20250529Staff Comments.pdf

RECEIVED
May 29, 2025
JEFFREY LOLL IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11675
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 IDAHO POWER )
COMPANY'S APPLICATION FOR ) CASE NO. IPC-E-25-09
MODIFICATIONS TO THE COMPANY'S )
RESIDENTIAL DEMAND RESPONSE )
PROGRAM, SCHEDULE 81 ) COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Jeffrey Loll, Deputy Attorney General,
submits the following comments.
BACKGROUND
On March 12, 2025, Idaho Power Company ("Company") filed an application
("Application") with the Commission requesting modifications to the Company's Schedule 81,
Residential Air Conditioner Cycling Program, ("Schedule 81")to add a Bring Your Own
Thermostat("BYOT") option to the Air Conditioning Cool Credit("ACCC")program.
Application at 1-2.
The Company represents that the ACCC program is offered to customers who take
service under Schedule 1, Residential Service; Schedule 5, Residential Service Time-of-Use
Plan; and Schedule 6, Residential Service On-Site Generation. Id. at 2. The Company states that
STAFF COMMENTS 1 MAY 29, 2025

under the current version of the ACCC program, customers can participate only by having a
device installed on their AC unit that automatically cycles the unit when the Company calls a
Demand Response ("DR") event. Id.
The Company represents that under the BYOT option, smart thermostats installed in
customers' homes would be used to reduce demand when the Company calls a DR event by
automatically adjusting the temperature settings. Id. at 4. The Company states that customers
must have a qualified smart thermostat to participate in the offering, and a list of Company-
approved qualified smart thermostats will be maintained on the Company's website. Id.
STAFF ANALYSIS
Staff has reviewed the Application, supporting workpapers, and responses to discovery.
Additionally, Staff has verified the proposed tariff revisions. Based on its review, Staff believes
that the proposed option can cost-effectively acquire 20 MegaWatts ("MW") of demand response
capacity by 2029 as identified in the 2023 Integrated Resource Plan ("IRP"); however, the
Company's proposal includes concerning elements. Staff recommends that the Commission
approve the Company's proposed modifications to the ACCC program and associated
modifications to Schedule 81 with certain adjustments.
First, Staff recommends that the Commission deny the Company's proposal to spread
enrollment incentive expenses across three years from when they are paid to customers, for cost-
effectiveness calculations.
Second, Staff recommends that the Commission allow the Company, for cost-
effectiveness calculations, to spread enrollment incentive expenses across three years for only
the first four years of the program.
Third, Staff recommends that the Commission direct the Company to require participants
who unenroll from the program before participating in one full demand response season to return
a pro-rated portion of the enrollment incentive based on months of participation.
Fourth, Staff recommends that the Commission require the Company to file an
application to continue the BYOT option prior to the contract expiration.
STAFF COMMENTS 2 MAY 29, 2025

2023 IRP DR Resource Selection
As part of its 2023 IRP, the Company contracted with a third-party evaluator to forecast
the potential of demand response programs in the Company's service territory. Id. at 3. The
results of this study were used as inputs into the Company's AURORA planning model. Id.
This model selected the addition of 20 MW of DR capacity to the Company's portfolio in 2029.
Id.. Based on this selection and the DR price estimates, the Company issued a Request for
Proposal to potential BYOT vendors. Id.
Staff reviewed the forecasted capacity reduction potential of the proposed BYOT option
and believes that the BYOT option will be able to provide the needed capacity by the indicated
date. In Attachment 2 to its Application, the Company provided cost-effectiveness workpapers
that include participation forecasts. Based on this forecast, the Company anticipates about 30
MW of capacity available by 2029. Application, Attachment 2 at 1. This amount is higher than
the capacity selected by the IRP but is more representative of actual BYOT options.
Current ACCC Option Participation
In recent years, the Company's existing ACCC program has seen a steady decline in
participation. The Company has regularly reported on the participation and capacity levels of the
program in its Energy Efficiency Advisory Group ("EEAG") meetings. As of the Company's
2024 Demand Side Management("DSM")Annual Report, the ACCC program has 17,641
participants with a maximum demand response potential of 24 MW. 2024 DSM Annual Report
at 28.
STAFF COMMENTS 3 MAY 29, 2025

Figure 1: ACCC participation levels from August 2024 EEAG
ACCC Participation Levels
30.OK
28.2K
26.2K
25.OK
23.8K
22.5K
21.OK
c
20.OK 19.1K
18.7K
a 17.6K
15.0 K
10.OK
2017 2018 2019 2020 2021 2022 2023 2024 YTD
In 2021, the Commission lifted a restriction limiting the Company's marketing for its DR
offerings. Order No. 35336 at 10. In 2022, the Company first marketed the ACCC program by
contacting customers that had a switch installed but were not participating and then expanding
outreach to all customers. May 2022 EEAG. The efforts managed to slow but not reverse the
attrition. August 2024 EEAG. Staff believes that while the BYOT forecasted capacity is more
than what was selected by the IRP, the excess capacity for the proposed BYOT option may offset
some of the degradation experienced by the current ACCC program, as well as potential future
reductions in capacity.
Proposed BYOT Option
While Staff is confident in the viability of the proposed option due to its similarities to
the existing option, Staff is also concerned with the overlapping functions of the two options and
differences in important performance metrics.
STAFF COMMENTS 4 MAY 29, 2025

Enrollment Incentive and Upfront Participation Incentive
Under the current ACCC option, Customers receive a$5 incentive for participation in
each month of the DR season or$20 annually. 2024 DSM Annual Report at 28. The proposed
BYOT option provides a $30 enrollment incentive with upfront payment of the first season's $20
participation incentive. Application at 6. After the first year, a BYOT participant would receive
the same $5 participation incentive as the switch option. Id. at 6. In response to Production
Request No. 11, the Company explained that most Original Equipment Manufacturers require an
enrollment incentive. Additionally, the Company explained that it considered a lower$30
enrollment incentive that does not include the first-year participation incentives. Response to
Production Request No. 11. The Company explained that the third-party aggregator
("Aggregator"), which will facilitate the BYOT offering, as well as other sources, believe that
the enrollment incentive is the most critical driver of participation and that a $30 enrollment
incentive is unusually low for these kinds of programs. Id.
Staff believes that this incentive structure presents a significant risk of"dine and dash"
behavior from customers. As proposed, customers would be able to claim the $50 incentive for
enrolling in the program, then immediately unenroll. If participants were to immediately
unenroll, the Company's program could incur significant costs with no benefit achieved from the
reduction in capacity from the participant. The Company's cost-effectiveness workpapers do not
include any assumption to reflect this "immediate unenrollment"behavior, and the current
structure of the program has no protections against this type of behavior from participants.
Rather, the Company merely states that it "does not anticipate customers signing up for the
BYOT option to get the enrollment incentive and then leaving the program,"due to feedback it
has received from peer utilities and third-party vendors. Application at 6-7.
If the Commission wishes to approve the $50 enrollment incentive, Staff recommends
that Commission direct the Company to require participants who unenroll from the program
before participating in one full demand response season to return a pro-rated portion of the
enrollment incentive based on months of participation. Staff proposes an even spread of the $50
enrollment incentive across the four months of a DR season. The Company explains that it
determined that the enrollment incentive is seen as a critical driver of program participation.
Response to Production Request No. 11. Staff s proposal retains the upfront incentive to
encourage participation. However,because the Company is required to run a minimum of three
STAFF COMMENTS 5 MAY 29, 2025

load control events, this ensures that the Company experiences some benefit to account for the
upfront costs. Staff believes that it is reasonable to allow participants to opt-out of individual
events as normal. For participants that enroll mid-season, the requirement should extend until
the participant has been enrolled for one complete season. This is similar to the Company's
proposal to prorate future incentives for participation that begins mid-month. Response to
Production Request No. 7.
Alternatively, if it is not possible to require participants to return portions of the
enrollment incentive or the Commission does not accept Staff s primary recommendation, Staff
recommends that the Commission direct the Company to closely monitor the occurrences of this
type of customer behavior, to report on this metric in its annual reports, and to immediately file a
case with the Commission should the rate of unenrollment before any participation exceed 20%
of new enrollments in a year. Staff estimates that the BYOT option could absorb up to 26% of
new enrollments immediately unenrolling before the option would fail to be cost-effective on a
one-year basis. This does not consider carry-over participation which would bolster the
programs' cost-effectiveness. Staff believes it is appropriate to exclude carry-over participation
in this comparison to maintain the perspective on new enrollment incentive expenses.
Additionally, Staff believes it is appropriate to set the threshold to trigger a filing lower than
26%to allow time for a response before the issue could significantly affect the cost-effectiveness
of the option.
Participant Attrition
Currently the ACCC program is operated by the Company through a switch installed on a
participant's air conditioner. Application at 2. During a DR event, a signal is sent to the switch
to begin cycling the unit off for set intervals expressed as a percentage. Id. There is no visual
indication to the customer when a DR event is underway; however, participants can opt-out of
specific days by communicating with the Company. Application, Attachment 1 at 2. With these
conditions in mind, the Company has observed a historical attrition rate of 5.8%. Application,
Attachment 2 at 3. For the BYOT, there is a clear indication of when a DR event starts and is
underway. Application at 5. Participants will receive a notification via the thermostat phone app
and the thermostat itself will indicate that an event is in progress. Id. Despite the increased
visibility and ability to opt-out, the vendor estimates only a 2% attrition rate. Application,
STAFF COMMENTS 6 MAY 29, 2025

Attachment 2 at 2. This low anticipated attrition rate is incongruous with the increased visibility
and opportunity to opt out of the BYOT option. Id. To complicate matters further, the vendor
estimates an 8%move-out rate. Id. This puts the combined attrition estimate at 10%, well above
the Company's observed attrition rates. Staff is concerned that the estimated attrition rates are
not consistent with observed rates.
Demand Reduction
The current ACCC program's capacity of 24 MW or average 1.36 kW/device is based on
a historical highest percent dispatch. 2024 DSM Annual Report at 28. This load reduction is
typically level during the entire event. Response to Production Request No. 8. The Aggregator
estimates between 1.1 and 1.3 kW of reduction per device. Attachment 2 at 2 The Company's
modeling assumes a 1.0 kW/device reduction. Id. This load reduction tends to drop off as
devices reach their adjusted temperature set points. Response to Production Request No. 8. By
communicating directly to the thermostat, the BYOT option is capable of additional functions
not available to the switch option, such as pre-cooling. Application at 6. Additionally, BYOT
devices are capable of providing more data. Response to Production Request No. 8. This data
may help inform impact evaluations but may also increase complexity. Id. Staff agrees with the
conservative forecasting; however, the additional function and load reduction profile suggest
there may be notable differences from what is offered by the switch option.
Based on the concerns and uncertainties presented above, Staff recommends that the
Commission direct the Company to submit a filing to continue the option before the proposed
contract expires. In response to Production Request No. 8, the Company explains that it intends
to evaluate the BYOT option in a similar manner to its existing option. This includes annual
cost-effectiveness evaluations and a third-party impact evaluation after the 2026 season. Staff
believes that the results of the first third-party impact evaluation will provide crucial information
for making an informed decision on the continuation of the option. In its impact evaluation, the
Company should specifically consider potential risks and efficiencies of a single program option,
areas of overlap between the two options, incremental evaluation costs, movement of participants
between options, and, if applicable, rates and expenses of unenrollment without participation, in
addition to typical impact evaluation metrics for both options to inform this filing.
Enrollment Incentive Expense Spread
STAFF COMMENTS 7 MAY 29, 2025

In its Application the Company proposes, for its cost-effectiveness modeling, to spread
the costs of enrollment incentives across three years from when they are incurred. Application at
8. Because of the large number of forecasted new enrollments in the first few years, the
Company workpapers suggest that the program may not be cost-effective during the first two
years of operation. Id. Spreading the enrollment incentive cost across three years improves cost-
effectiveness during the initial ramp-up. Id. The Company's Application proposes a similar
treatment for the one-time upfront Aggregator fee. Id. Staff believes it is reasonable to spread
some expenses incurred during the initial ramp up of an offering; however, the Company's
proposal is excessive.
The Company's proposal to spread enrollment incentives across three years does not have
an end date and would affect enrollment costs when it may not be needed. After year three, the
Company forecasts that new enrollments will drop and remain constant. Application,
Attachment 2 at 1. With the lower number of new enrollments, the Company's workpapers
support that the option will be cost-effective without any cost spreading. Id. This calculation
appears to assume that participants do not unenroll after receiving the upfront incentive.
Additionally, Staff believes that spreading the costs of enrollment incentives may obscure the
impact of customers claiming the incentive but not participating in the program. Staff
recommends that the Company be allowed to spread the enrollment incentives across three years
for only the first four years of the program.
This one-time cost spread is more consistent with the cost spread of the one-time upfront
Aggregator fee. Staff considered spreading initial enrollment incentive costs across only the first
three years; however, this resulted in year four costs per kW being extremely close to the cost-
effectiveness threshold.
STAFF RECOMMENDATION
Staff recommends that the Commission issue an order approving the Company's
Application with certain modifications. Specifically:
1. Denying the Company's proposal to spread enrollment incentive expenses across
three years from when they are paid to customers;
2. Allowing the Company to spread enrollment incentive expenses across three years for
only the first four years of the program for cost-effectiveness calculations;
STAFF COMMENTS 8 MAY 29, 2025

3. Directing the Company to require participants who unenroll from the program before
participating in one full demand response season to return a pro-rated portion of the
enrollment incentive based on months of participation; and
4. Requiring the Company to file an application to continue the BYOT option prior to
the contract expiration.
Respectfully submitted this 29th day of May 2025.
J frey 11
Deputy Attorney General
Technical Staff. Jason Talford, Laura Conilogue
1:\Utility\UMISC\COMMENTS\IPC-E-25-09 Comments.docx
STAFF COMMENTS 9 MAY 29, 2025

CERTIFICATE OF SERVICE
tA
I HEREBY CERTIFY THAT I HAVE THIS o
� DAY OF MAY 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. IPC-E-25-09, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN CONNIE ASCHENBRENNER
IDAHO POWER COMPANY MARY ALICE TAYLOR
1221 WEST IDAHO STREET (83702) IDAHO POWER COMPANY
PO BOX 70 1221 WEST IDAHO STREET (83702)
BOISE ID 83707 PO BOX 70
E-MAIL: BOISE ID 83707
mgoicoecheaallenaidahopower.com E-MAIL: caschenbrennercidahopower.com
dockets(cuidahopower.com mtayloraidahopower.com
ift x
PATRICIA JORDAN S CRETARY
CERTIFICATE OF SERVICE