20250710Staff Comments .pdf

RECEIVED
July 10, 2025
JEFFREY R. 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 INTERMOUNTAIN )
GAS COMPANY'S APPLICATION FOR ) CASE NO. INT-G-24-05
DETERMINATION OF 2023 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, Jeffrey R. Loll, Deputy Attorney
General, submits the following comments.
BACKGROUND
On December 20, 2024, Intermountain Gas Company("Company") filed an application
("Application") with the Commission for an order designating $3,846,358 of 2023 energy
efficiency(`BE") expenditures as prudently incurred. The Company's Application included its
2023 Energy Efficiency Annual Report("Annual Report"), an Evaluation, Measurement, and
Verification("EM&V") Study with a billing analysis, and proposed revised Rate Schedule EE-
RS.
STAFF COMMENTS I JULY 10, 2025

On February 3, 2025, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 36455. The Commission granted intervention to the City of
Boise City. Order No. 36487.
On May 25, 2025, in response to Production Request No. 29, the Company proposed
modifications to its Application based on updated supporting workpapers. Staff requested to
vacate the June 18, 2025 comment deadline. In response to Production Request No. 29, the
Company proposed new changes to its programs based on updated information to supporting
workpapers that conflicts with the changes proposed in the original Application.
On June 6, 2025, the Company submitted a Supplement to its Application and Exhibits
("Supplemental Application"). In the Supplemental Application the Company proposed several
new program changes based on updated inputs to supporting workpapers. The Company
requested to 1) retire the Whole Home Tier II incentive, 2)reduce the furnace incentive, 3)
reduce the tankless water heater incentive, 4) retire the smart thermostat incentive and revised
proposed tariffs provided in Exhibit No. 4.
STAFF ANALYSIS
The Company's Application is the sixth Demand-Side Management("DSM") Energy
Efficiency prudence filing made by the Company since the EE Program's inception on October
1, 2017. Staff examined the Company's Application, Supplemental Application, the Annual
Report, Annual Report Supplements, workpapers, and additional information provided by the
Company through discovery. Based on its investigation, Staffs recommendations are listed
below.
1. Staff recommends the Commission approve the Company's EE Program expenses of
$3,846,358 as prudently incurred.
2. Staff recommends that the Commission find that the Company complied with certain
portions of Order No. 36245.
3. Staff recommends that the Commission find that the Company has not complied with
Order No. 36245's direction to separate savings for new construction, retrofit, and
replacement for the 95% annual fuel utilization efficiency("AFUE") Furnace rebates
and direct the Company to immediately track furnace rebates separately.
STAFF COMMENTS 2 JULY 10, 2025

4. Staff recommends that the Commission not approve the use of the deemed savings
methodology proposed by the Company in its Application.
5. Staff recommends that the Commission accept the proposed retirement of the Storage
Water Heater, Tankless Water Heater Tier I, Whole Home Tier II and Smart
Thermostat rebates.
6. Staff recommends that the Commission deny the Company's proposed increases to
incentives for the Whole Home Tier 1, Combination Boiler, Boiler-95%AFUE, and
Tankless Water Heater Tier I rebates.
7. Staff recommends that the Commission approve Staff s proposed incentive amount
for the Furnace rebate.
8. Staff recommends that the Commission set an expectation that continued unjustified
deviations between program planning assumptions and the results of evaluations may
result in disallowances.
9. Staff recommends that the Commission direct the Company to begin quarterly
meetings with Staff to monitor the performance of its DSM program.
The comments below address the Company's program financials, impact evaluation
results, cost-effectiveness, and other topics. 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.
Financial Review
Tariff Rider
As of December 31, 2023, the Energy Efficiency Charge Rider("EEC") for the
Company's entire EE program was over-funded by$2,244,488. The Energy Efficiency Charges
on Residential Customers ("EEC-RS")was over-funded by$1,378,687, and the Energy
Efficiency General Service Customers ("EEC-GS") was $865,801 over-funded. Application at
13. Staff will continue to monitor the rider balance trends in the Company's quarterly updates
and recommend adjustments as needed. Table Nos. 1 and 2 below show the tariff rider balances
as of December 31, 2023.
By June 2024, the EEC-RS was over-funded by $1,919,667, and the EEC-GS was over-
funded by $1,029,904. 2023 Annual Report at 5. The Company filed a request to reduce the
STAFF COMMENTS 3 JULY 10, 2025

rates on August 6, 2024. Case No. INT-G-24-03. The Company stated two primary reasons for
the overfunded balance. The Company first represented that therm sales were higher than the
Company had forecasted. Case No. INT-G-24-03, Company's Application at 3. Secondly, the
Company stated that the 2021 revisions to the Residential Program resulted in change to the total
dollars paid out for rebates. Id. The Company proposed to reduce 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. Id. at 7. The Commission approved this decrease in Order No. 36337, effective
October 1, 2024. The Commission also directed the Company to file a case before the EEC-GS
becomes underfunded, to evaluate the long-term viability of the program. Order No. 36337 at 4.
Table No. 1: Residential Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2022 (Over- $ 450,521
funded
Tariff Rider Revenue $ 4,702,205
Tariff Rider Expenses $ (3,774,039)
Staff s Recommended Disallowance $ 300
Net expenses $ (3,773,739)
Ending Balance, as of December 31, 2021 (Over- $ 1,378,987
funded
Table No. 2: Commercial Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2022 (Over- $ 463,938
funded
Tariff Rider Revenue $ 474,181
Tariff Rider Expenses $ (72,318)
Ending Balance, as of December 31, 2021 (Over- $ 865,801
funded
Staff audited the Company's EE Program, which included a review of the Company's EE
incentives, marketing campaign, program administration, and labor expenses. Through review,
Staff discovered one rebate that was paid twice, which implies the Company's internal control
processes require improvement. The Tariff Rider balance, labor expenses, and direct assignment
of costs are also described in greater detail below.
While auditing the expenditures for the Residential program, Staff discovered that one
rebate had been paid twice. The rebate was for Tankless Water Heater Tier II, document
numbers 310104 and 311455. Staff discovered two water heater rebates to the same person and
STAFF COMMENTS 4 JULY 10, 2025

the same address paid out at different times, once on March 25, 2023, and another on April 15,
2023. In its response to Staff Production Request No. 22, the Company stated, "two qualifying
units were installed at the address." However, when Staff checked the corresponding documents,
two identical invoices were filed. Moreover, only one picture of a water heater was attached, not
two, as is required when a customer is getting two rebates. For these reasons, Staff believes that
one of the duplicate $300 rebates is not prudently incurred and should be disallowed.
Revenues and Expenditures
The EE Program expenditures are funded through collections from customers via EEC-
RS and EEC-GS. During the 2023 program year, an EEC-RS of$0.01564 per therm funded the
Residential Program. Application at 9. Total Residential Program revenues for calendar year
2023 were $4,702,205. Id. The Commercial Program was funded by an EEC-GS of$0.00320,
generating $474,181 in revenues. Id.
In 2023, customer participation in the Residential Program increased 6.9% over the
previous year with 8,496 rebates paid to customers, up from 7,745 in 2022. Id. at 18. The most
redeemed rebate was the Furnace rebate, with 3,280 rebates, or approximately 39% of the total
residential rebate count. Id., Exhibit No. 1 at 8. Due to the increase in participation, the
Company paid$2,767,789 in rebates to customers in 2023, up from $2,555,389 in 2022. 2023
Annual Report at 1; 2023 Annual Report at 5; 2022 Annual Report at 6.
Participation in the Commercial Program in 2023 was down from the previous year. The
Commercial Program had $474,181 in revenue but only $72,318 in expenditures. 2023 Annual
Report at 22. The Company explains that the low participation is from low awareness of the
program and difficulties contacting the decision makers of the commercial properties. Annual
Report at 1. Paid commercial rebates dropped significantly from $53,147 in 2022 to $26,505 in
2023. 2022 Annual Report at 17; 2023Annual Report at 22. In 2024, a continuing trend of lower
than anticipated participation in the commercial sector and the increasing rider balance led the
Company to file an application proposing in part to reduce the recovery of the EEC-GS to zero.
Revenue collection for DSM tends to follow a cyclical pattern. Staff expects the revenue
balance to increase more during the winter months as consumption increases and then will
decrease throughout the summer months as gas consumption decreases. Staff will continue to
monitor the Tariff Rider's revenue impact on the Tariff Rider balance.
STAFF COMMENTS 5 JULY 10, 2025

Labor Expenses
Staff estimates that in 2023 the percentage of labor expense to total program expenses
decreased by almost 2%. The Company's EE Program total labor expense for 2023 was 17.6%
of the total program expenses, which is comparable to 2020 and 2021, and lower than 2022.
2023 Annual Report; 2022 Annual Report; 2021 Annual Report; 2020 Annual Report. One
reason the labor percentage decreased was because the amount of total expenditures for the EE
Program increased. In 2022, expenditures for the entire EE Program were approximately $3.4
million, but in 2023 they were approximately $3.8 million. 2022 Annual Report; 2023 Annual
Report
During the 2023 EE program year, the Company implemented a new internal software
application for rebate processing, called the Enterprise Rebate App ("ERA"), which is expected
to improve rebate validation and streamline rebate payment processing with internal systems.
Application at 11
In 2024, the Company replaced their previous online rebate application system, which
was handled by a third party, with an internal product that allows customers to access rebate
applications through their account. Id. at 11. The new application system is expected to reduce
the work for the rebate processing team by reducing data entry, and therefore further reducing
overall labor costs for the EE Program. Id. As the internal application system went live after the
timeframe of this Application, Staff has not evaluated the rebate application's impact on
reducing labor costs. Staff will continue to monitor the EE labor expense in the 2024 DSM
prudence filing.
Staff believes that both rebate applications may reduce inefficiencies within the EE
program and may decrease labor expenses. Staff continues to recommend the Company reduce
labor costs wherever possible which will increase the cost-effectiveness of the Company's EE
Programs.
Direct Assignment of Costs
The Company has made improvements in directly assigning costs. Costs are directly
assigned between the Residential and Commercial Programs whenever possible. Id. at 10.
When costs are unable to be directly assigned, the Company allocates those costs 95%to the
Residential Program and 5%to the Commercial Program. Id. at 11. The amount of allocated
STAFF COMMENTS 6 JULY 10, 2025

expenditures continues to decline, from $682,020 in 2021 to $ $45,518 in 2023. 2021 Annual
Report at 4; Application at 11.
Staff will continue to review the Company's direct assignment and cost allocations in
future prudence filings. The Company should continue to assign costs directly to the programs
whenever possible. Direct assignment of labor expense alleviates concerns of the Company
over-allocating labor expenses to the Residential Program. Staff recommends that when the
Company does not directly assign costs, an explanation should be given as to why the costs were
not assignable.
Internal Controls
In its comments filed in Case No. INT-G-23-06, Staff recommended that the Company
implement regular internal audits of the EE Program. Internal audits are important to ensure that
EE programs are running efficiently and as intended. In Order No. 36245, the Commission
ordered the Company to "develop and follow a schedule for regular internal audits." Order No.
36245 at 12. The Company shared the new requirement with its parent company, MDU
Resources. In its response to Production Request No. 20, the Company stated, "On February 12,
2025, the MDUR Audit Committee approved the 2025 Internal Auditing Plan which includes an
audit of the Intermountain Energy Efficiency Program." The Company did not supply a date for
when the internal audits would take place. Staff recommends that the Company provide
notification regarding the expected timeline for the audit and the corresponding results when
available.
As mentioned above, in 2023, the Company implemented new internal rebate processing
software, ERA, that increases internal controls. The Annual Report listed many ways in which
the ERA will catch redundancies and inefficiencies for the EE Program. For example, the ERA
ensures that rebates cannot be assigned to the wrong workorder, and rebates cannot be paid for
the incorrect amount. Annual Report at 13. Staff is hopeful that the ERA will help with the
duplication of rebate payments and help to cut down on labor expenses.
While Staff agrees that the Company is making strides to tighten internal controls, Staff
remains concerned that the Company does not have specific controls in place for verifying
installation of the newly purchased items as previously mentioned in Staff comments in Case No.
INT-G-23-06.
STAFF COMMENTS 7 JULY 10, 2025

Previous Order
In Order No. 36245, the Commission ordered the Company to 1) file a completed EM&V
in its next prudence filing; 2) include billing analysis in the EM&V; 3) address smart thermostat
Estimated Useful Life; 4) develop an internal audit schedule; and 5) separate savings for new
construction, retrofit, and replacement for the 95% AFUE furnace rebates. In this case, the
Company complied with four of the items in Order No. 36245.
In compliance with Order No. 36245, the Company contracted with a third-party
evaluator("Evaluator")to conduct an impact evaluation of the Whole Home Tier I, Whole Home
Tier II, Furnace, and Smart Thermostat measures. Application at 14. However, the evaluation
did not separate savings for the new construction, retrofit, and replacement for the 95%AFUE
furnace rebates. Within the EM&V, the Evaluator stated that about 68% of furnace rebates were
excluded from the billing analysis evaluation due to insufficient pre-period billing data for new
construction home or new move in customers. EM&V at 37. In 2023, approximately half of all
furnace rebates were for new construction. Company's response to Production Request No. 1 —
Confidential Attachment. Staff recommends that the Company immediately begin tracking this
information to account for accurate information that can be used for future evaluations.
2024 Impact Evaluation
In its Application, the Company included the completed PY2021-2023 Impact Evaluation
of Intermountain Gas Company Residential Rebate Program("2024 Evaluation") as a
supplement to Attachment 1. The Evaluation included billing analysis for the Whole Home,
Furnace, and Smart Thermostat rebates. Id. at 14. The Evaluation conducted a secondary
analysis using the deemed savings methodology. Id. at 14. This methodology compared rebates
to Regional Technical Forum("RTF")Unit Energy Savings and Illinois Technical Resource
Manual ("TRM"), to the modeling analysis in the case of the Whole Home rebate. 2024
Evaluation at 6. A comparison of the results from each methodology is provided in Table No. 3
below. Additionally, the Company commissioned the Evaluator to develop a TRM for the
Company's program. Application at 20. The TRM is based on inputs from the RTF, Illinois
TRM, Idaho Power TRM, and previous impact evaluation reports. Id. at 20-21. The TRM is
expected to provide a framework and reference point for the Company's offerings. Id.
STAFF COMMENTS 8 JULY 10, 2025

Table No. 3: Summary of Therm Savings Values
Measure Planned Savings 2024 Evaluation 2024 Evaluation
Value Deemed Savings Billing Analysis
Whole Home Tier I 161 183 N/A
Whole Home Tier II 128 110 37.66
Furnace 87 46 31.65
Smart Thermostat 44 26 27.96
Combi Boiler 155 168
Boiler 159 107
Tankless Water 65 51
Heater
For the Whole Home, Furnace, and Smart Thermostat rebates the Evaluator recommends
against the use of billing analysis. For each rebate, the Evaluator recommended that the
Company align its evaluation methods with the utilities present in Idaho with comparable
measures and to evaluate the Company's programs using the RTF or Illinois TRM. Id. at 14.
The Evaluator states in its recommendations that this allows programs to be evaluated with the
same "measuring stick." Id.
Evaluation Methodology Proposal
The Company agrees with the Evaluators' recommendation and proposes that the deemed
savings approach should be adopted. Id. at 18. In Commission Order No. 35663 on page 11, the
Commission stated that"The Company may submit argument and evidence to justify other
empirical analysis as part of its annual DSM prudence filing." To support its proposal, the
Company provided justification consistent with the Commission Order from factual and legal
perspectives. Id. at 17. Staff is not convinced by the Company's arguments that the deemed
savings approach should be used to evaluate programs rather than through a billing analysis.
Staff recommends that the Commission not approve the use of the deemed savings methodology
developed and proposed by the Evaluator and the Company in this Application.
STAFF COMMENTS 9 JULY 10, 2025

Factual
The Company's first argument is based on a factual matter. On page 17 of its
Application, the Company states the following:
As a factual matter, a billing analysis uses bills from Intermountain's
existing customers. This is a small sample size, isolated to a specific
geographical area. It also results in biases to the data, as noted by the
Evaluator and set forth above. By contrast, the deemed savings
methodology used by the Evaluator uses information derived from large
customer sets. And the data is corrected to reverse or rectify biases that can
arise in billing data. This creates information that is more accurate.
However, the Company's argument is flawed in several ways. The Evaluation's billing
analysis sampled significant portions of the Company's rebate populations for the considered
time frame. For the Whole Home rebate, the billing analysis sampled 2,535 out of 3,171 rebates,
or 80% of all rebates between 2021 and 2023. 2024 Evaluation at 26. For the Furnace Rebate the
billing analysis sampled 1,532 out of 7,846 rebates or 20% of all rebates between 2021 and 2023.
Id. at 37. For the Smart Thermostat rebate the billing analysis sampled 844 out of 6,190 rebates,
or 14% of all rebates between 2021 and 2023. Id. at 42. For all of these rebates, the Evaluator
concluded that the billing analysis produced statistically significant results. 2024 Evaluation at
27, 39, and 45. The Company claims that the billing analysis is isolated to a small geographical
area. Application at 17. However, by considering all participants in the rebate, the billing
analysis is in fact considering the entirety of the Company's service territory. Finally, the
Company claims that using billing data creates a bias and that this bias is corrected using large
customer sets in the deemed savings methodology. This interpretation is incorrect. The purpose
of the billing analysis it to determine the actual performance of the Company's programs.
Billing data of the Company's existing participants and customers is an appropriate data set for
this type of analysis. In contrast,using deemed savings drawn from data outside of the
Company's service territory will inherently contain selection bias by using a data set that does
not represent the Company's programs. Simply using a larger data set does not increase
accuracy. Conversely, significant amounts of unnecessary data can obfuscate the relevant data
and prevent conclusions specific to the Company's program. In this context, the "limitations" of
billing analysis presented by the Company are caused by accurately representing the Company's
program.
STAFF COMMENTS 10 JULY 10, 2025

Legal
The Company's other argument is from a legal perspective. On page 17 of its
Application, the Company states the following:
As a legal matter, the Commission must approve nondiscriminatory rates
and policies. The energy-efficiency measures of other Idaho utilities are
evaluated using a deemed-savings approach, analogous to that proposed by
the Evaluator in this case. Other utilities in Idaho evaluate their offerings
using a deemed-savings approach.
The Company argues that the difference in evaluation methodologies creates issues of
discrimination between utilities and discrimination between customers.
For its argument of discrimination between utilities, Staff believes that the Company is
referring to the regulatory role of the Commission enacted by Idaho Code, Title 61, Chapter 5,
"Powers and Duties of Public Utilities Commission." This statute grants the Commission broad
powers to regulate public utilities in the state. Public utilities encompass a wide range of
services with unique characteristics. The Commission's mandate to ensure "just and reasonable"
rates and services may require it to treat each utility differently based on their type,
circumstances, and the specific issues at hand. Idaho Code §§ 503 and 507, specifically provide
wide discretion for the Commission to determine rulemaking procedures.
For its argument of discrimination between customers, Staff believes that the Company is
referring to Idaho Code, Title 61, Chapter 3, "Duties of Public Utilities." This statute prevents
utilities from discriminating between customers and provides the Commission with the power to
determine questions of fact with regard to claimed discrimination.
In its Application, the Company recognizes that the Commission is not required to treat
all utilities the same. Application at 18. However, it stated that differences in methodology
should be recognized and justified. Id. Staff believes that justification for the evaluation of the
Company's Whole Home, Furnace, and Smart Thermostat rebates with billing analysis is well
established by Commission Orders beginning in 2019. No other utility has an extensive and
specific record of relevant Commission Orders. With regard to other utilities, the Commission
has recently provided orders for similar programs operated by other utilities. These orders are
described in greater detail below but generally can be described as specific to the utility being
considered.
STAFF COMMENTS I I JULY 10, 2025

Future Evaluations
The Company's proposal is problematic for future evaluations. The Company's proposal
broadly requests Commission approval of an evaluation methodology for each rebate. Blanket
approval of the proposed methodology may make it difficult to justify any other method in the
future and does not allow for other evaluations to validate the deemed savings values. The
proposed evaluation method relies entirely on deemed savings values from other sources.
Deemed savings are essentially an agreement between the involved parties to accept a stipulated
value. National Action Plan for Energy Efficiency—Model Energy Efficiency Program Impact
Evaluation Guide at 4-7. "Common sources of deemed savings values are previous evaluations
and studies that involved actual measurements and analyses." Id. at 4-7. One of the primary
considerations to determine if a deemed savings approach is reasonable is if the risk of over- or
under-estimating the savings is low. Id. at 4-12. Large variation between billing analysis and
other savings estimates presented in the Company's past evaluations suggest that the risk for
over-estimating savings is high. Consistent with Evaluator,peer utility, and Company practices
described later in this document, the type of analysis used to evaluate a program should be
chosen relative to the rebate's savings, evaluation expense, past evaluations, and supporting
record.
Billing Analysis
Staff continues to recommend billing analysis as the most accurate evaluation method.
The foundation of billing analysis as the most accurate method is the measured energy
consumption from utility meter billing data("billing data") from the Company's customers.
Billing data is easily available and reflects a customer's actual usage on the Company's system.
The benefit value of the Company's DSM programs is determined by reductions in customer
usage that is directly represented in customer billing data. This can include effects of multiple
variables such as occupancy changes, other upgrades, weather, load snap-back, free ridership,
and other realities that the Company must consider and account for when planning and operating
a robust DSM program. Analysis supported with billing data("billing analysis")uses thorough,
statistically sound, and common quasi-experimental methods of comparing participant homes to
a matched group of similar non-participants. One method of billing analysis ("Matched Control
Group")matches rebate participants ("Treatment") to a random sample of non-participant
STAFF COMMENTS 12 JULY 10, 2025

customers ("Control")to account for these variables and to produce meaningful results.
Evaluators are provided billing data for all treatment and control customers that is typically
filtered to clean the data set for analysis. This can include removing customers with multiple
accounts, bill outliers, and participants without sufficient data. Matched Control Group analyses
then use propensity score matching to match participants with a statistically similar group of
Control households. This can be based on usage patterns, zip code, square footage and other
metrics.
This evaluation method is consistent with the Evaluator's general methodology and peer
utilities in Idaho. In the 2024 Evaluation, the Evaluator states the"The M&V methodologies are
program-specific and determined by previous Intermountain Gas Company evaluation
methodologies as well as the relative contribution of a given program to the overall energy
efficiency impacts." 2024 Evaluation at 7. This is, verbatim, the same principle used by Avista
Corporation, doing business as Avista Utilities ("Avista"), to describe its evaluation practices in
its most recent annual conservation report. 2023 Idaho Annual Conservation Report at 8. In
practice, this principle can be observed in Idaho Power's DSM program evaluations. This is best
demonstrated by Idaho Power's PY 2020 Heating & Cooling Efficiency Program, which
includes billing analysis for electric equivalent measures and includes the same M&V
methodologies statement. Impact& Process Evaluation of Idaho Power Company PY2020
Heating and Cooling Efficiency Program at 17. However, these comparisons are imperfect since
they represent different companies' DSM programs, often with different fuel types, in different
regions, with different levels of program maturity.
In the context of the Company's program with multiple and contentious evaluation
methodologies available historically, the Evaluators' general methodology considering"previous
evaluation methodologies"does not provide clarity; therefore, the relative contribution of a
program becomes the primary consideration. In this case, the Residential New Construction and
95%AFUE Gas Furnace measures make up the overwhelming majority of the Company's
savings. In 2023, the Company claims that the two rebates saved 311,718, or about 74%, of the
total 422,683 therms saved by the entire residential sector. Annual Report Exhibit I at 5.
Similarly, these measures combined cost$2,771,500, or 74% of the $3,774,039 of total 2023
residential sector expenditure. Id. at 5. Because the Company's residential sector is almost
STAFF COMMENTS 13 JULY 10, 2025

entirely composed of these two programs, an increased level of scrutiny is justified to validate
the claimed savings.
Further, billing analysis evaluations are proscribed by practices that the Company is
proposing to implement in this case. In response to Production Request No. 9, the Company
states that it understands that deemed savings values used in its TRM should incorporate billing
analysis results when feasible. Additionally, the Company provided the process for determining
savings values outlined by the Evaluator for use in the TRM:
"If a billing analysis completed during impact evaluation displays
statistically significant results, the billing analysis results would therefore
represent the actual observable energy savings demonstrated by the IGC
customers who installed the measure, and therefore is more accurate than
the assumed deemed savings and its assumptions. However, the TRM
deemed savings units and its assumptions stand as a unit energy savings
source in the case billing analysis is infeasible. If a billing analysis is
infeasible, likely due to low participation, or lack of statistical significance,
the engineering algorithms will be used to estimate savings. This provides
the company with a secondary method for estimating verified savings
should billing analysis be infeasible for a given measure."
Staff agrees with the principle presented here. However, the Company is not applying
this principle in this filing. Staff reviewed the updated TRM workpapers provided as Exhibit
No. 5 and found no evidence that the TRM makes use of historical billing analysis results to
inform savings estimates. Without correction to reflect the results of billing analysis, planning
from the current TRM will result in overstated savings in future program years.
In contrast to the Evaluator's own general methodology, recognition that billing analysis
is more accurate than deemed savings, and statistically significant billing analysis results, the
Evaluator recommended that the Furnace and Smart Thermostat measures be evaluated using
deemed savings due to the presence of potential bias. 2024 Evaluation at 36. In its Application,
the Company agrees with the Evaluator's recommendation to not use billing analysis results for
the Furnace and Smart Thermostat rebates. Application at 17. The Evaluator lists two potential
sources of bias.
First, the Evaluator explains that the billing analysis requires an assumption that
inconsistent occupancy occurs randomly, which cannot be proven true, therefore biases the
results towards homes that are consistently occupied, and therefore inflating energy consumption
behaviors of consistently occupied homes. 2024 Evaluation at 36. Staff believes this is not a
STAFF COMMENTS 14 JULY 10, 2025

sufficient reason to disregard the results of the billing analysis. While occupancy patterns are not
visible in this evaluation, the impact of occupancy patterns are reflected in the billing data and
therefore appropriately considered in the analysis. Additionally, obtaining occupancy data for
approximately four thousand residential homes would represent a significant expense that would
not be reasonable for this study.
The Evaluator explains that many homes have insufficient pre-period billing data, due to
new construction, or new move-in customers, and therefore are not included in the billing
analysis, which led to the exclusion of 68% of Furnace customers and 58% of Smart Thermostat
customers. Id. at 43. Again, Staff believes that this is not sufficient reason to disregard the
results of the billing analysis. As described in Staffs response to the Company's factual
argument for a deemed savings methodology, the billing analysis for the Furnace and Smart
Thermostat measures considered significant portions of the total population of participating
customers, and the Evaluator concluded that the billing analysis produced statistically significant
results for both measures. Id.
Billing Analysis for Whole Home
In its Application, the Company describes and agrees with the Evaluator's
recommendation to not evaluate the Whole Home Rebate using a billing analysis. Id. at 15. The
Company summarizes the Evaluators concerns with (1) other Idaho utilities, (2) RTF New
Homes Protocol, (3) lack of randomized control trial, and(4) further increased bias. In its
Supplemental Application, the Company proposes to retire the Whole Home Tier 1I rebate but
continue the Whole home Tier I rebate. Supplemental Application at 6. While the billing
analysis conducted in the 2024 Evaluation uses data from Whole Home II participants, the
results from the Whole Home II billing analysis contain important conclusions that are relevant
to the continued Whole Home Tier I rebate. In 2021, the Company split its existing Whole
Home program into the Whole Home Tier I and Tier I1 rebates. However, the two rebates use
the same savings mechanisms and claim savings in the same way. See Staff Comments in Case
No. INT-G-23-07. Staff believes that billing analysis is a valid and accurate method to evaluate
the whole home program, that the results of the 2024 Evaluation billing analysis have important
implications for the continued Whole Home Tier I rebate, and that the continued Whole Home
Tier I rebate is likely continuing to overstate savings.
STAFF COMMENTS 15 JULY 10, 2025

Similar to the evaluation of the Furnace and Smart Thermostat rebates, the Evaluation's
billing analysis uses a thorough, statistically sound, and common method of comparing
participant homes to a matched group of similar non-participant homes built during the same
time frame. For the Whole Home rebate, the Company provided billing data for 3,174 Whole
Home rebate participants and a random sample of 10,000 control homes constructed between PY
2021 and 2023. 2024 Evaluation at 26. The Evaluator filtered out certain criteria to clean the
data set for analysis. Id. The Evaluators then used propensity score matching to create a
statistically similar group of control households based on zip code and square footage. These
steps ensure that the analysis compares similarly sized homes built in the same timeframe, in the
same zip code, and as nearby as possible. Unlike the analysis for the Furnace and Smart
Thermostat measures,billing analysis for the Whole Home rebate did not include pre-period
billing data in its matching, because by definition, that data does not exist. The fit of the
matching is verified by regression results that conclude that treatment homes show a statistically
significant difference in heating load usage, but no differences in non-weather-related usage. Id.
at 27. For these reasons, Staff believes that billing analysis continues to be an accurate
evaluation of the savings participant customers experience compared to non-participant
customers.
Ultimately, the Evaluation suggests that newer homes are being built at standards greater
than the current residential building code and that there is a baseline difference between
modeling results and billing analysis results. Id. at 28. Currently, both Whole Home rebates
estimate savings by comparing the as-built efficient home to a User Defined Reference Home
("UDHR") Baseline. The UDHR is defined as an exact replica of the participant home, using
energy code efficiency values. Id. at 17. Idaho Energy Conservation Code § 403.7 indicates
new heating equipment shall be equal to or greater than the federal minimum standard of 80%
AFUE. In contrast, RTF data suggests that the market practice baseline for furnace efficiency in
newly constructed homes in Idaho is above the minimum federal standard. Nov 2024 RTF
Residential Gas Furnaces Presentation at 13. The Evaluator stated that even when built to code,
new homes are often more efficient and can incorporate more recent technology. Id. at 28. The
market practice baseline reflects what a home might have been built to in the absence of the
program and is therefore a more accurate representation of savings than a code baseline. This is
supported by the RTF New Homes Protocol ("Protocol")used by the Evaluator as a basis for its
STAFF COMMENTS 16 JULY 10, 2025

analysis. The Protocol states that program operators should use a baseline characterized by
current market average efficiency or the minimum requirements of applicable codes or standards,
whichever is more efficient. RTF New Homes Protocol v3.1 at 10. The difference between
code-built baseline and market practice baseline is savings that is not actually realized by the
Company's system and is currently being claimed through the modeling practices of both tiers.
By estimating and evaluating savings relative to federal minimum efficiency standards instead of
market average baseline, the Company has been and is proposing to continue to overstate the
savings of its Whole Home rebates.
Because of the limited participation in the Whole Home Tier I rebate, there are no
immediately applicable billing analysis results to suggest what the savings of the rebate might
actually be. However, due to the similar energy savings mechanisms between the Tier I and Tier
II rebates, a comparison can be made to indicate the magnitude of overstated savings. Staff
estimated Whole Home Tier I savings by applying the Whole Home Tier 1I realization rate. The
Tier 1I rebate claimed 110 therms/home and billing analysis reported 37.66 therms/home. This
results in a realization rate of 34%. Applying this ratio to the Tier I rebate claimed savings
suggest that the rebate would capture only 62.65 therms/home. Savings for the Tier I rebate
would likely be higher due to the higher air sealing requirement, higher furnace efficiency
requirement, and additional insulation requirement; however, it is unlikely these requirements
are sufficient to make up the 120-therm difference between the claimed savings and savings
adjusted by the Tier II realization rate.
The Evaluator notes several caveats with the billing analysis that should be addressed.
Evaluation at 28-29. First, the Evaluator compares the evaluation methodologies of residential
new construction programs run by other Idaho utilities. Id. The Evaluator explains that it is
useful to evaluate programs similarly to identify whether a program is beneficial to the utility's
customers. Other utilities evaluate their programs using deemed savings via RTF or using
energy modeling software. Staff believes that this caveat is outdated and only considers a
limited perspective of the actual evaluation practices of other utilities. In recent orders, the
Commission has given direction to each of the compared utilities in regard to their comparable
programs. Avista's ENERGY STAR Homes program incentive for energy efficient
manufactured homes is not directly comparable to the Company's Whole Home rebate for single
family homes and the program does not capture as much savings relative to the total savings.
STAFF COMMENTS 17 JULY 10, 2025

Regardless, Staff recommended that Avista consider conducting a billing analysis. Staff
Comments in AVU-E-24-09 at 8. In Order No. 36331, the Commission directed Idaho Power to
conduct an impact evaluation of its Residential New Construction program using billing analysis.
In Order No. 36529, the Commission did not find it necessary for PacifiCorp to conduct an
impact evaluation of its comparable program at the time but emphasized the priority of accuracy
and efficiency of its DSM programs. Finally, as described in more detail above, the typical
evaluation practice for peer utilities regularly includes billing analysis.
Next, the Evaluator highlights that the RTF New Homes Protocol provides support for
the validity of energy modeling to evaluate residential new construction home programs. 2024
Evaluation at 30. In contrast, the Protocol recognizes that it is unclear how well the REM/Rate
modeling software used by the Whole Home rebate estimates space heating energy savings.
Protocol at 36.
The Evaluator also sites a lack of Randomized Control Trial ("RCT"). 2024 Evaluation
at 31. The Evaluator states that it is ideal to have an RCT to eliminate bias between each group
caused by unmeasurable characteristics. Id. Staff believes that this argument is irrelevant since
this type of evaluation is not applicable to the Whole Home rebate and most other DSM
offerings. This type of evaluation is only possible when customers are randomly selected for
both the treatment and control groups. For most DSM programs, this type of evaluation is
impossible because the treatment groups self-select by customers choosing to participate in the
rebate.
The Evaluator's final caveat on its billing analysis is further increased bias. Id. The
Evaluator explains that because no pre-participation data is available for the newly constructed
homes, the Evaluator was unable to conclude if differences in consumption are due to the impact
of the rebate or due to other factors. Id. While it is not possible to isolate the impact of the
rebate without pre-participation data, by using billing data to support the analysis, the energy
savings effects of the Whole Home rebate along with other realities of the Company's system
that must be accounted for are reflected. As described in more detail above, billing analysis
makes use of data specific to the Company's service territory and provides statistically
significant results that should not be ignored.
STAFF COMMENTS 18 JULY 10, 2025

DSM Cost-Effectiveness
In 2023, the Company's DSM programs were not cost-effective. The Company reports
that the residential program had a UCT of 0.8 and the commercial program had a UCT of 0.9.
Annual Report at 1. During this program year, the Company evaluated each program with therm
savings supported by deemed savings values and not through a billing analysis. A summary of
the Company's reported cost-effectiveness is presented below. In its Application and
Supplemental Application, the Company proposes several changes with the intent of improving
the cost-effectiveness of its program.
Table No. 4: Summary of 2023 Participation and Cost-Effectiveness
Program Total Rebates in 2023 UCT
Residential 0.8
Whole Home 1 2 1.4
Whole Home 2 1,509 1.1
Furnace—95%AFUE 3,280 0.6
Combination Boiler 7 1.3
Boiler—95%AFUE 10 0.9
Water Heater<55 gallons 20 0.5
Water Heater>55 gallons 10 0
Tankless Water Heater Tier 1 818 1
Tankless Water Heater Tier 2 10 0.9
Smart Thermostat* 2,830 0.4
Commercial 0.9
Condensing Unit Heater - -
Boiler Reset Control - -
High-Efficiency Condensing Boilers 2 1.5
Fryer-Energy Star Certified 20 0.8
Steamer- Energy Star Certified - -
Griddle - Energy Star Certified - -
When supported with billing analysis results from the 2024 Evaluation, the cost-
effectiveness of the Company's residential portfolio is reduced to a UCT ratio of 0.5. Much of
this change is driven by reductions to the savings of the Whole Home Tier II rebate, which
decreases from a UCT of 1.1 to 0.3. Due to the reduction in benefits captured by the Company's
program, only $1,781,162 of the Company's total $3,846,358 2023 expenses would be
supportable as cost-effective. In Order No. 36245, the Commission denied Staff s
recommendation for a disallowance based on a similar calculation. Staff is not recommending a
STAFF COMMENTS 19 JULY 10, 2025

disallowance at this time. However, due to the extensive record on evaluation methodologies,
the results of the 2024 Impact Evaluation, and the arguments on evaluation methodologies
presented above, Staff recommends that the Commission set an expectation that continued
unjustifiable deviations from billing analysis results should serve as grounds for potential
disallowances in the future. If the Company cannot operate its EE programs cost-effectively
with accurate therm savings assumptions and appropriate labor and overhead expenses, Staff
may recommend disallowance of requested recovery in future prudency filings.
Review of Company's Proposals
In its Application and Supplemental Application, the Company proposed several changes
to is residential program. In its Application, the Company proposed to retire the Storage Water
Heater and Tankless Water Heater Tier 2 measures, to increase incentive amounts for all other
measures, and align program evaluations with other utilities. Application at 20-22. Staff s
review of the program evaluation proposal is presented in the evaluation methodology section
above. The Company did not propose any changes to the Commercial measures at this time;
however, the Company has hired ADM to create a Commercial TRM to help inform its
Commercial measures. Application at 22-23. Staff believes that the Company's proposals are
not likely to result in a cost-effective program.
For the Storage Water Heater rebates, the Company's Annual Report described that the
increase in efficiency requirements and minimal ability to increase the incentive would lead the
measure to continue to underperform, and the Company decided to retire the measure.
Application Attachment 1 at 10. The Annual Report describes how the efficiency requirements
for a non-ENERGY STAR water heater were essentially the same as the current Tankless Water
Heater Tier II. Id. Therefore, the Company decided it is only going to offer incentives for
ENERGY STAR rated tankless water heaters. Id. Staff supports the Company's proposal to
retire the Storage Water Heater and Tankless Tier 2 measures.
In its Supplemental Application, the Company adjusted its proposals to include retiring
the Whole Home II and Smart Thermostat rebates and to reduce the incentive for the Tankless
Water Heater and Furnace rebates. Supplemental Application at 6. First introduced in response
to Production Request No. 29, the Company's updated proposals are based on recent updates to
the RTF's residential gas furnace workbooks. The Company claims that the RTF changes to
STAFF COMMENTS 20 JULY 10, 2025

estimated therm savings have impacted the cost-effectiveness of both the Furnace and Smart
Thermostat rebates. Id. The Company first recalculated the cost-effectiveness of its program
with the updated furnace rebates therm savings. Id. The Company explains that the Furnace
rebate, Smart Thermostat rebate, and overall portfolio were not cost-effective when updated. Id.
The Company then introduced additional program changes and updated its budget and
participation forecasts to reflect the adjustments. Id.
The first of these additional proposals is to retire the Whole Home Tier II and Smart
Thermostat measures. In conversation with the Company, Staff clarified that the Smart
Thermostat rebate was not affected by the updated furnace savings and is not cost-effective
under its own structure and estimates. For the Whole Home Tier II rebate, the Company
explains that the reduced furnace savings and recent code improvements put the cost-
effectiveness of the rebate at risk. Id. In response to Production Request No. 32, the Company
clarified that the "recent" code changes it referenced is referring to current Idaho Energy
Conservation Code, which was effective on January 1, 2021. Additionally, as described above,
the"risk" of lower savings due to the reduced furnace savings are fully materialized in current
building market practices. Staff supports the Company's proposal to retire the Whole Home II
and Smart Thermostat measures.
In its Supplemental Application, the Company retained many of the proposed incentive
increases but also proposed to lower the incentive for the Furnace rebate and to reduce the
incentive increase for the continued Tankless Water Heater rebate. Staff recommends the
Commission deny the Company's proposed increases to rebate incentives. The Company's
proposed increases do not align with billing analysis supported therm savings and do not account
for any variance in participation levels; therefore, Staff is concerned that the measures will not be
cost-effective in the following program years.
In response to Production Request No. 29, the Company provided updated cost-
effectiveness workpapers. Staff s review of these workpapers discovered that the Company's
proposed$275 incentive for the Furnace Rebate is based on a therm saving estimate of 37
therms/unit. When supported with billing analysis results of 31 therms/unit, this incentive would
not result in a cost-effective measure. In response to Production Request No. 13, the Company
explains that because the results are relatively close, it chose to use the higher estimate. While
the difference is small, it is magnified by the large number of rebates and causes a significant
STAFF COMMENTS 21 JULY 10, 2025

impact on cost-effectiveness. Staff proposes for the Furnace rebate amount to be lowered to
$175, which will be cost-effective based on the Company's forecasted participation and billing
analysis supported therm savings values.
In its initial Application, the Company proposed an incentive of$400 for the Tankless
Water Heater rebate based on a participation forecast of 600 customers in 2026.1 However, in its
Supplemental Application, in contrast to the lesser incentive of$375 proposed by the Company,
it forecasts 2,000 participants in 2026. a Staff believes that the Company's justification for the
participation increase is faulty and will likely result in a non cost-effective measure. The
Company claims that the increase is due to participants from the retired Whole Home Tier II
rebate shifting to the standalone appliance rebate; however, under the current Whole Home Tier I
and Tier II rebates, customers are already able to stack the Tankless Water Heater incentive with
the Whole Home incentive. Therefore, the retirement of the Whole Home Tier II rebate would
have no positive impact on the participation of the Tankless Water Heater rebate. Staff
recommends that the rebate amount stay the same as the current rebate of$325. Below is a
summary table that displays the current and proposed rebate amounts for all rebates.
Table No. 5: Summary of Proposed Residential Rebate Amounts
Current Initial Updated Staffs
Residential Program Proposed Proposed Proposed
Rebate Rebate Rebate Rebate
Whole Home 1 $ 900 $ 1,500 $ 1,500 $ 900
Whole Home 2 $ 700 $ 1,000 Retire Retire
Furnace—95%AFUE $ 350 $ 350 $ 275 $ 175
Combination Boiler $ 800 $ 1,500 $ 1,500 $ 800
Boiler—95%AFUE $ 800 $ 1,000 $ 1,000 $ 800
Water Heater<55 gallons $ 115 Retire Retire Retire
Water Heater>55 gallons $ 115 Retire Retire Retire
Tankless Water Heater Tier 1 $ 325 $ 400 $ 375 $ 325
Tankless Water Heater Tier 2 $ 300 Retire Retire Retire
Smart Thermostat $ 100 $ 50 Retire Retire
'Response to Production Request No. 12—Confidential Supplemental Participation Attachment
2 Response to Production Request No.29—CONFIDENTIAL INT-G-24-05 PR 29 Residential Program
Changes Forecast 2026 V.2
STAFF COMMENTS 22 JULY 10, 2025

Program Planning
Staff is concerned with continued cost-effectiveness of the Company's residential
program. The rebate retirements, incentive decreases, limited measure options, low avoided
costs, increasing codes and standards, shifting market practices, and the high burden of overhead
expenses are all signs of poor program health and represent significant risks to the cost-
effectiveness of the program. Further, these issues may be exacerbated by potential issues in the
Company's planning process. As described in more detail in the Billing Analysis section, the
absence of billing analysis results in the TRM are likely to continue overstating program savings.
Staff recommends that the Commission direct the Company begin quarterly meetings
with Staff to monitor year-over-year DSM performance. These meetings should cover trends in
avoided costs, program participation, measure baselines, savings assumptions, and any other
changes related to the planning of cost-effective programs. If necessary, these meetings should
trigger a filing to immediately end the program. Staff believes that the risks to the Company's
programs in this filing are large enough that it is not reasonable to wait for the resolution of a
typical continuous improvement cycle. It is the Company's responsibility to plan cost effective
measures. If it cannot do so, the Company must file with the Commission with plans to correct
the measures or to retire the measures.
STAFF RECOMMENDATION
Based on its analysis of the Company's Application, supporting material, and discovery
requests, Staff recommends the Commission issue an order:
1. Approving the Company's EE Program expenses of$3,846,358 as prudently
incurred.
2. Finding that the Company complied with certain portions of Order No. 36245.
3. Finding that the Company has not complied with Order No. 36245 direction to
separate savings for new construction, retrofit, and replacement for the 95%AFUE
Furnace rebates and direct the Company to immediately track furnace rebates
separately.
4. Denying the use of the deemed savings evaluation methodology proposed by the
Company in its Application.
STAFF COMMENTS 23 JULY 10, 2025

5. Accepting the proposed retirement of the Storage Water Heater, Tankless Water
Heater Tier I, Whole Home Tier I1 and Smart Thermostat rebates.
6. Denying the Company's proposed increases to incentives for the Whole Home Tier 1,
Combination Boiler, Boiler-95% AFUE, and Tankless Water Heater Tier I rebates.
7. Approving Staff s proposed incentive amount for the Furnace rebate.
8. Setting an expectation that continued unjustified deviations between program
planning assumptions and the results of evaluations may result in disallowances.
9. Directing the Company to begin quarterly meetings with Staff to monitor the
performance of its DSM program.
Respectfully submitted this 1 Oth day of July 2025.
��44 ;�� —
effrey . Loll
Deputy Attorney General
Technical Staff: Jason Talford
Laura Conilogue
Kimberly Loskot
I:\Utility\UMISC\COMMENTS\INT-G-24-05 Comments.docx
STAFF COMMENTS 24 JULY 10, 2025

CERTIFICATE OF SERVICE
A
I HEREBY CERTIFY THAT I HAVE THIS h DAY OF JULY 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. INT-G-24-05, BY E-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 ivenspursle
E-MAIL: lori.blattner&intgas.com morgan og odina ig venspursle
igcregulatory(cr�,int ag s.com stephaniewg ig'venspursley.com
Ed Jewell, Deputy City Attorney Katie O'Neil, Energy Program Manager
Jessica Harrison, Deputy City Attorney Boise City Dept. of Public Works
Boise City Attorney's Office P.O. Box 500
P.O. Box 500 Boise, ID 83701-0500
Boise, ID 83701-0500 EMAIL: koneil(kcityoufboise.org
EMAIL: [e-mail]
jharrison(a-,cityofboise.org
[e-mail]
;&t-26(A p
PATIRICIA JORDAN, S CRETARY
CERTIFICATE OF SERVICE