20240801Application_CL.pdf

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RECEIVED
Avista Corp. Thursday,August 1, 2024
1411 East Mission P.O. Box 3727 IDAHO PUBLIC
Spokane, Washington 99220-0500 UTILITIES COMMISSION
Telephone [phone] NEW CASE: AVU-G-24-03
Toll Free 800-727-9170
August 1, 2024
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd.
Bldg. 8, Suite 201-A
Boise, Idaho 83714
Re: Avista Corporation Application for Determination of 2022-2023 Natural Gas Energy
Efficiency Expenses as Prudently Incurred
Dear Commission Secretary:
Enclosed for filing with the Commission is the Application of Avista Corporation, dba
Avista Utilities (Avista or "the Company"), requesting a determination of prudence for the
Company's natural gas energy efficiency expenditures from January 1, 2022 through December
31,2023.Also included in this filing are Exhibit Nos. 1-4 in support of the Application,containing
Avista's 2022 Annual Conservation Report(ACR),2023 ACR,2023 Northwest Energy Efficiency
Alliance (NEEA) Evaluation Report, and NEEA's Response to the Evaluation Report.
If you have any questions regarding this filing, please Kim Boynton, Manager, Energy
Efficiency Analytics, at(509) 495-4744 or kim.boynton(cavistacorp.com.
Sincerely,
14/,"w arrw
Jaime Majure
Regulatory Affairs Manager
Enclosures
cc: Avista Energy Efficiency Advisory Group

DAVID J. MEYER, Esq.
Vice President and Chief Counsel
Regulatory & Governmental Affairs
Avista Corporation
1411 E. Mission Avenue, MSC 27
P. O. Box 3727
Spokane, Washington 99220
Telephone: [phone]
david.me er&avistacorp.com
Attorney for Avista Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
AVISTA CORPORATION FOR A ) CASE NO. AVU-G-24-_
DETERMINATION OF 2022-2023 NATURAL )
GAS ENERGY EFFICIENCY EXPENSES AS ) APPLICATION OF
PRUDENTLY INCURRED ) AVISTA CORPORATION
In accordance with IDAPA 31.01.01 (Rules of Procedure, or RP), RP 052 and RP 201, et
seq., Avista Corporation, dba Avista Utilities (Avista or the Company), at 1411 East Mission
Avenue, Spokane, Washington, hereby applies to the Idaho Public Utilities Commission
(Commission) for an order designating Avista's natural gas energy efficiency expenditures from
January 1,2022 through December 31,2023, funded through the Company's Schedule 191 Energy
Efficiency Rider Adjustment in the amount of $4,149,757, as prudently incurred (hereinafter
Application).
The Company also requests that this filing be processed under the Commission's Modified
Procedure Rules (RP 201-204)through the use of written comments.
APPLICATION OF AVISTA- I

All communications,pleadings, and orders with respect to this Application should be directed to:
David J. Meyer, Esq. Shawn J. Bonfield
Vice President and Chief Counsel Senior Manager, Regulatory Policy& Strategy
Regulatory& Governmental Affairs Avista Corporation
Avista Corporation P. O. Box 3727
P. O. Box 3727 1411 E. Mission Avenue, MSC 27
1411 E. Mission Avenue, MSC 27 Spokane, Washington 99220-3727
Spokane, Washington 99220-3727 Telephone: [phone]
Telephone: [phone] E-mail: shawn.bonfield(&avistacorp.com
E-mail: david.me er&avistacorp.com
Avista Dockets (Electronic Only) - AvistaDocketsgavistacorp.com
Avista has included the following attachments in support of this filing, which are also
referenced below:
a) Exhibit No. 1 —Avista 2022 Idaho Annual Conservation Report
b) Exhibit No. 2—Avista 2023 Idaho Annual Conservation Report
c) Exhibit No. 3 —2023 NEEA Evaluation Report
d) Exhibit No. 4—NEEA response to ADM Evaluation
I. BACKGROUND
Avista has continuously offered energy efficiency services since 1978. Through these
offerings, the Company seeks to provide customers with programs and information that may help
them manage their energy use and to utilize cost-effective energy efficiency resources to meet the
energy and demand needs of the Company's electrical and natural gas systems. These efforts are
funded through Avista's Electric and Natural Gas Energy Efficiency Rider Adjustments(Schedule
91 and Schedule 191, respectively), or tariff riders.
The Company's Energy Efficiency Program (Program) consist of options for residential,
non-residential and low-income customer segments. The Program includes offerings through
traditional prescriptive channels along with site-specific projects and upstream buy-down
programs.Additionally,Avista introduced a midstream program in 2023. Each program within the
APPLICATION OF AVISTA-2

Company's natural gas Energy Efficiency Portfolio (Portfolio) is designed to meet cost-
effectiveness requirements and is evaluated by a third-parry evaluator each year. The results of
both the Company's and the third-party evaluator's annual assessments of the Program are
contained within Avista's Annual Conservation Report (ACR).
IL NATURAL GAS PROGRAM EXPENDITURES
The Company requests Commission determination that the expenditures incurred during the
2022-23 Program years, totaling $4,149,757 for its natural gas Program, were prudent and in the
public interest. Of the total amount spent, $3,435,926, or 83%, of total expenditures were paid out
to customers in direct incentives.' This percentage does not include additional benefits such as
technical analyses provided to customers by the Company's Energy Efficiency engineering staff or
regional market transformation efforts through the Northwest Energy Efficiency Alliance (NEEA).
The Company reports the Schedule 191 balance on a monthly basis to Commission Staff
and its Energy Efficiency Advisory Group (EEAG or Advisory Group). As of June 30, 2022,
Avista's natural gas tariff rider balance was about $1.65 million overfunded, meaning that more
tariff rider funding was collected than actually needed to fund the ongoing Program operations.
This overfunded balance is a reflection of lower customer participation in Program offerings. The
midstream program introduced in mid-2023 is showing strong volumes and participation, which
should help to better align future revenue with budgeted expenditures. Table No. 1 below
illustrates the balances for the 2022 and 2023 Program years on a monthly basis.
' $1,849,958 in incentives were paid to customers in 2022 and$1,585,968 in 2023.
APPLICATION OF AVISTA-3

Table No. 1 -Schedule 191 Tariff Balances By Month, January 2022-December 2023
Accounting Beginning Program Tariff Ending
Period Balance Expenditures Collections Balance
Jan-22 $ 2,067,047 $ 180,076 $ (268,312) $1,978,811
Feb-22 $ 1,978,811 $ 149,393 $ (230,469) $1,897,736
Mar-22 $ 1,897,736 $ 200,874 $ (214,361) $1,884,249
Apr-22 $ 1,884,249 $ 152,466 $ (143,455) $1,893,261
May-22 $ 1,893,261 $ 138,705 $ (113,753) $1,918,213
Jun-22 $ 1,918,213 $ 153,569 $ (65,906) $2,005,876
Jul-22 $ 2,005,876 $ 142,029 $ (35,720) $2,112,185
Aug-22 $ 2,112,185 $ 96,896 $ (30,768) $2,178,314
Sep-22 $ 2,178,314 $ 181,515 $ (30,603) $2,329,226
Oct-22 $ 2,329,226 $ 174,035 $ (46,290) $2,456,971
Nov-22 $ 2,456,971 $ 228,345 $ (297,091) $2,388,225
Dec-22 $ 2,388,225 $ 165,705 $ (730,094) $1,823,835
Jan-23 $ 1,823,835 $ 224,769 $ (707,244) $1,341,360
Feb-23 $ 1,341,360 $ 109,069 $ (614,012) $ 836,418
Mar-23 $ 836,418 $ 262,704 $ (648,475) $ 450,647
Apr-23 $ 450,647 $ 261,291 $ (399,108) $ 312,829
May-23 $ 312,829 $ 174,223 $ (218,243) $ 268,809
Jun-23 $ 268,809 $ 151,791 $ (101,302) $ 319,298
Jul-23 $ 319,298 $ 115,223 $ (89,521) $ 345,000
Aug-23 $ 345,000 $ 90,516 $ (79,914) $ 355,602
Sep-23 $ 355,602 $ 146,191 $ (90,592) $ 411,201
Oct-23 $ 411,201 $ 67,951 $ (151,914) $ 327,238
Nov-23 $ 327,238 $ 151,526 $ (390,804) $ 87,960
Dec-23 $ 87,960 $ 430,894 1 $ (571,512) $ (S2,6S8)
III. 2022 AND 2023 PROGRAM PERFORMANCE
The Company's energy efficiency targets are established on an annual basis through the
process of developing its natural gas Integrated Resource Plan (IRP). The targets derived through
the resource planning efforts provide a starting point for Program planning,which is accomplished
through the annual business planning process where Program offerings are optimized for the
Company's service territory based on current economic and market conditions. Program savings
for 2022 were 306,330 therms, which fell short the natural gas savings target of 522,441 therms,
APPLICATION OF AVISTA-4

achieving 59% of the target. For 2023, the Company accomplished 50% of its 465,478 therm
target, achieving annual energy savings of 231,497 therms. This represents 54%of the Company's
combined, two-year IRP target of 987,919 therms, which does not include the additional 499,133
therms acquired through NEEA. In support of these figures, Avista's 2022 and 2023 Natural Gas
Impact Evaluations are included as appendices within each respective year's ACR (See Exhibit
No. 1 for 2022 and Exhibit No. 2 for 2023).
Table No. 2—Therm Savings Compared to Target, 2022-2023
Time Period of Reported Savings Local Evaluated Therm Savings IRP Target Percent Achieved
2022 306,330 522,441 59%
2023 231,497 465,478 50%
2022-2023 537,827 987,919 54%
As shown in Table No. 2 above, from January 1, 2022 through December 31, 2023 the
Company achieved 537,827 therms of savings, excluding NEEA savings of 499,133 therms. Table
No. 3 below details the natural gas savings by residential,non-residential and low-income sectors,
which make up the Company's natural gas Portfolio.
Table No. 3 — 2022-2023 Natural Gas Savings by Program Sector
Program Sector Local Evaluated Therm Savings
Residential 433,890
Non-Residential 99,968
Low-Income 3,979
Total Portfolio 537,827
Avista evaluates the effectiveness of its natural gas Portfolio based upon a number of
metrics, including analyses utilizing four specific measurements to evaluate the cost-effectiveness
of a given program from both the Company's and from customers' perspectives: the Utility Cost
Test(UCT),2 the Total Resource Cost (TRC), the Participant Cost Test (PCT), and the Ratepayer
2 Also known as the Program Administer Cost(PAC)test.
APPLICATION OF AVISTA-5

Impact Test (RIM). The most commonly applied metrics to provide insight into the net value to
all customers are the UCTa benefit-to-cost test from the utility perspective that includes
incentives and excludes net costs and non-energy benefits (NEBs)—and the TRC, which
represents the customer perspective by including all measure costs and NEBs, excluding
incentives. Per Commission Staff recommendations in previous prudence reviews, Avista has
shifted, in recent years, to conducting its own cost-effectiveness calculations in-house,rather than
relying on a third party. This prudence review marks the second cycle in which Avista has run
these calculations internally,and the Company has continued to develop its quality control,review
processes and knowledge to ensure the consistency and accuracy of these calculations. Avista's
cost-effectiveness calculations have moved away from static, lump-sum inputs for cumulative
electric avoided costs, total year one energy savings, and total incentives. Calculations are based
on values within the Company's reporting structure, specifically, units installed, unit energy
savings, and per-unit incentives. Avista has also improved its quality control process for cost-
effectiveness calculations and for overall accuracy of the Company's work papers by developing
cost-effective workbooks that utilize active formulas, implementing peer reviews and reconciling
Portfolio savings totals against the systems of record. The Company will continue to refine its
processes, as needed,to ensure the appropriate and concise reporting of its Program. For 2022,the
overall Portfolio achieved a UCT ratio of 1.37 and a TRC ratio of 0.68 based on verified savings.
For 2023, the overall Portfolio achieved a UCT ratio of 1.01 and a TRC ratio of 0.35 based on
verified savings. The cost-effectiveness metrics are included in Table No. 4 below:
APPLICATION OF AVISTA-6

Table No. 4—Natural Gas Cost-Effectiveness, 2022-2023
Cost-Effectiveness Test 2022 2023
Uti I ity Cost Test(UCT) 1.37 1.01
Total Resource Cost(TRC) 0.68 0.35
There are two primary factors that impacted the overall decline in cost effectiveness from
2022 to 2023: 1) the continued decline in participation resulting in less than anticipated savings
and higher fixed cost ratios, and 2) lower realization rate on midstream measures due to
misalignment between the baseline assumptions used by the implementor and baseline
assumptions used by the evaluator. Throughout 2024, Avista has worked with both the midstream
implementor and the evaluator to better align baseline assumptions on both residential and
commercial measures. The Company also notes that the UCT cost ratio for the commercial/
industrial gas program sector increased in 2022 and 2023 (1.15 and 1.22, respectively) in
comparison with UCT cost ratios in 2020 and 2021 (1.01 and 0.64, respectively). These
improvements in UCT in the commercial sector reflect increased program participation as
compared to previous years, resulting in lower fixed administrative costs per project.
IV. PROGRAM EVALUATION
In addition to the cost-effectiveness analyses conducted for the Program, Avista also
contracts with independent, third-party consultants to provide program Evaluation, Measurement,
and Verification (EM&V) activities each year. These EM&V activities are used to validate and
report verified energy savings related to the Company's energy efficiency measures and Program
offerings, as well as provide viable recommendations to improve Program performance, enact
changes to Program components, and decide whether and when to phase out measures.
For both the 2022 and 2023 Program years,ADM and Associates,Inc. (ADM)was retained
by Avista to perform both impact and process evaluations on Avista's natural gas Energy
APPLICATION OF AVISTA-7

Efficiency Program, inclusive of the residential, non-residential, and low-income components of
the Program. The primary goal of the impact evaluations is to provide an accurate summary of the
gross natural gas and demand savings attributable to Avista's Portfolio,while the main purpose of
a process evaluation is to identify any improvements needed at the Program level to increase
Program effectiveness, and efficiency while improving the participation experience for customers.
As part of its 2022-23 evaluations, the evaluator concluded that Avista's natural gas
Program achieved 537,827 therms and the Program addressed all impact and process evaluation
needs in accordance with industry and regulatory standards.
V. NEEA EVALUATION
Per Order No. 35129 in Case Nos. AVU-E-20-13 and AVU-G-20-08, Avista's request for
a prudence determination of its 2018-2019 electric and gas energy efficiency programs, the
Commission ordered Avista to take several actions intended to improve its Program and associated
processes. One such action determined by the Commission was that Avista should pursue an
independent EM&V of the NEEA program in Idaho. The intent of this evaluation was to clarify
whether the savings claimed by NEEA, the allocation of those savings to Idaho, and the cost-
effectiveness are accurate and ultimately benefiting Idaho customers.
Avista began its EM&V vendor selection efforts early in 2022 and transitioned to pursing
a joint effort with Idaho Power for the NEEA review. Avista and Idaho Power collaborated to
jointly issue a Request for Proposal (RFP) for the review of the Program and ultimately selected
ADM to perform the EM&V evaluation. ADM completed their review in early 2023 and issued a
final evaluation report in April 2023. In summarizing their conclusions, ADM found that
contributions to NEEA efforts for standards and codes remained cost-effective across Program
years 2017 through 2021. ADM also made nine specific recommendations based on their findings,
APPLICATION OF AVISTA-8

eight of which have been agreed to and addressed by NEEA to-date.' The final recommendation
related to attribution of code savings is being reviewed by NEEA's Cost Effectiveness and
Evaluation Advisory Committee (CEAC) with a proposed resolution at the end of 2024. The full
ADM evaluation report is provided in Exhibit No. 3.
VI. ADDITIONAL PROGRAM ACTIVITIES
Midstream Program
In 2023, Avista launched its Midstream Program, which offers incentives to distributors
and trade allies,rather than directly to customers, ensuring that the mix of HVAC products offered
to customers includes items with high efficiency ratings. By moving commercial and residential
HVAC offerings, as well as commercial food service equipment offerings, from a direct rebate
model to a midstream model,Avista saw savings for these programs increase significantly,as more
customers were offered incentives by participating companies. While savings for these measures
increased due to higher volumes, the Midstream Program had a lower realization rate than
expected, due to differences between the baseline assumed by the implementor in comparison to
the RTF,which was the baseline favored by the Company's third-party evaluator.Avista continues
to work with the evaluator to coordinate and implement appropriate midstream design
modifications in pursuit of a higher realization rate for future Program years.
Research and Development Funding
In the Company's 2018-2019 prudence determination,Case Nos. AVU-E-20-13 and AVU-
G-20-08, the Commission directed Avista to update its Research and Development (R&D)
program to include measurable targets and metrics for programs that prioritize benefits for Idaho
customers (Order No. 35129). During 2022 and 2023, Avista continued to evaluate opportunities
3 See Exhibit No.4 for the NEEA Response to ADM Evaluation.
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for R&D projects that align with the Commission's order,but did not submit any updated proposals
for its R&D program. However, as noted in the Company's 2023 ACR, Avista is part of a large
cross-sector initiative to establish an Inland Northwest Center for Energy and Decarbonization
("INTENT"). Several Idaho entities, including the University of Idaho, North Idaho, the Coeur
d'Alene Tribe and the Nez Perce Tribe, are participating in the initiative, which has already
received a planning grant of approximately $1 million from the National Science Foundation's
Regional Innovation Engines Program to further develop a vision for the Center. Once the vision
has been finalized, Avista and its collaboration partners plan to submit the INTENT concept for a
10-year, $160 million grant from the National Science Foundation's Regional Innovation Engines
program. If the concept obtains funding through this program, INTENT could then potentially be
leveraged in the future to pursue efficiency-related R&D projects. At that time, if Avista
determines that such an endeavor will have measurable metrics and provide direct benefits to Idaho
customers as intended, Avista will submit such a proposal to the Commission for approval.
VI. REQUEST FOR RELIEF
As described in greater detail above,Avista respectfully requests that the Commission issue
an Order designating Avista's 2022 and 2023 total natural gas Energy Efficiency Program
expenditures of $4,149,757 as prudently incurred, with this Application being processed under
Modified Procedure through the use of written comments.
DATED this 1st day of August 2024.
Respectfully submitted,
Avista Utilities
By: Is/David Meyer
David J. Meyer, Vice President and Chief
Counsel for Regulatory and Governmental Affairs
APPLICATION OF AVISTA- 10