20250918Staff Comments.pdf

RECEIVED
September 18, 2025
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11560
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR A ) CASE NO. IPC-E-25-12
DETERMINATION OF 2024 DEMAND-SIDE )
MANAGEMENT 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, Erika K. Melanson, Deputy Attorney
General, submits the following comments.
BACKGROUND
On March 14, 2025, Idaho Power Company("Company") filed an application
("Application") with the Commission requesting an order designating expenditures of
$25,922,708 in Idaho Energy Efficiency Rider(`BE Rider") funds, and $8,950,583 of demand
response program incentives, as prudently incurred demand-side management("DSM")
expenses. Application at 1. In its Application the Company included its 2024 DSM Annual
Report("Annual Report") and two associated supplements ("Supplement 1" and"Supplement
2"
STAFF COMMENTS 1 SEPTEMBER 18, 2025

On April 8, 2025, the Commission issued a Notice of Application and Notice of
Intervention Deadline, setting a deadline for interested parties to file a petition to intervene.
Order No. 36534. No petitions to intervene were filed.
On June 30, 2025, in compliance with Order No. 36331, the Company filed a supplement
to its Application("Supplemental Application") containing a completed follow-up evaluation of
the Company's Residential New Construction("RNC")program. In its Supplemental
Application, the Company requested that the Commission find that the Company complied with
the directive outlined in Order No. 36331. Supplemental Application at 6.
STAFF ANALYSIS
DSM Portfolio
The Company reported that its DSM portfolio was cost-effective in 2024 with a Utility
Cost Test("UCT")ratio of 1.72. Application at 7. The programs in the portfolio captured a total
of 143,599 Megawatt-hours ("MWh") of energy savings. Id. These savings included an
estimate of 24,501 MWh of savings attributable to the Northwest Energy Efficiency Alliance.
Id. At a sector level, the Company's Commercial &Industrial ("C&I")programs continue to
provide the majority of savings with 90,336 MWh. Id. Next, the residential sector captured
24,472 MWh of savings. Id. Finally, the Irrigation sector contributed 4,290 MWh of savings.
Id. Of the Company's fourteen offerings across all sectors, five are not cost-effective. Annual
Report Supplement 1 at 16. In general, Staff believes the Company's DSM programs are well
managed and cost-effective. The comments below detail Staff s analysis of the Company's
DSM expenses, DSM changes from other Commission orders,program cost-effectiveness, and
other topics. Staff notes that the lack of comment on any portion of the Company's DSM
offerings should not be construed as approval or support.
Changes from other Cases
In 2023, the Company's General Rate Case ("GRC") and Integrated Resource Plan
("IRP") filings implemented several changes that affected its DSM programs. Due to the timing
of these filings, the 2024 program year was the first year many of the impacts of these changes
were realized.
STAFF COMMENTS 2 SEPTEMBER 18, 2025

First, in its 2023 IRP, Case No. IPC-E-23-23, the Company implemented changes to its
avoided cost practices and load shape time blocks for its DSM programs. The Company
previously evaluated its DSM programs using avoided cost averages provided by the most
recently acknowledged IRP. IPC-E-23-23 Staff Comments at 20. After discussions with its
stakeholders, the Company has changed its policy to use avoided costs provided by the most
recently filed IRP. Id. Staff believes that this change will allow DSM programs to reflect the
Company's system and planning process more closely.
Second, the 2023 IRP also included updated seasons and hours of highest risk that have
led to a change in the DSM program savings load shapes. Previously, the Company assigned
savings to five-time blocks with different values based on when the savings of the measure
occurred.' However, the Company forecasted an increase to risk in winter months in the 2023
IRP. This has expanded the current non-summer mid and off-peak time blocks into the off-
season low-risk block for shoulder months and the low, medium, and high-risk blocks for winter
months. 2023 IRP Appendix C at 92-95.
Third, in its 2023 GRC, Case No. IPC-E-23-11, a settlement approved by Order No.
36042 ("Settlement") made two changes to funding in the EE Rider. The approved Settlement
shifted a total of$1,324,853 in income-qualified weatherization and low-income education
funding from base rates into the EE Rider and approximately $3.5 million of the EE Rider
funded labor costs into base rates. Settlement at 7.
Financial Review
Staff conducted an audit of the Company's EE Rider and demand response ("DR")
expenses, which included a sampling and a review of more than 130 transactions across the
Company's programs. Staff believes the Company's expenses were well-documented, and
controls were in place and adjusted as needed to regulate proper payment of incentives and other
costs. Additionally, Staff believes the Company's internal review process identified and
corrected mistakes prior to the filing of its DSM reports. Based on Staff s audit, the Company's
EE Rider expenses appear to be prudent.
' Summer On-Peak,Summer Mid-Peak,Summer Off-Peak,Non-Summer Mid-Peak,and Non-Summer Off-Peak.
STAFF COMMENTS 3 SEPTEMBER 18, 2025

Staff recommends that the Commission find that the Company prudently incurred
$34,873,291 in DSM-related expenses for 2024. This total consists of$25,922,708 in EE Rider
expenses and $8,950,583 in DR incentives. Application at 8-9. Demand response incentives
were included for recovery and audited in the 2024 Power Cost Adjustment. Case No. IPC-E-24-
17, Order No. 36202.
The Company's internal review process identified two prior year-end adjustments to its
2023 EE Rider expenses. Application at 9. The first prior year adjustment was a reduction of
$1,771 and was associated with the Irrigation Peak Rewards program which should have been
charged to operations and management("O&M") expenses rather than the Idaho Rider; this
amount must be added back to the EE Rider expenses to avoid understating the 2024 prudence
request. Id. The second prior year adjustment was associated with the Residential New
Construction program where the expense was initially charged to the Oregon Rider instead of the
Idaho Rider, resulting in an additional $194. Id. The corrections to the EE Rider occurred in
2024; however, the $194 needs to be subtracted from the Company's 2024 prudence request
because it was already deemed prudent by the Commission in the 2023 request. Id.
In preparation of filing its case, the Company identified three current year-end accounting
adjustments to the EE Rider for 2024, and the corrections were made after the 2024 year-end
financial books were closed. Id. at 10. The first current-year adjustment was an increase of
$5,383, which was related to expenses associated with the Home Energy Audit program that
were charged to O&M expenses rather than the Idaho Rider. Id. The second adjustment was
also an increase of$5,523 that was associated with the Rebate Advantage program where the
expense was initially charged to O&M expenses instead of the Idaho Rider. Id. The final
adjustment was a reduction of$2,278 from the Irrigation Peak Rewards program where the
expenses were originally charged to O&M expenses but should have been charged to the Idaho
Rider. Id.
Staff calculated the DSM Rider account balance as of December 31, 2024, in Table No.
1,below:
STAFF COMMENTS 4 SEPTEMBER 18, 2025

Table No. I Tariff Rider Reconciliation
2024 Idaho Power Beginning Rider Balance $ 700,361
2024 Tariff Revenue $ 32,491,725
Interest on Tariff Rider Balance $ 290,925
Total Funds Accrued $ 33,483,011
2024 Reported Expenses $ (25,922,708)
Prior Year-End Accounting Adjustments
2023 Irrigation Peak Rewards Adjustments $ 1,771
2023 Residential New Construction Adjustment $ (194)
Current Year-End Accounting Adjustments
2024 Home Energy Adjustment $ 5,383
2024 Rebate Advantage Adjustment $ 5,523
2024 Irrigation Peak Rewards Adjustment $ (2,278)
2024 Total Expenses $ (25,912,503)
2024 Ending Balance $ 7,570,508
Table No. 1 shows that as of December 31, 2024, the EE Rider balance had a positive or
over-collected balance of$7,570,508. Nesbitt Testimony at 15. The EE Rider began the year
with an over-collected balance of$700,361, meaning the balance increased by almost $7 million.
This is a substantial increase when compared to historical trends. Calculating the change in the
EE Rider balance using the annual reports from the last four years shows that the EE Rider
increased by $4.3 million in 2023, $3.3 million in 2022, and$5.3 million in 2021.
On June 1, 2023, Idaho Power filed a GRC (IPC-E-23-11)where the Company requested
to reduce the EE Rider rate to 2.25%, from its current 3.1%. The parties in that case reached a
settlement, which included a component that set the EE Rider rate at 2.35%. In Order No.
36042, the Commission approved the EE Rider rate of 2.35%. The decrease helped the EE Rider
maintain a reasonable balance during the 2023 program year as shown in the 2023 Annual
Report. However, the current overfunded balance suggests that the EE Rider rate may be too
high.
STAFF COMMENTS 5 SEPTEMBER 18, 2025

Expenses
In 2024, the Company spent $25 million on EE Rider expenditures. This is
approximately $5 million less than the Company's 2023 expenses of$30 million. One of the
main reasons the Company's expenses decreased in 2024 was due to the DSM labor expenses
being removed from the EE Rider. In the 2023 General Rate Case, IPC-E-23-11, the Company
requested to shift labor cost out of the EE Rider and into base rates. In Order No. 36042, the
Commission approved the change.
The 2024 DSM program year experienced lower than expected participation in the
Heating and Cooling Efficiency ("H&CE")program. Nesbitt Testimony at 25. Further, the
incentive for the Smart Thermostat was reduced at the end of 2023, from $75 to $50. Id. Lastly,
the Home Energy Audit program in 2024 saw a drop in participation by 30%. February EEAG
Residential Presentation at 7.
Program Management—
Heating and Cooling Efficiency
The H&CE program provides monetary incentives for residential customers,builders,
and contractors for the installation of energy-efficient heating and cooling equipment. Annual
Report at 46. Cost-effectiveness of the program as a whole increased from a UCT of 0.94 in
2023 to a UCT of 0.95 in 2024. Id. The Company explained that updated DSM avoided costs in
the Company's 2023 IRP and monetary incentives that were lowered in November 2023
contributed to increased cost-effectiveness. Id. at 49. Despite the increase, the Company
asserted that"[t]he main driver of the H&CE program not being cost-effective in 2024 was lower
than anticipated program participation, which, in turn, resulted in lower program savings during
the year." Application at 13. The number of program participants decreased from 1,035 in 2023
to 622 in 2024. Annual Report at 46.
In 2024, the program consisted of 13 individual offerings, or measures. Id. at 46-47.
Incentive amounts vary depending on the measure, which can range from installation of smart
thermostats to heat pumps. Staff reviewed the Company's Application, testimony, Annual
Report, and supporting workpapers to analyze the performance of each individual measure and is
concerned with three measures based on their historical UCT values, which are shown in Table
No. 2 below.
STAFF COMMENTS 6 SEPTEMBER 18, 2025

Table No. 2 H&CE Measures With Historical UCT Values Below 1.0
Measure 2024 2023 2022 2021 2020
Ductless Heat Pump 0.62 0.41 0.54 0.66 1.19
Duct Sealing 0.71 0.41 0.81 0.94 1.06
Smart Thermostat 0.57 0.41 0.39 0.45 0.65
As seen in Table No. 2, the measures' performance based on UCT values has generally
declined since 2020. The Company lowered the monetary incentive for all three measures for
the 2024 calendar year, which helped improve their cost-effectiveness. Id. Staff recognizes the
Company's efforts to evaluate and modify individual measures that do not produce a UCT result
above 1.0. Staff does not recommend any changes to the H&CE program at the moment but
believes future changes to individual measures may be warranted depending on 2025
performance. The H&CE program will be undergoing a thorough evaluation in 2025 as part of
the Company's program evaluation plan. Annual Report Supplement 2 at 3. Staff expects
results of this evaluation to be available for review in 2026 and anticipates it to inform
recommendations for improving cost-effectiveness of the H&CE program and individual
measures within it.
In Order No. 36680, The Commission approved the Company's proposal for a Bring
Your Own Thermostat("BYOT") option to its existing A/C Cool Credit("ACCC") DR program.
The Company plans to market the BYOT option to customers that have received an incentive for
a smart thermostat under the H&CE program. IPC-E-25-09 Application at 5. Because the
BYOT option relies on the same smart thermostat technology as the energy efficiency option,
there may be potential for interactive risks and benefits between the two programs. Staff expects
that the planned 2025 evaluation may provide additional insights into the crossover of these two
offerings.
Home Energy Reports
The Home Energy Reports ("HERs")program was designed to encourage customers to
engage in energy-efficient behaviors through periodic home energy reports. Application at 55.
The Company contracts with a third party to deliver quarterly reports detailing customers'
energy use compared to similar homes along with suggestions on how to reduce their energy
STAFF COMMENTS 7 SEPTEMBER 18, 2025

usage. Id. In 2024, the HERS program contributed 18,596,812 kWh of savings. Id. This
amount represents 75% of total residential sector savings. At the end of 2023, the Company's
contract with their third-party vendor ended. Annual Report at 55-56. The Company has
contracted with a new vendor for the 2024 program year, which includes an additional treatment
group of approximately 25,000 customers. Id.
While the program was offered to more customers in 2024, Staff remains concerned that
the program's design excludes the participation of certain customers as described in more detail
in previous cases.2 In Order No. 36331, the Commission directed the Company to continue
exploring alternatives to validate the savings generated by the HERS program that would allow
all customers to participate. Through its February 2025 and May 2025 EEAGs, the Company
presented potential alternatives to the current randomized control methodology which included a
review of a similar program operated by a peer utility. As a result of these discussions the
Company moved its planned impact evaluation of the HERS program in 2027 to 2025. The
evaluation will have additional research objectives related to core deemed savings estimations,
control group options and optimization, eligible customer evaluation, utility bench marking, and
a short/long-term risk report. Staff will review the results of the evaluation when it is included in
a future prudence filing.
Residential New Construction
In Order No. 36331, the Commission ordered the Company to conduct a follow-up
evaluation of the RNC program using billing analysis. The Company contracted with a third-
party evaluator("Evaluator") to conduct the Residential New Construction Billing Analysis
("Evaluation"). The Company filed the completed Evaluation as Exhibit No. 4 to the
Supplemental Direct Testimony of Quentin Nesbitt. Staff s review of the Evaluation is detailed
below. Staff recommends that the Commission find that the Company complied with Order No.
36331.
The Evaluation presented its goals of its billing analysis to determine consumption
difference between participant and non-participant homes and provided recommendations to
enhance future savings estimates. Evaluation at 7. The primary analysis methodology of the
Evaluation used energy consumption billing data from participant and non-participant homes
2 See IPC-E-24-11 Staff Comments at 6-7.
STAFF COMMENTS 8 SEPTEMBER 18, 2025

built between 2021 and 2023 to match homes with similar summer consumption. Id. at 9.
Additionally, for participant customers, the Evaluation compared billing analysis results to
simulated savings tracking data. Id. at 22-23. Billing analysis results showed a 17%reduction in
winter heating consumption for participant customers and that the annual average actual usage
was within 5% of simulated models annual average consumption. Id. at 2-4. Staff believes that
the Evaluation has reasonably verified the actual energy savings of RNC participants on the
Company's system.
The Evaluator noted two caveats with its analysis; however, Staff believes that they do
not cause significant issues with the Evaluation results. Id. First, The Evaluator noted that the
analysis design likely resulted in a conservative estimate. Id at 22. The analysis design matched
participants with non-participants based on summer usage which inherently minimizes the
matched differences in winter usage. Id. Staff agrees that participants should use less energy in
all seasons compared to a similar non-participant. However, the previous evaluation suggested
that cooling savings are a small portion of the overall project savings, meaning that the current
Evaluation likely reflects the majority of savings claimed by the RNC program. Id. at 13.
Additionally, the Evaluator noted that some non-participant homes were built above code. Id.
This would naturally reduce actual savings estimates when compared to simulation modeling.
Id. Staff believes that the impact of this caveat is offset by part of the savings calculation
baseline detailed below. Second, the Evaluator noted that the number of participants considered
by the Evaluation was not sufficient to provide statistically meaningful results for most regions,
building types, or percent above code category. Id. at 21. The only category with sufficient
participation was for attached/townhome/condo building types in Boise. Id. However, the 260
participants considered were sufficient to provide program level results. Id. Staff recommends
that as part of its next evaluation of the RNC program, the Company consider the incremental
expense and availability of adequate participant data when justifying its selected evaluation
method.
Staff believes a key contribution to the agreement of billing analysis and simulated
analysis results is how the savings of the program are calculated. In response to Production
Request No. 9, the Company clarified that, while the program requirement specifies homes to be
built at least 10%, 15%, or 20% above code, claimed savings are calculated against a simulated
baseline that includes current market data when it is above code. Staff believes that this is
STAFF COMMENTS 9 SEPTEMBER 18, 2025

appropriate as it better represents the actual market practices in the Company's service territory.
Consistent with the caveat from the Evaluator, when non-participant homes are built above code,
the savings potential of the program is reduced and leads to a more conservative estimate of
program savings. Id. at 22.
Shade Tree
The Company's Shade Tree Project offered no-cost shade trees and educational materials
to residential customers to encourage planting trees in locations that will shade homes during
summer months and reduce energy used on cooling. Annual Report at 71. In 2023, the measure
received updated tree mortality rates and heating impact assumptions from a third-party impact
evaluation that resulted in the measure becoming not cost-effective. Id. at 72. Since the
Company had already committed to the purchase of trees for the 2024 program, the Company
continued to operate the Shade Tree Project until its final event in May 2024. Id.
Small Business Lighting
In its February 2024 and May 2024 EEAG meetings, the Company discussed and
developed a restructuring of the previously offered Small Business Direct Install offering that
closed in 2023. The new Small Business Lighting("SBL") offering launched September 2024.
Id. at 130. The new program targets hard-to-reach small business customers and offers
$0.40/kWh up to 100% of project costs. Id. Because the program launched late into the 2024
program year, it was not cost-effective but is expected to be cost-effective going forward. Id. at
131. Staff will continue to review the new SBL offering in the Company's next prudence filing.
Low-Income Weatherization
The Company offers two low-income weatherization programs: the Weatherization
Assistance for Qualified Customers ("WAQC")program, and the Weatherization Solutions for
Eligible Customers ("Weatherization Solutions") program. Id. at 75 and 90. The Company
reported that each low-income weatherization program remained not cost-effective in 2024. Id.
The WAQC program saw an increase in participation and savings leading to an increased UCT
of 0.17 or 0.16 when including the re-weatherization efforts. Id. at 81. The Weatherization
Solutions program saw an increase in participation and savings leading to a UCT of 0.14. Id. at
STAFF COMMENTS 10 SEPTEMBER 18, 2025

90. Staff recognizes the struggles of achieving a cost-effective low-income weatherization
program. In Case No. IPC-E-24-39, the Company proposed a series of changes to the WAQC
program because of the 2023 GRC Settlement. In Order No. 36406, the Commission approved a
one-time increase to the average annual cost cap as well as other changes. Staff continues to
work with the Company to improve the cost-effectiveness of these programs.
In 2023, a large balance of unused WAQC funds were carried over from previous years.
In Order No. 35583, the Commission approved the Company's proposal to allow carryover funds
to be used for re-weatherization projects as a solution to deplete a large pool of built-up funding.
Under these projects, the Company will pay 100% of the upgrade costs for homes that previously
qualified for the low-income assistance upgrades but did not receive heating, Ventilation and Air
conditioning ("HVAC")upgrades. In 2024, the re-weatherization program weatherized 12
homes. Annual Report at 80. These projects cost $168,893 with an average cost of$12,795 per
home. Id. Due to the additional spending for the re-weatherization program, the WAQC
program spent a total of$1,458,506, which was slightly over the annual allocation of$1,212,534.
Id. at 76. As of the August 2025 EEAG, the remaining carryover balance was $200,000.
Demand Response
Performance Summary
The Company maintained three DR programs designed to reduce load during critical
hours and minimize or delay the need to build new resources. Id.at 7-8. The ACCC program,
Flex Peak program, and Irrigation Peak Rewards program were designed to target the residential,
C&I, and irrigation sectors, respectively. In 2024, the Company's DR programs incurred
$8,950,583 in incentive payments funded through base rates. Application at 179. The programs
achieved 257 MW of non-coincident demand reduction from its 323 MW of nameplate capacity.
Annual Report at 8. Staff reviewed the Company's DR programs and believes that the programs
were well-managed, cost-effective, and prudent.
Cost-effectiveness Continuation
In Order No. 36133, the Commission directed the Company to work with Staff and other
stakeholders to develop and consider alternative methods to evaluate the cost effectiveness of its
DR programs. After several discussions, the Company filed case IPC-E-24-37 proposing
STAFF COMMENTS 11 SEPTEMBER 18, 2025

changes to its Flex Peak and Irrigation Peak Rewards DR programs. In Order No. 36449, the
Commission approved the proposals as filed.
STAFF RECOMMENDATION
Staff recommends that:
1. The Commission approve $34,873,291 of 2024 DSM expenses as prudently incurred;
and
2. The Commission find that the Company complied with Order No. 36331.
Respectfully submitted this 18th day of September 2025.
�,Mj ",-
Erika K. Melanson
Deputy Attorney General
Technical Staff. Jason Talford, Laura Conilogue, Michael Ott
I:\Utility\UMISC\COMMENTS\IPC-E-25-12 Comments.doex
STAFF COMMENTS 12 SEPTEMBER 18, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 18th DAY OF SEPTEMBER 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-25-12, BY &MAILING A COPY THEREOF, TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN CONNIE ASCHENBRENNER
REGULATORY DOCKETS MARY ALICE TAYLOR
IDAHO POWER COMPANY IDAHO POWER COMPANY
1221 WEST IDAHO STREET (83702) 1221 WEST IDAHO STREET (83702)
PO BOX 70 PO BOX 70
BOISE ID 83707 BOISE ID 83707
E-MAIL: E-MAIL: caschenbrennergidahopower.com
mgoicoecheaallen&idahopower.com mtgylor&idahopower.com
dockets(&,idahopower.com
PATRICIA JORD , SECRETARY
CERTIFICATE OF SERVICE