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Home My WebLink About20110107IPC to Staff 1-6.pdf*tIDA~POR(I An IDACORP Company LISA D. NORDSTROM \ n (, lAO Lead Counsel .. i \k.?~;~ S" InordstromØiidahopo+JbbM ,,- January 7,2011 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilties 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 filng please find an original and three (3) copies of Idaho Power Company's Response to the First Production Request of the Commission Staff to Idaho Power Company in the above matter. Very truly yours, ~;. iJ. '1 OL~ Lisa D. Nordstrom LDN:csb Enclosures 1221 W. Idaho St. (83702) P.O. Box 70 Boise, 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: (208) 388-5825 Facsimile: (208) 388-6936 Inordstrom(ëidahopower.com dwalker(ëidahopower.com RECE, ~';J 2. í'H JlllJ -7 pW12:li2Ul,i .tHl ri ..R 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 MAnER 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 COMMISSION STAFF TO IDAHO POWER COMPANY COMES NOW, Idaho Power Company ("Idaho Powet' or "Company"), and in response to the First Production Request of the Commission Staff to Idaho Power Company dated December 17,2010, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -1 REQUEST NO.1: Referencing Tables 1 and 2 in Exhibit No. 1 of Darlene Nemnich's testimony filed on October 22, 2010, please provide all data, assumptions and calculations used to construct those tables. Please provide this information in a fully executable spreadsheet. RESPONSE TO REQUEST NO.1: Please see the Excel spreadsheet provided on the enclosed CD. In this spreadsheet, tab one is a copy of the filed Exhibit No.1; tab two shows Tables 1 and 2 at the top of the spreadsheet with details of 2010 actual data (Jan-Aug) and forecasted demand-side resource expenses and forecasted demand- side resource incentives below; tab three shows calculation of 2010 forecast revenue (Sep-Dec); and tab four includes revenue used for the 2011 and 2012 forecasts. The response to this Request was prepared by 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 COMMISSION STAFF TO IDAHO POWER COMPANY - 2 REQUEST NO.2: Table 2, referenced above, shows forecasted Idaho Rider Revenue of $38,088,745 for both 2011 and 2012. On page 54 of Idaho Powets 2009 Integrated Resource Plan (IRP), Table 5.2 shows a 2% increase in median forecasted average monthly energy load from 2011 to 2012. a) Please explain why Ms. Nemnich's Tables 1 and 2 do not anticipate increases to either Idaho total revenue or Energy Effciency Rider revenue consistent with the IRP's forecasted load increase from 2011 to 2012. b) Do Tables 1 and 2 also not anticipate energy load growth from 2010 to 2011? If not, please explain. RESPONSE TO REQUEST NO.2: a) The Company used the recent test year revenue from the spring 2010 Power Cost Adjustment ("PCA") filng in order to reflect the most up-to-date normalized revenue approved by the Commission. For purposes of this filng, no growth in the revenues was estimated because it would not materially change the outcome of the analysis. b) Idaho Power did not explicitly include a load growth factor in calculating Energy Efficiency Rider ("Ridet') revenue growth between 2010 and 2011. 2010 Rider revenues were calculated using eight months actual revenues plus four months of forecast revenues based on the 2010 test year values. 2011 and 2012 Rider revenues are based upon the normalized revenues from the 2010 PCA test year. The response to this Request was prepared by 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 COMMISSION STAFF TO IDAHO POWER COMPANY - 3 REQUEST NO.3: Please reconstruct Ms. Nemnich's Tables 1 and 2 with the inclusion of load growth increases from 2010 to 2011 and from 2011 to 2012 that are consistent with such forecasted growth on page 54 of Idaho Powets 2009 IRP and with correction of the error noted by Idaho Power in its response to Request No. 15(c) of the Industrial Customers of Idaho Power. RESPONSE TO REQUEST NO.3: Please see modified Exhibit No. 1 provided on the enclosed CD. 2010 Rider revenues from the filed Exhibit No. 1 were escalated 4 percent from 2010 to 2011 and 2 percent from 2011 to 2012. These escalations are calculated from page 54, Table 2, of the 2009 Integrated Resource Plan. Also, demand response incentive values have been revised. The response to this Request was prepared by 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 COMMISSION STAFF TO IDAHO POWER COMPANY - 4 REQUEST NO.4: Please provide a fully executable spreadsheet containing all data, assumptions and calculations estimating the cost-of-service allocation effects of moving all demand response incentive payment costs from the Rider to the Power Cost Adjustment (PCA). RESPONSE TO REQUEST NO.4: The Excel spreadsheet included on the enclosed CD provides class allocation percentages of demand response incentive payment costs under each of the listed methods. Under the "Rider Approach," revenue is collected from customers based on a percentage of base rate revenue. Under the "PCA Approach," revenue from the PCA is collected according to biled kilowatt-hours. The percentages contained within this spreadsheet were derived from data used to create the Company's compliance filings made on June 1, 2010, with the Idaho Public Utilties Commission pursuantto Order Nos. 31091,31093, and 31097. The response to this Request was prepared by Matthew T. Larkin, 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 COMMISSION STAFF TO IDAHO POWER COMPANY - 5 REQUEST NO.5: Assuming Commission approval of the Company's request to capitalize the incentive payment costs of its Custom Effciency program beginning January 1, 2011, please provide a fully executable spreadsheet containing all data, assumptions and calculations estimating Idaho Powets annual earnings from 2011 through 2015 attributable to the requested change. RESPONSE TO REQUEST NO.5: The Excel spreadsheet included on the enclosed CD provides an example of the potential earnings (Le., the solely attributable impact of capitalizing incentive payment costs associated with the Custom Effciency program). This analysis reflects the assumption that the Company's revenue requirement wil be adjusted each year of the forecast period to reflect the full estimated amount of the incentive payments in rate base. The actual earnings impact wil depend on the timing of future revenue requirement proceedings and the amount of incentive payments authorized for recovery through the capitalization method. The response to this Request was prepared by Matthew T. Larkin, 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 COMMISSION STAFF TO IDAHO POWER COMPANY - 6 REQUEST NO.6: The Application infers that the Custom Effciency program was selected by the Company for cost capitalization partly because it is one of the most cost-effective programs. (p.9) The Company's April 16, 2010, Revised Edition of Supplement 1: Cost-Effectiveness to the Demand-Side Management 2009 Annual Report (p. 43) shows that cost-effectiveness was calculated with an assumption of 100% net-to-gross; Le. that no participating customers would have pursued any of the energy efficiency measures absent incentives paid by Idaho Power. a) What is the basis of Idaho Powets 100% net-to-gross assumption? b) A footnote on p. 43 of the Supplement states that TRC cost-effectiveness is maintained down to 30% net-to-gross (NTG). What is the utilty cost test benefit-cost ratio at 30% NTG? RESPONSE TO REQUEST NO.6: a) As stated in the Demand-Side Management 2009 Annual Report, Supplement 1: Cost Effectiveness,.Revised Edition, page 3: For the Custom Efficiency program a NTG adjustment is not used in the B/C ratio calculations because each project is analyzed independently and Idaho Power believes that there is considerable spilover from this program. A sensitivity analysis was performed for this program which indicated that even with a NTG adjustment of 30 percent the program would stil be cost-effective from a TRC perspective. As a point of clarification, a 30 percent NTG adjustment assumes that 70 percent of the participants would have completed their energy efficiency projects without the existence of the program and would have been "free-riders." b) Subsequent to the publishing and filing of the Demand-Side Management 2009 Annual Report, Supplement 1: Cost Effectiveness, Revised Edition, April 16, 2010, IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7 the Company realized that it did not refresh the sensitivity analysis of the NTG for the Custom Efficiency program, taking into account the change in the total resource cost ("TRC") calculations related to the Revised Edition. When this analysis was revised, it demonstrated that the Custom Effciency program would be cost-effective in 2009 with a 20 percent NTG adjustment. Assuming a 20 percent NTG adjustment (80 percent "free- ridership"), the Custom Efficiency program had a TRC ratio of 1.10 and a utilty cost test ("UCT") benefi-cost ratio of 1.27 in 2009. With a 30 percent NTG adjustment, the UCT ratio is 1.91. In addition, please see the worksheet provided on the enclosed CD. The response to this Request was prepared by Pete Pengily, Customer Research & Analysis Leader, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. DATED at Boise, Idaho, this 7tJ day of January 2011. ~Q.~~íSNOR~OM Attorney for Idaho Power Company IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this th day of January 2011 I served a true and correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Weldon B. Stutzman Deputy Attomey 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(ëpuc.idaho.gov Industrial Customers of Idaho Power Peter J. Richardson Gregory M. Adams RICHARDSON & O'LEARY, PLLC 515 North 27tJ Street P.O. Box 7218 Boise, Idaho 83702 Hand Delivered .. U.S. Mail _ Overnight Mail FAX .. Email peter(ërichardsonandoleary.com greg(ërichardsonandoleary.com Dr. Don Reading Ben Johnson Associates 6070 Hil Road Boise, Idaho 83703 Hand Delivered .. U.S. Mail _ Overnight Mail FAX .. Email dreading(ëmindspring.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 COMMISSION STAFF TO IDAHO POWER COMPANY - 9 Snake River Allance Ken Miler Snake River Allance 350 North 9tJ Street #B61 0 P.O. Box 1731 Boise, Idaho 83701 Idaho Irrgation 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 th Street Boise, Idaho 83702 Hand Delivered U.S. Mail _ Overnight Mail FAX .. Ernail kmiler(ësnakeriverallance.org Hand Delivered -LU.S. Mail _ Overnight Mail FAX .. Email elo(ëracinelaw.net Hand Delivered -LU.S.Mail _ Overnight Mail FAX L Email tony(ëyankel.net Hand Delivered -LU.S. Mail _ Overnight Mail FAX -L Ernail bmpurdy(ëhotmail.com & l) ~tlb- ) Lisa D. Nordstrô IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 10