20260115Staff Comments.pdf

RECEIVED
January 15, 2026
JEFFREY R. LOLL IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83702
[phone]
IDAHO BAR NO. 11675
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION'S APPLICATIONS FOR A ) CASE NOS. AVU-E-25-12 AND
DETERMINATION OF 2024 ELECTRIC AND ) AVU-G-25-09
NATURAL GAS 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 August 29, 2025, Avista Corporation, doing business as Avista Utilities
("Company"), filed two applications with the Commission requesting prudence determinations
of its 2024 Electric ("Electric Application") and Natural Gas ("Gas Application") Energy
Efficiency Expenses (collectively, the "Applications").
The Company requested an order designating its electric energy efficiency ("EE")
expenditures from January 1, 2024, through December 31, 2024, funded through the Company's
Schedule 91 Energy Efficiency Rider Adjustment ("Electric Rider") in the amount of
$17,276,972, as prudently incurred.
The Company also requested an order designating its natural gas EE expenditures from
January 1, 2024, through December 31, 2024, funded through the Company's Schedule 191
STAFF COMMENTS I JANUARY 15, 2026

Energy Efficiency Rider Adjustment("Natural Gas Rider") in the amount of$2,279,817, as
prudently incurred.
STAFF ANALYSIS
Staff reviewed the Company's Applications, reports, and responses to production
requests. Based on its review, Staff recommends the Commission approve $17,313,338 in
electric EE expenditures and$2,279,811 in natural gas EE expenditures as prudently incurred
from January 1, 2024, through December 31, 2024.
The comments below detail Staff s analysis of the Company's EE portfolio,program
financials, cost-effectiveness analyses,program offerings, and on-going projects. 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.
EE Portfolio Overview
In support of its filing, the Company submitted the 2024 Annual Conservation Report
along with attached appendices and exhibits. The reports and attachments provide detailed
overviews of the Company's electric and natural gas EE portfolio performance as well as
program and measure level performance details. A breakdown of each sector's savings and
Utility Cost Test("UCT") ratio by fuel type is provided in Table No. 1.
In the 2024 program year, the Company saved a total of 30,151 megawatt hours
("MWh") and 220,279 therms through its EE programs. 2024 Annual Conservation Report at 2.
These amounts do not include an additional savings of 6,952 MWh and 285,431 therms from its
participation in the Northwest Energy Efficiency Alliance's market transformation. Id. The
majority of electric savings are from the Commercial & Industrial ("C&I") sector while most
natural gas savings come from the residential sector. Both sectors show increasing electric
savings. Id. The residential sector shows increasing natural gas savings while the C&I sector
shows decreasing natural gas savings. Id.
STAFF COMMENTS 2 JANUARY 15, 2026

Table No. I Summary of EE Program Metrics
Fuel Type Electric Gas
Metric Savings UCT Savings (therms) UCT
(MWh)
Residential 2,391 3.78 185,712 1.17
Low Income 65 0.55 1,380 0.08
Non- 27,695 1.24 33,187 1.01
Residential
Portfolio 30,151 1.41 220,279 1.05
Financial Review
Staff performed an audit of the Company's EE expenses which included a sampling and
review of more than 120 transactions across all the EE programs. Staff found that expenses were
generally well-documented, and controls were in place and adjusted as needed to ensure proper
payment of incentives and other costs. However, Staff identified some expenses that were
misallocated and therefore needed to be adjusted. Based on Staff s audit and review of the
Company's EE expenses, the majority of expenses appear correct; however, certain expenses
must be adjusted and reassigned to their proper account.
Staff Audit
While auditing the Company's EE expenses, Staff found two misallocated transactions
paid to Resource Innovations Inc. that were part of the Small Business Direct-Install Lighting
program. The Company noticed these misallocations when they were pulling the documents,
and in response, reviewed all invoices for this program in 2024 and 2025. As a result of that
review, the Company found I 1 misallocated transactions across eight invoices in 2024. No
misallocations were found for 2025. See Company's response to Staff Production Request No.
12.
The identified adjustments result in an increase of$36,420 to Idaho's 2024 Electric Rider
because the expenses had been erroneously charged to Washington and should have been
charged to Idaho. This amount should be added back to avoid understating the Company's 2024
prudence request.
STAFF COMMENTS 3 JANUARY 15, 2026

During the audit, Staff identified$60 in gift cards in 2024 related to employee
recognition. Staff does not consider employee recognition expenses to be appropriate for
recovery from customers. Accordingly, these costs should be borne by shareholders. The
Company split the $60 between the Idaho Natural Gas Rider and the Idaho Electric Rider, with
$6 charged to the Natural Gas Rider, and $54 charged to the Electric Rider. The removal of
these expenses results in a decrease to both the gas and electric Idaho EE expenditures for 2024
and must be taken out to avoid overstating the 2024 prudence request.
In Staff Production Request No. 2, Staff requested copies of all internal audit reports
related to the Company's electric and gas EE programs and expenses for 2024. The Company
provided one internal audit report that was completed in July 2025 that reviewed expenses from
2022 through 2024. The Company stated the purpose of the audit was to "ensure expenses were
accurately allocated to their respective jurisdictions." See Company's response to Staff
Production Request No. 2. The report concluded that Internal Audit found no significant
findings and no expenses improperly allocated to the wrong jurisdictions.
While $36,420 is small relative to the $17,276,972 of expenses included in the Idaho
Electric Rider, Staff considers accuracy important regardless of magnitude. Staff also recognizes
that the misallocations of$36,420 in 2024 is significantly lower than the $125,558 of
misallocations that were found in the 2022 and 2023 EE program expenses and acknowledges
the Company's effort in reducing the number of misallocated charges in 2024.
Tariff Rider
Table No. 2 below provides a summary of the Company's Idaho Electric Rider revenues,
expenses and ending balance. Table No. 3 provides a summary of the Company's Idaho Natural
Gas Rider revenues, expenses and ending balance. The tables have incorporated the adjustments
discussed above.
STAFF COMMENTS 4 JANUARY 15, 2026

Table No. 2: Schedule 91 Electric Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2024—Overfunded $ 4,363,646
Reported Tariff Rider Revenue 2024 $ 4,091,564
Reported Tariff Rider Expenses 2024 $ (17,276,972)
Employee Recognition Gift Cards Adjustment $ 54
Small Business Direct-Install Lighting Program Adjustment $ (36,420)
Ending Balance, as of December 31, 2024—(Underfunded) $ (8,858,128)
Table No. 3: Schedule 191 Natural Gas Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2024—Overfunded $ 52,658
Reported Tariff Rider Revenue 2024 $ 4,035,247
Reported Tariff Rider Expenses 2024 $ (2,279,817)
Employee Recognition Gift Cards Adjustment $ 6
Ending Balance, as of December 31, 2023 - Overfunded $ 1,808,094
On January 1, 2024, the Company's electric tariff rider was overfunded by $4,363,646.
Electric Application at 4. On December 31, 2024, the electric tariff rider was underfunded by
$8.86 million. On July 31, 2025, in Case No. AVU-E-25-10, the Company filed an Application
requesting approval to increase its electric tariff Schedule 91, "Energy Efficiency Rider
Adjustment"rates, by 1.2%, effective October 1, 2025. In that Application, the Company stated
that the balance of the electric tariff rider balance was underfunded by nearly$17 million as of
June 30, 2025. The Company states that the biggest reason for the large,underfunded balance
was because the Small Business Direct-Install Lighting Program had much higher customer
participation than expected, starting in 2024 and continuing through 2025. Application at 3-4.
The Commission approved an increase to the Electric Rider rates, effective October 1, 2025.
Order No. 36779 at 4. The Company stated that it is hopeful the increase will bring the
forecasted electric tariff rider balance to zero by September 30, 2028. Order No. 36779 at 2.
Staff will continue to monitor the balance of the Electric Rider.
Table No. 3 shows that on January 1, 2024, the Company's Natural Gas Rider was
overfunded by $52,658. On December 31, 2024, the Natural Gas Rider balance was overfunded
by $1,808,094. The Company's 2024 Annual Conservation Report explained that the
STAFF COMMENTS 5 JANUARY 15, 2026

overfunded balance was a product of"lower-than expected participation in both commercial and
residential programs." 2024 Annual Conservation Report at 6.
On July 31, 2025, in Case No. AVU-G-25-06, the Company applied for approval to
decrease its Natural Gas tariff Schedule 191, "Energy Efficiency Rider Adjustment"rates,by
3.5%, effective November 1, 2025. In that Application, the Company stated that the balance of
the Natural Gas Rider was overfunded by approximately $2.9 million as of June 30, 2025.
Application at 3. The Commission approved a decrease in the Natural Gas Rider tariff rates,
effective November 1, 2025. Order No. 36821 at 3. The rate decrease is expected to bring the
forecasted natural gas tariff rider balance to zero by October 2028. Order No. 36821 at 2. Staff
will continue to monitor the balance of the Natural Gas Rider as well.
Natural Gas Furnace Evaluation
The Company contracted with a third-party evaluator("Evaluator") to conduct an impact
analysis of its 2024 programs. The Evaluation, Measurement and Verification("EM&V") of
Avista Idaho Natural Gas PY2024 Residential, Low-Income, and Nonresidential Energy
Efficiency Programs" ("Evaluation" or"2024 Evaluation") is included as Appendix B —2024
Natural Gas Impact Evaluation Report to the Company's Application.
In 2024, the residential natural gas Midstream program's most successful measure was
the natural gas furnace. The measure accounted for 1,558 of the midstream program's 1,640
rebates in 2024, which is more rebates than all other residential natural gas EE programs
combined. The Company reports that the measure saved 139,326 therms in 2024. 2024
Evaluation at 38. The Company states that the furnace measure's high savings can be attributed
to a cold climate and a baseline with a higher proportion of inefficient units. 2024 Annual
Conservation Report at 5. Due to the measure's large impact on the natural gas EE portfolio, the
baselines and assumptions supporting the measures savings estimates are an important
foundation for planning future cost-effective programs. The Evaluator ultimately recommended
that the Company estimate furnace savings based on the billing analysis results. Exhibit B at 40.
Staff believes that this recommendation does not provide an appropriate estimate of the furnace
measure savings to be used for planning future programs.
STAFF COMMENTS 6 JANUARY 15, 2026

2024 Evaluation Results
For the natural gas furnace measure, the Evaluator calculated a savings estimate using a
treatment-only billing analysis ("Treatment-only"). Appendix B at 38. This method calculates
savings by comparing the pre-period and post-period billing data of 337 participants to estimate
gross savings while accounting for the effects of weather and monthly behavioral variations. Id.
at 19-20. This method yields an annual gas savings of 90 therms/unit. Id. at 39. This is further
supported by Appendix H, in which the Evaluator conducts the same billing analysis for
participants from 2022 through 2024. Appendix H at 1.
The Treatment-only evaluation is a reasonable methodology for calculating the gross
savings in the 2024 program year and is well supported with billing data. However, Staff is
concerned that the sample considered by the analysis is not representative of full market
practices in the Company's service territory. Since the Treatment-only billing analysis considers
only data from self-selected participants in the program, a bias is introduced. This bias can be
demonstrated through comparison of regional estimates for the furnace measure with past
evaluation results of the measure in the Company's programs.
Market Practice Baseline
The Regional Technical Forum ("RTF") is a technical advisory committee that maintains
Unit Energy Savings ("UES")workbooks for measures that often serve as a basis for utility EE
programs. The RTF's UES workbook for natural gas furnaces provides calculations with
intermediate estimates for savings potential as assumptions and adjustments are incorporated.
Many of the Company's midstream programs measures are based on RTF calculations including
the expected savings for the furnace measure.
The Treatment-only analysis result of 90 therms/unit closely aligns with an intermediate
value in the workbook for the estimated savings from an 8 1%AFUE pre-condition baseline. The
furnace UES workbook estimates 98-110 therms/unit savings when considering an 8 1%AFUE
baseline upgrading to a 95-96.99%AFUE efficient option. RTF Residential ENERGYSTAR
Gas Furnaces v3.1 Workbook. This value is calculated before the workpapers apply the
assumption of a Current Practice Baseline ("CPB") to the measure. In this way, the Treatment-
only analysis results serve as a verification of the technical potential savings of the furnace
measure relative to a lower baseline efficiency.
STAFF COMMENTS 7 JANUARY 15, 2026

The most recent version of the RTF Furnace workbooks currently assumes that 51% of
the regional market has a high efficiency condensing boiler installed. When considering the
higher average efficiency of the CPB, the workpapers suggest a savings estimate of 36-44
therms/unit, approximately two times less than the result of the Treatment-only analysis. This
value is generally aligned with the savings the Company expected from the measure. 2024
Evaluation at 38. In the Company's previous prudence filing, Staff commented that a market
practice baseline provides an appropriate baseline to evaluate its programs and better represented
the Company's service territory. See Case No. AVU-E-24-09 Staff Comments at 7 and 8.
Conflicting Evaluation Results
The Evaluator's recommendation in the current Evaluation conflicts with results of a
previous evaluation. In its 2024 DSM prudence filing, the Company's Application contained an
impact evaluation of the 2022 program year residential natural gas programs ("2022
Evaluation"), which included a billing analysis of the furnace measure. AVU-E-24-09 &AVU-
G-24-09 Exhibit No. 1 at 240. This evaluation used a Post-Program Regression("PPR")billing
analysis method to calculate the savings estimate of 1,058 participants relative to statistically
similar non-participants. 2022 Evaluation at 31. This evaluation method concluded that the
furnace measure saved approximately 13 therms/unit. Id. Unlike the Treatment-only analysis,
the PPR analysis compares participants to statistically similar non-participants. Id. at 18. By
using non-participants as a baseline, this analysis better reflects the market practice of the
Company's service territory. Staff believes that the results of this analysis are valid, relevant,
and not appropriately considered by the Evaluator's recommendation in the 2024 Evaluation.
The results of the 2022 Evaluation are particularly noteworthy as it is the same year
considered by the multi-year Treatment-only analysis provided in the Evaluator's memorandum.
In Appendix H, the Evaluator provides the number of customers,by year, who were considered
for the multi-year analysis. Specifically, the Evaluator notes that for the 2022 program year, this
includes only 43 participants and is likely a contributing factor to the uncertainty behind the
estimate. Appendix H at 3. The 2022 PPR Evaluation considered 1,053 participants, all of
which were included in the analysis and matched with statistically similar non-participants. 2022
Evaluation at 31. Staff believes that the 2022 PPR Evaluation methodology produced more
meaningful results from a more representative sample and larger sample size.
STAFF COMMENTS 8 JANUARY 15, 2026

In Response to Staff Production Request No. 15, the Company details why the Evaluator
used the Treatment-only analysis as opposed to other methods. In the response, it explains that
the Evaluator was unable to verify that the non-participant customer billing data would constitute
a valid control group for treatment versus control regression analyses. Response to Staff
Production Request No. 15. Specifically, because the Company's tracking data did not include
information on residential customer household square footage and heating equipment type, the
Evaluator was not convinced that the available non-participant cohort would be a valid control
group for treatment versus control regression analyses. Id. The Evaluator's statement conflicts
with statements from the same Evaluator in other impact evaluations it has conducted. In a 2020
impact evaluation for a similar program, the Evaluator stated:
While it is not possible to guarantee the possibility of creating a sufficiently
matched control group, this method is preferred because it is likely to have more
meaningful results than a Treatment-only analysis. Some examples of outside
variables that a control group can sufficiently control for are changes in economies
and markets, large-scale social changes,or impacts from weather-related anomalies
such as flooding or hurricanes.
Intermountain Gas Company 2018-2019 Energy Efficiency Program Impact Evaluation at 8.
Staff believes that through the propensity matching, the PPR analysis controls for these
variables mentioned by the Evaluator, even if they are not explicitly known, address the
Evaluators concerns.
Natural Gas Portfolio Implications
In the August 2024 quarterly check-in with Staff, the Company described a decline in the
avoided costs of its natural gas sector. The Company explained that in its most recent update to
natural gas forecasts, the Company may not be able to maintain a cost-effective natural gas EE
portfolio. In response, the Company was considering suspension of its natural gas programs.
The Company previously suspended its natural gas programs in 2012. See Case No. AVU-G-12-
03. At the time, lower natural gas prices and associated lower avoided costs caused the
Company to suspend its natural gas EE programs by setting the Schedule 191 to $0.00/therm for
every rate class and re-evaluated the prospects of resuming the programs annually. Id. In 2015,
STAFF COMMENTS 9 JANUARY 15, 2026

the Company resumed its natural gas programs when the economics of natural gas EE programs
improved. See Case No. AVU-G-15-03.
In continued discussions with Staff, the Company refined its forecasts and believed it
could operate cost-effective natural gas programs. To do so, the Company proposed in its June
Energy Efficiency Advisory Group to discontinue certain natural gas measures and to reduce
incentives for certain other measures. However, the Company's program planning assumed a
therms savings estimate for the furnace measure of 85 therms. August 2024 quarterly check-in
slidedeck at 22. As described above, this assumption is based on a recommendation that does not
appear to accurately represent the Company's service territory. In this context, Staff is
concerned that overestimating the savings of the natural gas furnace measure could in turn inflate
cost-effectiveness of the measure and the cost-effective planning of the midstream program, the
residential gas sector, and the Company's natural gas portfolio. Staff recommends that the
Company make the necessary adjustments to plan for the furnace measure to reflect the
evaluation history and other baseline sources. Staff further recommends that the Company file to
suspend its natural gas programs if it cannot plan those programs in a cost-effective manner
under the reduced savings estimate.
ENERGY STAR Homes
The Company's ENERGY STAR homes program offers incentives for the construction
of new manufactured homes that are built to meet the Northwest Energy-Efficient Manufactured
Housing Program ("NEEM") V 1.1 Standards. In late 2024, the RTF updated the measure,
increasing the baseline for savings measurements from a non-NEEM home to the current NEEM
V 1.1 to better reflect market practices. In support, the RTF's slides suggest that nearly every
new manufactured home meets the NEEM V 1.1. See RTF November Meeting: Update Planning
UES: New Manufactured Homes and HVAC at 20. Review of the Company's current offering
suggests that it is directly affected by the RTF's change and could result in substantial reductions
to the measure's savings,potentially even eliminating current savings entirely. Staff
recommends that the Company review the RTF's changes and update as necessary. Should the
Company continue the measure, Staff recommends that the Company provide detailed analysis
that supports the continued savings of the program.
STAFF COMMENTS 10 JANUARY 15, 2026

STAFF RECOMMENDATION
Based on its review detailed above, Staff recommends that the Commission issue an
order:
• Approving $17,313,338 in electric EE expenditures and$2,279,811 in natural gas EE
expenditures as prudently incurred from January 1, 2024, through December 31, 2024;
• Directing the Company to make the necessary adjustments to plan for the furnace
measure to reflect the evaluation history and other baseline sources,
• Directing the Company to file to suspend its natural gas programs if it cannot plan those
programs in a cost-effective manner under the reduced savings estimate; and
• Directing the Company to review the RTF's changes to NEEM and make changes as
necessary.
Respectfully submitted this 15th day of January 2026.
Jeffrey- R. Loll
Depute Attorney General
I:\Utility\UMISC\COMMENTS\AVU-E-25-12 and AVU-G-25-09 Comments.docx
STAFF COMMENTS 11 JANUARY 15, 2026

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15TH DAY OF JANUARY 2026,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. AVU-E-25-12/AVU-G-25-09, BY E-MAILING A COPY THEREOF TO THE
FOLLOWING:
DAVID J. MEYER SHAWN J. BONFIELD
VP & CHIEF COUNSEL SR. MGR., REGULATORY POLICY & STRATEGY
REGULATORY& GOV'T AFFAIRS AVISTA CORPORATION
AVISTA CORPORATION PO BOX 3727
PO BOX 3727 SPOKANE WA 99220-3727
SPOKANE WA 99220-3727 E-mail: shawn.bonfield(cavistacorp.com
E-mail: david.me ergavistacorp.com
avistadockets(&,avistacorp.com
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PATRICIA JORDA , SECRETARY
CERTIFICATE OF SERVICE