20260714Staff Comments.pdf

RECEIVED
July 14, 2026
KELSEA E. ROSS IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83702
[phone]
IDAHO STATE BAR NO. 12050
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER IDAHO POWER'S )
APPLICATION FOR DETERMINATION OF ) CASE NO. IPC-E-26-05
2025 DEMAND-SIDE MANAGEMENT )
EXPENSES AS PRUDENTLY INCURRED )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"),by and through its attorney of record,Kelsea E. Ross, Deputy Attorney General,
submits the following comments.
BACKGROUND
On March 13, 2026, Idaho Power Company ("Company") filed an application
("Application")with the Commission requesting an order designating expenditures of$28,936,689
in Idaho Energy Efficiency Rider("EE Rider") funds, and$8,939,724 of demand response("DR")
program incentives, as prudently incurred demand-side management ("DSM") expenses.
Application at 1. In its Application the Company included its 2025 DSM Annual Report("Annual
Report") and two associated supplements ("Supplement 1" and"Supplement 2").
On April 21,2026,the Commission issued a Notice of Application and Notice of Modified
Procedure, establishing written comment deadlines. Order No. 37013.
STAFF COMMENTS 1 JULY 14, 2026

STAFF ANALYSIS
Staff reviewed the Company's Application, testimony,reports, evaluations, and responses
to production requests. Based on its review, Staff recommends the Commission approve
$28,936,689 in EE Rider expenditures and $8,939,724 in DR program incentives as prudently
incurred from January 1, 2025, through December 31, 2025.
The comments below detail Staff s analysis of the Company's energy efficiency (`BE")
and DR portfolios, program financials, cost-effectiveness analyses, program offerings, and on-
going projects. The absence of any discussion on additional points should not be construed as
Staff s support or endorsement for the Company's position without a full evaluation in the future.
DSM Portfolio
The Company reported that its DSM portfolio was cost-effective in 2025 with a Utility
Cost Test("UCT")of 1.70. Application at 7. The portfolio captured a total of 153,099 Megawatt-
hours ("MWh") of energy savings, including an estimate of 27,707 MWh of savings attributable
to the Northwest Energy Efficiency Alliance ("NEEA"). Id. at 6. At a sector level,the Company
reported its Commercial & Industrial ("C&I") programs continued to provide the majority of
savings with 91,620 MWh. Id. The Company represented the Residential sector captured 28,371
MWh of savings. Id. Finally, the Company stated the Irrigation sector contributed 5,400 MWh
of savings. Id. The Company represented that of the Company's 13 offerings across all sectors,
three were not cost-effective. Nesbitt Testimony at 21. In general, Staff believes the Company's
DSM programs are well managed and cost-effective.
Financial Review
Staff conducted an audit of the Company's EE Rider and DSM expenses, which included
sampling of transactions across the Company's programs. Based on its audit, Staff believes:
1. The Company's expenses were well documented, and controls were in place and
adjusted as needed to ensure the proper payment of incentives and other costs;
2. The Company's internal review process identified and corrected mistakes prior to the
filing of its DSM reports; and
3. The Company's EE Rider expenses are prudent.
STAFF COMMENTS 2 JULY 14, 2026

Staff recommends that the Commission find that the Company prudently incurred DSM
related expenses totaling $37,876,413 during 2025, consisting of $28,936,689 in EE Rider
expenses and$8,939,724 in DR incentives. DR incentives were included for recovery and audited
in the 2026 Power Cost Adjustment in Case No. IPC-E-26-10. Order No. 37054.
The Company represented that its internal review identified three prior-year accounting
adjustments to its 2025 EE Rider expenses. Application at 9. According to the Company,the first
adjustment of$5,383 related to the Home Energy Audit program, and the second adjustment of
$5,523 related to the Rebate Advantage program, were charged to operation and maintenance
("O&M") in 2024 but should have been charged to the Idaho Rider. Id. The Company corrected
the errors in 2025 by adding the expenses to the Idaho Rider. According to the Company,because
the Commission had already reviewed and deemed these expenses prudent in 2024, the Company
removed them from its 2025 prudence request. Id. The Company further stated that the third
adjustment of$2,278 related to the Irrigation Peak Rewards program, was charged to the Idaho
Rider in 2024, but should have been charged to O&M. Id. The Company corrected the error in
2025 by reducing Idaho Rider expenses and added $2,278 back to its 2025 prudence request to
avoid understating the prudent Idaho Rider expenses. Id.
In addition to the prior-year adjustments discussed above, the Company stated that its
annual review identified three current-year accounting adjustments to its 2025 EE Rider expenses
after the 2025 financial books were closed. Application at 9-10. According to the Company, the
first adjustment resulted in a $244 reduction related to the Home Energy Audit program, and the
third adjustment resulted in a$723 reduction related to the Residential Energy Efficiency program.
In both instances, the expenses were initially charged to the Idaho Rider but should have been
charged to the Oregon Rider. Id. The Company removed these amounts from its 2025 prudence
request so that only Idaho Rider expenses were included. Id. The Company further stated that the
second adjustment was a$346 addition related to the Residential New Construction program. The
expenses were initially charged to the Oregon Rider but should have been charged to the Idaho
Rider. Id. The Company included the $346 adjustment in its 2025 prudence request so that all
Idaho Rider expenses were reflected in the requested recovery amount. Id.
Staff calculated the DSM Rider account balance as of December 31, 2025, in Table No. 1,
below.
STAFF COMMENTS 3 JULY 14, 2026

Table No. 1 Tariff Rider Reconciliation
2025 Idaho Power Beginning Rider Balance $ 7,570,508
2025 Tariff Revenue Plus Accrued Interest $ 34,095,662
Interest on Rider Balance $ 645,030
Total Funds Available $ 42,311,200
2025 Reported Expenses $ 28,945,938
Prior Year-End Accounting Adjustments
2024 Home Energy Audit $ (5,383)
2024 Rebate Advantage $ (5,523)
2024 Irrigation Peak Rewards $ 2,278
Current Year-End Accounting Adjustments
2025 Home Energy Audit $ (244)
2025 Residential New Construction Program $ 346
2025 Residential Energy Efficiency Overhead $ (723)
2025 Total Expenses $ 28,936,689
2025 Ending Balance $ 13,374,511
Table No. 1 shows,as of December 31,2025,that the EE Rider had an over-funded balance
of $13,374,511. The EE Rider began the year with an over-funded balance of $7,570,508.
Attachment 1,Appendix 1, at 173. The over-funded balance increased approximately$5.8 million
during 2025. Staff believes that while this increase is lower than the approximately $6.9 million
increase recorded in 2024, it remains generally consistent with recent historical trends. Based on
the Company's annual reports, Staff calculated that the EE Rider balance increased by
approximately $4.3 million in 2023, $3.3 million in 2022, and $5.3 million in 2021. Staff will
continue to monitor the EE Rider balance, and absent a change in operations, may recommend a
reduction in the EE Rider rate in the future.
Expenses
In 2025,the Company spent approximately $28.9 million on Idaho EE Rider expenditures.
Attachment 1,Appendix 2, at 174. Staff calculated that this is approximately$3 million more than
the Company's 2024 expenses of$25.9 million. Staff believes that one of the primary drivers was
STAFF COMMENTS 4 JULY 14, 2026

the increase in C&I Retrofits spending. C&I Retrofits expense increased by $1,595,857, or 34%,
from $3,117,026 in 2024 to $4,712,883 in 2025. Nesbitt Direct Testimony, Exhibit No. 1. The
Company stated that this represented the largest increase among the Company's DSM programs
and was largely due to higher program activity, with the Company completing 53 additional
projects compared to 2024. Nesbitt Direct Testimony at 9. The Company represented that this
program also contributed significantly to portfolio efficiency, increasing total savings by 7,513
MWh year-over-year and helping drive higher energy efficiency portfolio savings in 2025. Id.
Program Management
The Company represented it devotes significant resources to maintaining and improving a
wide variety of EE offerings for all customer segments. Annual Report at 6-7. Staff reviewed EE
program details contained in the Company's Application, supplements, evaluations, the Annual
Report,workpapers, and responses to production requests. Based on its review, Staff believes the
Company's EE programs are managed cost-effectively and that the Company is taking steps to
improve EE program performance where necessary. Staff will continue to monitor the impacts of
ongoing EE program changes with the Company in future filings.
Heating and Cooling Efficiency
The Heating and Cooling Efficiency ("H&CE") program provides incentives for
homeowners,property owners,and builders to upgrade existing homes or construct new ones using
energy-efficient heating and cooling equipment and services. Id. at 41. In Staff s Comments for
the Company's 2024 DSM prudence filing,Case No.IPC-E-25-12, Staff expressed concerns about
the decline in measure savings since 2020, stating, "future changes to individual measures may be
warranted depending on 2025 performance." Staff Comments (Case No. IPC-E-25-12) at 7. In
2025, the H&CE program's cost-effectiveness decreased from a UCT 0.95 in 2024 to a UCT of
0.89. Annual Report at 41. The Company explained that the lower UCT was primarily driven by
expenses associated with the third-party process and impact evaluation performed in 2025 to
validate program savings and provide recommendations to improve performance. Id. at 44. The
Company represented that without the evaluation expenses, administrative costs would have been
22% lower and the program's UCT would have been 1.02. Id. Staff believes that while the
program was not cost-effective, the expense of the evaluation is necessary and that without the
STAFF COMMENTS 5 JULY 14, 2026

evaluation expense,the program would have been cost-effective. Additionally, Staff believes that
due to the changes detailed below, the cost-effectiveness of the program is expected to improve.
The Company evaluated the program's existing measures using avoided costs from the
2025 Integrated Resources Plan ("IRP") to determine what changes would benefit cost-
effectiveness in 2026. Id. at 43. The 2025 IRP avoided costs showed a shift in benefits from
winter to summer months, thus the Company changed incentives for certain measures. Id. The
Company represented that the ductless heat pump incentive,which made up 26%of 2025 program
participation,realizes more savings in the winter and was thus reduced by the Company from$500
to $400. Id. at 45-46. The Company also stated that the central air conditioning("A/C")measure
incentives, which realize more savings in the summer, were increased from $50 to $150 for units
with a Seasonal Energy Efficiency Ratio ("SEER") of 15 and$100 to $250 for units with a SEER
of 17. Id. Due to these changes, the Company expects participation for the ductless heat pump
measure to decrease by about 10% and participation for the central A/C measures to increase by
about 10%. Response to Staff Production Request No. 13. Staff developed Table No. 2 below to
show the impacts of the changes on the Company's cost-effectiveness forecasts for the measures.
Table No. 2—H&CE Measure Cost-Effectiveness Forecasts
Measure UCT (before incentive change) UCT (after incentive change)
Ductless Heat Pump 0.60 0.63
Central A/C (15 SEER) 1.37 1.07
Central A/C (17 SEER) 1.14 0.97
Id. Though the Company expects the UCT for the central A/C measures to decline with higher
incentive payouts, Staff believes the participation changes will have a positive impact on the cost-
effectiveness of the program. The Company stated that based on its forecasts, it expects the
program to be cost-effective in 2026. Nesbitt Direct Testimony at 25. Staff will review the impacts
of these changes on program performance in the Company's next DSM prudence filing.
Hoene Energy Reports
The Home Energy Reports ("HERs") program provides customers with periodic reports
detailing their home's energy consumption compared to similar homes and providing suggestions
on how to reduce energy usage. Annual Report at 52. It aims to provide behavioral savings of 1%
STAFF COMMENTS 6 JULY 14, 2026

to 3% of household energy consumption and promote participation in other energy efficiency
programs. Id. In 2025,the HERS program contributed over 72% of the total Residential portfolio
savings. Id. at 17. In Case Nos. IPC-E-24-11 and IPC-E-25-12, Staff expressed concerns that the
program's current randomized control methodology for validating savings excludes the
participation of certain customers. Staff Comments(Case No.IPC-E-24-11)at 7; Staff Comments
(Case No. IPC-E-25-12) at 8. In Order No. 36331, issued in Case No. IPC-E-24-11, the
Commission directed the Company to continue exploring alternatives to savings validation that
would allow all customers to participate.
The Company represented that consistent with Order No. 36331, the Company hired a
third-party evaluator("Evaluator")to conduct an evaluation("Evaluation")exploring the potential
for using a deemed savings approach to calculate savings,which was included in Supplement 2 of
the Annual Report. Overall,the Evaluator found that,although the deemed savings approach could
reduce program costs and improve alignment between key stakeholders, it carries significant risks
and limitations and ultimately recommended the Company continue using its existing randomized
control trial ("RCT") billing analysis to validate HERs savings. May 2026 Energy Efficiency
Advisory Group ("EEAG") — Home Energy Report Deemed Savings Investigation Results
Presentation at 14.
The Evaluator explained that for a deemed savings methodology, there is a significant risk
of program savings deviating from the deemed savings estimate if key treatment group metrics
and program design and implementation are not kept consistent. Id. at 19. This includes treatment
group characteristics such as proportion of electric vs. gas heating, geographic location,household
type, and average household square footage. Id. at 16. In addition, program design and
implementation,including the cadence of HERS delivery,use of peer comparisons, and percentage
of HERs emails opened must also remain the same. Evaluation at 16. The Evaluator argued that
this need to prevent program changes could inhibit the Company's ability to make changes
necessary to improve the program and ultimately limit performance. May 2026 EEAG— Home
Energy Report Deemed Savings Investigation Results Presentation at 11.
Furthermore, even if using a deemed savings approach to calculate savings, the Company
would still need to perform a billing analysis regularly to ensure savings values were up-to-date
and accurate. Evaluation at 16. The Evaluator explained that this would require the maintenance
of a valid control group developed using an RCT methodology,meaning the Company would not
STAFF COMMENTS 7 JULY 14, 2026

be able to provide HERS to all customers and maintain an accurate deemed savings estimate. Id.
at 17. Additionally, certain household characteristics, such as whether a customer has sufficient
billing data, would continue to limit the potential for increased treatment group sizes, as not all
households will generate significant savings. May 2026 EEAG—Home Energy Report Deemed
Savings Investigation Results Presentation at 10. For example,low energy consumers would result
in lower savings, increasing costs with little benefit and lowering overall cost-effectiveness. Id.
As part of the Evaluation, the Evaluator performed a statistical analysis to determine the
required control group size necessary to estimate savings accurately for future iterations of the
Company's HERS program. Evaluation at 13. The Evaluator calculated that after excluding
control customers, about 500,000 remaining customers could be eligible to receive HERS. Id. at
14. To identify a 1%treatment effect for a treatment group of this size, the Evaluator determined
the Company would need at least 32,025 valid control customers. Id. at 15. With about 51,000
valid control customers currently available and 100,875 participating homes in 2025, Staff believes
the Company has room to increase the number of treatment households without moving to a
deemed savings methodology. Evaluation at 14; Annual Report at 52. The Company took steps
to increase the number of treatment customers in 2025,introducing HERs to a new treatment group
of 29,659 additional Idaho customers. Annual Report at 53.
Based on the results of the Evaluation, Staff believes that the risks of overstating a HERs
deemed savings estimate are significant. This is because even if all protocols are diligently
followed, the large variety of factors affecting household energy consumption create the potential
for changes in savings that would not be reflected in the savings estimate without a full RCT
regression billing analysis. May 2026 EEAG — Home Energy Report Deemed Savings
Investigation Results Presentation at 14. These protocols also limit the Company's ability to adjust
the program to improve performance whenever necessary. Id. at 11. Staff agrees with the
Evaluator's recommendation that the Company continue to use its current RCT approach when
validating HERs savings. However, Staff believes there is continued opportunity to offer HERs
to additional treatment customers under the current validation methodology and will continue to
work with the Company to identify additional ways to increase the number of customers receiving
HERs without compromising the program's cost-effectiveness or the accuracy of reported savings.
STAFF COMMENTS 8 JULY 14, 2026

Rebate Advantage
The Residential Rebate Advantage program assists customers in purchasing Northwest
Energy-Efficient Manufactured Housing Program("NEEM")certified,ENERGY STAR qualified
manufactured homes and incentivizes sales consultants to encourage sales of energy-efficient
homes and discuss energy efficiency with customers during the sales process. Annual Report at
68. In late 2024,the RTF shifted its baseline for its new manufactured homes measure from a non-
NEEM certified home to a NEEM V1.1 home to better reflect current market practices. Update
Planning UES: New Manufactured Homes and HVAC (RTF November 2024 Meeting) at 20. As
a result,the Company found that the savings values for the program significantly decreased and it
is no longer cost-effective. Annual Report at 69. The Company suspended the program beginning
January 1, 2026, and plans to monitor market conditions with regional stakeholders to determine
if and when the program can be restarted. Id. at 70.
Low-Income Weatherization
The Company offers two low-income weatherization programs: the Weatherization
Assistance for Qualified Customers ("WAQC") program, and the Weatherization Solutions for
Eligible Customers ("Weatherization Solutions")program. Id. at 19. The Company reported that
each low-income weatherization program remained not cost-effective in 2025. Id. at 16. The
Company identified that the WAQC program saw a decrease in participation and savings leading
to a UCT of 0.12, or 0.13, when including the re-weatherization efforts. Id. at 80. The Company
also identified that the Weatherization Solutions program saw an increase in participation and
savings leading to a UCT of 0.17. Id. at 89. Staff recognizes the struggles of achieving a cost-
effective low-income weatherization program and will continue to work with the Company to
improve the cost-effectiveness of these programs.
In 2023, a large balance of unused WAQC funds were carried over from previous years.
In Order No. 35583 issued in Case No. IPC-E-22-15, the Commission approved the Company's
proposal to allow carryover funds to be used for re-weatherization projects as a solution to deplete
a large pool of built-up funding. In Order No. 36042 issued in Case No. IPC-E-23-11, the
Commission approved the elimination of future carryover of unspent funds and the allowance of
additional electric equipment upgrades necessary for completing Heating, Ventilation, and
Cooling("HVAC")upgrades. As a result,Community Action Partnership("CAP")agencies were
STAFF COMMENTS 9 JULY 14, 2026

able to spend most of the remaining carryover funds and ended 2025 with$22,657. Annual Report
at 76. In alignment with its EEAG and CAP agencies, the Company ended its re-weatherization
option at the end of 2025 and will spend the leftover funds on standard weatherization measures.
Decision Memorandum(Case No. IPC-TAE-26-01).
Small Business Lighting
The Commercial Small Business Lighting program provides small businesses with a free
lighting assessment and incentive for lighting projects of$0.40 per kilowatt-hour ("kWh") up to
100% of the project cost. Annual Report at 131. The program was not launched until September
2024; therefore, first year savings were minimal and the program was not cost-effective. 2024
DSM Annual Report at 131. However, Staff expected the program to be cost-effective moving
forward. Staff Comments(Case No.IPC-E-25-12)at 10. As expected,the program gained traction
in 2025, saving 663,044 kWh and ending the year with a UCT of 1.04. Annual Report at 131.
Residential New Construction
The Residential New Construction program offers home builders a cash incentive to build
energy-efficient, single family, all-electric homes that use heat pump technology. Id. at 71. The
program has three incentive levels for homes built 10%, 15%, or 20% above standard state energy
code requirements. Id. In its Annual Report, the Company states the program saved 2,719 kWh
per home, which is a decrease from the 3,309 kWh per home saved in 2024. Id. at 72. The
Company explained that the decline in savings is due to a 55.7% decrease in the number of homes
being built to the highest incentive level, which is the only incentive level that is cost-effective.
Id.; Supplement I to Annual Report at 29. Though the program was cost-effective in 2025 with a
UCT of 1.03, Staff is concerned that if this trend continues, the program may risk becoming not
cost-effective in future years. Staff will review the program's performance and determine whether
changes to measures that are not cost-effective are warranted in the Company's next prudence
filing.
NEEA Marketplace Pilot
In its November 2025 EEAG, the Company introduced its proposal to join an online
marketplace pilot through NEEA that will allow customers to explore energy efficient appliances
STAFF COMMENTS 10 JULY 14, 2026

and streamline the rebate process. Nesbitt Direct Testimony at 36; November 2026 EEAG —
Residential Presentation at 30. In Response to Staff Production Request No. 2, the Company
clarified that it plans to participate in this pilot at the advanced level, which would allow for
benefits such as utility branding of web pages, utility control over product categories, the ability
to incentivize specific energy-savings measures, and the ability for customers to apply for rebates
at the time of purchase. The Company explained that this will be funded separately from the
Company's 2025-2029 NEEA funding cycle. Response to Staff Production Request No. 11. The
Company expects the pilot to be cost-effective in 2026 with a UCT just over 1.0. May 2026 EEAG
—Residential Presentation at 20. Staff will review the pilot's performance in a future filing.
Demand Response
The Company maintained three DR programs designed to reduce load during critical hours
and minimize or delay the need to build new resources. Annual Report at 7. The A/C Cool Credit
program, Flex Peak program, and Irrigation Peak Rewards program were designed to target the
Residential, C&I, and Irrigation sectors, respectively. Id. at 4. In 2024, the Company's DR
programs incurred $12,777,362 in incentive payments funded through base rates. Id. at 9. The
programs achieved 161 MW of non-coincident demand reduction from its 328 MW of nameplate
capacity. Id. at 8. Staff reviewed the Company's DR programs and believes that the programs
were well managed, cost-effective, and prudent.
STAFF RECOMMENDATION
Based on its review, Staff recommends that the Commission approve $37,876,413 of 2025
DSM expenses as prudently incurred.
Respectfully submitted this 14th day of July 2026.
t�"�
Kelsea E. Ross
Deputy Attorney General
Technical Staff. Rebecca Cottrell, Ty Johnson, Laura Conilogue
I:\Utility\UMISC\COMMENTS\IPC-E-26-05 Comments.docx
STAFF COMMENTS 11 JULY 14, 2026

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF JULY 2026, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE NO.
IPC-E-26-05, BY &MAILING A COPY THEREOF, TO THE FOLLOWING:
LISA C. LANCE RILEY MALONEY
REGULATORY DOCKETS MARY ALICE TAYLOR
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707 BOISE ID 83707-0070
E-MAIL: [e-mail] E-MAIL:
[e-mail] rmaloney(a idahopower.com
[e-mail]
4 L41 -k-
PATRICIA JORDA9, SECRETARY
CERTIFICATE OF SERVICE