20101214IPC to ICIP 1-15.pdf

esIDA~POR(I
An IDACORP Company
LISA D. NORDSTROM
Lead Counsel
Inordstromc.idahopower.com
December 14, 2010
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-10-27
IN THE MATTER OF AN INVESTIGATION OF APPROPRIATE COST
RECOVERY MECHANISMS FOR IDAHO POWER'S ENERGY EFFICIENCY
PROGRAMS
Dear Ms. Jewell:
Enclosed for filing please find an original and three (3) copies of Idaho Power
Company's Response to the First Production Request of the Industrial Customers of Idaho
Power in the above matter.
Very truly yours,
x~&.~~~
Lisa D. Nordstrom
LDN:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
8oise, ID 83707
LISA D. NORDSTROM (ISB No. 5733)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
InordstromCâidahopower.com
dwalkerCâidahopower.com
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ZUlU DEC 14 PH 4=26
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AN INVESTIGATION )
OF APPROPRIATE COST RECOVERY )
MECHANISMS FOR IDAHO POWER'S )
ENERGY EFFICIENCY PROGRAMS. )
)
)
)
)
)
CASE NO. IPC-E-10-27
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF
THE INDUSTRIAL CUSTOMERS
OF IDAHO POWER
COMES NOW, Idaho Power Company ("Idaho Powet' or "Company"), and in
response to the First Production Request of the Industrial Customers of Idaho Power
dated November 23, 2010, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 1
REQUEST NO.1: Reference Direct Testimony of Darlene Nemnich, p. 7, lines
3-7. For the FlexPeak program, please provide a breakdown specifying, on an annual
basis, the Company's incentive costs paid to customers and the Company's incentive
costs paid for the demand-aggregator contractor for the Flex Peak program. Please
provide a copy of the contract with the demand-aggregator for Flex Peak program.
RESPONSE TO REQUEST NO.1:Please see the Company's
objection/response to the Industrial Customers of Idaho Powets Production Request
NO.1 filed on December 7,2010.
The response to this Request was prepared by Darlene Nemnich, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2
REQUEST NO.2: Reference Direct Testimony of Darlene Nemnich, p. 10, lines
6-13. Is the Company proposing the incentive payments to be included in the PCA
would not be subject to the 95/5 sharing? Because the Company also proposes to
include these incentive payments in future base rates, please explain how the Company
proposes to account for them in the PCA process.
RESPONSE TO REQUEST NO.2: The Company currently recovers 100
percent of its prudently incurred incentive payments. The Company is not requesting a
lesser amount of recovery. Therefore, the Company is proposing a 100 percent f1ow-
through of the incentive payments in the Power Cost Adjustment ("PCA"). Additionally,
Idaho Powets PCA provides for certain Commission-approved expenses to be
recovered on a 100 percent basis (Le., PURPA expenses). Going forward, the
Company anticipates that it would propose demand response base level expense in
future general rate cases, which would be reviewed and ultimately set by Commission
order. Variances from this base level would be recovered through the PCA at 100
percent.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 3
REQUEST NO.3: Reference Direct Testimony of Darlene Nemnich, p. 11, lines
13-19. Please provide a justification for the 4-year amortization period.
RESPONSE TO REQUEST NO.3: The amortization period proposed by Idaho
Power was viewed by the Company as balancing the need for timely recovery of out-of-
pocket, demand-side investments with the desire to establish a regulatory asset capable
of earning a return. As discussed in Ric Gale's direct testimony, stretching the recovery
period to the lifetime of the measure has proven to be problematic and would be
unacceptable because the Company is not the owner of the asset and the carrying
charges begin to overwhelm the regulatory asset balance. Please note that current
recovery of investments is anticipated to occur in one-yeats time.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4
REQUEST NO.4: Please explain why the Custom Efficiency program was
selected relative to similar programs such as Easy Upgrade to be moved from the EE
Rider to recovery as a regulatory asset? Does the Company plan, should the proposals
in this filng be approved, to move other programs to either a regulatory asset or to the
PCA? If so, please explain fully.
RESPONSE TO REQUEST NO.4: Pages 19 and 20 of Ric Gale's direct
testimony and pages 12 and 13 of Darlene Nemnich's direct testimony explain why the
Custom Effciency program was selected. Other programs could also be proposed for
regulatory asset treatment in the future depending upon the Commission's discussion
and decision in this case.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5
REQUEST NO.5: Reference Direct Testimony of Darlene Nemnich, p. 13, line
22, to p. 14, line 4. Has the Company conducted any analysis of the life of any (or all)
of the Custom Efficiency program equipment stated to be analogous to "physical plant"
(Le. lighting, Green Rewind, etc.)? If so, please provide the studies that were
conducted. Please explain why the amortization period for each of these components
should not be their expected life rather than a 4-year period.
RESPONSE TO REQUEST NO.5: Idaho Power did not perform such an
analysis for the purpose of making its amortization proposal (please see the Company's
Response to the Industrial Customers of Idaho Powets Production Request No.3).
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 6
REQUEST NO.6: Reference Direct Testimony of Darlene Nemnich, p. 7, lines
3-7. For the AlC Cool Credits program, please provide a breakdown specifying, on an
annual basis, the (a) Company's incentive costs paid to customers, and (b) other
program expenses.
RESPONSE TO REQUEST NO.6:
AlC Cool
Credit Idaho Rider Expenses
2003 2004 2005 2006 2007 2008 2009
Incentives $5,964 $12,567 $36,160 $104,037 $226,667 $353,305 $625,130
Other
Expenses $228,287 $261,406 $681,906 $1,126,789 $2,194,794 $2,569,680 $2,680,684
Total $234,251 $273,973 $718,066 $1,230,826 $2,421,461 $2,922,985 $3,305,814
The response to this Request was prepared by Pete Pengily, Customer
Research and Analysis Leader, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7
REQUEST NO.7: Please provide the following regarding the AlC/ Cool Credits
program:
(a) TRC ratio calculations and work papers for this program for individual
years 2008, 2009, and 2010.
(b) If item (a) is unavailable, please explain why.
(c) Reference the Idaho Power Demand Response Analysis Report, 2009
A/C Cool Credit Program, prepared by Paragon Consulting Services, at p. 1 (included in
the 2009 DSM Annual Report, Supplement 2: Evaluations) (stating that over 50% of the
participants were "free riders" and concluding the average demand reduction per
curtailment "was well below the expected demand reduction . .. found in other utility
studies.") Does Idaho Power believe that this program has a free rider problem?
Please explain the steps Idaho Power has taken to improve the demand reduction per
curtailment in this program in response to the Paragon Consulting Services report.
(d) Reference Order No. 29702, at p. 3, noting at the time of initial
authorization of the AlC Cool Credits program that "the Company performed a benefit-
cost analysis that showed a positive benefit-cost ratio of 1.42 over a 30-year period." Is
this program performing consistent with the prediction of a 1.42 benefit-cost ratio?
Please explain and provide supporting evidence.
RESPONSE TO REQUEST NO.7:
(a) According to the cost-effective analysis for the AlC Cool Credit program
updated through 2009, the benefit cost ratios from the Total Resource Cost ("TRC")
perspective for 2008,2009, and 2010 are 0.56,0.74, and 1.24, respectively. The TRC
ratio for 2010 is based on a forecast budget as of March 15, 2010, and wil be updated
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 8
with actual expenses and benefits after the 2010 books have been closed and the
financial records reported. The results of this updated cost-effectiveness wil be
included in the Demand-Side Management 2010 Annual Report. Copies of the
workpapers used to calculate these ratios have been attached hereto.
The analysis for the AlC Cool Credit program is updated each year to incorporate
actual costs and benefits from 2003-2009; however, the cost-effectiveness is
determined based on the 20-year life of the program. On page 5 of the Demand-Side
Management 2009 Annual Report Supplement 1: Cost-Effectiveness, the program is
shown to have a TRC of 1 .09 based on a 20-year life-cycle analysis.
As stated in the Company's Application, it is the Company's goal to keep the
treatment of demand-side resource assets on par with supply-side assets. The
levelized cost of a supply-side resource is viewed based on a life-cycle analysis, as is
the AlC Cool Credit program. The expenses for Idaho Power-managed demand
response programs are front loaded, as they are for supply-side resources. Many of the
expenses in the early years are for equipment, equipment installation, and initial
marketing.
(b) Not applicable.
(c) Idaho Power does not have a "free ridet' problem with this program. The
Industrial Customers of Idaho Powets Production Request No. 7(c) quotes from page 1
of the Idaho Power Demand Response Analysis Report, 2009 A/C Cool Credit Program,
prepared by Paragon Consulting Services. On page 33, under "Conclusions and
Recommendations," Paragon also states:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 9
Paragon considers the results of the 2009 AlC Cool Credit
Program to be inconclusive regarding its potential as a cost
effective resource. There were several factors that resulted
in modest demand reduction results during 2009. The mild
weather during the curtailment season contributed to these
modest demand reduction results. This type of demand
program is generally most valuable during the rare and
unpredictable heat storms. The summer of 2009 did not fit
this profile. ,
The results are also inconclusive in that the sample size
netted results that approach, but do not quite meet, 80%
confidence with 20% precision. This means that there is a
significant probabilty that the actual results are different from
the results obtained from this study.
The Company conducted third-party evaluations of the AlC Cool Credit program
in 2003, 2004, 2005, and 2006. The results of these evaluations have shown that
through the years, with various controllng devices and cycling routines, the average
kilowatt ("kW") savings per participant varies from 0.86 to 1.51. The most recent
evaluation prior to 2009 was conducted in 2006. This evaluation demonstrated that the
Company received an average of 1.12 to 1.51 kW per participant depending on outside
temperature and cycling routine. The 2006 study evaluated the program based on
equipment and cycling routines currently used by the Company. These evaluations
utilzed end use data and sampling to estimate the average kW savings per customer.
This method of analysis mitigates the impact of any so called "free ridership." None of
these analyses include the spilover effect of customers voluntarily decreasing their air
conditioner usage during peak times encouraged by the marketing and educational
efforts brought about by this program. The Company currently uses the more
conservative 1.12 kW per participant to estimate demand savings from the program.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -10
As stated on page 22 of the Demand-Side Management 2009 Annual Report
Idaho Power substantiated the load-reduction capabilty of
the AlC Cool Credit program by examining system load data.
This analysis is described in the 2009 Irrigation Peak
Rewards Program Report found in Supplement 2:
Evaluation. On July 16, 2009, the estimated Idaho Power
system peak would have been approximately 3,000 MW
without any demand response. By subtracting the load
reduction provided by Irrigation Peak Rewards and FlexPeak
Management, the remaining load reduction value of 29 MW
is assumed to be due to AlC Cool Credit. This amount of
demand response is consistent with previous analyses of the
program.
In February of 2010, Paragon Consulting Services was contracted to provide the
Company with a measurement and verification plan for an impact evaluation, which the
Company intends to conduct in 2011. Additionally, the Company has changed its
strategy for air conditioner cycling events per Paragon's recommendation. The
Company is also in the process of installng new Automated Meter Infrastructure ("AMI")
compatible switches utilzing power line carrier technology in all new installations where
AMI wil be available. This technology wil ensure more reliable signals to the units for
cycling and utilze limited two-way communication.
(d) The Company believes that the AlC Cool Credit program is generally
performing as predicted. In the original filng of Case No. IPC-E-04-27, the Company
stated the expectation was to have a benefit-cost ratio of 1.07 by the tenth year of the
program.
When the original cost-effectiveness analysis was performed for the AlC Cool
Credit program for Case No. IPC-E-04-27, there were several assumptions that were
made for the new program. Costs and projected participation was based on a one-year
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 11
pilot and it was assumed that the program would achieve 40,000 participants within five
years.
As with most programs, the actual results did not follow exactly what was
forecasted. First, for a variety of reasons, the program has not achieved its 40,000
participant goal to date but is expected to do so in 2011. While the Company plans to
continue to promote this program after the 40,000 participant goal is reached in order to
satisfy attrition, marketing efforts wil be reduced. Secondly, the cost of the switches
and the cost of providing the curtailment signal have increased. AMI was not a factor in
the original 2004 analysis, whereas now different switches are being installed with the
Smart Meters. The cost of the AMI switches is slightly more expensive. However, the
AMI switches provide a more reliable method of communicating and have limited two-
way communication. Finally, the Company changed its analysis to view the program
based on a 20-year life versus a 30-year life to be consistent with the changes from the
2004 to 2006 Integrated Resource Plan. This change impacted the cost-effectiveness
metrics because this program, like most demand response programs, becomes more
cost-effective after the ramp up of the program is complete.
As shown on page 5 of the Demand-Side Management 2009 Annual Report,
Supplement 1: Cost-Effectiveness, the program is still considered cost-effective over a
20-year life cycle.
The response to this Request was prepared by Pete Pengily, Customer
Research and Analysis Leader, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 12
REQUEST NO.8: Reference Application at 11 4. Does Idaho Power believe that
the requested relief wil place DSR on a "equal footing" with supply side resources?
Please explain how Idaho Power's profit incentive associated with building a new gas
peaking plant compares to Idaho Powets profit incentive associated with its DSR
programs as they would exist with the requested relief in this case. Please provide
supporting evidence or calculations.
RESPONSE TO REQUEST NO.8: The Company does not believe that the
requested relief would put demand-side resources on an equal footing with a supply-
side resource; however, it does believe it would provide a similar business rationale for
pursuing either demand-side resources or supply-side resources.
Creating a profit incentive for a demand-side resource is comparable to what is
allowed for supply-side resources.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -' 13
REQUEST NO.9: Reference Application at 11 19 (stating that Idaho Power would
need to increase the EE rider from 4.75 % of base rates to 6.6 % of base rates to
eliminate the negative balance on the EE Rider account by 2012, which negative
balance would be $29,677,151 if no action is taken.)
(a) In Order No. 29784, p. 6, the Commission stated: "We deny the
Company's proposal to authorize an increase in the Rider to 2.4% in June 2007 at this
time. As stated above, increasing the Rider to 1. 5% wil provide the Company with
ample funding to pursue its plans for implementing programs through at least June 1,
2006." Please reference the subsequent Commission order authorizing the Company to
maintain a negative balance in the EE rider account to fund DSM programs. Does the
Company understand the Commission's orders to pursue all cost effective DSM as a
directive to spend in excess of the amount collected from the EE rider?
(b) In Order No. 30814, p. 2, the Commission noted, "If the Rider is increased
as the Company proposes (to 4.75%) Idaho Power projects the deficit in the Rider
account wil be $1.2 milion at the end of 2011." Please explain how the Company now
projects the rider deficit would be over $29 milion by the end of 2012 in light of its prior
projection.
(c) Does Idaho Power admit it has mismanaged its expenditures to run up a
negative balance on the EE rider account? If not, please explain how the negative
balance is the result of properly managed DSM programs.
(d) Please provide an estimate of the percentage of base rates Idaho Power
will collect for total energy efficiency and DSR activities in 2011 if the Commission were
to grant Idaho Power's requested relief in this case. Please provide the estimate in a
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 14
dollar amount and as a percentage of base rates in 2011. If the percentage amount
exceeds 4.75%, does Idaho Power admit that this filng requests an increase in overall
payment from customers for energy effciency and/or DSR?
RESPONSE TO REQUEST NO.9:
(a) The Company is not aware of any order language that directs the
Company spend in excess of amounts collected from the Energy Effciency Rider
("Ridet'). The Company has viewed the Rider as a symmetrical mechanism that may
have periods of negative balances and periods of positive balances. The Rider has
experienced both circumstances during its existence. The Company has moved to
address the balances when the symmetry has been broken.
(b) The pursuit of all cost-effective demand-side resources is a primary
objective for Idaho Power. The primary reason for the increased Rider balance
projections between Case No. IPC-E-09-05 and the current case is the exceptional
growth and expansion of the demand-side resource programs in the Idaho Power
portolio. Comparing the forecasts used in these two filngs for 2010 and 2011, there is
a combined approximate $22.5 millon of increased program expenditures. The largest
component of this increase is an approximate $16 milion for energy efficiency program
expenditures ($11.5 milion in commercial, industrial, and irrigation alone), about $3.5
millon of this amount is for increased demand response program activity and $3 milion
is for increases in payments to the Northwest Energy Efficiency Allance.
(c) No. A negative balance (or positive one for that matter) is simply a timing
difference between program expenditures and the dollars collected through the
authorized rate mechanism - the Rider in this instance.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 15
(d) Zero percent.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, and Darlene Nemnich, Senior
Regulatory Affairs Analyst, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 16
REQUEST NO. 10: Reference Application at 11 18. Please explain the basis for
the request to earn the Company's authorized rate of return on its negative EE rider
account balance. Please explain how the negative balance is associated with
regulatory assets for which the Company would otherwise be entitled to earn a return.
RESPONSE TO REQUEST NO. 10: The authorized rate of return is an
appropriate carrying charge when the Company is financing an item over the longer
term. A perpetual negative Rider balance is de facto a long-term investment without the
explicit benefit of a Commission-established regulatory asset account. Should the
Commission take action that restores the symmetry of the mechanism, the impact of the
return is not nearly as material to the Company.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibility, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 17
REQUEST NO. 11: Reference Direct Testimony of John R. Gale, p. 21, lines 8-
12. Does Idaho law allow Idaho Power to earn "the authorized rate of return on equity
plus 5 percent" for conservation and demand-side resources? If so, please cite the law.
If not, please explain how is this testimony regarding Nevada's law is relevant.
RESPONSE TO REQUEST NO. 11: Idaho law does not address the matter.
The testimony states how a neighboring jurisdiction attempted to provide an incentive to
investments in demand-side resources through an equity kicker. Idaho Power is not
requesting an equity kicker in its filing, but the potential for one is a relevant part of a
demand-side resource business/regulatory model discussion.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibility, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 18
REQUEST NO. 12: Reference Direct Testimony of John R. Gale, p. 19, lines 4-
21.
(a) Please explain how the Company currently funds the custom effciency
program.
(b) Please explain how the custom efficiency program wil be funded in the
future.
(c) Wil the revenue source be the EE rider, the PCA, or base rates? If the
source wil be different in future years, please explain why.
(d) What is the revenue source for most of the Company's "regulatory assets,"
base rates, the PCA, the EE rider, or some other source? Please explain.
RESPONSE TO REQUEST NO. 12:
(a) The Custom Efficiency program is currently funded through the Rider.
(b) Incentive payments from the Custom Efficiency program wil be moved
into a regulatory asset account prospectively upon Commission approval as described
in Ric Gale's direct testimony. The remaining program administration expenses wil
remain in the Rider.
(c) As proposed, the direct incentive payments for the Custom Efficiency
program wil accumulate in a regulatory asset account, along with the current authorized
rate of return, until a future general rate case or similar application impacting base rates
filed. At that point in time, the annual amortization amount and the return amount would
be requested in the calculation of the Company's base rates. The remaining program
administration expenses wil continue to be recovered through the Rider.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 19
(d) The typical revenue source (or cost recovery mechanism) for regulatory
assets is inclusion in the Company's revenue requirement calculation for base rates.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 20
REQUEST NO. 13: Reference Direct Testimony of John R. Gale, p. 20, lines 8-
13, and p. 23, lines 3-8.
(a) If Company is requesting that custom efficiency program expenditures be
recovered as a regulatory asset for which it wil earn its authorized rate of return
effective for expenditures after January 1, 2011, how wil such treatment be consistent
with the agreement not to request a general rate change prior to January 1, 2012 per
the stipulation in Case No. IPC-E-09-30?
(b) Please identify some other expense in the PCA or the EE Rider for which
the Company earned its authorized rate of return at the time of the stipulation in Case
No. IPC-E-09-30.
(c) How wil the Company request recovery of the custom efficiency program
expenditures after January 1, 2012? Wil the Company place the program expenditures
in rate base? If not, please identify other regulatory assets which the company does not
place in rate base. Please explain.
RESPONSE TO REQUEST NO. 13:
(a) There wil be no specific rate request at the time the regulatory asset is
created, should the Commission authorize such action. As described in the Company's
Response to the Industrial Customers of Idaho Power's Production Request No. 12(c),
any rate change associated with the capitalized asset would occur in a subsequent filng
on or after January 1, 2012.
(b) There are none.
(c) Please see the Company's Response the Industrial Customers of Idaho
Powets Production Request No. 12(c). With Commission approval to create the
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 21
regulatory asset, the Company would request that the regulatory asset be placed into
rate base in a future general rate proceeding.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibilty, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 22
REQUEST NO. 14: Reference Direct Testimony of Darlene Nemnich, p. 9, lines
3-10, stating that the Company intends "to establish a base level of demand response
incentive cost recovery in base rates just like other power supply costs" . . . "but not at
this time."
(a) Why is the Company not requesting a base level of DSR at this time?
(b) Does the Company believe that labeling the requested DSR expenses as
a PCA expense, rather than a base rate input, changes the character of the expenses in
such a way as to make the increase in cost recovery from ratepayers consistent with the
stipulation in Case No. IPC-E-09-30? Please explain.
RESPONSE TO REQUEST NO. 14:
(a) The appropriate time to establish the new base level would be in the next
general rate proceeding.
(b) The recovery of the demand-side resource expenses either through the
Rider or through the PCA is consistent with the Stipulation in Case No. IPC-E-09-30.
Changing base rates at this time, which is not the Company's proposal, would not be
consistent.
The response to this Request was prepared by Ric Gale, Senior Vice President
of Corporate Responsibility, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 23
REQUEST NO. 15: Reference Direct Testimony of Darlene Nemnich, p. 8, lines
13-15.
(a) If the Company wil pay for the estimated $13.7 milion in DSR program
costs from PCA rates in 2011, wil the Company file to reduce the EE rider recovery by
that amount?
(b) If the answer to (a) is "no," please explain how the request to recover the
$13.7 millon in DSR program expenses through the PCA is not analogous to an
increase in the EE rider by $13.7 milion in 2011.
(c) Please provide the following estimates for this projected $13.7 millon
expenditure:
AlC Cool Credits Flex Peak Irrigation Peak
Rewards
estimated
expenditure ($)
peak reduction
estimate (MW)
expenditure/ peak
reduction ($/MW)
RESPONSE TO REQUEST NO. 15:
(a) Given the Company's current projections used in this filing and assuming
the Commission adopts Idaho Powets proposals while keeping the Rider funding level
at 4.75 percent, the Rider balance is expected to approach zero sometime in the middle
of the year 2012. The Rider is a balancing account and ideally would remain close to
zero. The Company wil monitor the adequacy of the Rider funds on a periodic basis
and if an adjustment to the funding level needs to be made, the Company wil file an
appropriate request with the Commission.
(b) It is analogous.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 24
(c)AlC Cool FlexPeak Irrigation Peak
Credit Rewards
estimated $798,000 $1,210,801*$11,744,534expenditure ($)
peak reduction 48 43 285estimate (MW)
expenditure/
peak reduction $16,625 $28,158*$41,209
($/MW)
On the "estimated expenditure ($)" row (row one) above, Idaho Power has
provided the information requested. However, in preparing this Response, the
Company identified an underestimation (*) of the Flex Peak 2011 estimated
expenditures. A more accurate estimate for 2011 is $2,421,603, resulting in a $/MW of
$56,316. This results in a total estimated incentive value of $14,964,137 instead of
$13,753,335 as referenced in the Application and testimony.
The dollars per megawatt ("MW") calculated in row three of the table above is
only a portion of the dollars per MW needed to offer a demand response program.
Excluded from the AlC Cool Credit and Irrigation Peak Rewards programs are Idaho
Power labor, third-party contract expenses, and material (equipment) purchases.
Excluded from the FlexPeak expenses are Idaho Power's labor and overheads. The
expenses for Idaho Power-managed demand response programs are front loaded as
they are for supply-side resources. However, with a performance contract, the
expenses are flat or linear based on the amount of demand reduction.
The response to this Request was prepared by Pete Pengily, Customer
Research and Analysis Leader, Idaho Power Company, in consultation with Lisa D.
Nordstrom, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 25
DATED at Boise, Idaho, this 14th day of December 2010.
òt~ÆWkh
LISA D. NORDST OM
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 26
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14th day of December 2010 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
upon the following named parties by the method indicated below, and addressed to the
following:
Commission Staff
Weldon B. Stutzman
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
-. Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-. Email Weldon.Stutzman(ãpuc.idaho.gov
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83702
Hand Delivered
-. U.S. Mail
_ Overnight Mail
FAX
-. Email peterCârichardsonandoleary.com
greg(ãrichardsonandoleary.com
Dr. Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83703
Hand Delivered
-. U.S. Mail
_ Overnight Mail
FAX
-. Email dreading(ãmindspring.com
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North Sixth Street
P.O. Box 844
Boise, Idaho 83701
Hand Delivered
-. U.S. Mail
_ Overnight Mail
FAX
-. Email botto(ëidahoconservation.org
NW Energy Coalition
Nancy Hirsh
NW Energy Coalition
811 1st Avenue, Suite 305
Seattle, Washington 98104
Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-. Email nancy(ënwenergy.org
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 27
Snake River Allance
Ken Miller
Snake River Allance
350 North 9th Street #B610
P.O. Box 1731
Boise, Idaho 83701
Idaho Irrigation Pumpers
Association, Inc.
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
201 East Center
P.O. Box 1391
Pocatello, Idaho 83204-1391
Anthony Yankel
Yankel & Associates, Inc.
29814 Lake Road
Bay Vilage, Ohio 44140
Community Action Partnership
Association of Idaho
Brad M. Purdy
2019 North 1 ih Street
Boise, Idaho 83702
Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email kmilercæsnakeriverallance.org
Hand Delivered
-. U.S. Mail
_ Overnight Mail
FAX
-- Email elocæracinelaw.net
Hand Delivered
-.U.S. Mail
_ Overnight Mail
FAX
.. Email tonycæyankel.net
Hand Delivered
-.U.S. Mail
_ Overnight Mail
FAX
-. Email bmpurdycæhotmail.com
g¡¿-i:~Lisa D. Nordstro
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 28
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-10-27
IDAHO POWER COMPANY
RESPONSE TO ICIP'S PRODUCTION
REQUEST NO. 7
Case No. IPC-E-1Q-27
First Production Request ICIP
Response to No. 7 a
12/14/2010
AC COL Credit
Cost-Effectiveness Model
Updated:
Cot-Effecveness Assumptions
Full Annual Participation (AC units)
Life (years)
Number of events (per season)
Load Reduction (kW per AC unit)
Avoided energy during SONP (kWh/Participant
Shifted energy to SMP (kWh/Participant) - snapback energy
SONP Line Loss
SMP Line Loss
Discount Rate
Cos~Effectiveness Resuks
Total Cost (20 Year NPV)
Total Benefit (20 Year NPV)
Total Resource Cost Ratio (20 Year)
Levelized Cost (20 Year, $/kW /Year)
Page lof2
1SiDA~POR..
An IDACORP company
3/15/2010
40,000
20
15
1.12
0.9
0.5
13.0%
10.9%
6.98%
$
$
31,578,689
34,474,357
1.09
58.57$
Case No. IPC-E-1O-27 ~AIDA
First Production Request ICIP -. PORqoResponse to No.7 a
12/14/2010 An IDACORP company
2dO~.2022. Progtål1witliHistoric.ACtùåls ,';- j
fotalJ~åd
Avoided Capacity Avoided EnergyReduction ..
Year Year W¡losses Benefit Benéfii: .Total Benefit Tatal COst tRC~átìp
1 2003 $$$$275,644
2 2004 452 $26,749 $314 $27,063 $287,253 0.09
3 2005 3,051 $180,558 $1,819 $182,377 $754,062 0.24
4 2006 6,328 $410,814 $4,398 $415,212 $1,235,476 0.34
5 2007 12,204 $792,284 $11,946 $804,230 $2,426,153 0.33
6 2008 25,538 $1,657,927 $16,327 $1,674,254 $2,969,377 0.56
7 2009 38,463 $2,497,008 $24,071 $2,521,079 $3,451,988 0.73
8 2010 50,624 $3,189,312 $22,318 $3,211,630 $2,580,734 1.24
9 2011 50,624 $3,189,312 $25,951 $3,215,263 $2,500,000 1.29
10 2012 50,624 $3,189,312 $32,199 $3,221,511 $1,905,500 1.69
11 2013 50,624 $3,189,312 $34,613 $3,223,925 $1,962,665 1.64
12 2014 50,624 $3,189,312 $35,350 $3,224,662 $2,021,545 1.60
13 2015 50,624 $3,189,312 $35,258 $3,224,570 $2,082,191 1.55
14 2016 50,624 $3,189,312 $34,999 $3,224,311 $2,144,657 1.50
15 2017 50,624 $3,189,312 $36,380 $3,225,692 $2,208,997 1.46
16 2018 50,624 $3,189,312 $37,28 $3,226,740 $2,275,267 1.42
17 2019 50,624 $3,189,312 $38,109 $3,227,421 $2,343,525 1.38
18 2020 50,624 $3,189,312 $39,992 $3,229,304 $2,413,830 1.34
19 2021 50,624 $3,189,312 $41,183 $3,230,495 $2,486,245 1.0
20 2022 50,624 $3,189,312 $41,315 $3,230,627 $2,560,833 1.26
NPV Program Life 539,179 $3:4,113,3:80 .$360,978 $34,474,357 $31,578,689 1.09
Levelized Cost $58.57
2010"2029 Expeeted
Total Load
Reduction Avoided Capacity Avoided Energy
Year Year w/losses Benefit Benefit Total Benefit Total Cost Bic Ratio
1 2010 50,624 3,189,312 $22,318 $3,211,630 $2,580,734 1.24
2 2011 50,624 3,189,312 $25,951 $3,215,263 $2,500,000 1.29
3 2012 50,624 3,189,312 $32,199 $3,221,511 $1,905,500 1.69
4 2013 50,624 3,189,312 $34,613 $3,223,925 $1,962,665 1.64
5 2014 50,624 3,189,312 $35,350 $3,224,662 $2,021,545 1.60
6 2015 50,624 3,189,312 $35,258 $3,224,570 $2,082,191 1.55
7 2016 50,624 3,189,312 $34,999 $3,224,311 $2,144,657 1.50
8 2017 50,624 3,189,312 $36,380 $3,225,692 $2,208,997 1.46
9 2018 50,624 3,189,312 $37,428 $3,226,740 $2,275,267 1.42
10 2019 50,624 3,189,312 $38,109 $3,227,421 $2,343,525 1.8
11 2020 50,624 3,189,312 $39,992 $3,229,304 $2,413,830 1.34
12 2021 50,624 3,189,312 $41,183 $3,230,495 $2,486,245 1.30
13 2022 50,624 3,189,312 $41,315 $3,230,627 $2,560,833 1.26
14 2023 50,624 3,189,312 $43,776 $3,233,088 $2,637,658 1.23
15 2024 50,624 3,189,312 $45,055 $3,234,367 $2,716,787 1.19
16 2025 50,624 3,189,312 $45,672 $3,234,984 $2,798,291 1.16
17 2026 50,624 3,189,312 $46,360 $3,235,672 $2,882,240 1.12
18 2027 50,624 3,189,312 $47,154 $3,236,466 $2,968,707 1.09
19 2028 50,624 3,189,312 $47,048 $3,236,360 $3,057,768 1.06
20 2029 50,624 3,189,312 $46,910 $3,236,222 $3,149,501 1.03
NPV Program Life 574,639 $36,202,248 $412¡141 $~6,614,389 $27,053,13Ó .1.35:
Levelized Cost $47.08
Page 2 of2