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Home My WebLink About200403121st Response of NW Energy Coalition to ID Power.pdfWilliam M. Eddie (ISB# 5800) ADVOCATES FOR THE WEST O. Box 1612 Boise, ID 83701 (208) 342-7024 fax: (208) 342-8286 billeddie~m1ci.net I~'L:'J t,., ; . L L ;:. I \' C. 7EQl\f~n~ \ 2 Pi~ 3: 34 ::(~ i ::; ;) Express Mail: 1320 W. Franklin S1. Boise, ID 83702 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO INCREASE ITS INTERIM AND BASE RATES AND CHARGES FOR ELECTRIC SERVICE CASE NO.IPC- E-03 - RESPONSE OF NW ENERGY COALITION TO FIRST PRODUCTION REQUESTS OF IDAHO POWER COMPANY NW Energy Coalition hereby responds to Idaho Power Company s First Interrogatories and Production Requests to the NW Energy Coalition. These responses were prepared by Nancy Hirsh, NW Energy Coalition, in consultation with William M. Eddie, attorney for NW Energy Coalition. REQUEST NO.1: On page 12 of Ms. Hirsh's testimony, she states that an increase in fixed charges would disproportionately impact low and fixed-income customers. Please provide all data, analyses and documentation that she relies on to support that testimony. RESPONSE TO REQUEST NO.1: The requested information is attached. REQUEST NO.2: On page 12 of Ms. Hirsh's testimony, she addressed fixed- income seniors living in trailer courts. Please provide any analysis, data or NW ENERGY COALITION'S RESPONSE TO FIRST PRODUCTION REQUESTS OF IDAHO POWER COMPANY -- documentation that supports the conclusion that seniors living in trailer courts are smal1 use customers. RESPONSE TO REQUEST NO.Of course, usage varies on a case by case basis but in general a 800-1300 square foot mobile home uses less energy than a larger single- family dwelling. There is a relationship between size and energy use. This is not to say that all mobile homes use less energy; there are certainly examples of small housing units using large amounts of energy. Those units must targeted for weatherization and efficiency improvements. Using a special tabulation of Energy Information Administration 1997 Residential Energy Consumption Survey public use data, Ms. Hirsh found that there is lower consumption in mobile home households with seniors than non-senior housing, using comparable prices. Households with seniors living in mobile homes: Ii Average annual electric use = 26 960 kBTU (per 1000 BTU) Median annual electric use = 25.856 kBTU Average price per kWh = 9.05 cents Median price per kWh = 9.14 cents Average annual bill = $677. Median annual bill = $687. Households with non-seniors in general housing stock: Average annual electric use = 39 042 kBTU Median annual electric use = 33 202 kBTU Average price per kWh = 9.38 cents Median price per kWh = 8.66 cents Average bill = $964, Median bill = $862. While the EIA 2001 ResidentiaJ Energy Consumption Survey is complete , the public data files are not yet available. NW ENERGY COALITION'S RESPONSE TO FIRST PRODUCTION REQUESTS OF IDAHO POWER COMPANY -- 2 Dated this 12th day of March, 2004. \;,~_. William M. Eddie Attomey for NW Energy Coalition NW ENERGY COALITION'S RESPONSE TO FIRST PRODUCTION REQUESTS OF IDAHO POWER COMPANY -- 3 CERTIFICATE OF SERVICE I hereby certify that on this 12 TI-J day of March 2004, true and correct copies ofthe foregoing NW ENERGY COALITION'S RESPONSE TO FIRST PRODUCTION REQUESTS OF IDAHO POWER were delivered to the following persons via hand delivery (for Commission and Idaho Power recipients) and US. Mail (for all others): Jean Jewell Commission Secretary Idaho Public Utilities Commission 472 W.Washington Boise, ID 83702 Anthony Yankel 29814 Lake Road Bay Vil1age, OH 44140 Lisa Nordstrom WeJdon Stutzman Deputy Attorney Generals Idaho Public Utilities Commission 472 W. Washington Boise, ID 83702 Lawrence Gollomp Assistant General Counsel US. Dep1. of Energy 1000 Independence Ave., SW Washington, DC 20585 Barton Kline Monica Moen Idaho Power Company O. Box 70 Boise, ID 83707-0070 Dennis Goins Potomac Management Group 5801 Westchester S1. Alexandria, VA 22310-1149 J 01111 R. Gale Idaho Power Company O. Box 70 Boise, ID 83707-0070 Dean Miller McDevitt & Miller O. Box 2564 Boise, ID 83701 Peter Richardson Richardson & O'Leary O. Box 1849 Eagle, ID 83703 Jeremiah Healy United Water Idaho O. Box 190420 Boise, ID 83719-0420 Don Reading Ben Johnson Associates 6070 Hill Road Boise, ID 83703 Conley Ward Givens Pursley O. Box 2720 Boise, ID 83701-2720 Randall Budge Eric Olsen Racine, Olson, et a1. O. Box 1391 Pocatel1o, ID 83204-1391 Dennis Peseau Utility Resources 1500 Liberty St, S. Suite 250 Salem, OR 97302 NW ENERGY COALITION'S RESPONSE TO FIRST PRODUCTION REQUESTS OF IDAHO POWER COMPANY -- 4 Brad Purdy 2019 N. 1 ih S1. Boise, ID 83702 Michael Karp 147 Appaloosa Lane Bellingham, W A 98229 Thomas Power Economics Dep1. Liberal Arts Bldg. 407 University of Montana 32 Campus Drive Missoula, MT 59812 Michael Kurtz Kurt J. Boehm Boehm, Kurtz & Lowry 36 E. Seventh S1., Suite 2110 Cinc~nati OH 45202 ) // ~ VL/ ~- --_... NW ENERGY COALITION'S RESPONSE TO FIRST PRODUCTION REQUESTS OF IDAHO POWER COMPANY -- 5 IPC-O3- NW ENERGY COALITION'S RESPONSE TO IDAHO POWER COMPANY'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO NW ENERGY COALITION ATTACHMENT TO RESPONSE TO REQUEST NO. 03/11/04 14: 48 FAX 206 621 0097 NWEC 19J 002 : Energy Consumption and Expendi tures by Low-Income Customers Available federal data indicates thaJ low-income households consume less energy than non-low-income households. The inescapable policy conclusion is that proposals to move a greater proportion of utility bills to fixed monthly charges are regressive in nature, Roger D. Colton is a Co-Founder . Roger D. Coltonand Principal of Fisher Sheehan & i Colton, a public interest economics consulting partnership, and as s electric utilities enter aPrincipal there, directs work at its Belmont, MA, office. He holds a J.D. period of increased price from the University of Florida and volatility, one industry response provides services in a variety of has involved an effort to increase areas, including regulatory the proportion of revenue col- economics, poverty law and lected through fixed charges.economics, public benefits environmental and natural resource Common forms these proposals have taken include an increasedeconomics, fair housing, community development, and planning and fixed monthly customer charge zoning. Projects he has worked on i as well as a set "minimum bill" include low-income electric and gas which includes the customer 'Jggregation. He has published seven charge plus a set amount of books and more than 50 journal usage.:lrtic es on a wide range of legal and One question posed by theseeconomic subjects. . proposals to institute higher fixed : bills is the extent to which, if at all I increasing fixed charges at lower ! consumption levels is regressive ---- j in nature. If low-income custo- mers have below-average energy consumption, increasing the use of minimum bills, as well as moving increased fixed charges to initial rate blocks, would dispro portionately harm low-income customers,Given t e inability-to- pay of many low-income custo- mers, implementing regressive fixed charges will likely meet stiff public resistance, as well as close regulatory scrutiny. To help address this question, this article outlines available federal data that documents the relationship between income and energy con-sumption. 70 ~) 2002, Elsevier Science me., 1040-6190/02/$ -see front matter PTI S1040-6190(02)00279-The Electricity Joumal 03/11/04 14: 49 FAX 206 621 0097 NWEC 19JO03 : 1. Low-Income Home ; Energy Assistance ! Program (LIHEAP) Each year, the Division Energy Assistance within the Office of Community Services the US. Department of Health and Human Services (HHS) pre- pares a "LIHEAP Home Energy Notebook" to assist state LIHEAP offices in delivering federal fuel assistance benefits. The federal fuel assistance program is known as the Low-Income Home Energy Assistance Program (LIHEAP). The LIHEAP Home Energy ! Notebook for Fiscal Year 1999, ! issued in July 2001, is the most ---;; cent such pub ation. The LIHEAP notebook presents : national as well as regional data. ccording to the LlliEAP report, low-ncome hou ..:=. . holds use considerabl less energy --.:..:: --- for home heating than do their ----- low-income counter arts (Table 1). For households heating with electricity, the national data demonstrates that low-income households consume 11.8 million Etu compared to a 14.8 mEtu consumption by non-low-income households. Indeed, the HHS data reports that not only do low- ! income households use less than their higher-income counterparts but that low-income households use less than average residential i consumption. Not surprisingly, , the only region where the con- sumption is even close is in the South, where the hot climate spurs heavy air conditioning use. Similar patterns exist too, for home cooling. According to the LIHEAP report, !:, lOt only do fewer low-income households cool their -= --- homes, but low-income house- lds that do cool their homes consume substantially less energy ---- Table 1: Home Heating Consumption and Expenditures per Household Consumption (mmBtu) United States All. households Non-low-Income Low-income Northeast All households Non-low-income Low-income Midwest All households Non-low-income Low-income All Fuels 49. 52. 41. 72.1 78. 59. 74. 76. 69. Natural Gas Expenditures ($) All Fuels Natural Gas 64. 67. 58. 13. 14. 11. 364 389 314 413 430 374 263 281 231 77.8 79. 74. 17. 20. 13. 554 599 461 638 651 609 478 524 404 84. 85.4 82. 21. 25. 14. 450 462 424 472 478 456 372 426 283 : South All households 29.0 48.3 12.273 333 226: Non-low-income 30.1 51.12.4 285 351 234 !rv;;;: ~ncome 26.9 42.9 11.249 300 209 ~ouseholds 33.2 45..ill 245 252 ~ : Non-low-income 38.50.271 275 E2. ~. ~ - . - 201 204 203I Low-income t.'+.t J4.1 10. Source: u.s. Department of Health and Human Services, Administration for Children and Families, Office of Community Services, Division of Energy Assistance, UHEAP HomeEnergy Notebook for FiscaJ Year 1999. at Table A-4 and A-5a (July 2001). April 2002 (eJ 2002, Elsevier Science Inc., 1040-6190 102/$-see front matter PIT 51040-6190(02)00279- 03/11/04 14: 50 FAX 206 621 0097 NWEC 19JO04 for cooling than do their non low- ""'D r l-"""" "'/- 'T'h ;n ........ --.- ...~ ~ - .~. .t' .. . . H " '" U L.l.C: ;ationwide as Wclras for each region of the country. For pur- poses of this analysis , " cooling includes central and room air- conditioning as well as non-air- conditioning cooling devices such as ceiling fans. ousehold expendirures follow the same pattern as household consumption. While low-income households heating with electricity in the South spend only 10.7 percent less than do non-low-income households, low-income households heating with electricity in the Midwest spend 33.6 percent less and low- income households heating with electricity in the West spend 25. percent less (Table 2). The pattern which exists for electric heating is not unique. The same pattern exists for natural gas heating, as well as for "all fuels. HHS reports, for example, that low-income Midwest households which use natural gas as their primary heating source have average annual home heating expenditures of $456. In contrast non-low-income households have average annual home heating Table 3: Home Energy Expenditures for All Fuels, Non-Law-Income and Low-Income Expenditures ($) All Fuels Natural Gas Electricity United States All households 254 299 131 Non-low-income 352 383 222 Low-income 061 116 964 Northeast All households 503 564 341 Non-low-income 638 641 1,466 Low-income 223 383 137 Midwest All households 286 310 079 Non-low-income 354 373 192 Low-income 125 151 893 South All households 265 369 205 Non-low-income 361 1,489 282 Low-income 082 148 039 West All households 976 018 900 Non-low-income 055 094 975 Low-income 842 858 79B Source: U.s. Department of Health and Human Services, Administration for Children and Families, Office of Community Services, Division of Energy Assistance, LlHEAP Home Energy Notebook for Fiscal Year 1999, at Table A-2a (July 2001). expendirures of $478. Average home heating expenditures for the total population are $472. In all regions of the country, as well as the country as a whole, low- income heating expendirures (and : Table 2: Dollar and Percentage Difference between Low-Income and Non-Low- ; Income Electric Heating Usage and Expenditures Non-Low-Income Low-Income Dollar Percentage Households ($)Households ($)Difference ($)Difference (Percent) National 2B1 231 17. Northeast 524 404 120 22. Midwest 426 283 143 33. South 234 209 ")r:::f\ ...., IV. West 271 203 25. , Source; Calculated from data of Table 1. ~ 2002, Elsevier Science Inc., 1040-6190/02/$-see front matter PIT 51040-6190(02)00279- consumption) are lower than those of average households. orne heating, of course, is not the only use of ~nergy. Non-heating electricity usage and expendirures appear in the "home energy" consumption and expendih1res data compiled by LIHEAP (Table 3). When electric non-heating is added to house- hold energy consumption and expendirures, low-income hou~e- holds still evidence lower con- sumption. LIHEAP reports, for' example, that low-income Mid- . , . . wesr nousenOlQS USIng natUral gas as their primary heating fuel have average annual total home The Electricity Journal 03/11104 14: 51 FAX 206 621 0097 NWEC 14!00~._- i energy expenditures (including i electricity) of $1 151, while non- i low-income households have average annual expenditures of 373, a difference of 16.2 per- cent. Home energy expenditures for the average household are 310. Again, the relationship holds for all fuels as well as for all , regions of the country. Clearly, low-income households have , total home energy expenditures that are not only "below aver- age," but that are considerably below what non-low-income households experience. II. Consumer Expenditures Survey (U.S. Department of Labor) The US. Department of Labor's Bureau of Labor Statistics pub- lishes an annual Consumer Expenditures Survey.l This ana- lysis is based on actual data pro- vided by households participating in the survey. The Consumer , Expenditures Survey presents national as well as regional data. It also presents data for selected metropolitZin areas. The survey provides electricity expenditures as well as natural gas expendi- tures. It does not provide con- sumption data. he Labor Deparhnent reports that there is a direct relationship between income and natural gas expenditures. While Northeast households with incomes of less than $5 000 have electric expenditures of $449 households with incomes of $20 000 to $30,000 have expendi- tures of $724, and households with income over $70,000 have electric expenditures of $1 168. Table 4 presents regional information from the most recent year period, 1999-2000, to illustrate the results. Similar results appertain to each prior 2- year period as wel1. The data shows that while the magnitude of the difference is greater for electric expenditures than for natural gas expenditures, natura gas expenditllres follow the samt pattern. Figure I, which presents the same information in graphicaJ form, demonstrates that each level of higher income reports higher electricity expenditures. III. Residential Energy Consumption Survey (RECS) A final source of information is the u.S. Department of Energy 1997 RECS. DOE reports that holding all else equal, low-income households that use electrIcity for space heating have a higher heating intensity" than do households with higher incomes, all other things equal. Heating intensity is measured as usage per thousand square feet per heating degree-day (HOD). DOE, however, found that fac- tors between income levels were not equal. The 1997 RECS results document that while the average household heating with electricity Table 4: Average Annual Expenditures ($) and Characteristics, 1999-2000 Natural Gas Electricity Northeast Midwest South West Northeast Midwest South West -.::$5 000 159 192 107 149 449 425 705 368000-$9,999 223 259 116 121 441 583 774 415 $10,000-$14 999 300 314 127 177 590 663 927 581 $15 000-$19 999 381 333 148 214 680 698 000 619 $20 000-$29,999 370 352 146 210 724 802 072 630 $30,000-$39,999 399 351 151 244 770 802 109 697 $40 000-$49 999 367 406 181 262 834 857 168 747 $50,000-$69,999 421 447 198 318 950 938 295 813 $70,000 and over 528 568 279 395 168 075 1,480 987 Totai househoids 385 391 171 259 812 821 109 713 Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditures Survey, available at http://www.bls.gov/cex/csxcross.htm (region of residence by incomebefore taxes). Scroll to the 2-year desired; multiple 2-year periods are provided. April 2002 ~t 2002, Elsevier Science Inc., 1040-6190/02/$-see front matter PIT 51040-6190(02)00279- 03/11/04 14: 52 FAX 206 621 0097 NWEC 19JO06 Home Electric Bill by Household Income 600 400 $1,200 000 $800 $600 $400 $200 Northeast .;~ Midwest South Figure 1: Average Annual Expenditures and Characteristics, Electricity, 1999-2000 I Table 5: Space Heating Usage and Space Heating Intensity by Income Electricity as Primary Space Heating Fuel Natural Gas as Primary Space Heating Fuel Space Heating Space Heating Htd Square Space Heating Space Heating Htd Square Use Intensityb Footage Use Intensity Footage .($10 000 10,910 981 56,11,242 152 $10 000-$24 999 11,907 226 61.758 363 $25,000-$49,999 13.802 1,468 67.610 1,750 $50 000 or more 15.678 037 75.406 366 Below poverty 11.4 923 080 55.10.564 208 Total households 12.0.794 468 66.876 1,757 has a space heating intensity (kWh/thousand square feet per degree-day) of 0.794, households with incomes below the poverty i level have a space heating inten- sity of 0.923. Households with incomes less than $10 000 have a space heating intensity of 0.910. A higher number means that there is greater consumption per thou- sand square feet per heating ! degree-day. f one were to stop at this point the conclusion would dearly be that, all else being equal, low- income households use more energy than households on aver- age. However, DOE goes on to find that while households heat- ing with electricity on average have 1,468 square feet of heating floor space~ households heating with electricity with incomes below the poverty line have only 080 of heated floor space. Households with incomes below $10 000 have only 981 square feet of heated floor space. As a result, while total electric space heating consumption is 12.8 mmBtu for . Less than $5,000 0$5 000 - $9 999 8$10,000 - $14 999 0$15 000 - $19,999 111$20 000 - $29 999 131 $30 000 - $39.999 0$40.000 - $49,999 1!$50,OOO. $69 999 Q$70 000 and over West the average household, total electric space heating consump- tion is only 11.4 mmBtu for the household living below the pov- erty level and only 10,4 mmBtu for the household with income below $10,000. s found by other agencies doing similar research natural gas consumption follows the same pattern as electric con- sumption. DOE also found that total space heating consumption for house- I holds using electricity steadily : Source: Energy Information Administration, U.S. Department of Energy (Nov. 1999). A Look at Residential Energy Consumption in 1997, at Table CE2-3c.a Space heating use in mmBtu. b Heating intensity in kWh for electricity and cubic feet for natural gas,I. -.. ~ 2002, Elsevier Science Inc., 1O40-6190/02/$-see front matter Pll 51040-6190(02)00279-The Electricity Joumal 03/11/04 14: 53 FAX 206 621 0097 NWEC 19J 007 Table 6: Total Household Energy Consumption in Physical Unit of Total Consumption per Household Total Energy Electricity Hot Water Electricitya Natural Gas Refrigerator Lights & Appliances Electricity Natural Gas Less than $10 000 372 114 3,461 233 $10 000-$24 999 926 198 4,462 657 $25,000-$49 999 173 279 511 953 $50,000 and more 974 603 219 3,430 Below Poverty 229 123 139 824 Total households 219 323 5,412 871 Source: Energy Information Administration. U.S. Department of Energy (Nov. 1999). A Look at Residential Energy Consumption in 1997, at 115, 184, 206.. Electricity presented in kWh. b Natural gas presented in thousand cubic feet (mcD. Table 7: Total Household Energy Consumption in U.S. Households by Household Income (1997) Income Space Heating Electricity (NCg)Hot Water Refrigerator Lights & Appliances 0:::$10 000 40.15.15.4 $10 000-$24 999 45.16.18.4 $25 000-$49 999 53.4 19.4.4 22. $50 000 and more 62.23.29. Below poverty 41.18.3.8 18. All households 52.5.7 19.22.4 Source: Energy Information Administration, U.S. Department of Energy (Nov, 1999). A Look at Residential Energy Consumption in 1997. at 115. increases as income increases. While households with incomes below the poverty line have 1 080 square feet of heated floor space, households with incomes of $50,000 or more have 2 037 square feet of heated floor space (Table 5). These findings are not limited to space heating. The RECS goes on to report that low-income energy consumption (and expenditures) is less than that of the average household (and certainly less than The available federal data, on a non-low-income households) not I national and regional basis, sup- just for space heating, but for total ; ports the conclusion that low- energy use, as well as for each end ' income households consume less : use. Total electric consumption : energy (whether heating energy or for households with income total household energy) than do below $10 000 is 7 372 kWh, for households on average, and cer- PY"TTInlco ",hi10 ""a~"~a 'h~"~n. i tairJ'T less than n dow-income ~~~' :;;~t ~~~' ~~n ~:;~O :"c- ! households. As a result, it is 219 kWh (Table 6). ! necessary to find that proposals to April 2002 he relationship between household income and energy consumption holds for each energy end use (Table 7). This includes space heating, electric air conditioning, domestic hot water, refrigeration, and electric lights and appliances. IV. Summary move a greater proportion of uti- : lity bills to fixed monthly charges are regressive in nature and will tend to impose adverse impacts on low-income consumers. Endnotes: 1. u.S. Depaxtment of Labor, Bureau of Labor Statistics, Consumer Expendi- tures Survey, available at http://wvV'w. bls.gov / cex/ csxcross.htm (region of re- sidence by income before taxes). 2. Poverty level is a way to measure the low-income status of a household taking into account household size. Poverty levels are updated annually. For 1997, the year the RECS data was gathered, the poverty level was set at 890 for a household size of one, and 720 higher for each additional household member (so that, for exam- ! pJe, the poverty line for a household of four people came to $16,050). The SOUIce for the 1997 data is 62 Federal Register 10856 (Mar. 10, 1997). (G) 2002, Elsevier Science Inc., 1O4G-6190/02/$-see front matter PI! S104D-6190C02)OO279- 03/11/04 18: 15 FAX 206 621 0097 NWEC 19J 002 - Economic and Demographic Factors Affecting California Residential Energy Use Prepared by William B. Marcus Gregory Ruszovan Jeffrey A. N ahigian JBS Energy, Inc. 311 D Street West Sacramento California, USA 95605 916.372.0534 September 2002 03/11/04 18: 16 FAX 206 621 0097 NII'EC 19J 003 INTRODUCTION ..................................................................................................... Table of Contents TI. ill. SUl\1l\1ARY OF FINDmGS ................................................................................ J.\fETHODOLOGY ................................................................................................ IV. PG&E ELECTRIC USE....................................................................................... 9 A. SIMPLE ANALYSIS OF INCOME, SQUARE FEET, AND HOUSEHOLD SIZE .................... 9B. HoUSING STOCK CHARACTERISTICS AND RELATIONSHIP TO INCOME.................... 15C. EXPLANATION OF RESULTS USING FULL EQUATIONS FOR Two ZONES ................. 1. Zone T "Basic " Example .................................................................................. 2. Zone Basic Example................................................................................ ....... D. SYSTEM-WIDE ANALYSIS OF RESULTS................................................................... 24E. VACATION HOMES ............................................................................................"'" 27 F. USE UNDER 6000 KWH PER YEAR......................................................................... 28G. FINDINGS FOR PG&E ELECTRICITY....................................................................... 31H. TIMING OF ELECTRICITY USE VERSUS SIZE OF RESIDENTIAL CUSTOMERS ............ 33 V. PG&E GAS AN'AL YSIS....................................................................................... VI. SDG&E ELECTRIC USE .................................................................................. 44 . A. ANALYSIS OF INCOME, SQUARE FEET, AND HOUSEHOLD SIZE............................... 44B. HOUSING STOCK CHARACTERISTICS ......................................................................C. ANALYSIS OF FULL EQUATIONS FOR SDG&E ........................................................49 1. Basic Use Equation................................................................................. .......... 2. All-Electric Equation......................................................................................... 51 3. Impact of Adding Household Members or of a Senior Citizen, Compared to Baseline Quantities. ........................................................................""""""""""""" 52 D. USAGE BY TIME PERIOD AND SIZE OF CUSTOMER.................................................. 53 E. SUMMARY OF FINDINGS ......................................................................................... 56 vTI. SOUTHERN CALIFORNIA EDISON ELECTRIC USE............................... 58 A. METHODOLOGICAL ISSUES UNIQUE TO EDISON ..................................................... 58B. SIMPLE ANALYSIS OF SQUARE FOOTAGE, INCOME, AND HOUSEHOLD SIZE........... 59,C. RELATIONSHIP OF HOUSEHOLD CHARACTERISTICS AND INCOME........................... 62D. AIR CONDITIONING, INCOME LEVELS, AND USAGE................................................ 64E. EXPLANATION OF RESULTS USING EQUATIONS FOR Two ZONES........................... 65 1. Zone 10 "Basic " Example................................................................................. 2. Zone 17 Basic Example..................................................................................... F. ANALYSIS OF OTHER ZONES AND OF ALL-ELECTRIC CUSTOMERS """""""""""'" G. WATER PUMPING ...................................................................................................H. VACATION HOMES ................................................................................................. 1. FINDINGs...,............................................................................................................ VITI. REFERENCES ................................................................................................ 03/11/04 18: 17 FAX 206 621 0097 N\\' LIST OF TABLES Table 1: Percentage of Housing by Square Footage and Single- Family by Baseline Zone Table 2: Equation for Average kWh Use by Household Size and Characteristics; Zone T Basic Table 3: Variation Between Largest and Smallest User Types: Zone T Basic Table 4; Average Annual Use by Income, Square Footage, Household Size, and Housing Type: Zone T Basic Table 4A: Average July Use by Income, Square Footage. Household Size, and Housing Type: Zone T Basic Table 5: Equation for Zone S "Basic" Table 6: Variation Between Largest and Smallest User Types: Zone S Basic Table 7: Average Annual Use by Income. Square Footage. Household Size, and Housing Type: Zone S Basic Table 7 A: Average July Use by Income, Square Footage, Household Size, and Housing Type: Zone S Basic Table 8: Baseline Quantity. Representative Customer Use, and Impact of Increasing Household Size or Adding a Senior Citizen without Changing Income or Square Footage, PG&E Basic Energy Use Table 8A: Baseline Quantity. Representative Customer Use, and Impact of Increasing Household SIze or Adding a Senior Citizen wIthout Changing Income or Square Footage. PG&E Basic Energy Use, Month of July Table 9: Baseline Quantity. Representative Customer Use, and Impact of . Increasing Household Size or Adding a Senior Citizen without Changing Income or Square Footage, PG&E All-Electric Energy Use Table 9A: Baseline Quantity, Representative Customer Use, and Impact of a Senior Citizen without Changing Income or Square Footage. PG&E All-Electric Energy Use. Month of January Table 10: PG&E Vacation Homes by Climate Zone Table 11: Use of Permanent Residents and Vacation Homes. Three PG&E Climate Zones Table 12: Percent with Income Over $75,000 by Residency Status, Three PG&E Climate Zones Table 13; Regression Equations Relating PG&E Summer On-Peak Use and Coincident Peak Demand to Size of Customer and Residential Rate Subclass No Regional Variables 19JO04 03/11/04 18: 17 FAX 206 621 0097 NWEC Table 13: Regression Equations Relating PG&E Summer On-Peak Use and Coincident Peak Demand to Size of Customer and Residential Rate Subclass, With Regional Variables Table 14: Estimated Summer Peak Usage by Size of PG&E Residential Customer Table 15: Equation forPG&E Zone T Gas Table 16: Baseline Quantity, Representative Customer Use. and Impact of Increasing Household Size or Adding a Senior Citizen without Changing Income or Square Footage. PG&E Gas Energy Use Table 16A: Baseline Quantity, Representative Customer Use, and Impact of Increasing Household Size or Adding a Senior Citizen without Changing Income or Square Footage. PG&E Gas Energy Use. Month of January Table 17: Percentage of SDG&E Customers Who Are All-Electric by Income Level Table 18: SDG&E Basic Use Equation Table 19: Effects ofIncome, Household size, and Dwelling Characteristics on Electricity Use, SDG&E Basic Table 20: SDG&E All Electric Use Equation Table 21: Analysis of AddL."1g Persons or Senior Citizen to SDG&E Reference Household Table 22:Summer Usage by Time Period and Coincident Peak Demand by kWh Sales Levels, SDG&E Residential Customers Table 23: Equation for Average Use by Household Size and Characteristics; SCE Zone 10 Basic Table 24; Variation Between Largest and Smallest User Types: SCE Zone 10 Basic Table 25: Average Annual Use by Income. Square Feet, Household Size. and Housing Type: SCE Zone 10 Basic Table 26: Equation for Average Use by Household Size and Characteristics; SCE Zone 17 Basic Table 27; Variation Between Largest and Smallest User Types: SCE Zone 17 Basic Table 28: Average Annual Use by Income, Square Feet. Household Size and Housing Type: SCE Zone 17 Basic Table 29: Use by Pennanent Residents and Vacation Homes, SCE Zones 15 and 16 LIST OF FIGURES Figure 1: PG&E Residential Basic Use by Square Feet and Climate Zone Figure lA: PG&E Residential All-Electric Use by Square Feet and Climate Zone Figure 2: PG&E Residential Basic Use vs. Income by Climate Zone 19J 005 03/11/04 18: 18 FAX 206 621 0097 NWEC Figure 2A: PG&E Residential All-Electric Use vs. Income by Climate Zone Figure 3: PG&E Residential Basic Use by Household Size and Climate Zone Figure 3A: PG&E Residential All-Electric Use by Household Size and Climate Zone Figure 4: Use by Income and Household Size Zone S Basic (without controlHng for housing characteristics) Figure 5: Relationship of Square Footage to Income and Household Size: Zone T Figure 6: Relationship of Single-Family Units and Income. Zone T Figure 7: Percent of PG&E Customers Using Less than 6000 kWh by Baseline Zone Figure 8: Percent of PG&E Customers Using Less than 6000 kWh by Size and Type of Dwelling Figure 9A: Percent Under 6000 kWh by income and Household Size Zone T (Bay and Coast) Figure 9B: Percent Under 6000 kWh by-Income and Household Size, Zone X (Bay Hills) Figure 9C: Percent Under 6000 kWh by income and Household Size, All Other Zones Figure 10: On-Peak Use by Size and Type of Residential Customer. PG&E Figure 11: On-Peak Use by Location and Size of PG&E Basic E-1 Customers Figure 12: Coincident Peak Load Factor by Size and Type Residential Customer, PG&E Figure 13: Coincident Peak Load Factor by Location and Size of PG&E Basic E-l Customers Figure 14: Percentage of Summer Use in On-Peak Hours by Size PG&E Residential Customer (kWh/day) Figure 15: Coincident Peak Load Factor by Size ofPG&E Residential Customer (kWh/day) Figure 16: PG&E Residential Gas Use by Square Feet and Climate Zone Figure 17: PG&E Residential Gas Use YS. Income by Climate Zone Figure 18: PG&E Residential Gas Use by Household Size and Climate Zone Figure 19: SDG&E Use vs. Square Footage Figure 20: SDG&E Use YS. Income Figure 21: SDG&E Use vs. Household Size Figure 22: Percent Single Family Household by Income. SDG&E Figure 23: Housing Size Under 1000 Squ~re Feet by Income, SDq&E 19JO06 At; ..... 03/11/04 18: 19 FAX 206 621 0097 NWEC 19JO07 Figure 24: Dwellings over 2500 Square Feet by Income, SDG&E Figure 25: Summer On-Peak Use is Greater for Large SDG&E Residential Customers Figure 26: Large SDG&E Residential Users Have Lower Load Factors than Smaller Customers Figure 27: Use vs. Square Feet, SCE Figure 28: SCE Energy Use vs. Income by Climate Zone Figure 29: Use vs. Household Size. SCE Figure 30: Edison Basic Usage by Income and Household Size (without controlling for housing characteristics) Figure 30A: Edison Basic Zone 17 Usage by Income and Household Size (without controlling for housing characteristics) Figure 31: Square Feet Under 1000, vs. Income and Household Size, SCE Figure 32: Square Feet Over 2500, vs. Income and Household Size, SCE Figure 33: Single Family, vs. Income and Household Size, SCE Figure 34: Air Conditioning Type by Income, SCE Zone 17 Basic Acknowledgment: This report was prepared by staff members of JBS Energy. Inc.: William B. Marcus. Principal Economist, Greg Ruszovan, Senior Energy Analyst. and Jeffrey Nahigian, Senior Economist. The report presents results of research that was funded by The Utility Reform Network, an organization representing residential and small business energy and telecommunications consumers in California. Large portions of this paper were presented in testimony in Cajjfomia PUC Rulemaking 01-05"047 (related to baseline quantities of electricity). Some other demographic material presented in this paper was used to analyze size limits for advanced metering options for residential customers and to analyze the cost differentials between large and small customers in PG&E's most recent rate design case. (Application 97-12-020 Phase 2). We acknowledge the funding of Utility Consumers' Action Network of San Diego in 2000 of research regarding the load patterns of SDG&E customers by size that is presented in this paper. This material was previously submitted in testimony in SDG&E's 1999 Rate Design Window (A. 91-11-024). Detailed working papers. Including equations produced in the process of preparing this report. can be obtained by contacting greg(Q)jbsenergy.com 03/11/04 18: 19 FAX 206 621 0097 NWEC 19JO08 I. Introduction This paper reports on a detailed analysis of the influence of household size and composition. housing characteristics, and income on residential usage for the three major California investor-owned utilities: Pacific Gas and Electric Company (PG&E), San Diego Gas and Electric Company (SDG&E), and Southern California Edison Company (Edison or SCE). Portions of this analysis were submitted in testimony to the California Public Utilities Commission (CPUC or California PUC) in its Rulemakfng 01-05-047 on baseline quantities for residential rate design, (Marcus, 2002, 2002a, Nahigian. 2002) We were able to conduct this analysis because the California utilities conducted detailed Residential Appliance Saturation Surveys (RASS) of thousands of households tor the California Energy Commission in the mid 1990s (1995 for Edison and PG&E and 1997 by SDG&E) and provided data from these surveys to jBS for this analysis. Utilities in most of North America do not make available the breadth of data to enable work like this to be undertaken. We appreciate the availability of this customer-specific data fo~ analysis. Unfortunately, these surveys have been discontinued now that long-run demand forecasts have been devalued by electric industry restructuring and deregulation. (See, for example. California Energy Commission, 2000) Three major variables influence energy use within a given climate zone and usage type: household size, income, and square footage. Typically, larger household size. higher income. and increases in square footage cause increased usage of electricity and gas. Vacation homes use less electricity and gas than permanent residences. In addition, single-family houses use more energy than apartments of the same size. In some parts of the state, households with senior citizens or and households with people who work at home were found to use more energy after controlling for the other variables. Economic and Demographic Factors Affecting Residential California Energy Use JBS Energy, Inc. September, 2002 03/11/04 18: FAX 206 621 0097 NWEC 19J 009 For Southern California Edison, where additional data are available on appliance characteristics that are not available for PG&E and SDG&E, we also conducted a brief investigation of the impacts of central air conditioning and water pumping on usage. The basic units of analysis for PG&E and Edison were baseline climate zones. These are zones established by the California Public Utilities Commission (CPUC) used to determine baseline quantities-- the lowest rate of a five-tier inverted residential rate structure (California PUC, 2001),1 Households were also divided into "basic" and "all-electric" customers, which is also a detenninant of the allowable baseline quantity. An all-electric customer uses electric heat. II. Summary of Findings OUf review of electricity and gas use described below yields the follovv'ing findings: Electricity and (to a somewhat l~sser extent) gas use increases as income increases. )- This finding sounds obvious, but many utilities across the country have been recently trying to deny it,2 This finding is also consistent with recent findings that low-income customers use less electricity and gas than higher.income customers by Colton (2002) from national data and Marcus (2002b) using Nevada Low Income Home Energy Assistance Program (LIHEAP) data. 1 Baseline climate zones were used because the initial purpose of this testimony was for use in a CPUC proceeding relating to the analysis of baseline rates. A different set of climate zones are used by the California Energy Commission in load forecasting. 2 Nevada Power (LipareUi. 2001), Sierra Pacific (Meacham. 2001), Reliant Arkla (gas) (Theberge 2001,2002), and Washington Gas Light (Raab, 2002) have all denied the nexus between income and usage in testimony before regulatory commissions in the most recent 12 months. Economic and Demographic Factors Affecting Residential Califof!'lla Energy UseJBS Energy. Inc. September. 2002 03/11/04 18: 21 FAX 206 621 0097 NWEC 19J 010 Without controlling for family size and housing characteristics, for all three utilities, electricity use by households wfth incomes over $100 000 was 200-250% of the use of households under $15,000 in nearly all utilities and climate zones. For SDG&E, where an income level over $150 000 was available, customers with this high income used three times as much energy as customers under $15.000. For gas, the disparity was not quite as large but was still significant. PG&E households earning more than $100,000 typically used 150- 200% more gas than those earning less than $15,000. There is a wide variation in use by income, housing unit size, and number of persons per household for all three utilities. Comparing the use of a single resident earning less than $20,000 per year in a small apartment to use by the largest family with the highest income (over $100,000 per year. 1994-95 dollars for PG&E and SCE, over $150,000 per year, 1997 dollars for SDG&E) in a single-family house of more than 3000 square feet, the high- income family in the large house uses 6 to 8 times as much as the low- income person in an apartment, depending on the utility. The impact of income on gas use is somewhat less. The high income large household in a large house referenced above uses 3.5 to 4 times as much gas as the low-income resident of the small apartment in PG&E's climate Zones Sand T. . Much of the increase arises because households with higher incomes are more likely to live in larger dwellings and in single-family units than households with lower incomes. ~ However, there were large increases in usage associated with income over $100,000-$150 000 in many PG&E and Edison electric and gas zones as well as in San Diego, independent and additional EconoIT'Jc and Demographic Factors .Ffecting Residential CaHfomia Energy Use jBS Energy. Inc. September. 2002 03/11/04 18: 21 FAX 206 621 0097 NWEC 19JOll to increases caused by larger dwelling units and a higher percentage of single-family homes among the well-to-do. In a number of zones for all three utilities. use was modestly lower (200-400 kWh per year) for households under $20,000 to $30,000 after controlling for housing characteristics and family size. )- In some inland zones in PG&E and Edison and in San Diego. large families with high incomes have a further relatively large increase in use beyond that otherwise explainable by income, family size and housing characteristics. In one or two PG&E zones, a large family with low income used less than otherwise expected. It was important to disaggregate these interactive variables of family size and income to assure that the impact of family size on use is properly computed. After controlling for income and housing characteristics. larger households used more electricity and gas than smaller ones, but generally by a smaller amount than would be predicted from analysis of household size alone without controlling for these other factors. Adding a second person to a household increases use for basic PG&E customers by an average of 125 kWh per month excluding coastal Zone T, where the increase is 75 kWh. A second person in an all-electric household also increases use by an average of 125 kWh. In San Diego, the second person adds 75 kWh per month to a basic household and 65 kWh per month to an all-electric household. For Edison, a second person added 45-100 kWh per month, with the lower figures in coastal baseline zone 10. Economic "od Demographic Factors Affecting Residential CalifOi'i'liB Ei,ergy Use lBS Energy, Inc. September, 2002 03/11/04 18: 22 FAX 206 621 0097 NWEC 19J 012 ~ The difference in use between a household of two and a household of six or more3 averaged 140 kWh per year for basic users and 150 kWh for all-electric users across PG&E climate zones (with higher amounts in the Central Valley) and 150 kWh per year for PG&E all- electric zones. The average increase was 80 kWh per month for SDG&E basic users, and 150 kWh for SDG&E all-electric users. Increasing household size from two to a maximum level on the Edison system also added 80-90 kWh per year. In a number of climate zones, use does not clearly increase as more than four persons are included in a household. We have observed it in a number of PG&E zones, as well as for Edison and SDG&E. This finding is probably consistent with needing to spend more income on goods other t:.ha..rl electricity in very large fa!!1iIies. ~ The increase in PG&E gas use going from one to two persons in a household was about 80 thenns per year on average. );- For PG&E, after controlling for housing characteristics, which have the most effect on gas use, increases in the number of people beyond two people has a smaller effect on gas use than the increase from one to two people or than the increase in electric use in most zones. The impact was 20 therms in one zone, approximately 50 therms per year in three zones, and 86 to 122 therms in Central Valley Zones Sand W. 3 In some cases, where there was no statistically significant difference or a decline as household size increased, a household size of four or more was used. "'--- --" -- -' "'--- ____ L'- ,,--,--- A ""u,,-- n__ ,-, -_..., "'."'-- '- ,,_u_- "u.L:.LUIIUIIIll. "IIU LlClHUI';"'I-'IUL ""LLU'~ /'1oIlCLUUI'; """'U"""'" vOU'UIIUO r.U"'1'SY U~" JBS Energy. Inc. September, 2002 03/11/04 18: 22 FAX 206 621 0097 NWEC 19JO13 Households with senior citizens tend to use more electricity and gas. although the phenomenon was not observed everywhere in the state. For basic use (excluding all-electric), a household with a senior citizen uses about 40 kWh more per month in San Diego. In PG&E. the impact of a person over 65 varied by region from zero (in three zones) to 15-25 kWh per month (in three zones), to 55 kWh per month in one zone. There was no significant impact for Edison. ~ The addition of a senior citizen to an all-electric household in the Central Valley increases use by about 200 kWh per month. A large portion of this additional use arises in peak winter months. significant impact could be observed statistically for all-electric households in PG&E's coastal zones, Edison, or SDG&E. ~ The addition of a senior citizen to a gas household in PG&E increases arumal use by about 100 therms per year, largely in winter heating costs. The cost impact (difference between baseline and non-baseline rates) is about $20-$25. Households with gas heat and a member who works at home use an extra 50 kWh (in PG&E's coastal zone T) and 70-100 kWh per month in most other PG&E zones.4 The impact on usage of having a worker at home could not be established with statistical significance in most zones for all- electric households and gas customers. The variable was significant in a few zones (about 100 kWh per month in one all-electric zone and 27- therms per year in two PG&E'gas zones). Vacation homes use 50-70% less tha.., permanent residences, "vvith the exception of the Edison low desert (Palm Springs) area, where use is 10- 4 This issue was not investigated for Edison and SDG&E. Economic and Demographic Factors Affecting Residenua1 CaHfomia Energy Use jBS Energy. Inc. September. 2002 03/11104 18: 23 FAX 206 621 0097 NWEC 19JO14 30% less. The lower use. in the Palm Springs area is concentrated in the summer months when vacation homes are less likely to be occupied. III. Methodology To analyze each utility, we ran several types of equations. Equations were prepared by climate zone that related annual usage only to household size, income, and square footage of dwelling unit. These equations provide simple snapshot views. In addition, for at least one representative basic climate zone for each utility. an equation was prepared which related usage to income and household size without controlling for housing stock. This equation is important for determining whether a utility s rate design proposals might affect a group disproportionately) such as low-income or lower-middle-income large families). Finally, complete equations were prepared to control for aU of the three major effects. In those equations. annual use was related to variables for: . Number of people in household (up to six categories. corresponding to through 5 people and six and over) Square footage (divided into up to nine categories) Income (divided into up to nine categories) . Single-family vs. multifamily Whether a senior citizen lived in the homes Whether anyone worked from home (PG&E only) Categories were combined (in the income, square footage, and household size variables) if there were no statistically significant differences among them, and variables were deleted if not significant. 5 Defined as "65 or over" for PG&E and SDG&E and alternatively as "60 and over" or "retired" for SCE. because the utilities used different definitions in their RASS surveys. Economic and Demographic Factors Aflecting Residentiai California Energy Use JBS Energy, Inc. September, 2002