20250722Final_Order_No_36680.pdf

Office of the Secretary
Service Date
July 22,2025
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER ) CASE NO. IPC-E-25-09
COMPANY'S APPLICATION FOR )
MODIFICATIONS TO THE COMPANY'S )
RESIDENTIAL DEMAND RESPONSE ) ORDER NO. 36680
PROGRAM, SCHEDULE 81 )
On March 12, 2025, Idaho Power Company ("Company") applied to the Idaho Public
Utilities Commission ("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").
On April 11,2025,the Commission issued a Notice of Application and Notice of Modified
Procedure, establishing a May 29, 2025, deadline for initial comments and a June 12, 2025,
deadline for the Company to file reply comments. Order No. 36540. Commission Staff and the
City of Boise City filed the only public comments. The Company filed reply comments.
Having reviewed the record in this case, we now issued this Final Order approving the
Company's Application with modifications as described below.
BACKGROUND
The Company utilizes a residential demand response ("DR") program, the ACCC, to
reduce summer electricity demand during times of system need. Application at 1. Currently, the
ACCC program allows customer participation through only the Air Conditioner ("AC") Cycling
option, which permits the Company to connect a load control device to the customer's AC unit to
cycle the unit during DR events. Id.
THE APPLICATION
The Company stated that as part of its 2023 Integrated Resource Plan("IRP"), it modeled
options for expanding its DR program and identified the Bring Your Own Thermostat ("BYOT")
option as one of the lower cost potential DR offerings.Id. at 3. The Company subsequently issued
a request for proposal to potential BYOT vendors and determined the BYOT option could be a
cost-effective addition to its ACCC program. Id.
ORDER NO. 36680 1

The Company represented that under its proposed 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 stated 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.
According to the Company, it would"partner with a third-party aggregator("aggregator")
who will coordinate directly with the smart thermostat original equipment manufacturers("OEM")
to facilitate the BYOT offering."Id. The Company represented the aggregator will provide it with
a centralized interface that the Company can use to communicate with all major thermostat brands
and provide support with customer enrollment,thermostat responses, and post-event reporting.Id.
The Company represented that OEMs would market the BYOT program to qualified
customers through in-app marketing, with some also utilizing email campaigns. Id. at 4-5. The
Company stated that it also planned to market "in tandem with its smart thermostat incentive
offered under the Heating and Cooling Efficiency Program."Id. at 5.
The Company stated that BYOT participants would "receive notification through their
smart thermostat's app that an event has started, and the smart thermostat will indicate when they
are in an event." Id. The Company represented it would collaborate with the aggregator's data
science team to achieve DR targets.Id. at 6.
The Company represented that new ACCC participants who enroll in the BYOT option
would receive a $50 enrollment incentive, which would include the first year of participation
incentives. Id. According to the Company, customers who leave the BYOT option and later re-
enroll and customers who leave the AC Cycling option within 12 months of applying to participate
in the BYOT option would not be eligible for additional enrollment incentive. Id. The Company
stated that after the first year of enrollment, customers would be eligible to receive $5 bill credits
for the months of June, July,August, and September if they participate in at least 50%of DR event
hours during the DR season. Id. The Company represented that it did not anticipate customers
signing up for the BYOT option to get the enrollment incentive and then leaving the program based
on feedback from peer utilities with similar offerings. Id. at 6-7.
The Company represented that it did not anticipate the BYOT program to be cost-effective
on a measure level until year three and after, due to the upfront costs of enrollment incentives and
the initial aggregator fee. Id. at 7-8. To account for the upfront costs, the Company's cost-
ORDER NO. 36680 2

effectiveness modeling for the BYOT option spread the initial aggregator fee over the initial three
years of the program, and the enrollment incentives over three years from when the incentives are
paid to customers.Id. at 8. The Company stated that by spreading the costs in this manner, each of
the program's first five years project to fall below the 2025 avoided cost threshold. Id. The
Company stated that the ACCC program as a whole, using the actual costs of the BYOT option,
was anticipated to be cost-effective in 2025-2029. Id. at 10.
STAFF COMMENTS
Based on its review of the materials provided by the Company, Staff believed the proposed
option would cost-effectively acquire 20 megawatts of demand response capacity by 2029, as
identified in the Company's 2023 IRP. Id. However, due to what it described as "concerning
elements" of the Company's proposal, Staff recommended that the Commission approve the
Company's proposed modifications to the ACCC program and associated modifications to
Schedule 81 with certain adjustments.Id.
Enrollment Incentive and Upfront Participation Incentive
Firstly, as the proposed BYOT option would provide customers with $50 of enrollment
incentives ($30 enrollment bonus and upfront payment of the first season's $20 participation
incentive), Staff believed the option would create a significant risk of"dine and dash" behavior,
whereby customers could claim the enrollment incentive before immediately unenrolling.Id. at 5.
Therefore, Staff recommended that if the Commission approved the $50 enrollment incentive, the
Commission should 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.Id. Alternatively, Staff recommended"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."Id. at 6.
Application to Continue the BYOT Option
Secondly, Staff was concerned with the BYOT option's overall efficacy due to uncertain
participant attrition and demand reduction. Id. at 6-7. Staff believed that the estimated attrition
rates were understated given the increased visibility of an underway DR event the BYOT option
will provide compared to the AC Cycling option, creating more opportunities for participants to
ORDER NO. 36680 3

opt-out of a given event. Id. at 6-7. Staff noted that "the additional function and load reduction
profile suggest there may be notable differences from what is offered by the [AC Cycling] option."
Id. at 7.Based on these concerns and uncertainties, Staff recommended that the Commission direct
the Company to apply to continue the option before the proposed contract expires. Id. The initial
BYOT contract was for three years. Application at 7.
Enrollment Incentive Expense Spread
Finally, while Staff agreed it was reasonable to spread some costs of the initial ramp-up of
the BYOT option across multiple years for purposes of evaluating cost-effectiveness, it believed
the Company's proposal was excessive. Staff Comments at 8. Staff noted: "[t]he 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." Id. Staff was concerned "that spreading the
costs of enrollment incentives may obscure the impact of customers claiming the incentive but not
participating in the program."Id. Staff recommended that the Company be allowed to spread the
enrollment incentives across three years for only the first four years of the program.Id.
PUBLIC COMMENTS
The City of Boise City supported the Company's proposal to add a BYOT option to its
ACCC program and commended the Company for its commitment to Demand-Side Management.
City of Boise Comments at 1.
COMPANY REPLY COMMENTS
The Company disagreed with Staffs recommendation (1) regarding a proposed
modification to require customers who unenroll from the BYOT option before completing a full
DR season to pay back a prorated portion of the enrollment incentive; and (2) limiting spreading
enrollment incentives for cost-effectiveness reporting. Company Reply Comments at 3-5. The
Company supported Staffs recommendation to monitor and report instances of unenrollment
before fully participating, and Staff s recommendation to require an application to continue the
BYOT option prior to the contract expiration. Id. at 5.
Enrollment Incentive and Upfront Participation Incentive
The Company reiterated that it received feedback from peer utilities that offer similar
programs to the BYOT option incentive,stating it was rare for customers to sign up for the program
to receive incentives and then unenroll before any system benefits are realized. Id. at 5. The
Company did not believe it was practicable to require participants who unenroll before
ORDER NO. 36680 4

participating in a full DR season to return a portion of the enrollment incentive.Id. The Company
stated it did, however, support Staff s alternative recommendation for the Company to monitor
instances of unenrollment before participation, report on the rate of such occurrences, and file a
case with the Commission should the rate exceed 20%. Id.
Application to Continue the BYOT Option
The Company supported Staff s recommendation that the Commission require the
Company to file an application to continue the BYOT option prior to the initial three-year contract
expiration.Id. The Company stated it would"additionally include data and analysis specific to the
BYOT option, as well as at the ACCC program level, alongside any such application for
continuance of the BYOT option."Id.
Enrollment Incentive Expense Spread
The Company stated that Staffs recommendation concerning a limitation on spreading
enrollment incentives for cost-effectiveness reporting was inapplicable based on a
misunderstanding of the Company's proposal. Id. at 3. The Company explained that its cost
spreading analysis was done as an"illustrative exercise"to emphasize the effect of initial costs on
the BYOT option's cost effectiveness,but, as the Company clarified,it does not intend"to use this
method to determine cost-effectiveness of its proposed BYOT offering."Id. Rather,the Company
stated that it plans to report cost-effectiveness results using actual annual costs.Id.
Program Implementation Timeline
The Company further advised that it had recently learned through the aggregator"that full
implementation of the BYOT option and customer enrollment may extend beyond the 2025 DR
season, regardless of whether a Commission Order is received by July 15, 2025"—the date by
which the Company had previously requested an order, with hopes of implementing the program
during the 2025 DR season. Id. at 6. Due to the potential delay, the Company represented that it
"is in the process of reevaluating its marketing strategies for the BYOT option in an effort to shift
program enrollment so that the bulk of initial incentive payments may more likely occur ahead of
the 2026 DR season to better align the costs and benefits of the program."Id.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company's Application and the issues in this
case under Title 61 of the Idaho Code including Idaho Code §§ 61-301 through 303. The
Commission is empowered to investigate rates, charges,rules,regulations,practices, and contracts
ORDER NO. 36680 5

of all public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provisions of law, and to fix the same by order. Idaho Code
§§ 61-501 through 503. The Commission has reviewed the Application, all submitted materials,
and all submitted comments. Based on its review of the record, the Commission finds it fair,just,
and reasonable to approve the Company's Application to expand its DR program by adding a
BYOT option, while adopting some of Staff s recommendations.
The Commission appreciates Staffs concern regarding the potential for program
participants to immediately unenroll after receiving the enrollment incentives. However, the
Commission does not believe the risk is significant enough to require the Company to implement
a complicated enrollment incentive structure that requires participants who unenroll before
participating in a full DR season to return a pro-rated portion of the incentive. Rather, the
Commission adopts a modified approach to Staffs alternate recommendation; the Company shall
monitor instances of customer unenrollment from the BYOT option before participation in a full
DR season, report on this metric in the Company's annual Demand-Side Management Annual
Report, and immediately file a case with the Commission should the rate of unenrollment before
any participation exceed 10% of new enrollments in a given year.
The Commission also agrees with Staffs recommendation that the Company should be
required to seek Commission approval prior to renewing the BYOT option. Therefore, the
Company shall apply to the Commission to continue the BYOT option before the initial three-year
BYOT contract expires.
ORDER
IT IS HEREBY ORDERED that the Company's Application to expand its residential
demand response program by adding a BYOT option is approved.
IT IS FURTHER ORDERED that the Company shall monitor instances of customer
unenrollment from the BYOT option before participation in a full DR season,report on this metric
in the Company's annual Demand-Side Management Annual Report, and immediately file a case
with the Commission should the rate of unenrollment before customers participate in the program
exceed 10% of new enrollments in a given year.
IT IS FURTHER ORDERED that the Company shall apply to the Commission to continue
the BYOT option before the initial three-year BYOT contract expires.
ORDER NO. 36680 6

THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 22nd day of
July 2025.
G
EDWARD LODGE, PRWDENT
J R. HAMMOND JR., COMMISSIONER
D YN HA IE, OMMISSIONER
ATTEST:
MAR
n B - hez
Commission Secretary
IALegal\ELECTRICUPC-E-25-09_Sch 81\orders\IPCE2509_FO_jl.docx
ORDER NO. 36680 7