20110526IPC to ICIP 1-8.pdf

Ei;/r-DREC- \i t:. ..1
isllW~POR~
LISA D. NORDSTROM
Lead Counsel
InordstromRìidahopower.com
An IDACORP company
12: 32
May 26,2011
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-11-05
IN THE MATTER OF THE APPLICA TlON OF IDAHO POWER COMPANY
FOR A PRUDENCY DETERMINATION OF 2010 ENERGY EFFICIENCY
RIDER EXPENDITURES
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 ofthe Industrial Customers of Idaho
Power in the above matter. Also enclosed are four (4) copies of a non-confidential disk
containing documents responsive to the aforementioned production request.
Very truly yours,
lLl)Cf~
Lisa D. Nordstrom
LDN:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise. 10 83707
LISA D. NORDSTROM (ISB No. 5733)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
InordstromCâidahopower.com
dwalkerCâidahopower.com
REeEI
i01l HAY 26 PH /2: 32
~PjA¡"l()UTILi rIF,;'"o'.J
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
PRUDENCY DETERMINATION OF 2010
ENERGY EFFICIENCY RIDER
EXPENDITURES.
)
) CASE NO. IPC-E-11-05
)
) 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
Company dated May 5, 2011, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 1
REQUEST FOR PRODUCTION NO.1: Please provide in electronic format
Exhibits NO.1 and NO.2 attached to Darlene Nemich's (sic) Direct Testimony.
RESPONSE TO REQUEST FOR PRODUCTION NO.1: Electronic versions of
Exhibit Nos. 1 and 2 to Darlene Nemnich's Direct Testimony are included on the
enclosed CD.
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 FOR PRODUCTION NO.2: On pages 12 and 13 of Darlene
Nemich's (sic) Direct Testimony she stated:
According to the National Action Plan for Energy Efficiency's
Understanding Cost-Effectiveness of Energy Efficiency
Programs: Best Practices, Technical Methods, and
Emerging Issues for Policy-Makers, this test is typically a
secondary test used to evaluate relative impacts on rates. It
should be noted that Staff, in Attachment NO.1 to the DSM
MOU, while stating an expectation that programs should
pass the TOU, UC, and PCT tests (and if not provide an
explanation), there was no stated expectation that programs
must pass the RIM test.
(a) Please explain what is meant by a "secondary test used to evaluate
relative impact on rates."
(b) Does the Company believe the RIM test should be used to evaluate DSM
program costs effectiveness? Please explain why or why not.
(c) Please provide a copy of "Understanding Cost-Effectiveness of Energy
Efficiency Programs: Best Practices, Technical Methods, and Emerging Issues for
Policy-Makers. "
RESPONSE TO REQUEST FOR PRODUCTION NO.2:
(a) Below is an excerpt from page 5-2 of "Understanding Cost-Effectiveness
of Energy Efficiency Programs: Best Practices, Technical Methods, and Emerging
Issues for Policy-Makers":
The RIM as a primary consideration test is not as common
as the other two distributional tests. If used, it is typically a
secondary consideration test done on a portolio basis to
evaluate relative impacts of the overall energy efficiency
program on rates. The results wil provide a high-level
understanding of the likely pressure on rates attributable to
the energy efficiency portolio. A RIM value below 1.0 can
be acceptable if a state chooses to accept the rate effect in
exchange for resource and other benefits. Efficiency
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 3
measures with a RIM value below 1.0 can nevertheless
represent the least-cost resource for a utilty, depending on
the time period and long-term fixed costs included in the
avoided costs.
(b) Idaho Power believes all the cost-effectiveness tests are of value and that
they give an opportunity for regulators and others to compare programs. The Company
does not use the results of the Ratepayer Impact Measure ("RIM") extensively and does
not believe that passing the RIM test should be a requirement for offering a program or
used in the determination of prudency of a utilty program.
In compliance with the Memorandum of Understanding ("MOU") signed by the
Idaho Public Utilties Commission ("Commission") Staff ("Staff) and Idaho's investor-
owned utilties on January 25, 2010, in Case No. IPC-E-09-09, Idaho Power calculates
the standard energy cost-effectiveness tests for its energy effciency programs,
including the RIM or "no losers" test.
In the MOU, Staff specifically does not require Idaho Power's programs to pass
the RIM test. On page 9 of Attachment NO.1 of the MOU, Staff states:
. . . Staff believes that prudent DSM management requires
that cost-effectiveness be analyzed from a wide variety of
perspectives, including the ratepayer impact perspective,
and that all programs and individual measures should have
the goal of cost-effectiveness from the total resource, utility,
and participant perspectives. (See IPUC Order No. 22299
issued January 27, 1989, and Order No. 28894 issued
November 21,2001.)
(c) A copy of Understanding Cost-Effectiveness of Energy Effciency
Programs can be downloaded from the following web link:
http://ww .epa.gov/cleanenergy/documents/suca/cost-effectiveness. pdf.
The response to this Request was prepared by Pete Pengily, Customer
Research and Analysis Leader, and Darlene Nemnich, Senior Regulatory Analyst,
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4
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 FOR PRODUCTION NO.3: On page 17 of Darlene Nemich's (sic)
Direct Testimony she states, "These studies, along with market effects evaluations
conducted by NEEA (provided in the CD included in Attachment No. 1 to the
application) are included in Supplement 2." Please provide a copy of the CD that was
included as an attachment to the application.
RESPONSE TO REQUEST FOR PRODUCTION NO.3: A copy of the CD
included in Attachment No. 1 to the Application was provided inside the back cover of
the Demand-Side Management 2010 Annual Report, Supplement 2: Evaluation.
However, an additional copy of the CD wil be provided to the Industrial Customers of
Idaho Power ("ICIP") with this Response.
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 - 6
REQUEST FOR PRODUCTION NO.4: The Company's Demand-Side
Management 2010 Annual Report states there were 30,803 participants in the A1C Cool
Credit program in 2010 (page 20). On page 23 the DSM Annual Report it states:
The 2011 program target is to reach 40,000 total
participants. Once the target is achieved, the company wil
continue A1C Cool Credit marketing and promotion to
determine if saturation has been achieved or if it is possible
to increase participation. As Smart Meters are installed in
those areas where the paging signal is unavailable, the A1C
Cool Credit program wil be able to expand.
The current demand reduction is 39.0 MW.. With the 30% increase in participants
expected in 2011, does the Company expect an equal 30% increase in MW demand
reduction (11.7 MW)? What is the expected increase in participants and demand
reduction for the areas where paging signals are not available?
RESPONSE TO REQUEST FOR PRODUCTION NO.4: Idaho Power measured
the number of A1C Cool Credit parties in the program, 30,803 participants, at the time of
Idaho Power's system peak. As noted on page 20 of Idaho Powets Demand-Side
Management 2010 Annual Report, participation in the A1C Cool Credit program as of
December 2010 was 34,640 participants, which equates to a demand reduction of 43.84
megawatts ("MW"). The annual participation target for year-end 2011 is 40,000
participants, which is about 15 percent over the 2010 annual participation target. At
40,000 participants, the demand reduction available for normal cycling events would be
approximately 50.6 MW, which is also 15 percent greater than the year-end 2010
demand reduction potential of 43.84 MW. The expected increase in participants and
demand reduction in areas where the paging signal is not available is approximately
2,000 participants, which is about 2.5 MW in demand reduction. Power line carrier
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7
communications will be used instead of paging signals to initiate demand response
events in areas not served by paging providers in the Twin Falls and Pocatello areas.
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 - 8
REQUEST FOR PRODUCTION NO.5: Exhibit 1, page 1 of Darlene Nemnich's
Direct Testimony shows the Irrigation Peak Rewards Program rider expenditures for
2010 of $13,096,946. In Order No. 32200, IPC-E-10-46, March 9, 2011, the
Commission approved significant changes to the Irrigation Peak Rewards Program.
What changes in the expenditures for this program does the Company expect to the
changes approved by the Commission? Does the Company expect any MW changes
do (sic) to the program changes?
RESPONSE TO REQUEST FOR PRODUCTION NO.5: Because the
Commission issued Order No. 32200 on March 9, 2011, and both the Demand-Side
Management 2010 Annual Report ("Report") and Case No. IPC-E-11-05 were filed on
March 15, 2011, there was not enough time to forecast the impact of changes to the
Irrigation Peak Rewards Program in the Report or the filing of Case No. IPC-E-11-05.
Since the filng of Case No. IPC-E-11-05, participant enrollment in the Irrigation
Peak Rewards Program has increased from 2010 levels, which equates to an increase
in potential load reduction. Idaho Power estimates a peak reduction of approximately
310 MW (at generation level) for the summer of 2011, which is about a 60 MW increase
from 2010. Based on the changes approved and denied by the Commission and the
latest enrollment in the program, the Company expects the total cost of the program in
2011 to range between approximately $11 millon (with no demand response events
called by the Company) and $14 milion (with the maximum demand response events
called by the Company).
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 - 9
REQUEST FOR PRODUCTION NO.6: The Company's 2010 Demand-Side
Management Annual Report, page 102 discussing the Irrigation Peak Rewards Program
states;
Idaho Power wil continue to educate customers on the
program, through workshops and agriculture shows, though
may have to limit participation levels to near current levels,
based on the overall need for demand response as a
resource to meet future loads.
(a) Does this mean Idaho Power plans to limit expansion of their Demand
Response Programs beyond their current levels?
(b) If so, please explain why the Company would limit Demand Response
Programs when it is showing Peak-Hours deficits beginning in 2015 as displayed on
slide 43 presented at the November 18, 2010, Integrated Resource Plan Advisory 20
Council (IRPAC) meeting.
(c) Has the Company compared the costs of increased the (sic) DSR to the
costs of a new peaking plant to meet the projected demand referred to in (b)?
RESPONSE TO REQUEST FOR PRODUCTION NO.6:
(a) No. The Company has not limited participation in the Irrigation Peak
Rewards Program as a result of Commission Order No. 32200. The Company does
believe there is an optimal amount of demand response for Idaho Powets system and
that this amount should be updated with each new Integrated Resource Plan ("IRP"), as
stated on slide 23 in the presentation presented to the IRPAC on November 18, 2010.
This presentation can be found via the following link:
http://ww.idahopower.com/aboutus/planningforfuture/irp/2011/2011 irpac schedule.cfm.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 10
Slide 23 is also described on page 8 of the Direct Testimony of Peter Pengily in
Case No. IPC-E-10-46. The demand reduction from the FlexPeak Management
program is determined by contract with EnerNOC. The potential expansion of the A1C
Cool Credit program is addressed on page 23 of Idaho Power's Demand-Side
Management 2010 Annual Report. Page 23 states, "The 2011 program target is to
reach 40,000 total participants. Once the target is achieved, the company wil continue
A1C Cool Credit marketing and promotion to determine if saturation has been achieved
or if it is possible to increase participation."
(b) A Peak-Hour deficit is shown on slide 43 of the presentation presented at
the November 18, 2010, IRPAC meeting beginning in 2015 because, as can be seen in
slide 22, the Achievable DR with 60 Hour Programs, Demand Response Target, and
Operation Target are all less than the L&R Balance Deficit Position w/o DR Programs.
As long as system demand is growing, demand response programs are not intended to,
nor are they capable of, eliminating the need for all new resources. Demand response,
as a resource in a system with growing demand, is intended to defer new resources and
only satisfy deficits that come within the program parameters. At some point, the
deficits become too large and out of scope for demand response programs.
(c) Yes. Idaho Power does use the levelized capacity cost of building a new
simple-cycle combustion turbine ("SCCT") as the comparison resource to determine
demand response cost-effectiveness.A description of the cost-effectiveness
methodology for the Company's demand response programs can be found on pages
22,85, and 101 of the Demand-Side Management 2010 Annual Report. A description
of the Company's cost-effectiveness methodology can also be found on pages 1 and 2
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 11
of the Demand-Side Management 2010 Annual Report, Supplement 1: Cost-
Effectiveness. Idaho Powets demand-side management ("DSM") alternate costs are
calculated for each IRP and are fully explained in the technical appendix of each IRP.
The most recent explanation can be found on page 97 of Appendix C - Technical
Appendix of the 2009 IRP.
Even though the Company uses the capacity cost of a SCCT for cost-
effectiveness, the Company believes further analysis is needed to determine the
optimum level of demand response for its system and how to utilze this resource. For
example, the irrigation and commercial demand programs are only available for 60
hours each summer during what the Company would expect to be peak times, whereas
a peaker would be available any month of the year. Even if 60 hours were not the limit
to the time period that customers were willng to be turned off, the appropriate
interruption rate is very limited. Because of this limit, there is a defined amount of
demand response that is useful on Idaho Powets system. The level of demand
response wil change as new load is added and as other supply-side resources are
added. This analysis was described in the Irrigation Peak Rewards filing, Case No.
IPC-E-10-46, and presented to the IRPAC on November 18,2010.
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 FOR PRODUCTION NO.7: Reference the Idaho Power IRPAC
Meeting Slide Presentation on Nov. 18, 2010, at slide 22.
(a) Please provide all data regarding "operational targets" for individual DSM
programs used in the 2011 IRP process. Please organize the data by DSM program.
(b) Please provide all data regarding "demand response targets" for individual
DSM programs used in the 2011 IRP process. Please organize the data by DSM
program.
RESPONSE TO REQUEST FOR PRODUCTION NO.7:
(a) The operational targets are a level of demand response that is estimated
by the program managers to be achievable, maintain participation, and satisfy as much
of the deficit position as possible. These estimates were made at the time of the
analysis conducted in conjunction with the 2011 IRP process. The table below shows
the operational targets by program determined in the fall of 2010. However, as a result
of Commission Order No. 32200, the conclusions drawn from this analysis are perhaps
not relevant because Commission Order No. 32200 states, ". . . the Commission finds
that adding language to limit participation in the Program is not necessary, and could
unduly discourage participation." Also, the targets are based on the information
available at the time and are meant to change with each IRP analysis as more relevant
information on participation levels, new technology, and system load becomes
available.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 13
AlC Irrigation
FlexPeak Cool Peak
Operational Management Credit Rewards
Year Target (MW)(MW)(MW)(MW)
2011 330 45 35 250
2012 310 51 35 224
2013 315 51 40 224
2014 315 51 40 224
2015 321 51 40 230
2016 351 51 40 260
2017 351 51 40 260
2018 351 51 40 260
2019 351 51 40 260
2020 351 51 40 260
(b) The demand response targets are a result of analyses of the load duration
curves from the 2011 IRP analysis. As such, they are not program specific. This IRP
analysis views demand response as a resource. It is necessary in this analysis to
combine the capacity of all demand response programs as a single resource because
these programs must be run concurrently to remain cost-effective. This analysis looks
at the difference between the 60th hour on the load duration curve for each year and the
peak hour for each year. The difference is the achievable amount of demand response
for each year under IRP planning assumptions. This process is detailed on page 8 of
the Direct Testimony of Peter Pengily in Case No. IPC-E-10-46. The Excel file included
on the enclosed CD contains the load duration curves for the top 120 hours for the
years 2011 through 2020. Please note that in 2012, the June peak hour was used as
the annual peak hour because the Company expects the Langley Gulch Power Plant to
come on-line in July.
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 - 14
REQUEST FOR PRODUCTION NO.8: Does Idaho Power use the "demand
response targets" or the "operational targets" when analyzing cost effectiveness in the
2010 DSM Report? Please provide supporting evidence of the demand reduction (MW)
or energy use reduction (kWh or MWh) for each DSM program.
RESPONSE TO REQUEST FOR PRODUCTION NO.8: Idaho Power used
neither demand response targets nor operational targets when analyzing cost-
effectiveness in the 2010 DSM report. The demand savings used in the cost-
effectiveness analysis are based on a forecast made for the Demand-Side Management
2010 Annual Report and were based on the 20091RP.
The "demand response targets" and the "operational targets" are new terms and
were arrived at during the 2011 IRP analysis process. The 2011 IRP has not yet been
filed with the Idaho Public Utilities Commission or the Public Utilty Commission of
Oregon.
Additionally, the cost-effectiveness results published in the Demand-Side
Management 2010 Annual Report were conducted for 2010 and the Commission did not
issue an order on Case No. IPC-E-10-46 until March 9, 2011.
The cost-effectiveness analyses used for Idaho Powets DSM programs are
static analyses as described on pages 96-97 of Appendix C - Technical Appendix of the
2009 IRP. The cost-effectiveness test for demand response does not address the need
or amount of load reduction; those analyses are performed in the IRP process through
the load and resource balance analysis. The IRP analysis was described in the
presentation to the IRPAC on November 18, 2010, and slides from this presentation can
be found via the following web link:
http://ww.idahopower.com/aboutus/planningforfuture/irp/2011/2011 irpac schedule.cfm.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 15
Additionally, the avoided cost used in the demand response programs is the
capacity cost of a SCCT (see Idaho Powets Response to ICIP's Production Request
No. 6(c) above). The program availabilty, timing constraints, and magnitude of
available demand response resources are evaluated separately to ensure that they can
help satisfy system deficits. Demand response programs must be utilzed concurrently
in order to be cost-effective so the program parameters must be similar enough to
achieve this method of dispatch.
Provided on the enclosed CD are the documents supporting the demand
reduction for the demand response programs. Idaho Powets energy efficiency
programs and the source and date of each measure's energy savings is found in the
program tables in Idaho Powets Demand-Side Management 2010 Annual Report,
Supplement 1: Cost-Effectiveness.
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.
DATED at Boise, Idaho, this 26th day of May 2011.
~Q~
LISA D. NORD~ M
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 16
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 26th day of May 2011 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.StutzmanCcpuc.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 peterCcrichardsonandoleary.com
gregCcrichardsonandoleary.com
Dr. Don Reading
6070 Hil Road
Boise, Idaho 83703
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email dreadingCcmindspring.com
rif)~ìš . Nõrdstro
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 17