20161013AVU to Staff 1-5.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
October 12, 2016
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83720-0074
Attn: Camille Christen
Deputy Attorney General
AVISTA'
RCC EI /ED Corp.
2016 OCT 13 AM 8: 57
···, 1.
Re: Production Request of the Commission Staff in Case No. AVU-E-16-06
Dear Ms. Christen,
Enclosed on three separate CD's are copies of Avista's responses to IPUC Staffs production
requests in the above referenced docket. Included in this mailing is A vista's response to production
request Staff 01 -05.
If there are any questions regarding the enclosed information, please contact Paul Kimball at (509)
495-4584 or via e-mail at [e-mail]
Sincerely,
-£-7-~--
Paul Kimball
Regulatory Analyst
Enclosures
JURISDICTION:
CASE NO :
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-16-06
PUC Staff
Production Request
Staff-01
DATE PREPARED: 10/12/2016
WITNESS: Dan Johnson
RESPONDER: Mike Dillon
DEPT: DSM
TELEPHONE: [phone]
EMAIL: [e-mail]
Please provide a list in Excel format showing all expenses charged to the DSM Rider in 2014 and
2015. Please include a brief description of the expense, the date, vendor, amount, and the account
to which the charges were booked. Please include and identify any adjustments made in 2014 or
2015 to previously booked expenses. Please separate all expenses by program. If any amounts
are allocated to multiple programs and/or jurisdictions, please describe the allocation method.
Please identify if each expense is an incentive payment, purchases, service, labor/admin.,
materials, or any other classification of expense.
RESPONSE:
Please see Staff PR 01 Attachment A, B, C, and Din Excel format only.
Page I of I
AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
IDAHO
A VU-E-16-06
PUC Staff
Production Request
Staff-02
DATE PREPARED: 10/12/2016
WITNESS: Dan Johnson
RESPONDER: Mike Dillon
DEPT: DSM
TELEPHONE: [phone]
EMAIL: [e-mail]
Please provide a listing of all recommendations made by Cadmus following its impact and process
evaluations of the 2012-2013 biennium. Please also include what actions, if any, the Company
has taken with respect to each recommendation. If a recommended action was not taken, please
explain why not.
RESPONSE:
Please see Staff PR 02 Attachment A.
Page I of I
The following sections outline the major recommendations from the impact and process
evaluation reports completed for the 2012-2013 portfolio of programs and notes what
changes were made to the 2014-2015 Avista programs as a result of these evaluations.
1.1 Process Evaluation Summary
Recommendations from A vista's 2012-2013 process evaluation 1 report and subsequent
implementation actions taken by Avista are summarized below.
1.1.1 Residential Sector
1.1.1.1 Program Participation
Conclusion: Avista's implementation of new and continued support for existing third­
party implemented programs such as Simple Steps, Smart Savings and Residential
Behavior effectively captures energy savings in the residential market segments.
Recommendation: Continue exploring new measures, program designs, and delivery
mechanisms that leverage the national expertise of experienced third-party
implementation firms. Possible programs may include additional partnership with
ENERGY STAR in the form of the Home Performance with ENERGY STAR program .
Status: In 2014 the Company offered Energy Star rebates through NEEA as the
implementer, and distinguished between an Energy Star stick build home and a
manufactured home.
Conclusion: Avista's continued investment in pilot programs provides a low-risk way
test the effectiveness of new measure offerings, delivery channels, and implementation
partners.
Recommendation: Continue testing new program designs and measure offerings
through the use of pilots-even if secondary sources of funding or local partners are not
available.
Status: Avista initiated 3 pilot programs in 2014, a pilot program for reducing
losses in compressed air systems called Air Guardian, a pilot program to test the
efficacy of controlling block heaters on vehicles to reduce losses, and a pilot
program to perform strategic energy management (SEM) in our industrial
customers. The Company has yet to get an industrial customer to sign up for the
second phase of the SEM initiative, but should have some preliminary results
from the other two pilots by August of 2015.
1 Avista 2012-2013 Process Evaluation Report, The Cadmus Group, Inc , May 15, 2014.
Staff_PR_02 Attachment A Page 1 of 12
Conclusion: While still early, evaluation findings indicate the Residential Behavior
program is an effective way to capture savings in the residential market and Opower is a
strong partner for program implementation.
Recommendation: If determined to be cost-effective, consider expanding the
Residential Behavior program (for example, lowering the energy consumption threshold
for participation and implementing measures to track the methods these customers use
to save energy). Given that Avista has already included all cost-effective customers in
their target population for this program, future opportunities for expansion may be
limited.
Status: The Company will consider expansion of the OPower Residential
Behavior program pending 2014-2015 cost effectiveness results. Avista will take
into consideration the cost effectiveness of the program over the full program life.
1.1.1 .2 Program Design
Conclusion: Inconsistencies continue to exist in measure and program naming and
organization across program planning , tracking and reporting activities wh ich result in
less transparency in program operations and limit effective program evaluation.
Recommendation: As part of the transition to the new data tracking system, consider
aligning program and measure names with offerings articulated in annual business plans
and other planning materials.
Status: Avista 's transition to a new tracking system has taken considerably
longer to accomplish than was considered at the writing of this recommendation
due to a prolonged initiation of the new customer information system. The
present thought process, at the time of this report, is that Avista will enhance the
historical savings database, Saleslogix, with tracking capabilities in the same
database. As that change is made in the 2nd and 3rd quarter of 2015, the
alignment of program, measure, planning materials and business planning will be
a priority.
Conclusion: The elimination of appliance rebates gives customers fewer ways to
participate in Avista energy-efficiency rebate programs.
Recommendation: Consider ways to encourage repeat participation (such as marketing
targeted at previous participants and online profiles that reduce application paperwork).
Status: The Company has noted the response of its General Population Survey
which indicated that approximately 10% of surveyed customers planned to
Staff_PR_02 Attachment A Page 2 of 12
replace HVAC equipment in the next couple years. Avista will continue to
promote these measures to serve this demand.
Conclusion: Considering self-report customer freeridership scores and market baseline
data from the RTF is an effective way to assess the appropriateness of measure
offerings.
Recommendation: Continue use of customer freeridership and market assessments as
a way to assess the appropriateness of measure offerings.
Status: Avista is employing accepted Northwest Power and Conservation
Council methodologies to the extent possible, to include the use of unit energy
savings and freeridership values as identified by the RTF. When such values are
not available, Avista will utilize the best estimate of what future third-party impact
evaluation will reveal. Avista will continue to track freeridership values for
measures and programs and will consider program changes and measure
offerings in cases where market transformation has fully occurred.
1.1.1.3 Program Implementation
Conclusion: Avista prioritization of customer satisfaction has been very successful and
overall participant experience is very positive across all rebate programs.
Recommendation: Continue Avista's commitment to customer satisfaction, but monitor
increased staffing costs and impacts of the 90-day participation window on freeridership.
Status: Avista agrees and continues to be committed to customer satisfaction.
Staffing costs are continually tracked and efforts have been made to save where
possible. Avista believes there is a long standing approach that balances customer's
ability to participate along with implementation/operational considerations. Avista
typically provides 90 days for program changes to allow for market communications
and smooth transitions in and out of programs. Avista believes the 90 day
participation window is an optimal, balanced approach considering customer equity
and increasing documentation requirements.
1.1.1.4 Marketing and Outreach
Conclusion: Avista implements a strong general awareness campaign around energy­
efficiency, but some room exists in market segmentation and targeting specific customer
groups.
Recommendation: Utilize survey results from this evaluation and other data collection
activities to understand which audiences are more likely to participate in Avista
programs.
Staff_PR_02 Attachment A Page 3 of 12
Status: Avista appreciates the intent of this recommendation , however, due to
limitations in our customer care and billing system , the Company doesn't have a
comprehensive customer relationship management tool that allows for segmentation
and targeting and campaign management. The Company does believe that a
continued broad reach approach engages new customers and further engages
customers who have previously participated in energy efficiency programs
demonstrated by repeat customers. The Company has found success in highlighting
some programs but usually in the context of broader messaging that drives
customers to our website to find offerings that are available to them. The Company
has also had success in stretching our outreach efforts by building relationships with
media partners such as local television stations and personalities and weekly
newspapers that leverage and add endorsement.
1.1.2 Nonresidential Sector
1.1.2.1 Program Management and Implementation
Conclusion: Several parties over several years, internal and external to Avista, have
observed the need for greater data quality assurance, in both documentation and input
tracking . Quantitative inputs to the savings and rebate calculations have repercussions
for tariff compliance, incentive payments, and savings realization rates.
Recommendation: Avista should continue efforts to improve program processes. The
evaluation team believes unifying the organizational structure under central leadership is
a step in the right direction and may help alleviate some previously documented issues
with internal communications . In addition to the reorganization, it was recommended that
Avista develop standardized processes within the DSM group, including clear delineation
of roles and precise description and assignment of all processes and responsibilities for
both residential and nonresidential programs. All affected parties should be included in
formalizing and standardizing the DSM group's processes, roles, and responsibilities.
Further, all parties must formally agree to clearly delineated responsibilities under the
new organizational structure. While these activities need to be prescriptive and precise,
we caution that the resulting structure should still allow some flexibility: increased clarity,
transparency, and accountability should serve to enhance program delivery and
customer satisfaction.
Status: In 2014, the Company carefully reviewed the recommendations from
external evaluators, Advisory Group and Commission Staff regarding the DSM
Team Organization. By April 2014, the Customer Solutions Team, including the
Energy Efficiency Group was reorganized and is now reporting to one Leadership
individual, a Sr. Director. In July, the Energy Efficiency Team was re-organized to
report to one Sr. Manager to include Program Managers across all three states
(WA/ID/OR), Energy Efficiency Engineering, and the Analyst Team. This
Staff_PR_02 Attachment A Page 4 of 12
reorganization has facilitated coordination and communication by the team
members in delivering successful programs to customers. In addition, this new
organizational structure included a thorough review of the Standard Operating
Practices, EM&V Framework, Duel Fuel Incentive Calculators, and the Top Sheet
Reviews . These process documents are expected to be complete in early 2015
and made available to the Advisory Group at the Spring 2015 meeting The team
continues to be committed to developing, designing, and implementing prudent
cost effective programs for the Company's customers.
1.1.2.2 Customer Feedback
Conclusion: Customers were highly satisfied with the program overall and with
individual components. Customer satisfaction has increased since 2011 , which had in
turn increased from 2010.
Recommendation: Continue to prioritize and monitor program satisfaction.
Status: Customer satisfaction and feedback will continue to be collected on
programs through third party evaluation efforts conducted for 2014-2015 program
years.
1.1.2.3 Market Feedback
Conclusion: According to commercial lighting contractor feedback, the nonresidential
programs are successful in driving incremental energy-efficient equipment sales, and the
market has not yet transformed to make energy efficiency standard practice.
Recommendation: Continue to monitor market transformation indicators to measure
programs' market impact over time.
Status: Avista will continue monitoring signs of market transformation in the
Nonresidential sector through efforts taken by the third party evaluator.
1.1 .2.4 Marketing and Outreach
Conclusion: The characteristics of the evaluation survey respondents indicate that the
office I professional services and local government sectors may be underserved by the
programs relative to their incidence in the nonparticipant population. Further research is
necessary to determine whether this is true.
Recommendation: Identify underserved industries, and seek opportunities to target
outreach to specific underserved industries such as; investigate overall customer
industry distribution, compare to participant industry distribution, and develop targeted
outreach strategies for any underserved sectors.
Staff_PR_02 Attachment A Page 5 of 12
Status: This will be investigated as part of the 2014-2015 process evaluation.
1.1.2.5 Quality Assurance and Verification
Conclusion: Avista monitored its site-specific project review process and instituted
refinements during the evaluation period in response to feedback from users. While this
has led to improvements, including notably improved reliability of reported savings in
2012, quality assurance problems may persist.
Recommendation: Continue to monitor the effectiveness of the site-specific project
review process and refine as needed. The third party evaluator recommends
implementing the following to ensure continued improvement:
Status: Avista implemented the following review model on April 24, 2015 that
focuses on review guidelines based on a risk assessment:
• Measures that have an incentive of $0 and an energy based simple
payback of over 20 years require no report and no review, just a form
letter to the customer.
• Measures that have incentives between $1 and $2 ,000 will be processed
by the reporting engineer without any other review.
• Measures that have incentives between $2001 and $25,000 will be
reviewed before going to the customer by another qualified engineer.
• Measures over $25,000 will be reviewed by another qualified engineer
with an additional technical management review prior to releasing to the
customer.
• Measures over $40,000 will be reviewed by another qualified engineer, a
technical manager, and an additional director review prior to releasing to
the customer.
• Each review above will use the technical Top Sheet as a reviewing
instrument with appropriate name and review level noted .
• A completed project must be re-submitted through the technical review
process only if the incentive changes more than 10% when the savings or
costs from the original report change . The report and DFIC will always be
changed and recorded when savings or incremental costs change upon
completion .
Recommendation: Conduct an external third-party review of Top Sheets, including
reviewing a random sample of completed Top Sheets for completeness and accuracy.
These were not reviewed as part of the 2012-2013 process evaluation, but should be
included in the next process evaluation. Review should not only verify the presence of
the Top Sheets, but also the quality and accuracy of the information provided.
Staff_PR_02 Attachment A Page 6 of 12
Status: Several implementation improvements, either in-progress or recently
completed, were reviewed and their impact upon 2014 prog ram performance was
discussed by the Avista implementation team . These improvements include:
• Revisions to the site-specific program implementation processes to
improve clarity and promote the timely movement of projects through the
pipeline.
• The establishment of three checklists (or "Top Sheets"), one prior to
contracting and one prior to the payment of the incentive, in order to
ensure consistent documentation and treatment of each project as it
progresses through these processes towards completion.
1.2 Impact Evaluation Summary
Recommendations from Avista's 2013 Idaho Electric Impact evaluation2 report and
subsequent implementation actions taken by Avista are summarized below.
1.2.1 Recommendations
1.2.1.1 Residential Electric Programs
The 2013 Idaho Electric Impact evaluation recommended the following changes to
Avista's residential electric programs. Applicable updates have been included under the
"status" sub bullet.
Recommendation: Consider updating its per-unit assumptions of recycled equipment to
reflect the 2012-2013 evaluation findings in order to ensure that planning estimates of
program savings are in line with evaluated savings.
Status: Per unit energy savings for refrigerators were updated from 482 to 424
kWh , and per unit energy savings for freezers were updated from 555 to 478.
Recommendation: If clothes washer rebates are reinstated, Avista should track them all
within the electric program unless there is a large penetration of gas dryers.
Status: Clothes washer rebates were not reinstated .
Recommendation: Increase the measure level detail captured on applications and
include this detail in the tracking database. Specific additional information shou ld include
2 Avista 2013 Idaho Electric Impact Evaluation Report. The Cadmus Group, Inc., June 17. 2014.
Staff_PR_02 Attachment A Page 7 of 12
energy factors or model numbers, baseline information for insulation, and home square
footage, particularly for the ENERGY STAR Homes program.
Status: Energy factors and home square footage are being captured in Avista's
tracking database. Model numbers are captured on rebate applications as well as
baseline information for insulation which will likely be considered in 2016 after the
new tracking database has been stabilized. Energy Star Homes is a regional
(NEEA) program that has its own builder training , inspections, certifications and
database. Avista requires customers meet and provide proof of their Energy Star
Homes certification. Avista also collects square footage, primary space heating
fuel and primary water heating fuel.
Recommendation: Consider tiered incentives by SEER rating as higher SEER systems
generally require ECM fan motors to achieve certain SEER ratings .
Status: The Air Source Heat Pump rebate is no longer offered due to not meeting
cost effectiveness requirements .
Recommendation: Avista should consider completing a lighting logger study within its
territory if Avista believes the results of the forthcoming RBSA study do not accurately
represent usage in their territory.
Status: A lighting logger study is being conducted by the Nexant Team as a part
of the 2014-2015 independent third-party evaluation activities.
Recommendation: Avista should consider researching the percentage of Simple Steps,
Smart Savings bulb purchase that are installed in commercial settings. This could
increase the average installed hours of use and increase program savings.
Status: This research is being conducted by the Nexant Team during the 2014-
2015 evaluation period
Recommendation: Perform a billing analysis on ENERGY STAR homes using a non­
participant comparison group once enough homes have participated under the new
requirements to justify performing the work. This research could be used to demonstrate
the achieved savings through energy efficiency construction practices.
Status: If enough homes participate during the 2014-2015 program period that
allow for a study population large enough to produce statistically significant
results, this research will be conducted by the Nexant Team during the 2014-
2015 evaluation period.
Staff_PR_02 Attachment A Page 8 of 12
Recommendation: Consider researching the current variable speed motor market
activity to determine if this measure should continue as a stand-alone rebate or be
packaged with other equipment purchases.
Status: This research is being conducted by the Nexant Team as part of the
2014-2015 evaluation.
Recommendation: Continue to promote efficiency programs in the Behavior Program
energy reports, as the reports increased both the rate of efficiency program participation
and savings.
Status: Avista will continue to promote efficiency programs bi-annually on the
Behavior Program energy reports.
Recommendation: Avista should consider performing additional research about the
peak-coincident demand savings from the behavior program.
Status: This will be considered for the 2014-2015 evaluation and largely
depends on the data available and whether or not a study of peak-coincident
demand savings is applicable for planning purposes.
1.2.1.2 Low Income Programs
The 2013 Idaho Electric Impact evaluation recommended the following changes to
Avista's low income programs. Applicable updates have been included under the
"status" sub bullet.
Recommendation: Consider including a control/comparison group in future bill ing
analyses.
Status: In the 2014-2015 evaluation, a billing analysis will be used to analyze
energy impacts; a comparison group approach will be used as the preferred
method if sufficient data is available.
Recommendation: Consider options for increasing the analysis sample size due to
small program populations (such as combining Washington and Idaho program
participants).
Status: In the 2014-2015 evaluation, combination tactics are being utilized to
increase the analysis sample size.
Recommendation: Obtain a full list of weatherization measures from agencies.
Staff_PR_02 Attachment A Page 9 of 12
Status: The list of weatherization measures from agencies is provided in Section
Error! Reference source not found. of this report.
Recommendation: Consider targeting high-use customers.
Status: The Community Action Agencies have a priority screen that they utilize
which includes high energy use customers. Additional data mining from Avista is
not possible as the Utility does not have access to income data and as such does
not presume that a high use customer would also be eligible for low income
weatherization services. The high use customer data has been used in the past
to target potential participants for the residential behavior program along with
electric to natural gas conversion opportunities.
Recommendation: Track and compile additional data from agency aud its.
Status: Avista includes on the Agency billing invoice a space for type of home
(e.g. stick built or mobile) age of home, square footage of home, heating fuel and
whether or not air conditioning exists. Additional data points will be gathered as
needed .
Recommendation: Consider perform ing quantitative, non-energy benefit analyses.
Status: Avista currently quantifies two primary non-energy benefits for Low
Income Programs. One is a dollar for dollar benefit related to health and human
safety (H&HS) improvements. Savings are not currently claimed applicable to
H&HS but these are improvements that protect the investment of and/or enable
the energy efficiency improvements to occur. The other is the benefit equivalent
to the cost of the standard efficient equipment benefit compared to the high
efficiency equipment measure (e.g. furnaces, water heaters, refrigerators and
broken windows). For some measures, like insulation, the incremental cost is the
full cost as if the customer did not have to replace anything and could have just
left the under-insulated space untreated. For the high efficiency improvements,
Avista is making the assumption that the baseline equipment is at or close to end
of life and, is therefore a replace upon burnout situation.
1.2.1.3 Nonresidential Electric Programs
The 2013 Idaho Electric Impact evaluation recommended the following changes to
Avista's nonresidential electric programs. Applicable updates have been included under
the "status" sub bullet.
Recommendation: Create a quality control system to double-check all projects with
savings over 300,000 kWh.
Staff_PR_02 Attachment A Page 10 of 12
Status: Avista implemented the review model on April 24, 2015 as discussed in
Section 1.1.2 above. Avista uses measure level evaluation because the number
of measures in a project may change, but the incentives and risks on a per
measure basis will stay consistent. Avista found the incentive levels that most
closely matched the 300,000 kWh threshold to create the risk-based strategy
below as outlined.
Recommendation : Consider working with participants to accelerate the process of
claiming energy savings and paying the project incentive. Preferably this should happen
within one year of measure installation, depending on Avista's requirements for post­
installation data on the particular project.
Status: Avista continually works with participants to accelerate the process of
claiming energy savings and paying the project incentive. Balancing the level of
rigor required to make sure savings claims are as accurate as possible,
appropriate documentation is received and requirements for post installation data
are achieved is part of our on-going active management of projects. Site specific
projects that are not performance based are typically paid within weeks of invoice
receipt and verification of installation. For performance based projects, the
payment timeframe is determined by the ability to collect adequate performance
data unique to the project parameters. Performance periods are typically within
one year of installation.
Recommendation : Avista may want to consider tracking and reporting demand
reduction to better understand measure load profiles and peak demand reduction
opportunities.
Status: Avista is working with their Power Supply department to find the value of
demand reduction at different times for different measures. Presently the
program operates only on commodity savings. Avista already calculates and
reports demand reduction when it occurs both in custom and prescriptive
measures and will continue this process.
Recommendation : Update prescriptive measure assumptions and sources on a regular
basis.
Status: Technical Reference Manual (TRM) updates, including prescriptive
measure assumptions, are being conducted as part of the 2014-2015
independent evaluation activities.
Recommendation: Streamline its file structure to enable reviewers to more easily
identify the latest documentation.
Staff_PR_02 Attachment A Page 11 of 12
Status: All documentation pertaining to a project is now stored in one file for
each project/opportunity. This includes; Energy Efficiency Report, DFIC , Top
Sheets, Contract, Invoices, lnstallationNerification report and copy of incentive
check. A PDF file can easily be developed to upload to external FTP sites or it
can be viewed by anyone with access to Saleslogix. Avista has changed the
naming convention for projects to account for version control.
Recommendation: Continue to perform follow-up measure confirmation and/or site
visits on a random sample of projects (at least 10%).
Status: Avista continues to perform installation verifications on all Site Specific
projects and 10% of all Prescriptive projects.
Recommendation: Consider flagging sites for additional scrutiny when the paid invoice
does not include installation labor.
Status: Avista will implement data collection concerning installation labor on the
technical Top Sheet on May 11 , 2015. While labor for some customers is a sunk
cost and will not show up in the incremental costs, for those that must have it be
a part of the incremental costs, it will be recorded and reviewed as part of the
technical Top Sheet process.
Recommendation: Avista may consider adding a flag to the tracking database to
automatically calculate the unit of energy savings per dollar (kWh/$ or therm/$) to
provide a quick check to identify extreme outliers.
Status: Avista added this metric to the lighting calculators in 2014 and this will be
added to the other calculators as they are updated in 2015.
Recommendation: In the case of redundancy, Avista may want to consider incenting
pump projects through the Site-Specific Program to more accurately characterize the
equipment operating hours.
Status: This issue has not been significant enough to change the prescriptive
process for VFD's to site specific at this time.
Recommendation: Avista may want to adopt modeling design guidelines to set
minimum standards, such as The Energy Trust of Oregon guidelines.
Status: Avista uses both eQUEST and Energy Plus for modeling and will design
minimum standards for modeling design for contractors and Avista DSM
engineers to use, drawing on the experience of Energy Trust and others in 2015.
Staff_PR_02 Attachment A Page 12 of 12
AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
IDAHO
A VU-E-16-06
PUC Staff
Production Request
Staff-03
DATE PREPARED: 10/12/2016
WITNESS: Dan Johnson
RESPONDER: Mike Dillon
DEPT: DSM
EMAIL: [e-mail]
Please provide a listing of all recommendations made by Nexant following its impact and process
evaluations of the 2014-2015 biennium. Please also include the Company's response to those
recommendations and any actions the Company has taken or plans to implement with respect to
each recommendation. If a recommended action was not taken, please explain why not.
RESPONSE:
Please see Staff PR 03 Attachment A.
Page I of I
1.1 Conclusions and Recommendations
The following outlines the key conclusions and recommendations as a result of the
evaluation activities. Specific details regarding the conclusions and recommendations
outlined here, along with additional conclusions and recommendations can be found in
the program-specific sections of this report and in Section Error! Reference source not
found ..
1.1 .1 Nonresidential Programs
The overall realization rate for the nonresidential portfolio is 95%. The realization rates
ranged from 102% for the Small Business program down to 54% for the "Prescriptive
Non-Lighting Other" program. The largest program in the nonresidential portfolio, Site
Specific, had a realization rate of 99%. The evaluation team found that the processes
Avista is utilizing for estimating and reporting energy savings for the nonresidential
programs are predominantly sound and reasonable. The following subsections outline
specific key conclusions and recommendations for several of the nonresidential
programs.
Conclusion: The Site Specific program constitutes more than 60% of the program
energy shares. Within the last 2 years, Avista has increased their level of quality
assurance and review on projects that participate through the program. The evaluation
team 's analysis resulted in a 99% realization rate for the Site Specific program. The high
realization rate indicates that Avista's internal process for project review, savings
estimation, and installation verification are working to produce high quality estimates of
project impacts.
Recommendation: The evaluation team recommends that Avista continue to
operate this program with the current level of rigor. For interior lighting projects,
Avista should consider applying the interactive factors deemed by the Regional
Technical Forum (RTF) to quantify the interactive effects between lighting
retrofits and their associated HVAC systems.
Status: We are in the process of changing our interactive effect values for both
prescriptive lighting and site specific lighting. The RTF updated values in March 2016
and those will be reflected in our documents by November 1, 2016.
Conclusion : Avista 's EnergySmart Grocer program is successfully providing retail and
restaurant customers with an avenue to upgrade their refrigeration equipment.
Participation in the program includes both prescriptive and custom projects. The
evaluation team's review of projects in the program resulted in a realization rate of 90%.
For prescriptive projects, the evaluation team determined that RTF deemed savings
values were being appropriately applied in most cases. However, low project-level
Staff_PR_03 Attachment A Page 1 of 13
realization rates for custom projects, which tend to be larger in size than prescriptive
projects, are driving the program realization rate downward .
Recommendation: Avista should consider more internal review of energy
savings estimates submitted by vendors for custom projects under this program.
Alternatively, Avista could consider tracking custom projects under the Site
Specific program with other projects of similar size and complexity.
Status: In 2016, we began treating EnergySmart Grocer Site Specific measures the
same way we treat our own.
• Conclusion: Avista reported 2014-2015 participation in six other prescriptive programs.
Of these, the HVAC Motor Controls program is the largest, constituting 65% of the
energy savings for this group. The evaluation team's review of projects in these
programs resulted in a 54% realization rate. Cases of ineligible VFD projects receiving
incentives were cause of the low realization rate for these programs.
Recommendation: Avista should revise the HVAC Motor Controls program to
include more verification of motor eligibility status. More emphasis should be
placed on confirming motor application and duty status to ensure compliance
with the program's existing eligibility requirements. More specifically, Avista
should place specific emphasis on ensuring VFDs are installed in a manner that
saves energy (i.e. not just as "soft starters") and that incentivized VFDs serve
primary-duty motors.
Status: To address this issue the VFD incentive application now includes two additional
check boxes stating "VFD is for control and not for a soft start" and "There are not 2
VFD's on the same fluid flow system."
Conclusion: The Small Business reported savings for faucet aerators were found to be
conservatively low based upon the evaluation team 's secondary research. The
realization rates for faucet aerators were 126% for electric savings and 204% for natural
gas savings.
Recommendation: It is recommended that the modified deemed savings values
utilized by the evaluation team be adopted by the program for future reporting
purposes.
Status: The modified deemed savings values have been updated and are included in
the 2017 business plan.
1.1.2 Residential Programs
The overall realization rate for the residential portfolio is 109%. The realization rates
varied significantly across the various programs evaluated with the Shell and Fuel
Staff_PR_03 Attachment A Page 2 of 13
Efficiency programs having the lowest realization rate (60% and 62% respectively). The
evaluation team found that the reported savings for the majority of the programs were
understating the actual impacts found from the evaluation activities. The following
subsections outline specific conclusions and recommendations for several of the
residential programs.
Conclusion: The evaluation team found that the reported deemed savings value (per
recycled unit) for the program was lower than estimated gross savings valued from prior
studies. Avista may have aligned their deemed savings values close to the RTF deemed
savings values, but it is important to understand that the RTF is reporting a value that
accounts for net market effects (i.e. free ridership).
Recommendation: If Avista choses to offer an appliance recycling program in
the future, it is recommended that a clear distinction between gross and net
savings values is noted if Avista reports the most current RTF values.
Status: Avista discontinued its appliance recycling program in the middle of 2015 and is
not planning on offering this program due to newer refrigerator and freezer vintages
having greatly reduced savings.
Conclusion: The evaluation team found, through billing regression analysis, a relatively
low realization rate for the Air Source Heat Pump (ASHP) measures (RR of 49%).
Recommendation: The evaluation team recommends Avista reexamine the
assumptions relating to annual per-home consumption and savings estimates in
homes receiving ASHP installations. In addition, to help better understand the
baseline for the ASHP replacement, Avista could consider requesting that
contractors and customers provide a better description of the replaced unit
Status: Previously, Avista had been using a figure from a previous evaluation and has
since updated the value to match the RTF UES, which is more in line with the evaluated
results. As a result high efficiency ASHPs were not cost-effective for 2016 and were
discontinued. Customers may switch from electric straight resistance to either natural
gas or an ASHP but the stand alone new or replacement HE ASHP is no longer
available.
Conclusion: For showerheads distributed through the Simple Steps program, Avista
allocates 50% of its reported savings to electric savings and 50% to natural gas savings
to account for homes that have different water heating fuel types.
Recommendation: The evaluation team recommends Avista update this
allocation assumption to be based on representative water heater fuel type
saturation. These data are available through the Regional Building Stock
Staff_PR_03 Attachment A Page 3 of 13
Assessment study; however, we recommend Avista base the allocation on data
specific to its territory.
Status: Avista has decided to continue to utilize the RTF figure for any water heating
retail showerheads, which is nearly a 50/50 split.
Conclusion: The evaluation team conducted a billing regression analysis for the Fuel
Efficiency participants and found realization rates of 60-70% for rebate projects that
included the conversion of a home's heating system from electricity to natural gas. When
regression coefficients were examined in detail, the evaluation team noted that the
estimated reduction in electric heating load was being offset by an increase in estimated
base load within participating homes.
Recommendation: Because the rebate amounts and per-home savings from
Fuel Efficiency are so large and the number of participants is relatively low, the
evaluation team recommends Avista ask participating customers for details on
any additional home renovations that were completed in parallel with the fuel
conversion. Home improvement projects such as an addition, finishing a
basement, or adding air conditioning can drastically change the consumption
patterns within a home and render the assumed baseline inaccurate.
Status: Avista concurs with the findings and has chosen to utilize the newly evaluated
fuel efficiency numbers for future program design. Interestingly a previous impact
analysis found higher realization rates that resulted in the lock UES used most recently.
The impact analysis aligns with anecdotal feedback from customers that the higher
incentive is helping reach customers with less usage and shortening their payback to
successfully encourage them to convert.
Conclusion: The evaluation team found that over half the homes receiving Fuel
Efficiency rebates in 2014-2015 did not have a gas billing history with Avista prior to the
conversion. These homes realized savings at a higher rate than homes that did have
previous gas service.
Recommendation: The evaluation team recommends that Avista consider
adding a field to the program tracking database that indicates the gas meter
installation date or service start date of participating homes. This would more
clearly delineate homes that were previously all electric and became dual-fuel
around the same time as the Fuel Efficiency project, from homes that had been
dual-fuel historically. Avista may also want to consider assuming a more
conservative electric savings estimate for homes that had prior gas service
because it's possible that the home was not 100% electrically heated prior to
program participation.
Staff_PR_03 Attachment A Page 4 of 13
Status: While the database may not be able to track the additional data points, Avista
will look for opportunities to track and/or communicate greater detail for eva luation.
Avista has chosen to utilize the newly evaluated fuel efficiency number fo r futu re
program design.
Conclusion: Avista 's deemed savings estimates, which were generally the same for all
similar product types and not correlated to the bulb wattage, understated the savings
found by the evaluation team. This was especially the case for Avista's CFL giveaway
program .
Recommendation: The evaluation team recommends that Avista consider more
detailed product type deemed values in an effort to be more closely aligned with
the actual participating lamps. Simple Steps has shifted its program tracking to
specific product types by lumen bins in accordance with the most current BPA
UES measure list. Avista should consider using these higher resolution deemed
value for internal reporting with the Simple Steps program and for use with
internal residential lighting programs.
Status: Avista will shift its Simple Steps tracking to align with the most recent RTF UES.
Recommendation: An overarching recommendation related to the Residential Lighting,
is that Avista monitor the LED lamp market for technology cost changes and customer
preferences, and consider increasing LED lamp options from the 2014-2015 portfolio in
future DSM planning. Currently, LED prices are dramatically decreasing and customer
preferences are shifting from CFL to LEDs as a preferred choice as an energy efficient
technology. Consequently, CFLs shelf space share is declining as an abandoned
technology, despite its better cost effectiveness compared to LED lamps.
Status: Avista will continue to monitor the quickly changing residential lighting market.
Conclusion: The evaluation team found a low realization rate (38%) for shell rebate
measures (windows and insulation). This finding indicates that reported savings values
were too aggressive on average. The evaluation team compared the end-use shares
estimated via regression analysis and found that only approximately 5,500 of the 13,000
kWh of average annual consumption in residential homes in Avista's service territory
was assigned to heating and cooling load. Given this end-use share, the reported
savings values claimed by Avista equate to a 25% reduction in HVAC loads.
Recommendation: The evaluation team recommends Avista examine planning
assumptions about per-home consumption, end-use load shares, and percent
reductions in heating and cooling loads from shell improvements. It may be that
the percent reduction assumptions are sound, but they are being applied to an
overstated assumption of the average electric HVAC consumption per home.
Conversely, the assumed end-use shares may be accurate, but the end-use
Staff_PR_03 Attachment A Page 5 of 13
reduction percentage is inflated. This investigation should be conducted
separately for electrically heated homes and dual fuel homes as the heating
electric end-use share will be different.
Status: Avista had been using older RTF numbers that corresponded to the time of the
Conservation Potential Assessment. The current business plan is utilizing the most
recent RTF numbers.
Conclusion: The evaluation team found that savings held fairly consistent during the 6
month interruption in Home Energy Report delivery. The finding reinforces Avista's
decision to assume a multi-year measure life when calculating the cost-effectiveness of
the Opower program.
Recommendation: The evaluation team recommends Avista examine the program
delivery model in the 2016-2017 cycle. Given the fixed and volumetric nature of
program costs, measure life assumptions, and mechanisms by which measured
savings are counted toward goal achievement the evaluation team believes there are
alternatives to the traditional delivery model that optimize program achievements
relative to costs.
Status: Avista will continue to utilize the same design for the 2016-2017 Home Energy
Reports program , but will be looking at all options of different HER program design for
2018-2019.
Conclusion: The evaluation team found a high realization rate for the fuel conversion
measures implemented through the Low Income program . One reason for the high
realization rate could be due to the fact that Avista caps the reported savings value to
20% of the contractor estimated savings. In addition, the evaluation team found that the
verified savings for these fuel conversion measures aligned closely with the verified
savings found through the regular-income Fuel Conversion program.
Recommendation: The evaluation team recommends re-evaluating the current
savings cap for fuel conversion projects. In addition, we recommend that Avista align
assumptions for fuel switching savings for the Low Income and Fuel Efficiency
programs.
Status: Avista is re-evaluating the cap for low income savings claim. Based on past
impact analysis savings were capped at 20% of the home. There should be a distinction
between a cap for weatherization and conversions where savings could exceed 20%.
1.3 Conclusions and Recommendations
Staff_PR_03 Attachment A Page 6 of 13
The evaluation team concluded the following and provides several suggestions for
Avista's programs. This section begins with conclusions and recommendations pertinent
across all programs (cross-cutting), followed by nonresidential and small business, and
ending with residential specific conclusions and recommendations .
1.3.1 Cross-cutting
Conclusion 1: Contractors are key program partners.
Contractors are the driving force of Avista's rebate programs, as they inform both
nonresidential and residential consumers about Avista 's rebate opportunities and
convince them to purchase qualifying equipment. The nonresidential contractors also
initiate a notable portion of work in comparison to customer-initiated jobs and appear to
be playing a larger role in application preparation than in years past. Both nonresidential
and residential customers report being highly satisfied with contractors and are taking
into account contractor's recommendations on what to install.
Recommendations: Increase support for contractors.
Consider the following suggestions to continue strengthening relationships with
contractors and to improve their effectiveness in generating program savings:
1. Offer an opt-in mailing list to contractors. Contractors subscribed to this
mailing list would receive regular information on program offers,
changes, trainings, and other program supporting information. This list
would be open to any interested contractor.
2. Promote outreach to contractors: Encourage program staff and account
executives to engage further with contractors by continuing and perhaps
increasing their involvement with contractor-related resources such as the
Northwest Lighting Network. This work can further educate contractors and
nudge them to cross-promote the rebate programs to their customers .
Additionally, training may help contractors' up-sell high efficiency
equipment through the program by improving their understanding of and
ability to sell high efficiency solutions. Therefore, Avista should continue to
support contractors attending NEEA's training sessions including their
recently launched comprehensive training for lighting contractors and
distributors.
3. Share effective messaging or marketing collateral with contractors.
Contractors could support program and marketing staff by providing
insights into how to best target certain customer types, learn from Avista on
how to better target certain customer segments, and possibly promote
cross-program referrals and participation. As findings from the evaluation
show that most contractors specialize in the nonresidential or residential
sectors, even if they serve both , developing sector-specific messaging may
be particularly effective.
4. Investigate offering cooperative (co-op) marketing. Co-op marketing
can help contractors effectively market the program consistent with
Staff_PR_03 Attachment A Page 7 of 13
Avista's objectives and increase customer perceptions of contractor's
credibility and cross-promote other programs.
Status: We have in the past offered quarterly updates to contractors and attempted to
further engage them. There was limited engagement in the additional events and we
have focused on 1-2 per year with high engagement at outreach early in the year where
we reiterate program guidelines, updates and changes. We have established a web
page for contractors where they can go for reference materials. We have broadened
our communication of program changes sending both HVAC and Electrical (Lighting) as
well as residential and non-residential in order to avoid gaps in communicating with
contractors. We have discussed co-op marketing opportunities and are evaluating such
opportunities with internal stakeholders.
Some other outreach efforts include our Questline newsletter which is available to
businesses and vendors alike. It provides regular updates on energy related issues and
Avista programs. Our commercial and industrial outreach has centered on case studies
that provide customers and vendors a starting point for proposing energy efficiency
measures. We have also underwritten vendor training and are active in related groups
like BOMA and NEEA lighting efforts.
Conclusion 2: Avista and its implementation contractors deliver rebate programs
efficiently, and promoting the programs further could help maintain or even
increase participation.
Several indicators suggest program promotions could be optim ized. First,
participants and nonparticipants expressed high interest in learning more about
Avista's rebate programs, indicating that although they may be aware of Avista's
offers, their knowledge is limited. Second, a majority of residential participants who
indicated learning primarily about Avista's offers through contractors were not aware
of other program opportunities outside the program they participated in.
Recommendation: Develop more abilities to target marketing. For example,
cross-promote programs to recent participants by acknowledging their recent
participation and informing them of other program opportunities applicable to
their home or business.
Status: Continue to cross-promote additional programs in our small business effort
where we emphasize additional opportunities and have seen additional throughput.
Work with marketing as they evaluate Customer Relationship Management (CRM)
software solutions that can enable us to track customer participation in different
programs and cross-promote additional offerings. In the meantime continue to utilize
our existing direct mail channels such as the customer newsletter and bill inserts.
Staff_PR_03 Attachment A Page 8 of 13
Recommendation: For residential customers, continue improving messaging in
direct mail promotions to better communicate program information since
residential customers prefer to receive this information via mail.
Status: In 2014 and 2015 we utilized direct mail to promote our electric to natural gas
conversion rebate. In 2016, energy efficiency was included via direct mail in our
Connections customer newsletter as part of our, "Efficiencies Matter" and "Way to
Save" Campaigns; we also utilize bill inserts to extend our message as appropriate.
1.3.2 Nonresidential, Including Small Business
Conclusion 3: Although declining participation rates could threaten Avista's
ability to achieve long-term goals, evaluation results point to opportunities to
drive additional savings.
Developing new strategies to encourage deeper savings or increased participation will
be paramount to reversing the decline in participation and achieving long-term savings
goals. Almost one-third of nonparticipants reported they will make a building upgrade
in the next two years, indicating a continued potential for program participation. In
particular, evidence suggests that much opportunity remains for converting lighting
from T12s.
Recommendation: Develop a marketing approach specifically targeting
replacement of T12 lamps.
The switch to a T8 baseline in 2012 had a dramatic effect on participation because the
rebates became far less attractive to customers to upgrade from T12s. While it may
not be feasible for Avista to alter the baseline for T12 change-outs, Avista should look
into developing targeted marketing strategies for convincing nonresidential customers
with T12s to replace them with more efficient lighting, focusing not only on savings but
improved lighting quality and performance. Avista could begin by targeting businesses
that the Small Business Program has identified as still having T12s.
Status: Currently, Avista has prescriptive incentives for electric commercial customers
for replacing T12's or T8 lamps with Tubular LEDs (TLEDs). To replace T12 lamps with
TLEDs, the customer will need to replace the T12 ballast with a LED driver or a ballast
that supports the TLED lamp. This incentive is extremely popular and does not require
additional marketing, at this time. Lighting contractors have been heavily marketing
these incentives and numerous customers are changing out their lamps. Avista also
has prescriptive commercial lighting incentives for replacing T12's Fixtures with new or
retrofit High Performance T8 (using low wattage T8 lamps-25 or 28 watt) or DLC
qualified LED fixtures. It was found to be cost effective only for lighting with run times
greater than 80 hours per week. This limits the business marketing audience-electric
Staff_PR_03 Attachment A Page 9 of 13
commercial customer that would qualify for this incentive. Target marketing only to the
business customer that qualifies would be difficult.
It is believed that many customers with existing T12's fixtures are most likely rate
Schedule 11 's. Avista currently has a small business program that is treating those
customers and cross-promoting other opportunities like lighting. Avista is also piloting
additional lighting (T12 replacements) for this customer segment as an expansion of the
current program.
Questline Newsletter is another avenue to let Avista electric commercial customers
know about A vista's incentives for T12 conversions and other energy efficient lighting
incentives.
Recommendation: Work with nonresidential lighting contractors to promote
replacement of T12 lamps.
Contractors make their living by selling equipment. Avista should work with
nonresidential lighting contractors to make sure they are fully aware of the advantages
that more efficient lighting (including the reduced wattage tube lighting that NEEA is
targeting through its Reduced Wattage Lamp Replacement Initiative) offers their
customers.
Status: Avista currently markets to lighting vendors through Avista Commercial Lighting
update newsletters and vendor outreach workshops about the T12 lamp conversions.
The lighting vendors and contractors have been responsive and market the T12/T8
lamp replacement to TLED lamp conversions and many customers are taking
advantage of the incentives.
Recommendation: Consider claiming Simple Steps savings for bulbs purchased
for the nonresidential sector.
The evaluation found that about 12% of Simple Steps LED sales and somewhere from
5% to 12% of Simple Steps CFL sales go to nonresidential customers. The mean hours
of use for such lighting is much higher in a nonresidential than residentia l settings,
meaning that the total Simple Steps savings is potentially higher than currently
estimated, and at a minimum, Avista should consider claiming the additional savings for
these purchases.
Status: This was considered but upon further review we chose to continue to just use
the RTF UES even if it might be slightly conservative given some longer runtime
commercial applications.
1.3.3 Residential
Staff_PR_03 Attachment A Page 10 of 13
Conclusion 4: Participation in the Avista rebate programs has rebounded since
2013 driven by a fivefold increase in shell program participation.
Rebate program participation reached a low point in 2013, after which participation
increased year over year by 51% from 2013 to 2014 and by 43% from 2014 to 2015.
This is a positive sign; however, maintaining or increasing program participation
requires cost effective savings opportunities for residential customers. Avista 's
residential programs operate in a fast-changing market. Consumers are adopting LEDs
rapidly, retailers are transitioning away from CFLs to LEDs, and the federal government
and regulators are mandating higher efficiency standards for bulbs and other energy
efficient technologies. The convergence of these forces has implications for the cost
effectiveness of Avista's downstream rebate programs. Program administrators
throughout the United States are exploring and testing alternative program designs
such as upstream and midstream designs in response to the evolving market. Although
Avista is currently participating in the Simple Steps, Smart Savings program (a
midstream program), when asked about future opportunities, program staff did not
mention any upcoming pilots or programs that apply these types of designs.
Recommendation: Continue regularly reviewing the expected savings and
cost-effectiveness of the measures in residential portfolio and exploring
the benefits and costs of other program designs including upstream and/or
midstream designs. Consider these suggestions:
1. Continue monitoring the technological advances and availability of ductless
heat pumps and water heating equipment. Surveyed contractors
recommended both of these categories as candidates for inclusion in Avista's
programs. NEEA, for example, has been working to promote the savings
potential of heat pump water heaters in the Northwest via the Northern
Climate Heat Pump Water Heater Specification, and The Northwest Power
and Conservation Council has identified both of these measure types as
promising technologies in the recently adopted Seventh Power Plan .
2. Explore upstream program opportun ities outside of the lighting market.
Upstream incentive programs offer the potential to increase the adoption of
energy efficient technologies at a lower cost compared to downstream
incentive programs. Program administrators in California and elsewhere
have successfully tested or used upstream program designs for
technologies that Avista currently incents, including HVAC equipment and
water heaters.
Status: The business planning process includes an annual review of expected savings
and cost-effectiveness for residential measures. We ensured that ductless heat pumps
and heat pump water heating technologies received additional review as we didn't
currently have incentives. We are planning incentives for both in 2017. Also we have
Staff_PR_03 Attachment A Page 11 of 13
added upstream buydown opportunities for water heating savings in both low flow
showerheads and clotheswashers.
Conclusion 5: Residential customers who rent their home are underserved.
Nonparticipants say living in a rental property prohibits them from making
improvements. This was the second most commonly cited barrier to making energy
efficient upgrades among nonparticipants (after the up-front cost barrier). More than a
quarter (27%) of nonparticipant survey respondents were renters, whereas only 3% of
the participant survey respondents were renters. Renters account for about one-third of
the population in Avista territory. 8
Currently, Avista serves renters via the low-income program. The CAP agencies
reported having difficulty serving the low-income renter population because it is
difficult to convince landlords to participate. Additionally, there appears to be no
multifamily program in the Avista portfolio that could serve this market, although
Avista does offer an incentive for a natural gas space and water heating measures to
multifamily property owners.
Recommendation: Investigate energy savings opportunities in the rental market.
Consider the following suggestions:
1. Estimate the number and distribution of rental units in the single family,
manufactured home, and among multifamily buildings. Analyzing these data
geographically and by vintage would likely yield insights regarding the energy
saving potential in these markets.
2. Conduct needs assessment research with landlords to understand their needs
and concerns and explore ways to bolster their willingness to make energy
efficiency upgrades on their properties. This research should consider the
needs landlords serving low-income renters as well as renters not eligible for
the low income program .
3. Conduct needs assessment research with renters to understand their needs
and the barriers to participation they face. For example, although some energy
savings activities may not be appropriate for renters (for example, HVAC
system replacement), other activities such as installing energy efficient lighting
and/or advanced power strips could be appropriate.
Status: Renters are a difficult market due to the split incentive issue where landlords
are hesitant to make capital improvements where the return is to the renter rather
themselves. Our billing system does not have the ability to break down customers by
single family, manufactured home and multifamily. There are some manual analysis
that could be done to query customers with landlord agreements but it is a manual
Staff_PR_03 Attachment A Page 12 of 13
process at this time. We have worked with renters who inquire about energy efficiency
programs and have had some success with certain programs, like electric to natural gas
conversions where landlords have taken advantage of rebates that currently cover a
significant portion of the retrofit and while the energy savings accrue to the renter it's an
obvious and lower than otherwise out of pocket improvement to the property.
We also tailor our outreach efforts with our energy fairs and mobile outreach to include
low-cost improvements that most renters can do within their rental agreement such as
rope-caulk, window kits and v-seal.
Low-Income
As part of the review of evaluator recommendations we also reviewed comments from
community action partners in regards to low income programs. Overall their
suggestions were for additional health and human safety, home repair or measures that
are not cost-effective EE measures (such as renewables). There were also comments
and review of educational opportunities that we continue to try and provide outreach but
also recognize the CAP funding and flexibility from LIRAP or special DSM Con/ED
funding to design and deliver different educational approaches.
Staff_PR_03 Attachment A Page 13 of 13
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-16-06
PUC Staff
Production Request
Staff-04
DATE PREPARED: 10/12/2016
WITNESS: Chris Drake
RESPONDER: Renee Coelho
DEPT: DSM
EMAIL: [e-mail]
Please provide copies of all internal audit reports for all audits completed on the Company's DSM
expenses and processes.
RESPONSE:
Please see Staff_PR_04 Attachments A, B, C, and D.
Page I of I
~i\J111STA.
Corp.
.DATE:
Internal Audit Report
September 24, 2009
TO:
FROM:
SUBJECT:
Scott Morris, Roger Woodworth, Dennis Vermillion,
Pat Lynch, Bruce Folsom
Teresa Carter
.Demand Side Ma.nagement Audit
Internal Auditing recently completed an audit of our Demand Side Management (DSM)
programs. This report summarizes our findings and recommendations for improvements
to existing practices.
Our objectives were to:
• Evaluate the prudency of DSM expenditures and whether they were in
compliance with tariff riders and with specific program guidelines.
• Verify that energy savings calculations, both pre-project and post-project, are
performed consistently.
• Verify that charges to DSM account codes are onJy for DSM-related projects;.
• Detem1ine whether incentive/rebate payments to customers are appropriate and
internal controls over such payments are adequate.
Our audit work covered DSM programs in effect from January 1, 2008 and through May
31, 2009. For expenditure testing, we selected all 32 accounts payable C'A/P")
transactions over $100,000 (totaling $5,082,851) and a statistical sample of 83
transactions (totaling$] 15,190) under that amount.
Summary Conclusion
Internal controls over DSM expenditures adequately minimize the risk of errors or
irregularities. We found programs to be in compliance with tariff requirements and
incentive rebates to be in compliance with specific program requirements.
With the large volume of site-specific and prescriptive commercial/industrial projects and
residential customer rebate requests, we were impressed that few errors were fow1d
during our audit. Good work DSM team!
While no significant errors were found, the following pages of this report discuss a few
minor errors and improvement opportunities for management's consideration.
Staff_PR_04 Attachment A Page 1 of 9
1. Accounting Errors
Avista Utilities Internal Audit Report
Demand Side Management -2009
Our review of invoices over $100,000 revealed two natural ga5-related expenditures
totaling $69,685 that were incorrectly charged to electiic project codes.
We also found, in our sample of 83 invoices under $100,000, that one Washington
customer incentive payout was charged to an Idaho project code. While the amount of
this error was small ($1 ,475), extrapolating the error to the entire population of invoices
under $100,000 indicates that approximately $294,000 in coding errors could have
occurred in the population. Those potential errors would likely have been made in both
directions, resulting in some netting of errors.
Recommendation
DSM accounting records should be corrected to reflect correct kWh 's, therms and dollar
amount<; for the transaction in error. In addition, the Sales.Logix administrator should
consider creating a query in the program to search for project site states that do not match
up with accmmting project state, and should make any corrections as necessary.
Management Response: Bruce Folsom, Manager Demand Side Management
Agreed. The noted accounting corrections will be made and the SalesLogix administrator
will create a "cross-linked" query to detect future jurisdictional account coding errors.
Page 2 of9
Staff_PR_04 Attachment A Page 2 of 9
Avista Utilities Internal Audit Report
Demand Side Management -2009
2. Allocation of Common Costs Between Jurisdictions
Certain DSM expenses affect multiple jurisdictions. Because of this, special project
numbers have been set up. They are:
Project #09803400 for WA and ID common electric projects
Project #0980340 I for WA and ID common gas projects
In 2008 and years prior, Energy Solutions used a manual 70/30 split (WA/ID) for
integrated resource planning purposes. Each year, DSM staff would look retrospectively
at incentive payouts to see if the 70/30 split was accurate. According to DSM staff the
actual incentives were always within a percentage point or two from the estimate.
For 2009, our Rates & Tariffs department determined that DSM costs common to
Washington and Idaho should be split based on the Production/Transmission Ratio (for
electric projects) and on the System Contract Demand Ratio (for gas projects). The
Production/Transmission Ratio is based on load and on capacity used. The System
Contract Demand Ratio is based on peak gas demand.
The Production!fransmission Ratio is 65.788% to Washington and 34.212% to Idaho.
The System Contract Demand Ratio is 70.93% to Washington and 29.07% to Idaho.
When DSM employees code costs to the 0980340X projects, the correct allocations are
made in the accounting system.
All of the 2009 transactions we tested were correctly coded using the 0980340X project
codes. However, we believe errors could occur since we spoke with DSM team members
who were unaware of the 2009 change in allocation percentages, and could potentially
use the manual 70/30 split.
Recommendation
2009, and future, allocation percentages should be communicated to all DSM employees.
Employees should be instructed to use these allocation percentages when manually
splitting expenses between jurisdictions.
Management Respon.se: Bruce Folsom, Manager Demand Side Management
Agreed. DSM employees will be reminded to use the automatically allocated project
numbers as appropriate.
Page 3 of9
Staff_PR_04 Attachment A Page 3 of 9
Avista Utilities Internal Audit Report
Demand Side Management -2009
3. Service Provider Contracts
A vista contracts with certain third party vendors to administer some of our DSM
programs. Examples are our contracts with Portl.and Energy Conservation, Inc. (PECI)
and with UCONS, LLC.
The PECI-administcrcd AirCare Plus program, now completed, required PECI to manage
and process customer incentive payments on Avista's behalf. PECI sent us detailed
spreadsheets showing incentives paid for each month; DSM staff compared incentives
paid per the spreadsheets to those invoiced by PECI, and then paid the invoiced amount.
Without periodically validating incentive payouts, third party program administrators
could invoice Avista for incentives not paid, or could have spreadsheet errors that
continue undetected. Unscrupulous HV AC contractors could likewise create fictitious
customer invoices to receive unearned incentive payments.
Recommendation
We do not believe there is a significant risk of errors or irregularities \/\,1th our current
service provider-administered programs. However, DSM staff should ensure that
incentive payouts by all current and future vendors are periodically validated. TI1is could
be done by spot-checking a few from each program administrator invoice, or by selecting
a larger sample from invoices each quarter or each year.
Management Response: Bruce .Folsom, Manager Demand Side Management
Agreed. DSM staff considers the type of verification standards required for third party
service provider contracts. DSM staff anticipates potential problems early in its vendor
selection process. Generally, the DSM staff seeks vendors with significant experience
and proven reputation. Due diligence is performed prior to contract finalization and the
resulting agreement provides for quality assurance in verification and reporting. For
those that would benefit, the assigned DSM program manager will develop and document
testing procedures.
Page 4 of9
Staff_PR_04 Attachment A Page 4 of 9
Avista Utilities Internal Audit Report
Demand Side Management -2009
4. Site-Specific Verification Procedures
Under our commercial and industrial energy savings programs (both site-specific and
prescriptive), DSM technical leads or account executives calculate estimated energy
savings, project costs and potential incentive payouts. This is generally done using the
Dual-Fuel Incentive Calculator ("DFIC") with inputs from customers, contractors and/or
Avista field visits. When a project bas been completed, calculations are re-run in the
DFIC based on actual costs, actual energy savings, and resulting changes in payback
periods. Incentive payments are then issued based on those final calculations.
When a DSM employee prepares both the initial and final DFIC calculations, there is
potential for clerical errors or for deception. The site-specific program managers (and, in
most cases, the assigned Account Executive) looks at each project from a reasonableness
basis but may not discover inegularities.
No errors were found, but a formal control procedure would reduce the risk that errors or
irregularities are carried through undetected from initial to final incentive calculations.
Recommendation
Implement a policy requiring all commercial and industrial incentive payout final
calculations to be reviewed by a knowledgeable employee other thm1 the one performing
the initial calculations.
l\fanagement Response: Bruce Folsom, Man.ager Demand Side Management
Agreed. A policy will be formalized establishing a second-person final payout validation
for commercial and industrial projects.
Page5of9
Staff_PR_04 Attachment A Page 5 of 9
Avista Utilities Internal Audit Report
Demand Side Management -2009
5. Customer Service Opportunity
During our testing, we noted that a customer (Avista account #1709425) applied for and
received an incentive rebate jn January 2009 for a hjgh efficiency natural gas furnace.
That customer failed to also request an allowed $100 rebate for a variable speed motor
which was specifically listed on the customer's sales invoice.
We unders1and that it would be time-consuming for DSM employees to ensure that all
qualifying rebates are paid. We also understand that it is A vista's policy to not to grant
rebates after 90 days of project completion, and this project was completed in December.
However, since this unclaimed rebate has come to our attention, we believe that the
customer would appreciate it if Avista would grant an exception to policy and issue the
variable speed motor rebate.
Recommendation
Consider issuing our customer a variable speed motor rebate of $100.
Management Response: Bruce Folsom, Manager Demand Side Management
Agreed. DSM staff will issue the customer rebate and wiIJ do so in the future when
discovered during rebate processing procedure.
Page 6 of9
Staff_PR_04 Attachment A Page 6 of 9
Avista Utilities Internal Audit Report
Demand Side Management -2009
6. Incentive Rebates ]>aid for Incorrect Amounts
Window incentive rebates are paid based on window square footage. Avista requires that
window square footage, or at least window sizes, be listed on vendor invoices submitted
for rebates.
Our tested sample of rebate payments included two window rebates that were incorrectly
calculated. In both cases, A vista paid the window rebate based on the square footage the
customer wrote on the rebate request form. On one o:fthe rebates we overpaid a
customer $30 and on the other we overpaid $144.
Recommendation
DSM employees responsibl.e for validating incentive rebate requests should be reminded
to recalculate window square footage before approving rebate payments.
Management Response: Bruce Folsom, Manager Demand Side Management
Agreed. Employees wjJ] be reminded of the importance of calculating correct rebate
amounts. Further, we will put on the rebate form a "how to calculate window square
footage" so that customers can better understand and properly present their rebate
request. This, in turn, will allow a new internal control to be established to be responsive
to the recommendation above.
Page 7 of9
Staff_PR_04 Attachment A Page 7 of9
Avista Utilities Internal Audit Report
Demand Side Management -2009
7. Incentive Payments Based on Vendor Bids/Proposals
DSM policy requires customers to submit vendor invoices to substantiate residential
customer incentive requests. This proves that the customer actually had the work done,
and it a11ows DSM staff to verify that the appliance purchased does qualify for a rebate.
Occa..,ionally a customer will submit a vendor's proposal sheet instead of an actual
invoice. The reason may be that the vendor does not issue a final invoice, preferring to
have their customer simply pay off the original proposal sheet.
Without a vendor invoice, Avista cannot be sure that the customer purchased the
appliance.
Recommendation
If a customer does not have a vendor invoice to prove they purchased a qualifying
appliance, DSM staff should use alternative procedures to verify the purchase. A phone
call to the vendor would be one method of verification. If an altematjve method is used,
DSM staff should note so in the documentation filed for the payment request.
Management Response: Bruce Folsom, Manager Demand Side Management
Agreed. This is the current policy and the DSM staff performs alternative verification
procedures on rebate requests that are not accompanied by a vendor invoice.
Page 8 of9
Staff_PR_04 Attachment A Page 8 of 9
Avista UtiJities Internal Audit Report
Demand Side Management -2009
8. CSS Security Access for Oregon Res idential Rebates
Oregon residential customer rebates are entered into the Customer Service System (CSS)
by one of two designated Oregon employees. Periodically, a report is run from CSS and
faxed to A/P for rebate check issuances.
That periodic CSS report is not signed by a DSM employee as authorization for payment.
Therefore, the customer rebates paid from the report. are not properly authorized
according to Company policy. An employee other than those who enter the rebates into
CSS should review the CSS report for reasonableness and sign as authorized before
submitting it to A/P for payment.
Also, we found that four employees other than the two designated rebate entry employees
have security access to enter rebates into CSS. We believe this is not necessary and
could pose the risk that unauthorized rebates could be entered for payment. No incorrect
rebates were identified during our audit.
Recommendation
Only the two employees designated for rebate entry into CSS should have the ability to
make those entries. All others should have their access removed.
CSS reports should be reviewed for reasonableness by a separate DSM employee. That
employee shou.ld then sign the report authorizing the rebate payments and submit the
report to A/P.
Management Response: Bruce Folsom, Manager Demand Side Management
Agreed. IT wi11 be notified of the security access changes and DSM will designate
someone other than. the CSS rebate entry designees to review and authorize rebate
payments.
Page 9 of9
Staff_PR_04 Attachment A Page 9 of 9
Internal Audit Department
Audit Report
TO: Bruce Folsom, Pat Lynch
CC: Jason Thackston, Dennis Vermillion, Scott Morris, Tracy Van Orden
FROM: Lauren Pendergraft
DATE: July 19, 2013
SUBJECT: Demand Side Management Audit Follow Up Report
Bac.kground and Purpose
In response to the Washington Util.ities and Transportation Commission's (WUTC) Order No. 7
in Dockets UE-10046 7 and UG-100468, A vista had a third party evaluator, Moss Adams,
perform a review of the processes and procedures of the Demand Side Management (DSM)
program. The Moss Adams Review was completed in 2011 with the conclusion that, overall, the
DSM programs are working as intended. The manual nature of the DSM process was noted and
areas were identified for improvement. The DSM Programs and Observations and
Recommendations Report wa,; presented to the WUTC along with the Company's responses and
status updates related to the report's recommendations and findings.
The purpose of Internal Audit's review was to perform a follow up on the report issued by Moss
Adams in 2011 and ensure communicated action items filed have been properly implemented.
Sco·pc and Procedures
As the DSM program is currently being reviewed by third parties, the scope of this review is
limited to the Company's responses a11d communicated action items included in the Moss Adams
report.
Inquiry of Implementation Team and Policy, Planning, and Analysis (PPA) staff and review of
applicable documentation were used to gather sufficient evidence to verify the Company's
response and status updates.
Observations and Recom.mendations
l) Several of the responses to Moss Adam's recommendations and observations are not
occurring as documented in the filed report. In general, new processes and procedures have
been implemented to address the recommendations and risks presented by Moss Adams;
Staff_PR_04 Attachment B Page 1 of 3
however, they are not consistent with the Company's filed response and status updates.
While there arc new manual controls, there have been o system or automated controls
implemented as indicated.
Recommendation: Update and document the cw-rent status of the recommendations to
reflect the current state of the DSM program. Additionally, best practice is to implement a
system that can ensure proper segregation of duties and implement system or automated
controls.
Management Response: As noted in the background section of this internal audit follow up
report, the M.oss-Adarns' review in 20 I I concluded that overall the DSM programs were
working as intended. Residential rebate processing continues to be quite manual but
effective. Process improvements have been implemented to address the recommendations in
the review that allow for additional review, follow up on pending rebates and some
automation has been added for rebate submittals and coordination with accounts payable.
Automated controls are planned as part of the new customer care and billing system that will
replace the current CSS system. The DSM team has been working closely with Project
Compass on residential rebate processing tools that will include automation and segregation
of duties for processing, reviewing and approving rebates.
The current state of DSM continues to evolve as it works closely with external process
reviewers to further enhancements made as a result of the Moss-Adams review. The current
state continues to meet the spirit and intent of those initial recommendations and the
summary that was previously communicated externally. The current state continues to be
transparently communicated through advisory groups and commission staff audits including
a recent review by WUTC staff.
2) Specific observations of procedures that have been implemented, but are not operating
effectively were noted:
• Only 6 out of 18 projects greater than $50,000 were independently reviewed by the PPA
staff in 2012. (Note: This independent review process has changed in 2013 due to
structural limitations of the independent review process. A peer review before incentive
payment has been implemented with the independent review occurring as an audit a:ftcr
incentive payment.)
Recommendation: Significant projects should still obtain an independent review prior
to incentive payout. The Implementation Team and PPA staff should determine the
thresholds for significant projects based on risk and dollar amount.
Management Response: As stated, this independent review process was changed in
2013 due to structural limitations of the independent review process. A peer review has
been implemented with the independent review occurring as an audit after incentive
payment. These actions, combined with more frequent randomly-selected reviews,
focuses on thresholds for significant projects.
• Review comments or questions noted by PPA staff are not always corrected or addressed.
Staff_PR_04 Attachment B
Recommendation: Comments from both the peer review and independent review need
to be appropriately addressed and documented. If there is a disagreement in amount or
calculation, this should be noted with a justification for the amount. Review comments
should not be left open.
Management Response: We agree that comments or quest.ions should be noted with
justifications and should not be left open.
• Post verification/installation verification (PV) on all non-residential projects is not
documented on a consistent basis.
Recommendation: Clearly define, document, and communicate to all Implementation
Team and PPA staff what projects require post verification or instaUation verification.
Implement a review control to ensure that post verification/installation verification is
occurring and properly documented within Saleslogix.
Management Response: A stand alone data extract from Saleslogix regarding post
verification of an installed measure is not cmrently sufficient to determine the PV date
because the date field was not consistently filled in. PV (insta1lation verification)
information is typically found in the notes or attachments section, which is not included
in the data extract. A process improvement is being implemented to improve consistency
of the use of the PV date field for 2013 and beyond to supplement the instaHation
verification written information already included with the individual project.
3) The roles and responsibilities of the Implementation Team and PPA staff are not clearly
defined. Accountability and authority for process or procedural recommendations are not the
sole responsibility of one group.
Recommendation: Define and communicate the roles and responsibilities of the
Implementation Team and PP A staff to ensure acceptance of the purpose of each function.
Work with staff to establish clear.ly defined lines of authority.
Management Response: Granularity of functions is being addressed by DSM management
through RACI modeling to clearly establish defined lines of authority.
Staff_PR_04 Attachment B
TO: Bruce Folsom, Pat Lynch
Internal Audit Department
Audit Report
CC: Jason Thackston, Dennis Vermillion, Karen Feltes, Scott Morris, Tracy Van Orden
FROM: Lauren Pendergraft
DATE: April 3, 2014
SUBJECT: Wild Rose Review and Demand Side Management Follow-up
Background and Purpose
The Demand Side Management (DSM) group is made up by two teams -the Policy, Planning,
and Analysis (PPA) team and the Implementation team. From an organizational perspective, the
teams report to different directors and executives; but are collectively referred to as the DSM
group. There have been organizational issues between the two groups as the roles,
responsibilities, purpose, and authority of each team are not understood and implemented by all.
In 2013, the PPA team became aware of the Implementation team's activities associated with the
Wild Rose Church and evaluated the prudency of the time and expenses associated with this
project. The PPA team's review resulted in a $22K adjustment to move the associated time and
expense below the line. The review of the Wild Rose activities was not conducted in a
transparent manner and was not communicated to Implementation team management in a timely
manner.
The purpose of this review was for Internal Audit to provide an independent assessment of the
Wild Rose activities. Additionally, Internal Audit performed other procedures over DSM
including detail testing of the Top Sheet process, a review of the installation verification dates of
completed projects in 2014, and a review of third-party reports issued about DSM since July
2013 .
Scope and Procedures
The following scope and procedures were performed during this review:
1. Wild Rose: Inquired of PPA and Implementation team employees in order to understand
the nature of the Wild Rose Church activities and calculate any necessary adjustments.
2. Top Sheets: The Top Sheet process was implemented in July 2013 to ensure compliance
with policy, procedures, and documentation in site-specific projects. Internal Audit
Staff_PR_04 Attachment C Page 1 of 4
tested a sample of 25 site specific projects for the existence of Top Sheets. Projects were
randomly selected from the population of all site-specific projects with a contract start
date and payment date after July 2013.
3. Installation Verification: Reviewed all completed projects in 2014 within SalesLogix to
determine installation verification rates in both prescriptive and site-specific projects.
4. Third-party Reports : Reviewed third-party reports issued since July 2013 including the
Cadmus 2012 Process Evaluation memo and Idaho Staff Prudency Review Comments
(Case No. A VU-E-13-09 and A VU-G-13-02).
Observations and Recommendations
The following observations and recommendations were made based on the different procedures
performed:
I. Wild Rose: The activity associated with Wild Rose appeared to be more than incidental
and on a recurring basis. As such, an adjustment to move the direct labor hours below
the line is appropriate given Avista's Regulatory Accounting Guidelines related to
community involvement activities. A range of possible adjustments calculated by
Internal Audit are below:
Direct labor (total hours worked $ 20,944.59 on project)
Net Impact (direct labor less
additional "make-up" hours $ 12,279.63 worked (ie. weekends, after-
hours,etc.))
Net Impact less 8 hours of team $ 7,235.89 building
The calculations above are loaded at October's total payroll loading rates of I 00.25%.
The actual adjustment made for labor was $21,485.60, but was only loaded at the payroll
benefits rate of 63.5% (had it been loaded at the I 00.25% it would have resulted in an
adjustment of $26,314). A $167 .88 adjustment for expenses was also made; however,
Internal Audit did not find any needed adjustments for expenses associated with Wild
Rose.
The adjustments made for Wild Rose were conservative and more than covered all of
Internal Audit's adjustment estimates.
Recommendation: The employee or manager of employees responsible for the initial
charges of time and expense should be included in the evaluation and calculation of any
needed adjustments to ensure the accuracy of adjustments.
Management Response:
Director of P PA Team response: I agree with the recommendation as written. The "in a
transparent manner" (as described in the "Background and Purpose") would benefit from
providing or establishing a policy in this regard.
Staff_PR_04 Attachment C
Director of Implementation Team response: I agree with how the issue has been
presented and with the observations and recommendations.
2. Top Sheets: Out of a sample of 25 projects (75 top sheets total as each project should
have a Technical Review Top Sheet, Energy Efficiency Agreement Top Sheet, and an
Incentive Payment Top Sheet), 5 top sheets were missing or unable to be found.
Additionally, 1 other project was missing a Technical Review Top Sheet as the
engineering review was performed by an outside engineering firm. Based on inquiry of
DSM employees, it is unclear if there is a policy that requires Technical Review Top
Sheets for outside engineering analyses. All other Top Sheets were completed and saved
as attachments in SalesLogix.
There is evidence to suggest Top Sheets are implemented and being used on a consistent
basis. The timing and nature of the exceptions are reasonable given the recent
implementation of the Top Sheet process.
Recommendation: Perform an internal review in the next 6 months to test both the
effectiveness and existence of Top Sheets (as Internal Audit's review was limited only to
existence). Establish, communicate, and document the policy requiring Top sheets for
outside engineering evaluations for site-specific projects. Additionally, remind DSM
engineers that Technical Top Sheets are required for revised engineering evaluations.
Management Response:
We agree with the recommendations as written. The two areas noted could use clearer
guidelines. Any exceptions to current or revised policies should be communicated prior
to implementing those exceptions.
3. Installation Verification (IV): Based on Internal Audit's review of all projects
completed in 2014 within SalesLogix, the following IV rates in both prescriptive and site­
specific projects were calculated:
Number of Number of projects
projects w/ IV date in Sales
completed Logix IV rate
Site specific 56 54* 96%*
Prescriptive 276 32 12%
*The IV did occur for the two projects missing the IV date in SalesLogix. The account executive has since
updated SalesLogix and input the IV date. The IV rate is now I 00% for site specific projects within
SalesLogix.
The IV rate for site-specific projects in 2014 is considerable improvement from the 2012
rate of 66% presented in the 2012 Process Evaluation Memo by Cadmus. Based on
discussion with DSM employees, it is unclear what the policy or established goal of the
IV rate is for prescriptive programs.
Staff_PR_04 Attachment C
Recommendation: Develop and document the policy or established goal for an IV rate
for prescriptive programs. Consider developing a specific goal for each prescriptive
program and include that information in the program plans.
Management Response:
We agree with the recommendations as written.
4. Third-party Reports: Internal Audit reviewed both the 2012 Process Evaluation Memo
performed by Cadmus issued on August 2, 2013 and the Idaho Staff Prudency Review
Comments issued on March 6, 2014. Both reports contained observations, areas of
concern, and recommendations. There is not a centralized document utilized by both the
PPA and Implementation team addressing Avista's response to report findings or
recommendations.
Recommendation: Develop and implement a DSM "Issues Tracker" to document and
track all internal and external report 's findings and recommendations in a centralized
location. The Issues Tracker should list the findings and recommendations, document
Avista's response to the finding or recommendation, and provide an update on the status
of the remediation efforts of the finding. The Issues Tracker should be owned by both
the PPA and Implementation team and clearly document the responsibility for addressing
the item. On a recurring basis (quarterly, semi-annual etc.) the Issues Tracker should be
presented to a third party, like Internal Audit, to ensure findings and recommendations
are being addressed.
Management Response:
We agree with the recommendations as written.
Staff_PR_04 Attachment C
Internal Audit Department
Audit Report
DATE: August 4, 2016
TO: Dan Johnson, Chris Drake, Tom Lienhard
CC:
FROM:
Kevin Christie, Dennis Vermillion, Scott Morris, Tracy Van Orden, Mike Dillon
Janice Gibler and Amy Parsons
SUBJECT: Demand Side Management (DSM) Review
Purpose:
The objective of this review was to ensure that the DSM department has appropriate policies and
procedures in place in order to accurately process qualified customer rebates. Internal Audit has limited
its testing to rebates issued in 2015 for both residential and non-residential customers.
Procedures:
Internal Audit performed the following procedures:
• Interviewed DSM management in order to determine areas of risk/concern within the
department, validate that the new organizational structure is operating as intended and verify
that communication within the department has improved since our last review.
• Obtained an understanding of the various reviews performed by third parties (Nexant,
WA/ID/OR commissions, etc.) and inquired of any material exceptions/findings observed in
recent reviews.
• Reviewed the DSM Standard Operating Procedures (SOPs) to obtain an understanding of rebate
qualifications and procedures in place for processing rebates .
• Selected 15 residential and 15 non-residential rebates processed in 2015 and performed the
following procedures:
Results:
• Verified the rebate qualifications were met and the amount calculated appeared
accurate.
• Confirmed all required paperwork, signatures, approvals, etc. were obtained prior to
payment to the customer.
• The DSM department appears to be working as a cohesive group and the current organizational
structure appears to be operating as intended.
• Per inquiry of management and review of the Nexant report for 2014-2015, no material
exceptions or findings noted from third party reviews.
• Current SOPs appear to be robust and sufficiently outline qualifications for each rebate and
internal policies and procedures.
• Residential and non-residential rebates selected for testing appear to meet specified
qualifications and be accurately calculated. Further, with the exception of the observation
noted below, it appears that internal processing requirements were followed.
Staff_PR_04 Attachment A Page 1 of 2
Observation: One residential rebate selected for testing was not signed by the customer and
instead stated "Refer to File" on the signature line. Upon discussion with DSM staff, it was not
known if a customer signature was a legal requirement or an internal policy. Further, it was
noted that signatures are not obtained for rebates submitted electronically.
Recommendation: Internal Audit recommends that the DSM department work with the Legal
department and determine what the appropriate operating policy should be in regards to
obtaining signatures from customers on submitted DSM rebate forms (both hard copy and
electronic) and update current SOPs.
Conclusion:
Other than the observation noted above, it appears that the DSM department has appropriate policies
and procedures in place to accurately process qualified customer rebates.
Staff_PR_04 Attachment A Page 2 of 2
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
REQUEST:
AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
AVU-E-16-06
PUC Staff
Production Request
Staff-05
DATE PREPARED: 10/12/2016
WITNESS: Dan Johnson
RESPONDER: Mike Dillon
DEPT: DSM
EMAIL: [e-mail]
Please provide invoices for all third party evaluators for 2014 and 2015. Please illustrate how
those costs were allocated among jurisdictions.
RESPONSE:
Please see Staff PR 05 Attachment A through U. Due to the voluminous nature of the
documents, the attachments are being provided on CD only.
Page I of I