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Home My WebLink About20260326Staff Comments.pdf RECEIVED March 26, 2026 JEFFREY R. LOLL IDAHO PUBLIC DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83702 (208) 334-0357 IDAHO BAR NO. 11675 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-26-02 AUTHORITY TO REVISE RATE SCHEDULE ) EE-RS—RESIDENTIAL ENERGY ) EFFICIENCY REBATE PROGRAM ) 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 January 16, 2026, Intermountain Gas Company ("Company") applied to the Commission requesting authority to revise Rate Schedule EE-RS—Residential Energy Efficiency Rebate Program("EE-RS") ("Application"). The Company requested an effective date of March 1, 2026. The Commission issued a Notice of Application,Notice of Modified Procedure, and Notice of Suspension of the Company's proposed effective date. Order No. 36944. The Company previously offered to retire its Whole Home Tier I energy efficiency rebate measure in a petition for clarification or reconsideration in Case No. INT-G-24-05. Application at 3. The Commission ruled that the Company would have to request retirement of the measure through a separate filing that provided interested parties with the opportunity to participate in the STAFF COMMENTS 1 MARCH 26, 2026 proceeding. Id. In response, the Company filed the Application, requesting authorization to retire the Whole Home Tier I measure. Id. The Company stated that the Whole Home Tier I measure was not evaluated in the 2024 Evaluation, Measurement, and Verification ("EM&V") study due to inadequate data for a meaningful evaluation resulting from limited customer participation in the rebate measure. Id. The Company further represented that the Whole Home Tier I rebate measure is not cost- effective based on Staff s therm savings estimate included in its comments in Case No. INT-G- 24-05. Id. at 4. The Company has "substantial doubt regarding the prudence of the expense of an EM&V study on the Whole Home Tier I measure,"given the uncertainty of participation levels sufficient to produce statistically significant results and the Company's prediction that the rebate measure will not be cost-effective under a billing analysis approach. Id. Therefore, the Company requested(1) Commission authorization to retire the Whole Home Tier I measure, and(2) a declaration that the Company is no longer required to produce an EM&V study with a billing analysis for the Whole Home Tier I measure in its next energy efficiency prudency filing. Id. at 5. STAFF ANALYSIS Staff has reviewed the Company's Application, workpapers, responses to production requests, and forecasts regarding the Company's request to adjust its EE-RS. Based on its investigation, Staff agrees with the Company's concern that the Whole Home Tier I measure is not likely to be cost-effective and that conducting an EM&V study on the measure post- retirement would produce an unnecessary expense that would provide no benefit to the Company and its customers. Staff highlighted in a previous case that when compared to deemed savings estimates, the Whole Home Tier II billing analysis resulted in a 66% lower savings estimate and a Utility Cost Test ratio ("UCT") of 0.3. Staff Comments (Case No. INT-G-24-05) at 17, 19. Although a billing analysis could not be performed on the Whole Home Tier I measure due to limited participation, the measure has similar construction criteria and savings calculation methodologies as the Whole Home Tier II rebate and the reduction in savings between the deemed savings analysis and billing analysis would likely be comparable. Id. Therefore, Staff estimated Whole STAFF COMMENTS 2 MARCH 26, 2026 Home Tier I savings by reducing the deemed savings estimate by 66%. Id. Using Staff s estimate, the Company forecasted the Whole Home Tier I measure to have a UCT of 0.6. Company's Response to Staff s Production Request No. I —Confidential Attachment"2026 UCT Residential Forecast." Since the Whole Home Tier I measure is not projected to be cost-effective, Staff recommends the Commission approve the Company's EE-RS rate schedule as filed and declare the Company no longer be required to produce an EM&V study with a billing analysis for the Whole Home tier I measure in its next EE prudency filing. The comments below address the Company's program financials, historical program performance, and proposed program changes as well as Staff s concerns about the cost- effectiveness of the remaining portfolio. The absence of any discussion on additional points should not be construed as Staffs support or endorsement for the Company's position without a full evaluation in the future. EE-RS Program Based on the Company's explanation and historical EE-RS program performance, Staff is not opposed to the Company's proposed changes to the residential portfolio. However, based on Staffs observations described in detail below, Staff is concerned that the residential program is at risk of not being cost-effective over the next two years. In its Company's Response to Staffs Production Request No. 1, the Company provided forecasted savings, costs, and participation for each of the residential portfolio measures. These forecasts are shown in Tables No. 1 and 2 below. The 2026 forecast suggests a UCT of 0.8. Id. Even though the Storage Water Heater, Whole Home Tier II, Tankless Water Heater Tier II, and Smart Thermostat measures were not retired until the end of 2025, they are expected to receive rebate applications until March of 2026 and will have a reducing effect on the UCT. This effect will not show in future years after retirement. Staff will continue to review the residential program's cost-effectiveness in the Company's future DSM prudence filings. Though the portfolio is expected to recover by the end of 2027 with a UCT of 1.0, almost 100% of portfolio savings are expected from the Furnace and Tankless Water Heater measures. Company's Response to Staff s Production Request No. 1 —Confidential Attachment"2027 UCT Residential Forecast." Staff is concerned that any deviation from forecasts (i.e. lower STAFF COMMENTS 3 MARCH 26, 2026 participation) for these measures has the potential to reduce the residential portfolio cost- effectiveness to below 1.0, which is significant when considering the uncertainty with the Furnace measure detailed in the sections below. Staff will continue to review the residential program's cost-effectiveness in the Company's future DSM prudence filings. Table No. 1: Historical and Future Residential Portfolio Participation � - 2027 Rebate Incentive Count Whole Home 1 $900 35 150 - Tankless Tier 1 $325 1,164 1,500 2,000 Furnace* $275 4,032 2,700 2,500 Combi boiler $800 3 5 5 Boiler $800 13 10 10 Storage Tank Water Heater $115 29 10 - Whole Home Tier 11 $700 1,744 250 - Tankless Tier 11 $300 4 - - SmartThermostat $100 3,389 700 - Rebate decreased to$275from $3501/1/2026-2026forecasts representa * combination of remaining old rebate payouts and new rebates Proposed retirement- expectto accept rebates until9/2026 Retired as of 12/31/2025- rebates accepted until 3/21/2026 Table No. 2: Historical and Future Residential Portfolio Savings and Cost-Effectiveness Total Therm Savings Incentive Savings Savings Savings Whole Home 1 $900 1,995 9,450 - 0.6 0.6 - Tankless Tier 1 $325 75,660 75,375 100,500 1.7 1.1 1.1 Furnace* $275 225,792 85,800 80,000 1.2 0.7 0.9 Combi boiler $800 465 841 841 1.8 2.0 2.3 Boiler $800 2,067 1,071 1,071 2.0 1.3 1.5 Storage Tank Water Heater $115 1,102 250 - 1.3 0.7 - Whole Home Tier II $700 99,408 9,500 - 0.8 0.5 - Tankless Tier II $300 232 - - 1.6 - - SmartThermostat $100 149,116 19,600 - 1.5 0.8 - ' MEmrvn®m� STAFF COMMENTS 4 MARCH 26, 2026 Furnace Measure The residential portfolio cost-effectiveness is heavily dependent on Furnace measure savings, which are expected to comprise 44% of total portfolio savings in 2027. Company's Response to Staff s Production Request No. 1 - Confidential Attachment"2026 UCT Residential Forecast." The Company acknowledged the uncertainty of this measure in its Response to Staffs Production Request No. 1, stating, "the Furnace measure carries the greatest uncertainty until the 2026 EM&V Furnace study is completed." As a result of the Furnace rebate being decreased on January 1, 2026, the measure is expected to pay out the remainder of the $350 rebates into the beginning of 2026, reducing overall cost-effectiveness for this year. Id. However, the measure is also projected to not be cost-effective in 2027, with a forecasted UCT of 0.9. Company's Response to Staff s Production Request No. 1 —Confidential Attachment "2027 UCT Residential Forecast." Due to these issues, Staff is concerned the Furnace measure carries the risk of not meeting forecasted savings, which has the potential to bring total residential portfolio cost-effectiveness below 1.0. Tankless Water Heater Measure The other measure expected to have a major impact on the residential portfolio is the Tankless Water Heater Tier I. In 2027, this measure is forecasted to receive 2,000 rebates, or 44% of the total portfolio participation. Id. This is a 42% increase over the number of rebates received in 2024. Id. and Application—Exhibit No. 1 (Case No. INT-G-25-05) at 13. The measure is projected to contribute 55% of total therm savings in 2027 and is expected to be cost- effective throughout both forecast years with a UCT of 1.1, as shown in Table No. 2 above. According to the Company, "[the] forecasts were based on 2025 projected and actual rebate counts and the Company's assumption that some builders previously applying for rebates under the Whole Home measures will likely switch to utilizing equipment rebates." Company's Response to Staff s Production Request No. I —Confidential Attachment"2026 UCT Residential Forecast." Staff stated in a previous case that it does not believe the retirement of the Whole Home Tier I measure is likely to have a significant impact on Tankless Water Heater measure participation as customers are already able to combine the Tankless Water Heater rebate with the Whole Home rebate. See Staff Comments for Case No. INT-G-25-05 at 22. Though this may STAFF COMMENTS 5 MARCH 26, 2026 result in lower-than-forecasted participation, it is not likely to have a significant impact on the cost-effectiveness of the measure. Future Studies In compliance with Order No. 36797, the Company indicates new categories for the Furnace measure, including new construction, replacement, and retrofit will likely be introduced in 2027, following the 2026 EM&V Furnace study. Company's Response to Staff s Production Request No. 1 —Confidential Attachment"2027 UCT Residential Forecast." The Company also details its plans to engage a third-party consultant to conduct a full-scale Conservation Potential Assessment for the 2027 Integrated Resource Plan ("IRP") and use the results to design a cost- effective program, beginning in June 2026. Company's Response to Staffs Production Request No. 3. The retirement of the Whole Home Tier I rebate will help inform the scope and priorities of this study. Id. Financial Review In its Response to Staffs Production Request No. 1, the Company stated the residential EE rider balance was $37,300 as of January 1, 2026. Company's Response to Staffs Production Request No. 1 —Confidential Attachment"2026 UCT Residential Forecast." In this filing, the Company provided Staff its forecast for 2026 if the Commission approves the Company's retirement of the Whole Home Tier I rebate. Based on its review of the forecasted data, Staff is concerned that the estimated collections may be overstated. The Company estimates that in 2026, the residential EE Rider will collect a total of $3,668,745. Id. Staff believes the Company's 2026 forecast is overly optimistic relative to historical years. In 2025 the residential EE Rider collected $3,085,314. December 2025 Intermountain Gas Quarterly Report. In 2024 the residential EE Rider collected$3,394,896. 2024 Annual Report. Additionally, on October 1, 2024, the Commission approved the reduction of the Rider rate to $0.01149 from $0.015640 per therm, meaning the residential EE Rider was collecting at a higher rate throughout most of 2024 than it will be in 2026. Order No. 36337. While the amount of rider funding collected may increase with population growth in the Company's service territory, this growth is only projected to be about 4.4%between 2024 and STAFF COMMENTS 6 MARCH 26, 2026 2026, thus it seems unlikely that the EE Rider would collect more in 2026 than in 2024 when the rate was higher. 2025 IRP at 15. The Company spent $3,508,480 on rebates in 2025 and is forecasting $1,713,150 in residential rebate expenditures in 2026. Company Response to Staff s Production Request No. 1 —Confidential Attachment"2026 UCT Residential Forecast" and December 2025 Intermountain Gas Quarterly Report. Staff believes the lower rebate forecast for 2026 is reasonable given the Company's proposed retirement of the Whole Home Tier I measure and retirement of the Storage Tank Water Heater, Whole Home Tier II, Furnace, Tankless Water Heater Tier II, and Smart Thermostat measures. However, the Company will be accepting applications for these measures until March 31, 2026. Staff believes these retirements may lead to an increased balance in the residential EE Rider in 2026 because of the reduced rebate expenses. Company's Response to Staff s Production Request No. 1 —Confidential Attachment"2026 UCT Residential Forecast." Staff will continue to monitor the balance of the residential EE Rider in future filings. STAFF RECOMMENDATION Based on its investigation, Staff recommends the Commission approve the Company's EE-RS rate schedule as filed and declare the Company no longer be required to produce an EM&V study with a billing analysis for the Whole Home Tier I measure in its next EE prudency filing. Respectfully submitted this 26th day of March 2026. Jeffrey R. Loll Deputy Attorney General Technical Staff. Rebecca Cottrell, Laura Conilogue I:\Utility\UMISC\COMMENTS\INT-G-26-02 Comments.docx STAFF COMMENTS 7 MARCH 26, 2026 CERTIFICATE OF SERVICE I HEREBY CERTIFY THAT I HAVE THIS 26TH DAY OF MARCH 2O26, SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE NO. INT-G-26-02, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING: MICHAEL PARVINEN 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: michael.parvinen(&cn cg com E-MAIL: prestoncarterk_i�pursley.com igcre ug latorykint ag s.com mem(crs_i�pursle. stephaniewkgivenspursle, PATRICIA JORDAN, ECRETARY CERTIFICATE OF SERVICE