20241219Comments.pdf

RECEIVED
2024 December 19
IDAHO PUBLIC
CHRIS BURDIN UTILITIES COMMISSION
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9810
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 THE APPLICATIONS )
OF AVISTA CORPORATION FOR A ) CASE NO. AVU-E-24-09 AND
DETERMINATION OF 2022-2023 ELECTRIC ) CASE NO. AVU-G-24-03
AND NATURAL GAS ENERGY EFFICIENCY )
EXPENSES AS PRUDENTLY INCURRED )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Chris Burdin, Deputy Attorney General,
submits the following comments.
BACKGROUND
On August 1, 2024, Avista Corporation, doing business as Avista Utilities ("Company"),
filed two applications with the Commission requesting prudence determinations of its 2022-2023
Electric and Natural Gas Energy Efficiency Expenses.
The Company requests an order designating its electric energy efficiency (`BE")
expenditures from January 1, 2022, through December 31, 2023, funded through the Company's
Schedule 91 Energy Efficiency Rider Adjustment in the amount of$15,972,882, as prudently
incurred.
STAFF COMMENTS I DECEMBER 19, 2024

The Company also requests an order designating its natural gas EE 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.
STAFF ANALYSIS
Staff reviewed the Company's Application, attached reports, and discovery responses.
Based on its review, Staff recommends the Commission approve $15,866,304 in electric EE
expenditures and $4,146,586 in natural gas EE expenditures as prudently incurred from January
1, 2022, through December 31, 2023.
The comments below detail Staff s analysis of the Company's EE portfolio,program
financials, cost-effectiveness analyses,program offerings, and on-going projects. The absence of
any discussion on additional points should not be construed as Staff's support or endorsement for
the Company's position without a full evaluation in the future.
EE Portfolio Overview
In support of its filing, the Company submitted the 2022 Annual Conservation Report and
the 2023 Annual Conservation Report along with attached appendices and exhibits. These
reports and attachments provide detailed overviews of the Company's electric and natural gas EE
portfolio performance as well as program and measure level performance details. A breakdown
of each sector's savings and Utility Cost Test' ("UCT") ratio by fuel type is provided in Table
No. 1.
In the 2022 and 2023 program years,the Company saved a total of 30,458 MWh and
537,827 therms through its EE programs. These amounts do not include an additional savings of
11,686 MWh and 499,133 therms from its participation in the Northwest Energy Efficiency
Alliance's ("NEEA")market transformation. The majority of Electric savings are from the
Commercial & Industrial ("C&I") sector while most Natural Gas savings come from residential.
Both sectors show increasing savings,however the residential sector has not completely
recovered from decreased savings in the 2021 program year.
1 The UCT considers cost-effectiveness from the perspective of the utility. The UCT presents as a ratio of the
benefits of avoided supply costs to costs incurred by the program administrator. Any ratio above one is cost-
effective.
STAFF COMMENTS 2 DECEMBER 19, 2024

Table No. 1 Summary of EE Program Metrics
FuelType Electric Gas
Program
Year 2022 2023 2022 2023
Savings Savings Savings Savings
Metric MWh UCT MWh UCT therms UCT therms UCT
Residential 1,133 1.461 1,727 2.69 2669415 1.54 167,465 1.22
Low
Income 13,708 0.24 13,631 0.28 37,961 0.31 62,007 0.05
Non-
Residential 85 1.38 171 1.43 1,954 1.15 2,025 1.19
Portfolio 14,927 1.28 15,530 1 1.45 306,330 1.37 231,497 1.01
Financial Review
Staff performed an audit of the Company's Demand Side Management("DSM")
expenses, which included a sampling and review of over 100 transactions across all the
Company's programs. Based on Staff s audit and review of the Company's DSM rider expenses,
the expenses appear to be prudent; however, Staff discovered that some expenses were
incorrectly recorded.
Staff Audit
During its audit of EE expenses, Staff identified seven expenses during 2022 and 2023
that were incorrectly recorded. Six of those expenses were charged to the Idaho riders when they
should have been charged to Washington. The expenses were from Allied Energy Group,
Spokane Neighborhood Action Partners ("SNAP"), and Helveticka, Inc. There was also a
Helveticka, Inc. expense Staff found that was charged to Washington, but should have been
assigned to Idaho. In total, $109,749 was mis-allocated to Idaho. Two invoices totaling $7,905
were allocated to Washington that should have been assigned to Idaho.
Between the Electric and Natural Gas riders, there were six Helveticka, Inc. invoices that
were incorrectly recorded. Four that were charged to Idaho that should have been charged to
Washington, and two that were charged to Washington that should have been charged to Idaho.
The total of those expenses was $2,282 that should have been allocated to the Idaho rider to
avoid understating the prudence request. The majority of the adjustments came from two
invoices from SNAP. The SNAP invoices totaled $108,631. The Idaho rider balances will be
adjusted to correct the misallocation of charges. There were also three expenses by Applied
STAFF COMMENTS 3 DECEMBER 19, 2024

Energy Group that should have been charged to Washington, totaling $3,399. The SNAP and
Applied Energy Group amounts must be removed from the Idaho rider to avoid overstating the
prudence request.
When asked about the incorrectly recorded expenses the Company stated:
In response to these findings, the energy efficiency team reviewed all invoices paid
to these organizations within 2022-2023 time period to determine if any additional
coding errors had occurred. Three additional invoices from Helveticka, Inc. were
determined to have been coded incorrectly.
Company Response to Staff Production Request No. 13. The Company also stated that
"[c]orrections have since been submitted for all coding errors." Id.
Finally, the Company stated that it plans to take steps to mitigate misallocation errors in
the future. The first step the Company plans to implement is requiring the entire energy
efficiency team to complete mandatory project accounting training in 2025. The second step is a
review of the authorization levels currently set in the Company's accounting system to ensure
appropriate controls are in place for coding and authorization of invoices. Lastly, the Company
requested its internal audit team perform an audit of Energy Efficiency project coding for
invoices, timesheets, and employee expense reimbursements for program year 2024, to be
conducted in 2025.
Staff recognizes the Company's steps to reduce the number of coding mistakes made in
the future. However, based on Staff s audit findings in its samples of program years 2022 and
2023, Staff believes an internal audit must also be conducted for the program years 2022 and
2023. Staff recommends the Company provide a report when the steps outlined above are
completed. The report should include a copy of the employee training curriculum, the internal
audit report and findings for program years 2022-2024, and outline any changes made to the
authorization levels in the accounting system. Staff further recommends the Commission reserve
the right to make further adjustments to the rider account balances in the next DSM prudence
filing based on the findings of the Company's internal audit.
Tariff Rider
Table No. 2 below provides a summary of the Company's Idaho Electric rider revenues,
expenses and ending balance. Table No. 3 provides a summary of the Company's Idaho Natural
Gas rider revenues, expenses and ending balance. The referenced tables have incorporated the
adjustments.
STAFF COMMENTS 4 DECEMBER 19, 2024

Table No. 2: Schedule 91 Electric Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2022—Overfunded $ 3,362,295
Reported Tariff Rider Revenue 2022 $ 10,285,989
Reported Tariff Rider Expenses 2022 $ 6,835,422
Ending Balance, as of December 31, 2022 - Overfunded $ 6,812,862
Reported Tariff Rider Revenue 2023 $ 6,668,244
Reported Tariff Rider Expenses 2023 $ 9,137,460
Spokane Neighborhood Action Partners Adjustment $ 29,740
Spokane Neighborhood Action Partners Adjustment $ 78,891
Helveticka Inc. Adjustment ID to WA $ 724
Helveticka Inc. Adjustment WA to ID $ 7,114
Helveticka Inc. Adjustment ID to WA $ 4,337
Ending Balance, as of December 31, 2023 - Overfunded $ 4,450,224
Table No. 3: Schedule 191 Natural Gas Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2022— Underfunded $ 2,067,047
Reported Tariff Rider Revenue 2022 $ 2,206,820
Reported Tariff Rider Expenses 2022 $ 1,963,608
Ending Balance, as of December 31, 2022 $ 1,823,835
Reported Tariff Rider Revenue 2023 $ 4,062,642
Reported Tariff Rider Expenses 2023 $ 2,186,149
Applied Energy Group Adjustment ID to WA $ 1,613
Applied Energy Group Adjustment ID to WA $ 1,041
Applied Energy Group Adjustment ID to WA $ 746
Helveticka Inc. Adjustment (ID to WA) 482
Helveticka Inc. Adjustment ID to WA $ 80
Helveticka Inc. Adjustment (WA to ID) $ 790
Ending Balance, as of December 31, 2023 - Overfunded $ 55,830
As of December 31, 2021, the Company's electric tariff rider was overfunded by
$3,362,295. On July 31, 2023, in Case No. AVU-E-23-10, the Company filed for approval to
decrease its electric tariff Schedule 91, "Energy Efficiency Rider Adjustment"rates,by 1.2%,
effective October 1, 2023. In that Application, the Company stated that the balance of the
electric tariff rider was overfunded by nearly $7.3 million as of June 30, 2023. The Commission
approved a decrease to the EE Rider Adjustment rates effective October 1, 2023. Order No.
35935 at 3. This change is expected to bring the forecasted tariff balance to $0 by September 30,
2026. Id. at 1. The electric tariff rider was overfunded by $4,450,224 as of December 31, 2023.
Staff will continue to monitor the balance of the Rider.
STAFF COMMENTS 5 DECEMBER 19, 2024

Table No. 3 shows that as of December 31, 2021, the Company's Natural gas tariff rider
was underfunded by$2,067,047. On September 2, 2022, in Case No. AVU-G-22-07, the
Company applied for approval to increase its natural gas tariff Schedule 191, "Energy Efficiency
Rider Adjustment"rates, by 3.0%, effective November 1, 2022. In that Application, the
Company stated that the balance of the natural gas tariff rider was underfunded by approximately
$2.1 million as of July 31, 2022. The Commission approved an increase to the Energy
Efficiency Rider Adjustment rates effective October 1, 2022. Order No. 35575 at 3. This
change is expected to bring the forecasted tariff balance to $0 by September 30, 2025. Id. at 2.
As of December 31, 2023, the natural gas tariff rider balance was overfunded by $55,830. Staff
will continue to monitor the balance of the natural gas rider tariff as well.
Cost-effectiveness Calculations
Between the reports for the 2022 and 2023 program years, the Company made
incremental adjustments to its cost effectiveness calculations. In general, Staff believes that the
updated calculations represent a continuous improvement of the Company's cost-effectiveness
calculations. The Company indicated that the changes were to streamline the workpapers for use
and review. Staff verified the calculations supporting the reported cost-effectiveness. However,
during its review Staff, discovered inconsistencies in the allocation of Non-incentive Utility
Costs ("NIUCs")between the sector and program levels. Through its response to Production
Request No. 18, the Company explains that its accounting framework tracks expenses at the
sector level (i.e. Residential,Non-Residential, Low Income). In conversation with Staff, the
Company clarified that NIUCs are allocated to the program and measure levels based on a
percentage of savings to the total sector or program level savings, respectively. While this
method accurately tracks costs at the sector level, it can be difficult to accurately track NIUCs at
a more granular level where labor hours and other costs can frequently overlap between
programs. Therefore, the Company did not completely calculate the allocation of NIUCs. Staff
believes that it is important to consider the impact of NIUCs on the cost-effectiveness of each
program and measure. Staff recommends that the Company continue to make improvements to
its workpapers.
STAFF COMMENTS 6 DECEMBER 19, 2024

Natural Gas Avoided Costs
In its August 2024 quarterly check-in, the Company described a decline in the avoided
costs of its gas sector. The Company explained that it updates its natural gas forecasts annually,
and the most recent update suggests that the Company may not be able to maintain a cost-
effective natural gas portfolio. Due to the timing of EE program planning, the 2024 program
year was planned using assumptions that suggested the program would be cost-effective. For the
next EE program year, Staff expects the Company to file to suspend its natural gas programs if
the Company believes that it cannot implement cost-effective programs at the time of program
planning. The Company previously suspended its natural gas programs in 2012. At that time,
lower natural gas prices and associated lower natural gas avoided costs caused the Company to
suspend its natural gas EE programs by setting the Schedule 191 to $0.00/therm for every rate
class and re-evaluated the prospects of resuming the programs annually. In 2015, the Company
successfully resumed its natural gas programs when the economics of natural gas EE programs
improved.
Midstream
In April 2023, the Company launched its new Midstream program. The Midstream
program is implemented through a third-parry vendor, Energy Solutions. In contrast to a
traditional direct customer rebate, or downstream incentive, the Midstream program captures
energy savings by offering incentives to distributors for a variety of technologies to encourage
the inflow of energy efficient measures in the region. The program includes incentives for
commercial Heating Ventilation and Air Conditioning ("HVAC"), residential HVAC,water
heating equipment, and commercial food service equipment for both fuel types. These are
measures that the Company previously offered through its traditional direct rebate programs,
many of which have ended with the beginning of the Midstream program. The Company reports
that the partial year program was cost-effective and that it will continue to refine the offering.
As part of its annual evaluation, the Company contracted for a third-part evaluation of the
partial year operations. The evaluation made use of billing analysis when possible; however, due
to the partial year, this was not possible for all measures. The evaluation resulted in several
recommendations for program improvements and a 53%realization rate. This result is due to a
misalignment between the minimum code baseline assumption used by the implementer and the
STAFF COMMENTS 7 DECEMBER 19, 2024

Regional Technical Forum ("RTF") supported market practice baseline used by the evaluator.
The market practice baseline was ultimately used resulting in a large downward adjustment of
program savings and a low realization rate for the program. Despite the reduction in savings, the
evaluation supports that the program remained cost-effective. Staff believes that the evaluation
used the appropriate baseline to evaluate the Midstream programs. While savings are less, they
are more representative of the markets in the Company's service territory. However, for future
evaluations it is important that billing analysis is conducted to verify the impact of the program
on the Company's system.
Low-Income Weatherization
For both 2022 and 2023, the Company reports that the Low-Income Weatherization
program was not cost-effective. While the program has traditionally struggled with cost-
effectiveness, the Company reports the success of 79 electric projects and 75 natural gas projects
in 2022, capturing 85 MWh of electric savings and 1,954 therm savings. In 2023, the program
funded 142 electric projects and 62 natural gas projects capturing 171 MWh and 2,025 therms of
energy savings. Staff will continue to work with the Company to improve the cost-effectiveness
of the program.
ENERGY STAR Homes Evaluation
For its 2022 and 2023 program years, the Company conducted evaluations of its
ENERGY STAR Homes program. For these evaluations, and for the 2019 and 2021 evaluations
of this program, the verification of savings was provided by comparing Avista's Technical
Resource Manual to the RTF Unit Energy Savings ("UES") workbook measure. Similar to
residential new construction programs offered by other utilities, the RTF's UES savings
assumptions makes use of simulation energy models to predict savings for newly constructed
manufactured homes. While the repeatable and consistent nature of manufactured homes allows
for certification for qualifying manufactured homes and increased certainty in measure savings,
it remains important to conduct evaluations that verify the impact of the program on the
Company's system. Staff recommends that the Company consider conducting a billing analysis
of the ENERGY STAR Homes program to verify the actual impact of the program on the
STAFF COMMENTS 8 DECEMBER 19, 2024

Company's system. Staff does not recommend a specific timeline as the evaluation should be
considered relative to the participation and savings associated with the measure.
Updated Evaluation Schedule
In its quarterly check-ins and Energy Efficiency Advisory Group meetings across 2024,
the Company has explored changes to its evaluation and prudence filing schedule. In
conversation with Staff, the Company stated that it has implemented a new evaluation schedule
and is comfortable with its prudence filings every other year. The Company will continue to file
its EE reports annually. Staff believes that the change to the evaluation schedule will reduce
costs for programs that are well established and maintain an appropriate level of scrutiny for
newer programs. Staff will review the impacts of this change in the Company's 2024-2025
prudence filing.
"W7sidential Program Evaluation Period
Water Heat Closed
HVAC Closed
Midstream Annually
Appliance Biannually
Shell Biannually
Sm. Home & Multif. Wx Biannually
Multifamily Excellence Program Annually
Home Energy Audit Biannually
On Bill Repayment Biannually
Behavioral Annually
Low-income Biannually
NCIF Projects Biannually
ENERGY STAR Homes Biannually
Tommercial Program9w Evaluation Period
Prescriptive HVAC Closed
STAFF COMMENTS 9 DECEMBER 19, 2024

Prescriptive Lighting Closed
rescriptive HVAC VFD Closed
Midstream Annually
Prescriptive Food Service Biannually
Prescriptive Shell Biannually
Site Specific Annually
Business Partner Annually
Grocer Biannually
Fleet Heat Annually
Green Motors Biannually
Compressed Air Annually
FRIPWrogram Evaluation Period
W State Clean Bldgs. Act Early Adopter M. valuation Necessary
BEIQ Annually
TOU&PTR Pilot Annually
Energy Use Index Retrofit Annually
Smart Bldgs Center Tool Annually
Active Energy Mgt Annually
NEEA Evaluation
In April 2023, the Company, in cooperation with Idaho Power Company, completed an
impact evaluation(`BM&V") of the cost-effectiveness of the NEEA's market transformation
initiatives as directed by the Commission in Order No. 35270. While the evaluation concluded
that the NEEA was cost-effective, it discovered several concerns and provided recommendations
for improvements. In its response to Production Request No. 9, the Company explains that it has
worked with the NEEA to address each of the recommendations provided by the evaluation.
While this has addressed Staff s initial concerns with funding the NEEA, there are additional
concerns that the evaluation did not address.
STAFF COMMENTS 10 DECEMBER 19, 2024

In the previous cycle,NEEA declared the market for ductless heat pumps as transformed
while potential for this technology in Idaho remained, resulting in the Company and Idaho Power
Company pursuing a market transformation pilot specific to Idaho. Staff remains concerned that
the regional focus of the NEEA's efforts may again deviate from benefiting Idaho customers in
the future. Additionally, Staff is concerned with the third-party influence evaluations conducted
for federal standards changes. These evaluations may continue to use a logic model provided by
the NEEA causing uncertainty in the independence of those evaluations and the associated
savings.
While these concerns remain, Staff believes that the responses to the EM&V
recommendations are a significant improvement to the previous funding cycle. In its response
Production Request No. 12, the Company provided its estimated cost shares for Cycle 7 at
$1,350,048 for natural gas programs and$4,627,723 for electric programs. However, if in the
future the Commission deems that the Company's participation in the NEEA is not in the best
interests for Idaho ratepayers, the Company has provisions in its NEEA contract that allow the
Company to terminate its agreement and cease funding of Cycle 7. Staff will review the cycle 7
NEEA funding and savings results in future prudence filings.
STAFF RECOMMENDATIONS
Based on its review detailed above, Staff recommends that the Commission issue an
order:
• Approving $15,866,304 in electric and $4,146,586 in natural gas expenditures as
prudently occurred from January 1, 2022, through December 31, 2023;
• Directing the Company to provide a report on the results of the Company's training,
authorization level review, and internal audit results of program years 2022-2024 as a
compliance filing to this case; and
• Reserving the right to make further adjustments to the rider account balances in the
next DSM prudence filing based on the findings of the Company's internal audit.
STAFF COMMENTS 11 DECEMBER 19, 2024

Respectfully submitted this 19th day of December 2024.
L , C' A-
Chris Burdin
Deputy Attorney General
Technical Staff: Jason Talford
Laura Conilogue
I:\Utility\UMISC\COMMENTS\AVU-E-24-09 and AVU-G-24-03 Comments.docx
STAFF COMMENTS 12 DECEMBER 19, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19TH DAY OF DECEMBER 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. AVU-G-24-03 AND CASE NO. AVU-E-24-09, BY E-MAILING A COPY THEREOF
TO THE FOLLOWING:
DAVID J MEYER SHAWN J BONFIELD
VP & CHIEF COUNSEL SR MGR REGULATORY POLICY
AVISTA CORPORATION AVISTA CORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail: [e-mail] E-mail: [e-mail]
avistadockets(k avi stacorp.com
KERI J. HAWKER, SECRETARY
CERTIFICATE OF SERVICE