20240912Staff Comments.pdf

RECEIVED
Thursday, September 12, 2024 3:21:10 PM
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 INTERMOUNTAIN )
GAS COMPANY'S APPLICATION TO ) CASE NO. INT-G-24-03
REVISE RATE SCHEDULE EEC-RS— )
RESIDENTIAL ENERGY EFFICIENCY )
CHARGE AND EEC-GS COMMERCIAL ) COMMENTS OF THE
ENERGY EFFICIENCY CHARGE ) 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 August 6, 2024, Intermountain Gas Company ("Company"), applied for authority to
revise its rate schedules for the Residential Energy Efficiency Charge ("EEC-RS") and the
Commercial Energy Efficiency Charge ("EEC-GS"). The Company requests that this matter be
processed via Modified Procedure, with an effective date of October 1, 2024, for the revised
rates.
The Company represents that, as of June 30, 2024, it had over-collected $1,919,667.40
through the EEC-RS and $1,029,904 through the EEC-GS.
STAFF COMMENTS 1 SEPTEMBER 12, 2024

The Company proposes decreasing the EEC-RS from $0.01564 per therm to $0.01149
per therm and decreasing the EEC-GS from $0.00320 per therm to $0.00 per therm to reduce the
over-collected balances described above.
The Company represents that the proposed decreases will eliminate the over-collected
balance for the EEC-RS entirely and halve the over-collected balance for the EEC-GS by the end
of 2026.
The EEC-RS allows the Company to fund its Residential Energy Efficiency Program
("EE-RS Program"). Similarly, the EEG-GS allows the Company to fund its Commercial
Energy Efficiency Program(`BE-GS Program").
STAFF ANALYSIS
Staff reviewed the Company's Application, workpapers, responses to Production
Requests, Company forecasts, and the deferral balance for both the EEC-RS and the EEC-GS.
Staff supports the Company's request to decrease the EEC-RS to $0.01149 per therm and the
EEC-GS rate to zero, effectively suspending the EEC-GS collections. An EEC-RS and EEC-GS
schedule decrease is needed to reflect actual energy efficiency program participation and
expenditures.
If the Company's proposals are approved as written, a typical Residential customer
would see their monthly bill decrease by $0.27 per month, and a typical Commercial customer
would see their monthly bill decrease by $1.09 per month as a result of these reductions.
Application at 5 and 6.
PREVIOUS FILINGS
In Order No. 33888, Case No. INT-G-17-03, the Commission authorized the Company to
implement its current EEC-RS to fund its newly created Residential Energy Efficiency Rebate
Program. The EEC-RS started at$0.00367 per therm and was based on a budget of$777,000 of
total annual program expenditures.
STAFF COMMENTS 2 SEPTEMBER 12, 2024

In Order No. 34454, Case No. INT-G-19-05, the Commission authorized an increase of
the Company's EEC-RS to $0.02093. The EEC-RS in that case was based on a budget of
$4,235,685 of total annual program expenditures.
On June 30, 2022, the EEC-RS program was over-collected by $4,893,882. In Order No.
35539, Case No. INT-G-22-05, the Commission authorized a decrease of the EEC-RS to
$0.01564 per therm. This rate was based on a three-year average forecasted annual budget of
$3,944,642 of total annual program expenditures. Also, in Order No. 35539, the Commission
approved the refund of$4.85 million of the over-collected residential balance through the
Company's annual Purchased Gas Adjustment("PGA")to provide a credit to residential
customers. The Company claimed that by implementing the two changes: 1) transferring $4.85
million in over-collected EE-RS Program balance to the PGA for a refund to residential
customers, and 2) reducing the EEC-RS -the growth of the deferral balance would slow
drastically, and begin under-collecting in 2025. However, as of June 30, 2024, the balance of the
EEC-RS is $1.9 million over-collected.
In Order No. 34941, Case No. INT-G-20-04, the Commission authorized the Company's
EEC-GS of$0.00320. The EEC-GS allows the Company to fund its EE-GS Program. The
current EEC-GS was based on a forecasted annual budget of$411,000 in total annual program
expenditures. As of June 30, 2024, the balance of the EEC-GS is over-collected by $1.0 million.
BALANCES AND PROPOSALS
RESIDENTIAL
As mentioned above, the Company is proposing to decrease the EEC-RS from $0.015640
to $0.01149 per therm. This proposed rate adjustment is forecasted refund the over-collected
balance of the EEC-RS by December 31, 2026. Exhibit I at 2. By extending the collection
period over a longer period, the Company is attempting to align the collection of revenue in the
EE-RS Program more closely with the annual Energy Efficiency Program budget, thus
minimizing the future rate impact to customers. The proposed EEC-RS will decrease annual
revenues by approximately $1.23 million. Application at 5.
STAFF COMMENTS 3 SEPTEMBER 12, 2024

Despite the Company's previous decrease to the EEC-RS, the program balance remained
overfunded, and the over-collected balance has continued to increase. As of June 30, 2024, the
Company's EE-RS Program balance was over-collected by$1,919,667, meaning the EEC-RS has
been collecting more revenues than what is being distributed. The Company describes two main
factors that contributed to the over-collected balance. First, actual therm sales were higher than
the forecast used to calculate the current EEC-RS. Secondly, revisions to the Residential Energy
Efficiency Program that were effective in April 2021, resulted in changes to the total dollars paid
in rebates compared to the forecast. Application at 3.
The proposed EEC-RS charge is based on estimated average annual program costs of
approximately $4,129,712 for 2024 through 2026.1 Forecast EEC-RS Program expenses are
comprised of labor,promotional and program delivery, and rebates paid directly to residential
customers. The Company's promotional and program delivery, and labor expenses are
forecasted to average $862,108 per year, including an increase of 2% every year. Staff will
address the reasonableness of labor increases and expenses in the Company's next general rate
case and will continue to review labor expenses in the Company's regular prudency filings.
Shown in Table No. 1 below is the actual EEC-RS expenses since 2021 and the
Company's forecasts from various cases.
Table No. 1: Company Actuals vs. Company Forecasts for Residential Program Expenses
Year Actual Total Company Company Company
Expenses Forecast Forecast Forecast
INT-G-19-05 INT-G-22-05 INT-G-24-03
2020 $3,656,158 $3,944,642
2021 $3,877,857 $3,994,642
2022 $3,271,644 $3,994,642 $2,792,922*
2023 $3,774,039 $4,040,543
2024 $4,430,826 $4,261,753*
2025 $3,436,685
2026 $4,690,699
*These numbers have half a year of actuals included,and the other half is a forecast
' See Attachment A to Application for EEC-RS forecasted revenues and expenditures for 2024-2026.
STAFF COMMENTS 4 SEPTEMBER 12, 2024

The Company forecasts approximately $4.1 million in expenses for the EEC-RS
program, with approximately $3.3 million earmarked for customer rebates. The Company
predicts a significant increase in rebate expenses between 2025 and 2026. Exhibit 1 at 2. This
prediction is a marked increase in rebate expenses compared to historical performance. In
response to Production Request No. 6, the Company states that its forecast is based on historical
2022, and 2023 program year performance relative to year-to-date 2024 program performance.
The Company used current year trends to inform changes in participation by measure. Notably
the Furnace and Tankless Water Heater measures are forecasted to increase participation by 18%
and 40%, respectively. However, as shown in Table 1, the Company has been over forecasting
the expenses for the program since 2019. Staff is concerned that the proposed rate of$0.01149
per therm could still be too high given the Company's historically overestimated forecasted
expenditures and low participation in programs. Additionally, Staff notes that these forecasts
were made before the results of the Company's recent EM&V were received. Staff anticipates
that the results of the EM&V could lead to additional changes to program participation and
expenses. Staff expects the Company to closely monitor the rider balance and adjust the EEC-
RS when necessary to avoid a significantly over or under-collected balances.
COMMERCIAL
As of June 30, 2024, the EE-GS Program rider balance was $1,029,904 over-collected.
The Company states that the over-collected balance is due to the slow uptake in the Commercial
Energy Efficiency program by commercial customers. The Company explains that reducing the
rate of$0.00320 per therm to zero will allow full participation in the program, while reducing the
deferral balance by approximately half by the end of 2026. Application at 5. Based on historical
Commercial expenses, which were $105,211 annually on average since its inception in 2021,
Staff estimates it would take approximately 10 years for the balance of the EE-GS Program rider
to reach zero.
The proposed EEC-GS program expenses are comprised of labor,promotional and
program delivery, and rebates. The Company's promotional and program delivery, and labor
STAFF COMMENTS 5 SEPTEMBER 12, 2024

expenses are forecasted to average $301,583 per year, including an increase of 2% every year.2
The Company is also planning an evaluation, measurement, and verification(`BM&V") study in
2025. Application at 5.
Table No. 2 below, shows the actuals of the Commercial Program versus the Company's
forecasts.
Table No. 2: Company Actuals vs. Forecasts since 2021
Year Actual Total Company Company
Expenses Forecast Forecast
INT-G-20-04 INT-G-24-03
2021 $150,317 $411,000
2022 $92,997 $411,000
2023 $72,318
2024 $189,569
2025 $314,346
2026 $400,833
Average: $105,211
The Company forecasts an average of$184,347 in customer rebates for the EEC-GS
program across the 2024 and 2026 program years. Exhibit 2 at 2. This is a significant increase
relative to the Commercial programs historical spend. The Company states the increased
forecast includes implementing additional commercial measures as well as implementing custom
energy efficiency commercial projects which could have a dramatic impact on future rebate
expenses. Application at 5. More specifically, in Response to Production Request No. 3, the
Company stated that:
"the forecasted expenses for the Commercial Program that are not
currently approved by the Commission include measures for the light commercial
sector and a custom commercial offering. The light commercial sector offering
would address customers that are on the commercial rate but do not use the high-
capacity equipment that is currently offered. The planned addition of commercial
incentives to address light commercial sector would include the following
measures: furnace, combination boiler and smart thermostats."
2 See Attachment B to Application for EEC-GS forecasted revenues and expenditures for 2024-2026.
STAFF COMMENTS 6 SEPTEMBER 12, 2024

Staff is concerned that these measures may not increase rebates expenses by the amount
that the Company is forecasting, especially without an application to the Commission giving
specific details about the programs. In Response to Production Request No. 3, the Company
states that it expects to file proposed additions later this year. As of September 12, 2024, the
Company has not filed an application to the Commission requesting authority to add these new
measures. Staff cautions that without approval of the pending programs, and if the increase in
paid rebates does not materialize, refunds may be necessary. Relative to the Commercial
program's historical spend the Company forecasts a 167% increase across 3 years. Table No. 3
below shows the Company's rebate forecast expense along with past actual rebates expenses.
Table No. 3: Company Forecasts for Commercial Program Rebates
Year Actual Rebates Company Company
Forecast Forecast
INT-G-20-04 INT-G-24-03
2021 $13,836 $241,000
2022 $53,147 $241,000
2023 $26,505
2024 1 1 1 $85,914
2025 $166,040
2026 $301,160
Unfortunately, the EE-GS Program growth has been on a slower trajectory than the
Company previously forecasted. In 2022, only two out of the six commercial rebate offerings
had customer participation with a total of 26 rebates paid out. Intermountain Gas 2022 Annual
Report at 17 and 18. Given the historically low participation and slow adoption of the
Commercial program, Staff is concerned with the long-term viability of the EE-GS Program.
Staff recommends the Company file a case prior to EE-GS Program becoming underfunded or at
the end of 2026 (whichever comes first) demonstrating that the Commercial program can be
viable long term and has sufficient participation to warrant continuing the program.
Cost-effective Demand Side Management ("DSM"), including energy efficiency
programs is a significant resource that helps customers control their utility bills, reduces the need
for higher-cost supply-side resources, and increases system reliability. Staff expects that the
Company's DSM program costs will continue to be prudently incurred and that the programs will
remain cost-effective. It is not Staff s intent to either validate or question the Company's DSM
STAFF COMMENTS 7 SEPTEMBER 12, 2024

prudency or its actual cost-effectiveness calculations for any of its programs at this time. Such
validation and additional review was not requested in this case.
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Each document addresses the following cases: (1) this case (INT-G-24-03) and(2) the PGA
(INT-G-24-04). Staff reviewed the documents and determined that both meet the requirements
of Rule 125 of the Commission's Rules of Procedure. IDAPA 31.01.01.125. The notice was
included with bills mailed to customers beginning August 14, 2024 and ending September 11,
2024.
The Commission set a comment deadline of September 12, 2024. Some customers in the
last billing cycles may not have received or had adequate time to submit comments before the
comment deadline. Customers should have the opportunity to file comments and have those
comments considered by the Commission. Staff recommends that the Commission consider late
filed comments from customers. As of September 10, 2024, no customer comments had been
filed.
STAFF RECOMMENDATION
After examining the proposed decrease to Rate Schedule EEC-RS, Staff recommends that
the Commission approve the Company's Application and tariffs as filed, decreasing the
Residential Energy Efficiency Charge rate to $0.01037 per therm.
Staff also recommends the Commission approve the Company's Application and tariffs as
filed, decreasing the Commercial Energy Efficiency Charge rate to $0.000 per therm.
Finally, Staff recommends that the Commission direct the Company to file a case prior to
the EE-GS Program becoming underfunded or at the end of 2026 (whichever comes first)
demonstrating that the Commercial program can be viable long term and has sufficient
participation to warrant continuing the program.
STAFF COMMENTS 8 SEPTEMBER 12, 2024

Respectfully submitted this 12th day of September 2024.
Adam Triplett
Cal Deputy Attorney General
Technical Staff. Laura Conilogue
I:\Utility\UMISC\COMMENTS\INT-G-24-03 Comments.docx
STAFF COMMENTS 9 SEPTEMBER 12, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 12; DAY OF SEPTEMBER 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. INT-G-24-03, BY &MAILING A COPY THEREOF, TO THE FOLLOWING:
LORI BLATTNER PRESTON N CARTER
DIR—REGULATORY AFFAIRS GIVENS PURSLEY LLP
INTERMOUNTAIN GAS CO 601 W BANNOCK ST
PO BOX 7608 BOISE ID 83702
BOISE ID 83707 E-MAIL: prestoncarter(a�,givenspursley com
E-MAIL: lori.blattnergint ag s.com [e-mail]
PATRICIA JORDAN
CERTIFICATE OF SERVICE