those funds.
Another means of reducing unspent funds, while at the same time providing greater
ability to achieve savings, is to increase the cap of$6,000 annual average cost. The average cost
per unit(ACPU) cap—originally established in IPC-E-03-13 and eventually increased to $6,000
in 2013 —is insufficient in today's dollars to achieve maximum savings. Indeed, as discussed
earlier, the cap severely limits the savings potential, thereby decreasing cost-effectiveness.
According to the Bureau of Labor Statistics, it takes $1.35 in June of 2024 to achieve the same
12 Id. at 95.
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buying power as June of 2013.11 Thus, it would take at minimum $8,07311 to achieve the same
outcome today as $6,000 in 2013; yet the cap remains unchanged.
The re-weatherization program is indicative of the need to increase the cap. While "Idaho
CAP agencies had a combined average cost per home weatherized of$6,897,"15—higher than the
$6,000 cap—the re-weatherization program focusing exclusively on installing ductless heat
pumps had an average cost of$10,858.16 Certainly some of the costs are duplicated in the re-
weatherization effort but the overall trend proves out that$6,000 is insufficient to cover whole-
house re-weatherization efforts.
For comparison purposes, the State of Idaho 2023 State Weatherization Plan currently
assigns an annual average cap of$8,213 and the Department of Energy is required under federal
law to adjust the cap annually by the lesser of in the increase to the Consumer Price Index or
three percent.17
Based on the $8,073 figure cited above as the real dollar value of$6,000 in 2013, and the
$10,858 figure for re-weatherization efforts,NWEC/SCAAP propose Idaho Power increase the
annual average cap to $10,000. This would have multiple benefits. First, the increase would
provide CAP agencies greater flexibility and the ability to absorb the actual cost of providing
weatherization services. Costs of widgets, costs for sub-contractors, and costs for administrative
staff have all increased considerably in the last several years. The increase to the cap would
merely mirror those increases. Second, the increase would allow for CAP agencies to more
quickly spend down the pool of unspent carryover dollars and re-balance funding and spending.
" https:Hdata.bIs.gov/cgi-bin/cpicaIc.pl?cost1=1&year1=201306&year2=202406
14$6,000 x$1.71
15 Idaho Power DSM 2023 Annual Report at p. 91.
16 1d. at 93.
17 CFR§440.18(c)
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Ideally, funding and spending are one in the same; increasing the cap brings the spending gap
closer to parity.
As such, NWEC/SCRAP suggest the Commission require Idaho Power to a) increase the
annual average cap to $10,000 and b) re-evaluate the cap at least every three years in order to
keep up with inflationary pressures.
III. Conclusion
For the reasons laid out above,NWEC/SCCAP recommend the Commission: a) grant
Idaho Power's request for prudency determination for its 2023 DSM expenses; b) encourage
Idaho Power to redouble its efforts in acquiring residential DSM savings; c) encourage Idaho
Power to continue funding its low-income weatherization programs—WAQC and Solutions; and
d) require Idaho Power to increase its contracted Average Cost Per Unit cap to $10,000.
DATED this 25'day of July 2024.
- 0, , �I---
F. Diego Rivas
Regulatory Counsel
NW Energy Coalition
Counsel for NWEC/SCCAP
IDAHO PUBLIC UTILITIES COMMISSION, Case No. IPC-E-24-11 Page 9
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CERTIFICATE OF SERVICE
I hereby certify that on this 25th day of July, 2024, I delivered true and correct copies of
the foregoing Comments of NWEC/SCCAP to the following persons via the method of service
noted:
/s/F. Diego Rivas
Regulatory Counsel
NW Energy Coalition
1101 8m Ave
Helena, MT 59601
[e-mail]
Electronic Mail Only(See Order No.
35058):
Idaho Public Utilities Commission
Monica Barrios-Sanchez
Commission Secretary City of Boise
[e-mail] Ed Jewell
[e-mail] Steven Hubble
150 N. Capital Blvd.
Commission Staff P.O. Box 500
Adam Triplett Boise, Idaho 83701-0500
Deputy Attorney General [e-mail]
Idaho Public Utilities Commission [e-mail]
[e-mail] [e-mail]
Idaho Power Company Idaho Conservation League
Megan Goicoechea Allen Matthew Nykiel
Connie Aschenbrenner Brad Heusinkveld
1221 W. Idaho St. 710 N. 6th St.
P.O. Box 70 Boise, Idaho 83702
Boise, ID 83707-0070 [e-mail]
[e-mail] [e-mail]
[e-mail]
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