20250731Reply Comments.pdf

RECEIVED
July 31, 2025
IDAHO PUBLIC
Preston N. Carter, ISB No. 8462 UTILITIES COMMISSION
Morgan D. Goodin, ISB No. 11184
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
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Attorneys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION Case No. INT-G-24-05
OF INTERMOUNTAIN GAS COMPANY
FOR A DETERMINATION OF 2023 INTERMOUNTAIN GAS COMPANY'S
ENERGY EFFICIENCY EXPENSES AS REPLY COMMENTS
PRUDENTLY INCURRED AND
APPROVAL OF RATE SCHEDULE EE-RS
Intermountain Gas Company (Intermountain or Company) submits the following Reply
Comments in response to comments filed by the Idaho Public Utilities Commission Staff(Staff).
The Company appreciates the opportunities during the review in this case for open dialogue with
Staff and looks forward to continued collaboration in continuous program improvement
INTRODUCTION
Since the Company was ordered to implement an energy efficiency program in 2017, the
Company has sought to create and maintain a cost-effective program, evaluated in line with best
practices and other Commission-regulated utilities, administrated in an efficient and transparent
manner.
In pursuit of that goal, the Company agrees with several, though not all, of Staff s
recommendations in this case, as discussed in more detail below.
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REPLY TO STAFF'S RECOMMENDATIONS
Staff makes nine recommendations. The Company replies to each recommendation
below. For the sake of brevity, the Company does not reply to statements in the body of the
comments that are not part of the nine recommendations to the Commission.
1. Areas of agreement
Recommendation 1 —Approving EE Program expenses as requested. The Company
agrees with this recommendation.1
Recommendation 2—compliance with components of Order No. 36245. The Company
agrees with this recommendation, though as addressed in more detail in response to
recommendation 3, the Company submits that it has complied with all relevant aspects of Order
No. 36245.
Recommendation 5—accepting proposed retirement of certain rebates. The Company
agrees with Staff s recommendation to accept the proposed retirement of the rebates for Storage
Water Heater, Whole Home Tier II, and Smart Thermostat. This recommendation states that the
Commission should accept the proposed requirement of the rebate for Tankless Water Heater
"Tier L" Comments at 24 (emphasis added). However, the Company recommended retirement of
the rebate for Tankless Water Heater Tier 11. Application at Exh. 1 p. 22 (proposing to retire the
Tankless Water Heater Tier II rebate.)
Staffs reference to "Tier I"rather than"Tier II" appears to be a typographical error; the
chart earlier in its comments identifies the Tankless Water Heater Tier II rebate as having a UCT
'In evaluating the program,Staff identified"one rebate that was paid twice."Staff Comments at 4. Staff states that
this"implies the Company's internal control processes require improvement."Id. The Company does not agree.It
administered over 8,500 rebates during the relevant period.Intermountain Gas submits that a single double payment
indicates successful internal controls.
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of.9. Accordingly, the Company requests that the Commission accept retirement of the rebates
for Storage Water Heater, Whole Home Tier II, Smart Thermostat, and Tankless Water Heater
Tier II.
Recommendation 9—quarterly meetings to monitor DSM per formance. The Company
does not object to quarterly meetings with Staff, or to more collaboration. However, the
Company requests clarification on the scope and intended contents of the quarterly meetings. As
the Company has noted in prior comments on this issue, data related to energy efficiency
program performance has significant lag-time and is difficult to collect and analyze. As such, it
is unlikely that new or useful program performance data will routinely become available on a
quarterly basis. In addition, items that Staff expresses a desire to discuss during these meetings—
such as savings value, engineering algorithms, baseline conditions, operating hours, climate
zones, and so forth—should be set at the time of program planning and are fixed throughout the
evaluation cycle. As such, these items should not change on a quarterly basis or require quarterly
updates.
That said, the Company does file quarterly reports related to the program that include
information such as rider balances and a summary of rebate performance. The Company would
be willing to meet on a quarterly basis to discuss the information contained in the quarterly
reports and information such as the number of rebates paid each quarter, the number of
cumulative rebates in the current program year, and comparisons of rebate numbers to prior
years.
In addition, the primary mechanism for discussions regarding updates to the energy
efficiency program has been the Energy Efficiency Stakeholder Committee. The Committee's
input has been valuable due in large part to the variety of perspectives espoused by its
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stakeholders, including the perspective of Staff. The Company believes that review and
discussion of DSM performance in these meetings has been helpful. However, the Company
desires to avoid duplication with the EESC meetings, and to avoid any perception that the
meetings with Staff take precedence over, or undercut the work of, the EESC.
Accordingly, the Company requests that, if the Commission orders quarterly meetings
with Staff, that the Commission confirm 1)the scope and content of the quarterly meetings, 2)
their interplay with the EESC, and 3)whether the Company should maintain or dissolve the
EESC.
Recommendations 6 and 7—denying proposals for certain incentives and proposing
Staff 's proposed incentive amount for furnace rebate. The Company prefers that rebate amounts
for incentives be addressed on a forward-looking basis through a collaborative process, including
evaluations and the EESC. Adopting calculations proposed by Staff in a prudency case could be
seen as undercutting the importance—or, worst case, the entire purpose of—those processes.
Stated another way, if Staff has the ability to unilaterally calculate and obtain approval
for rebate amounts in a manner that overrides recommendations from the third-party evaluators
and the EESC, it's not clear what role those processes play.
The Company believes the root of many of the frustrations outlined by Staff over the
years is the lack of an agreed-upon plan for the program as changes are made to the tariffs. To
alleviate this problem, the Company has proposed the use of a Technical Reference Manual
(TRM) for program planning going forward. The TRM would include all of the assumptions
upon which the program is based. The TRM would provide an important framework for
collaborative discussion and to document agreed upon assumptions. It would be updated as
needed through a collaborative process and with EM&V results going forward. Prudence could
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be determined based on whether the Company implemented the agreed upon program. Forward-
looking program planning would update the TRM through a collaborative process and document
agreed upon assumptions for the next tariff change.
The Company would be willing to accept Staff s proposed rebate amounts so long as the
Commission approves the use of a TRM for program planning going forward. The Company
envisions the TRM being updated through a collaborative process.
2. Areas of disagreement
Recommendation 3—noncompliance with aspects of Order No. 36245. Staff asserts that
the EM&V evaluator excluded approximately 68% of furnace rebates from its billing analysis
evaluation "due to insufficient pre-period billing data for new construction or new move in
customers." Comments at 8. According to Staff, this means the evaluation "did not separate
savings for the new construction, retrofit and replacement for the 95%AFUE furnace rebate."Id.
And, in turn, Staff asserts that the Company did not comply with the Order No. 36245. a
The Company respectfully disagrees. Order No. 36245 states, in relevant part, "The
EM&V must seek to separate savings for new construction, retrofit, and replacement for the 95%
AFUE rebates." Order No. 36245 at 12. The Evaluator did just that: it evaluated, to the extent
possible, separate savings for new construction, retrofit, and replacement for the 95% AFUE
rebates. See Application at 16; Supplement 1 to Application at 36-37.
The problem is, a cost-savings analysis based on billing data—which is what Staff states
that it desires—requires billing data. There is no billing data for new construction. So savings
associated with new construction cannot be evaluated using billing data.
2 Staff also recommends"that the Company immediately begin tracking this information"—that is,information
related to furnace rebates—"to account for accurate information that can be used for future evaluations."Comments
at 8.The Company does track this information;it just cannot be used in a billings analysis because there is no pre-
rebate baseline.
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To address this fundamental—and unavoidable—problem, the evaluator excluded the
furnace rebates for new construction from the analysis. Supplement 1 to Application at 36-37.
Taking this approach separated the savings from new construction (omitted due to lack of
sufficient data) from the savings from retrofit and replacement. This is just what the Commission
ordered: that the `BM&V seek to separate savings" for new construction, retrofit, and
replacement. Order No. 36245 at 12. The evaluator complied with Order No. 36245.
Recommendation 4—denial of proposed deemed savings methodoloa. Staff recommends
that the Commission reject the deemed-savings approach espoused by the third-party evaluator
and instead adopt an approach that Staff has developed based on billing data.
The Company submits that the approach recommended by the evaluator should be
adopted, for the reasons set forth in the Application and the additional reasons addressed below.
First, the approach recommended by the evaluator represents the current best practices in
the northwest. The recommended approach is based on referencing a Technical Reference
Manual. In this instance, among other information, the evaluators referred to the Regional
Technical Forum, which is a decades-old technical advisory committee established to develop
standards to verify and evaluate energy efficiency savings. Supplement 1 to Application at 30.
The committee uses regional data to produce energy savings evaluations, which are then used to
develop and evaluate these measures. Id. at 31.
This approach is commonly used and adopted for a reason. Billing analysis alone does
not provide a complete picture of program performance and should not be the sole basis for
determining program performance. A billing analysis evaluates the success of a program on net
savings alone. However, as the evaluator noted, a thorough evaluation would compare both net
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savings and gross savings—i.e., total energy savings versus those directly attributable to the
energy-efficiency program.
Transparency and agreement on a planning approach are key characteristics of a
successful DSM program. In pursuit of these goals, and as originally recommended by Staff,3 the
Company proposes to create a TRM, based on part on the RTF, that contains the methods,
assumptions, and information used to evaluate the program. A TRM would provide deemed
savings values, engineering algorithms,baseline conditions, operating hours, climate zones, and
measure lifetimes—many of the elements that Staff suggests discussing in its proposed quarterly
meetings (discussed above). More importantly, developing a TRM provides a forum for
consistency and transparency, through which items such as assumptions and other related factors
can be discussed and agreed upon upfront. This enhances consistency and transparency; reduces
areas of disagreement after-the-fact; and simplifies after-the-fact audits.
The proposed TRM would be specific to Intermountain's program, but would be
consistent with the methodologies used to evaluate the DSM programs of other Commission-
regulated utilities, addressed below.
Second, the approach recommended by the evaluator is used by the Commission to
evaluate the other Commission-regulated utilities with DSM programs. As the evaluator notes,
other utilities regulated by the Commission evaluate their DSM programs using the same
approach used by the evaluator.Id. at 30. Staff has not justified measuring Intermountain's
program with a different yardstick. Staff notes that different approaches can be used by different
utilities. Staff Comments at 11. That's true, but different approaches have to be justified by
particular characteristics of a utility. The fact that difference may be supported does not itself
s See Order No. 35663 at 5 ("Staff encouraged the Company to explore other acceptable and vetted bases for
deemed savings such as the Regional Technical Form.")
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support the difference. Staff s observations that different utilities can be treated differently does
not itself justify differential treatment. And Staff does not point to any significant differences
between utilities that would justify evaluating Intermountain's DSM program using a different
methodology than other Commission-regulated utilities.
Third, Staff appears to recommend an ad hoc approach that is not fully developed, is not
transparent, and is not implemented by any utilities, much less the industry as a whole. While
Staff critiques the evaluator's methodology, it does not support Staffs own proposed approach.
Staffs comments, for example, do not cite any third-party resource; do not cite any academic
literature; do not cite any national or regional groups that use its proffered approach; and do not
cite any precedent(apart from orders limited to Intermountain)that require its approach. Indeed,
Staff cannot cite to a single other utility that uses its approach. Staffs proffered approach
appears to be novel,untested, and unprecedented. The evaluator's proposed method,by contrast,
is based on a thorough review of national and regional sources; a review of programs of other
utilities; and other similar sources. See Supplement 1 to Application at 28-32.
Fourth and finally, Staff s analysis of the evaluator's recommendation is flawed. The
evaluator notes that billing data is flawed because Intermountain's customer base reflects a
relatively small geographic footprint, leading to various statistical biases associated with small
sample sets. Staff responds by noting that the evaluator concluded that the billing analysis
"produced statistically significant results." Staff Comments at 10. This conflates two different
concepts. A study can produce statistically significant results within a small sample size,yet still
be biased based on the small size of the data set itself. In other words, pointing to statistical
significance within the dataset does not address the well-established statistical biases associated
with small data sets themselves.
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Staff counters that"[s]imply using a larger data set does not increase accuracy," and that
"the `limitations' of the billing analysis presented by the Company are caused by accurately
representing the Company's program." Staff Comments at 10. Again, not so. Larger sample sizes
do increase the reliability of studies. Recognizing this,utilities do not limit DSM evaluations to
their own customer groups. To the contrary, they use deemed savings approaches using larger
sample sizes to iron out biases inherent in smaller groups.
If referring to other data sets "obfuscate[s] the relevant data" and"prevent[s] conclusions
specific to the Company's program," as Staff asserts, one would expect other utilities to use that
approach. But that's not the case. Indeed, Staff does not identify any other utility that uses Staff s
proposed methodology to evaluate its DSM programs.
The Company submits that the evaluator has it right: the evaluator presents the best
practices in the industry that are used to evaluate the DSM programs of the other utilities
regulated by the Commission.
Recommendation 8—disallowances related to deviations between planning
evaluations. Staff requests that the Commission"set[] an expectation that continued unjustified
deviations between program planning assumptions and the results of evaluations may result in
disallowances." Comments at 24.
The Company does not agree with this recommendation. First and foremost, the proposed
approach mis-conceptualizes both the role of planning and the role of disallowances in the DSM
process.
Planning is just that—forward-looking steps taken in an attempt to predict how customers
will react to certain offerings, and predictions regarding how the offerings themselves will
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perform. Only one thing about planning is predictable: it will be wrong. That is why continuous
evaluation and adjustments to energy-efficiency programs are so important.
The Company has consistently engaged in the cyclical planning process, and adjusted its
offerings accordingly, through the Commission-approved EESC meetings, recommendations
from third-party evaluators, and other sources. Deviations between planning and evaluations are
to be expected. Indeed, deviations, and adjustments to address them, prove only that the cyclical
process is working. Simply put, deviations from planning and evaluations are inevitable and
baked into the entire concept of planning.
Staff s comment seems to perceive disallowances as a type of"punishment" for plans or
forecasts that turn out to be incorrect. But that is not the proper role of disallowances. A utility is
entitled to reimbursement for expenses that are prudently incurred. When it approves a particular
rebate amount, the Commission 1) determines that the existence and the amount of the rebate
amount is reasonable,justified, and in the public interest and 2) that the Company is legally
required to administer the rebate in accordance with the terms of the approved tariff. Once the
tariffs are approved, the Company cannot deviate from them. If the rebates are later determined
to be in need of adjustment, the adjustment must be made on a forward-looking basis.
If there are to be disallowances, they must be based on deviations between what the
Company did and what the Company was legally required to do under the tariffs. For example, if
the Company provided rebates in an amount greater than required by the tariffs, or if the
Company provided rebates for products that weren't eligible under the tariffs, the Company
would not be able to recover those costs. If the Company sought to recover those costs, they
could be disallowed.
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By contrast, here the Staff asks the Commission to set the expectation that expenses
incurred under a Commission-approved tariff be disapproved. The Company submits that
disallowance under those circumstances would be arbitrary and inconsistent with law. The
Commission should not accept this recommendation.
3. Company's requests
For these reasons, the Company requests that the Commission:
1. Approve the EE expenses as prudently incurred.
2. If the Commission is inclined to make any finding at all regarding Order No. 36245, find
that the Company has complied with Order No. 36245 in full.
3. Approve the retirement of the Tankless Water Heater Tier II rebate (not Tier I), along
with Staff s proposed retirements of the Storage Water Heater, Whole Home Tier II and
Smart Thermostat rebates.
4. If the Commission orders quarterly meetings between the Company with Staff, confirm
the scope and content of the meetings as well as their interplay with the EESC.
5. Approve the TRM proposed by the Company for program planning going forward to
establish a shared, transparent, and efficient framework for program planning, program
implementation and program evaluation.
Dated: July 31, 2025.
GIVENS PURSLEY LLP
By Is/Preston N. Carter
Preston N. Carter
Givens Pursley LLP
Attorneys for Intermountain Gas Company
COMPANY REPLY COMMENTS PAGE I I OF I I

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT on July 31, 2025 I caused a true and correct copy of the
foregoing to be served upon the following parties as indicated below:
Commission Staff Via Electronic Mail
Monica Barrios-Sanchez, Commission Secretary [e-mail]
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, ID 83714
Chris Burdin [e-mail]
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, ID 83714
City of Boise
Ed Jewell [e-mail]
Jessica Harrison [e-mail]
Deputy City Attorneys [e-mail]
Boise City Attorney's Office
150 N. Capitol Blvd.
PO Box 500
Boise, ID 83701-0500
Katie O'Neil [e-mail]
Energy Program Manager
Is/Preston N. Carter
Preston N. Carter
COMPANY REPLY COMMENTS