20260129Staff Comments.pdf

RECEIVED
January 29, 2026
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83702
[phone]
IDAHO BAR NO. 11560
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-25-05
DETERMINATION OF 2024 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, Erika K. Melanson, Deputy Attorney
General, submits the following comments.
BACKGROUND
On September 2nd, 2025, Intermountain Gas Company("Company") filed an application
("Application") with the Commission for an order designating $4,466,551 of 2024 energy
efficiency expenditures as prudently incurred. The Company's Application included its 2024
Energy Efficiency Annual Report("Annual Report"), a Process Evaluation of Commercial
Program Rebates, and a Commercial Technical Reference Manual ("TRM"). The Company's
Application is the seventh Demand-Side Management ("DSM") Energy Efficiency (`BE")
prudence filing made by the Company since the EE Program's inception on October 1, 2017.
On February 3, 2025, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 36768. There were no intervening parties in this case.
STAFF COMMENTS 1 JANUARY 29, 2026

STAFF ANALYSIS
Staff examined the Company's Application, Annual Report, workpapers, and additional
information provided by the Company through discovery. Based on its investigation, Staff
recommends the Commission approve the Company's EE Program expenses of$4,466,551, less
$975 in financial adjustments as prudently incurred, for a total of$4,465,576, and acknowledge
that the Company has not yet had a chance to comply with Order No. 36797.
The comments below address the Company's Program financials, Impact Evaluation and
Evaluation Measurement and Verification ("EM&V")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
Staff Audit
Staff performed an audit of the Company's EE expenses, which included a review of EE
incentive payments, marketing campaign expenses, and labor expenses, as well as a sampling
and review of more than 50 transactions across all the EE Programs. Staff found that the
Company's EE expenses were generally well documented and that controls were in place to
ensure the proper payment of incentives and other expenses. However, Staff identified certain
rebates that were paid more than once and therefore should be removed to avoid overstating the
Company's 2024 prudence request. These instances indicate that the Company's internal control
processes may require improvement.
While auditing the expenditures from the Residential Program, Staff identified three
rebates that were paid more than once. The rebates were for the Tankless Water Heater Tier I,
and each rebate payment was to the same customer at the same address, for the same water
heater, on two separate dates. The duplicate payments occurred on at least three separate
occasions during 2024. In the Company's response to Staff Production Request No. 12, the
Company stated, "[s]ample Item#14: This is a duplicate payout for the equipment associated
with Sample Item#13." The Company provided similar responses for Sample Items Nos. 19 and
36. See Company Response to Staff Production Request No. 12. Staff believes that the three
duplicate payouts of$325, total of$975, were not prudently incurred and should be disallowed.
STAFF COMMENTS 2 JANUARY 29, 2026

Accordingly, Staff recommends the $975 in rebates that had been erroneously paid twice be
removed to avoid overstating the Company's 2024 prudence request.
Tariff Rider
Table No. 1 below provides a summary of the Company's Residential Rider revenues,
expenses, and ending balance. Table No. 2 provides a summary of the Company's Commercial
Rider revenues, expenses, and ending balance. The tables have incorporated the adjustments
discussed above.
Table No. l: Residential Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2024 (Over-funded) $ 1,352,769
Tariff Rider Revenue $ 3,989,432
Tariff Rider Expenses $ (4,314,915)
Staff s Recommended Disallowance $ 975
Net expenses $ (4,313,940)
Ending Balance, as of December 31, 2021 (Over-funded) $ 1,028,261
Table No. 2: Commercial Tariff Rider Reconciliation
Beginning Balance, as of January 1, 2024 (Over-funded) $ 891,719
Tariff Rider Revenue $ 294,202
Tariff Rider Expenses $ (151,637)
Ending Balance, as of December 31, 2021 (Over-funded) $ 1,034,285
On January 1, 2024, the Energy Efficiency Charge ("EEC") Rider 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$1,352,769, and the Energy Efficiency
General Service Customers ("EEC-GS")was $891,719 over-funded. See Annual Report at 5 and
23.
By June 2024, the EEC-RS was over-funded by$1,919,667, and the EEC-GS was over-
funded by $1,029,904. Case No. INT-G-24-03, Company's Application at 3. The Company
filed a request to reduce the rates on August 6, 2024, in Case No. INT-G-24-03. The Company
stated two primary reasons for the overfunded balance. First, the Company stated that therm
STAFF COMMENTS 3 JANUARY 29, 2026

sales were higher than the Company had forecasted. See 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 changes to the total dollars paid in rebates compared to the forecast." Id.
The Company proposed to reduce the EEC-RS from $0.01564 per therm to $0.01149 per therm,
and decrease the EEC-GS from $0.00320 per therm to $0.00 per therm. Id. at 7. The Company
stated that it is hopeful the decrease will reduce the forecasted electric tariff rider balance by half
by the end of 2026. See INT-G-24-03 Application at 5. The Commission approved the 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 and to evaluate the long-term viability of
the Program. Id. at 4. Staff will continue to monitor the rider balance trends in the Company's
quarterly updates and recommend adjustments as needed.
Revenues and Expenditures
The Company's EE Program expenditures are funded via the EEC-RS and the EEC-GS.
During the 2024 Program year, the Residential Program was funded through an EEC-RS rate of
$0.01564 per therm until October 1, 2024, when the rate was reduced to $0.01149. Application
at 6. Total Residential Program revenues for calendar year 2024 were $3,989,432. Id. The
Commercial Program was funded through an EEC-GS rate of$0.00320 until October 1, 2024,
when the collection rate was reduced to zero. Prior to October 1, 2024, the EEC-GS generated
$294,202 in revenues. Id.
Customer participation in the Residential Program increased significantly in 2024, rising
22.5% compared to 2023. The Company paid 10,413 rebates in 2024, up from 8,496 in 2023.
See 2024 Annual Report at 6-15; 2023 Annual Report at 7-11. The most frequently redeemed
rebate was the Furnace rebate, with 4,032 rebates issued, followed by the Smart Thermostat
rebate, with 3,389 rebates issued. Id. Corresponding with the increased participation, the
Residential Program rebates increase from $2,767,789 in 2023 to $3,394,896 in 2024. See 2024
Annual Report at 5; 2023 Annual Report at 5.
Participation in the Commercial Program remained unchanged in 2024, with 22 rebates
paid in both 2024 and 2023. See 2024 Annual Report at 23-25; 3023 Annual Report at 7-11. In
2024, the Commercial Program recorded revenues of$294,202 and expenditures of$151,637.
2024 Annual Report at 23. The Company attributes the continued low participation to slow
STAFF COMMENTS 4 JANUARY 29, 2026

customer uptake of the Commercial Program. Id. Although the number of Commercial rebates
remained unchanged in 2024, total Commercial rebate expenditures increased from $26,505 in
2023 to $54,828 in 2024. See 2024 Annual Report at 6-15; 2023 Annual Report at 7-11. This
increase was primarily due to the issuance of seven High Efficiency Condensing Boiler rebates
in 2024, compared to two in 2023. See 2023 Annual Report at 22; 2024 Annual Report at 23.
The High Efficiency Condensing Boiler incentive offers customers $4.50 per kBTUh for
qualifying installations and can result in a relatively large rebate per project.
Revenue collection through the EEC-RS and EEC-GS tariffs tend to follow a cyclical
pattern. Staff expects the Tarif Rider balances to increase during winter months as natural gas
consumption rises and to decrease during summer months as consumption declines. Staff will
continue to monitor the Tariff Rider's revenue collections and their impact on the Tariff Rider
balance.
Labor Expense
Labor expense as a percentage of total EE Program expenses remained stable in 2024 at
17.2%, compared to 17.6% in 2023. See 2024 Annual Report; 2023 Annual Report. Although
the EE Program labor expenses increased by$93,148, the total Program expenses increased by
$620,196 during the same period. See 2024 Annual Report at 5; 2023 Annual Report at 5.
In 2024, the Company replaced its prior third-party online rebate application system with
an internally developed platform, the Enterprise Rebate App (`BRA"), which allows customers
to submit rebate applications through their online customer account. See Application at 8. The
Company states that implementation of the ERA is expected to reduce rebate processing
workload by minimizing manual data entry, which may result in lower overall EE Program labor
costs. Id. The Company further states that both customers and the Company are expected to
realize benefits from the ERA beginning in 2025. Id.
Staff believes that the ERA has the potential to reduce inefficiencies within the EE
Program and may lead to reduced labor expenses over time. Staff continues to recommend that
the Company pursue opportunities to manage labor costs where feasible to improve the cost-
effectiveness of its EE Programs. Staff will continue to monitor the EE Program labor expenses
in the Company's 2025 EE prudence filing.
STAFF COMMENTS 5 JANUARY 29, 2026

Direct Assignment of Costs
In Order No. 35663, issued on January 13, 2023, the Commission ordered the Company
to directly assign EE Program costs when possible. In 2024, the Company revised its EE
Program expense allocation from 95% Residential and 5% Commercial to 92% Residential and
8% Commercial. See Application at 7.
The Company states that the updated 2024 allocation is based on the distribution of
service starts between the Residential and Commercial sectors recorded in its Construction
Tracking system. According to the tracking data, activity reflected a 92% Residential and 8%
Commercial split. Id. The Company further states labor costs were assigned based on this
analysis through an automatic standard labor distribution within its payroll system. Id. at 7. For
costs that cannot be directly assigned, the Company allocates those costs using the same 92%
Residential and 8% Commercial allocation. Id.
Staff will continue to review the Company's use of direct assignment and cost allocation
methodologies in future EE prudence filings. Staff continues to recommend that the Company
directly assign EE Programs costs whenever possible. Direct assignment of labor expense
alleviates concerns regarding the Company's over-allocation of labor costs to the Residential
Program. When costs are not directly assigned, Staff recommends the Company provide an
explanation describing why such costs were not directly assignable.
Internal Controls
In its comments in Case No. INT-G-23-06, Staff recommended that the Company
implement regular internal audits of the EE Program. Internal audits are an important tool to
ensure that EE Programs are operating efficiently. In Order No. 36245, the Commission ordered
the Company to "develop and follow a schedule for regular internal audits." Id. at 12.
During its investigation in this case, Staff requested copies of any internal audit reports
prepared pursuant to Order No. 36245. See Staff Production Request No. 2. In its response, the
Company stated that it does not typically disclose internal audit reports; however,pursuant to
Order No. 36245, the audit report was provided to demonstrate compliance with the Order. The
Company provided one internal audit report completed in August 2025, which reviewed
expenses incurred from January 1, 2025, to June 30, 2025. Id.
STAFF COMMENTS 6 JANUARY 29, 2026

According to the audit report, the objective of the audit was to "ensure rebates provided
to customers are accurate, properly documented, and aligned with Program eligibility criteria."
Id. The report concluded that rebates paid to customers were accurate,properly documented and
did not include duplicate claims.
While Staff acknowledges that the Company is making progress in strengthening its
internal controls, Staff remains concerned that the Company lacks specific controls to verify the
installation of newly purchased items by contractors receiving rebates, as Staff previously noted
in Staff comments in Case No. INT-G-23-06. Id. at 4. Staff further encourages the Company to
ensure that future internal audits cover a time period of at least one year, especially if those
audits are conducted every three years. While Staff recognizes that the EE team is small, Staff
believes it would be reasonable and in the best interest of the EE Program for the Company to
audit a percentage of issued rebates, consistent with the rebate contracts executed by
participating customers.
Previous Order Compliance
In Order No. 36245, issued in Case No. INT-G-23-06, the Commission ordered the
Company to 1) file a completed EM&V in its next prudency filing; 2) include a 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. Id. at 13-14. In Order No. 36797, Case No INT-G-24-05, the
Commission found that the Company complied with four of these items. Specifically, the
Company did not separate savings for new construction, retrofit, and replacement for the
Residential 95%AFUE furnace rebates, and was thus ordered again to do so again. Id. Since
Order No. 36797 was not published as of the filing of this Application, the Company did not
have a chance to address it in this filing. Staff recommends that the Commission acknowledge
that the Company has not yet had a chance to comply with Order No. 36797. Staff will review
the results of the 2025 EM&V study in a future filing.
Cost-Effectiveness
In its Annual Report, the Company reports that its 2024 Residential and Commercial
Programs were cost-effective with a portfolio level Utility Cost Test("UCT")ratios of 1.2 and
STAFF COMMENTS 7 JANUARY 29, 2026

2.3, respectively. Annual Report at 3. The Company's reported cost-effectiveness is calculated
using the deemed savings values. Application at 9. However, Exhibit No. 1 to the Company's
Application ("Exhibit 1") also includes calculations of cost-effectiveness when supported with
billing analysis results from the 2024 EM&V. Exhibit 1 at 22. When supported by billing
analysis, the Company's Residential Programs were not cost-effective with a UCT of 0.8. Id.
Due to the timing of the Company's filing, direction had not yet been provided by Order
No. 36797 as detailed above. Additionally, Order No. 36797 approved the retirement of several
measures. While the Company's Residential Programs are not cost-effective when supported
with billing analysis, several of these measures have been adjusted or retired. Staff will review
the cost-effectiveness of the Company's EE portfolio in a future prudence filing.
Billing Analysis Supported Portfolio
In its Application, Exhibit 1 provides cost-effectiveness calculations to the measure level.
The cost-effectiveness results of the portfolio when supported by billing analysis therms savings
results can be seen in Table No. 3 below.
Major drivers of the reduced Residential sector cost-effectiveness are from reduced
savings for the Whole Home and Furnace measures. The Company reports Whole Home Tier II
savings of 110 therms/units. Billing analysis supports a lower estimate of 38 therm/unit. Exhibit
1 at 5, 22. The Company reports furnace measure savings of 44 therms/units. Billing analysis
supports a lower estimate of 32 therm/unit. Id. With the reduced savings, less expenses can be
supported as cost-effective. Exhibit 1 at 22 shows that when supported with billing analysis
savings estimates the Company's combined Programs have a UCT benefit value of$3,625,546.
Of the total $4,466,551 of EE rider expenditures, the billing analysis supported benefit to actual
spend suggests that $977,965, or approximately 22%, of EE expenses were not cost-effective.
Reported Savings
According to the Company's reported savings, the overall cost-effectiveness of the
Residential sector in 2024 was 1.2. Table No. 3 below shows a breakdown of the Residential
and Commercial portfolios and their measures.
STAFF COMMENTS 8 JANUARY 29, 2026

Table No. 3: PY 2024 Residential Program Cost-Effectiveness Results
0.4 2
0.5 1.5
0.7 0.9
:. - 1.9
1.3
Storage Tank Water Heater
0.9
Storage
0.1
1.6
1.3
Smart Thermostat 0.9 0.7
Commercial
�i
-
3.7
0.9
.. 0.2
The Commercial sector experienced very little participation and thus did not have enough
data to conduct a billing analysis. According to the deemed savings results, the sector ended the
year with a cost-effectiveness ratio of 2.3. See Table No. 3 above.
Commercial Program Plans
Of the six offered Commercial rebates, only three saw participation in 2024 with a total
of 24 participants. Exhibit 1 at 22. In an effort to grow the Commercial Program and increase
participation, the Company has taken action to make several Program changes. Application at
10. This includes reallocating one FTE worth of labor funding from the Energy Services
Representative position to a full-time Energy Efficiency Analyst position that will be responsible
for Commercial customer outreach and energy efficiency awareness for Commercial customers.
The Company also developed a Commercial TRM to identify savings potential for top
Commercial measures identified in the 2023 Conservation Potential Assessment and included it
as Attachment 1 Supplement 2 to this Application. This TRM uses a deemed savings approach
STAFF COMMENTS 9 JANUARY 29, 2026

to forecast savings utilizing the Illinois TRM Version 12.0, the California electronic TRM, and
the Regional Technical Forum's unit energy savings estimates.
In addition to the measures taken above, the Company hired a third-party evaluator to
perform a Commercial Process Evaluation, included as Attachment 1 Supplement 1 to this
Application. This Process Evaluation identified several recommendations to improve
Commercial Program performance, including:
1. Enhancement to marketing and outreach by communicating to a better targeted
audience,because these materials were previously reaching general business contacts
rather than decision-makers.
2. Formalization of contractor engagement by establishing a Trade Ally Program and
clearer rebate application guidance. The Trade Ally Program will allow members to
have access to a Contractor Central Portal in which they can submit rebate
applications on their customer's behalf, will include a directory in which the member
will be featured, will offer contractors marketing materials to promote rebates to
customers, and will offer a newsletter to include Program updates, training
opportunities, and industry news and updates. To become a Trade Ally, a member
must be a licensed contractor in the State of Idaho and remain in compliance with
licensing, bonding, and insurance requirements set forth by the Idaho Division of
Occupational and Professional Licensing. Response to Staff Production Request No.
10.
3. Improvement of data tracking and rebate verification by refining the ERA to include
more detailed data capture and incorporating better customer follow-up.
4. Expansion of rebate offerings.
New Commercial offerings and Program improvements will be further discussed in Case
No. INT-G-25-07 ("Application to Request Authority to Revise Rate Schedule EE-GG—General
Service Energy Efficiency Rebate Program"), which requests approval of Commercial Program
changes filed after the application was submitted for this case. Staff will review these documents
in the context of the proposed changes in Case No. INT-G-25-07.
STAFF COMMENTS 10 JANUARY 29, 2026

STAFF RECOMMENDATION
Staff examined the Company's Application, supplemental attachments, workpapers, and
additional information provided by the Company through discovery. Based on its investigation,
Staff recommends the Commission approve the Company's EE Program expenses of$4,466,551,
less $975 in financial adjustments as prudently incurred, for a total of$4,465,576, and
acknowledge that the Company has not yet had a chance to comply with Order No. 36797.
Respectfully submitted this 29th day of January 2026.
Erika K. Melanson
Deputy Attorney General
Technical Staff. Jason Talford, Rebecca Cottrell, Laura Conilogue
I:\Utility\UMISC\COMMENTS\INT-G-25-05 Comments.docx
STAFF COMMENTS 11 JANUARY 29, 2026

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 291h DAY OF JANUARY 2026,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. INT-G-25-05, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
LORI BLATTNER PRESTON N. CARTER
DIR—REGULATORY AFFAIRS MEGANN E. MEIER
INTERMOUNTAIN GAS CO GIVENS PURSLEY LLP
PO BOX 7608 601 W BANNOCK ST
BOISE ID 83707 BOISE ID 83702
E-MAIL: lori.blattner( int a� E-MAIL: prestoncarterk i�pursley.com
igcre ug latory(kint ag s.com mem(crs_i�pursle.
stephaniewkgivenspursle,
PATRICIA JORDAN, ECRETARY
CERTIFICATE OF SERVICE