20140418IPC to Staff 1-10.pdf

SIffi*.
An IDACORP Company
LISA D. NORDSTROM
Lead Counsel
I [e-mail]
April 18,2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-14-03
2014-2015 Fixed Cost Adjustment - ldaho Power Company's Response to
the First Production Request of the Commission Staff
Dear Ms. Jewel!:
Enclosed for filing in the above matter are an original and three (3) copies of ldaho
Power Company's Response to the First Production Request of the Commission Staff
("Staff') to ldaho Power Company.
Also, enclosed are four (4) copies each of non-confidential and confidential disks
containing information responsive to Staffs production requests. PIease handle the
confidential information in accordance with the Protective Agreement executed in this
matter.
Sincerely,/<-*0@
Lisa D. Nordstrom
LDN:kkt
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom @ id a ho powe r. co m
Attomeys for ldaho Power Company
!N THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO IMPLEMENT FIXED
COST ADJUSTMENT RATES FOR
SERVICE FROM JUNE 1,2014,
THROUGH MAY 31,2015.
"'1t-
CASE NO. |PC-E-14-03
IDAHO POWER COMPANY'S
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF TO IDAHO
POWER COMPANY
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
COMES NOW, ldaho Power Company ("ldaho Powed' or "Company"), and in
response to the First Production Request of the Commission Staff ("Staff') to ldaho
Power Company dated April 4, 2014, 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: Please provide all executable electronic models used to
calculate the weather-normalized energy for both the Fixed Cost Adjustment (FCA)
deferral period and the forecasted FCA collection period. As part of the response,
please include a detailed explanation of all the modeling variables, and provide the
descriptive statistics used to evaluate the predictive accuracy of each mode!. If third
party economic or demographic projections were utilized, please provide all the data
used for the adjustment and the names of the primary data vendors.
RESPONSE TO REQUEST NO. 1: The Company's historical weather
normalization and energy forecast models entail large amounts of data found in
disparate and numerous executable software applications. ldaho Poweds primary and
third-party data sources are compiled into multiple Oracle Express databases, which
occupy approximately 800 megabytes of disk space. Regression modeling and
development of the final energy sales figures occurs primarily in MetrixND and Oracle
Express. The executable files associated with data and modeling require specific
database engine and application software, without which the files would be unusable.
Consequently, ldaho Power has attached to this response all related files that can
reasonably be provided in an executable and informative format, but is unable to
provide the complete working models. To review the models in their entirety, please
contact Doug Jones at [phone] or Camilla Victoria at [phone] to arrange
a time for review at the Company's corporate headquarters.
H ISTORICAL WEATHER NORMALIZATION
Attachment 1 provided on the non-confidential CD provides an overview of the
Company's weather normalization methodology and a detailed description of the
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 2
weather adjustment process. Confidential Attachments 2 through 5 include the
descriptive statistics and predictive accuracy for each of the four regression models
used to weather-adjust Residential and Commercial sales. The tabs in Attachments 2
through 5 contain the following information:
Confidential Attachment 6 illustrates in spreadsheet format the weather
normalization process detailed in Attachment 1, utilizing the coefficients calculated in
the four regression models detailed in Confidential Attachments 2 through 5. Within this
spreadsheet, daily weather is transformed into daily heating and cooling degree days
("HDD' and "CDD") for each city described in Attachment 1. HDD and CDD are then
weighted by the number of cycles being read each day and summed over the billing
month start and end dates. Next, each city is weighted by the number of customers
(Residential or Commercial) in each operating area of the Company to arrive at actual
weighted monthly HDD and CDD. The difference between the actual monthly HDD/CDD
and the 3O-year normal HDD/CDD, times the weather coefficient(s) for a given month,
times the electric space heat saturation (or central air-conditioning saturation in
summer), times the number of customers results in a monthly weather adjustment. The
adjustment is added to actual sales to determine weather-adjusted sales. The
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 3
Tab Name Description
Data H istorical/forecast data by variable
Corr Correlation between variables
Coef Coefficients and associated descriptive statistics for each variable
MStat Descriptive statistics for entire model
Err Actualdependent variable, predicted value, and residua!
Commercial models do not use space heat or air-conditioning saturation in those
calculations.
Attachment 7 contains a variable key with a description of each coded variable
contained in both the historical weather normalization models and the energy forecast
models described below.
ENERGY SALES AND CUSTOMER FORECAST
The process of calculating future energy and customer counts is detailed in
Attachment 8 provided on the non-confidential CD. The descriptive statistics and
predictive accuracy for the Residential forecast model are provided as Confidential
Attachment 9, while statistics related to the Commercial forecast models are provided
as Confidential Attachments 10 through 14. The tabs in Confidential Attachments g
through 14 follow the same structure as the tabs detailed in the table above.
Confidential Attachment 15 contains Idaho Power-specific dependent and independent
(explanatory) variables that are utilized as inputs to ltron's Residential Statistically-
Adjusted End-Use ("SAE') model, which is used to forecast system Residential sales
and use-per-customer. The variables in Confidential Attachment 15 are also detailed in
the variable key provided as Attachment 7 to this response.
Attachments 2 through 6 and 9 through 15 provided in response to this request
are confidential and will be provided on the confidentia! CD to those parties that have
executed the Protective Agreement.
The response to this Request is sponsored by Zach Harris, Regulatory Analyst,
ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 4
REQUEST NO. 2: On page 3 of Zach Hanis's testimony, he discusses each
component of the FCA mechanism. Specifically, he describes the following formula:
FCA = (CUST X FCC) - (NORM X FCE). Because the weather-normalization
adjustment affects the Company's estimation of actua! fixed cost recovery, please
explain how the Company verifies the accuracy of its weather-normalization mode!.
RESPONSE TO REQUEST NO. 2: ldaho Power verifies the accuracy of the
weather-normalization model in the following ways:
1. Monthly, ldaho Power performs an analytical review of the results of the
mode! for reasonableness. The Company compares the weather-adjusted sales for the
current month to the same month in prior years, and researches unusual variances,
usually through internal discussions and reviews of the inputs to the model.
2. Quarterly, ldaho Power performs a more detailed review and recalculates
the results of the weather-normalization model using an independent model within a
different software package (Excel). This redundant process validates the inputs,
assumptions, and results of the weather adjustment calculations.
3. Annually, ldaho Power engages a third-party consultant to review the
weather normalization model's statistical assumptions, inputs, and results with respect
to theoretical soundness and practical application. The most recent review conducted
in December 2013 concluded that the model is working as intended. The model was
also reviewed by a separate independent consultant in October 2012 who also
concluded that the model is of proper design and operation.
The response to this Request is sponsored by Zach Harris, Regulatory Analyst,
ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 5
REQUEST NO. 3: On page 5 of Zach Harris's testimony, he says: "the
Company began using a prorated customer count based on the number of active
meters at the end of each month." Please explain how the Company defines an
account and how it determines whether the account is considered inactive, and
consequently, must be removed from the jurisdictional customer count. As part of the
response, please provide the number of ldaho accounts deemed inactive over the last
five years. Please provide this on a monthly basis.
RESPONSE TO REQUEST NO. 3: Per a discussion with Staff on April 8, 2014,
this response will address the various definitions associated with the customer count
used for FCA purposes, as well as customer counts for the ldaho jurisdiction for the
past five years, by month, for the Residential and Small General Service customer
classes.
To calculate the FCA, ldaho Power previously used a customer count that has
been prorated based on revenue attributable to the Service Charge. ln September
2013, the Company implemented its Customer Relationship and Billing ("CR&B")
system, which tracks and records the detail of the revenue in a different manner than
the prior billing system. The Company modified its determination of customer counts in
August to ensure the ongoing accuracy of the FCA computations by using the number
of Utility Service Agreements ("USA") active at the end of each month to calculate the
customer count. The impact of the CR&B system to the customer count, as well as the
customer count computation will be explained in more detail in the Company's response
to Staffs Production Request No. 5.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 6
The USA is the most granular level for billing and analogous to the Service
Charge prorated customer count. As of August 2013, the FCA uses the USA count
active at the end of each month because this represents the contract between a location
and a customer. An account is a single record of the customer established for billing
purposes. Using an account instead of the USA to determine the customer count may
not always be appropriate because there may be an account with multiple residences,
such as a customer with a home and a cabin. Each location is connected to the
Company's system and has fixed costs associated to the separate residences and
would have a separate USA for each Iocation. There may also be a residence with
multiple meters. Using the USA is more appropriate because there would be one
service agreement for this location even though there are multiple meters.
The customer counts provided as an attachment to this response on the non-
confidential CD reflects the number of USAs active at the end of each month for the
previous five years, by month, for the Residential and Small General Service customer
classes.
The response to this Request is sponsored by Zach Harris, Regulatory Analyst,
ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 7
REQUEST NO. 4: Please provide the number of residential and small
commercial customer accounts considered active with no energy usage over the last
five years and the percentage of total accounts the number represents. PIease provide
this on a monthly basis for each rate schedule.
RESPONSE TO REQUEST NO. 4: Please see the attachment for this response
provided on the non-confidentia! CD. This data represents the total number and
percentage of customers billed with zero energy usage. The total number of customers
billed may not match the number of USAs as explained and provided in the Company's
response to Staff's Production Request No. 3 because the USAs reflect the count of
customers at the end of the month and the total number of billed customers is a count of
all customers that were billed during the month. The number of billed customers
includes customers billed for partial months due to customers moving in and out of
residences.
Net Metering customers on Schedule 84 may also reflect a higher percentage of
billed customers with zero energy usage because if the customer generates equal to or
more than the energy used during a month, the customeds bill would reflect an energy
usage of zero.
The response to this Request is sponsored by Zach Harris, Regulatory Analyst,
ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 8
REQUEST NO. 5: On page 5 ol Zach Harris's testimony, he discusses how the
Company's implementation of its new Customer Relationship and Billing system has
caused it to change how it calculates customer counts. Please explain how the change
impacts the accuracy of the Company's customer count. As part of the response,
please also explain how the Company calculated the prorated customer count, given
that the methodology changed in August2013.
RESPONSE TO REQUEST NO. 5: ln September 2013, the Company
implemented its CR&B system. Because the new CR&B system tracks and records the
detail of the revenue in a different manner than the prior billing system, it was necessary
to modify the determination of prorated customer counts to ensure the ongoing
accuracy of the FCA computations. ln August 2013, the Company began using a
customer count based on active USAs at the end of each month to calculate the
customer count used to determine the FCA balance. The methodology used for the
FCA to determine the customer count from January through July was the same as prior
years, which was prorated based on revenue attributable to the Service Charge. Both
customer count calculations will be explained in more detail below.
The proration methodology based on the Service Charge revenue has been used
in the past because it reflects a customer count that includes customers that have only
been billed for a partial month. An example of this would be a customer that requests
service from the Company for three days of a 30-day month. This customer would be
counted as one-tenth of a customer (3 days / 30 days) for purposes of calculating the
FCA. This is accomplished by how the Service Charge revenue is tracked. During
2013, the Service Charge for the Residential and Sma!! General Service customer
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 9
classes was $5.00, and the Minimum Charge was $2.00. The customer that received
service for three days would have a Service Charge of fifty cents (3/30 X $5.00), and a
Minimum Charge of $1.50, so the total minimum bill would be at least $2.00. This
method of tracking revenue allows for partial customer counts regardless of when the
customer requests service. This customer count calculation would determine a prorated
customer count because it divides the total revenue attributable to the Service Charge
bv $s.oo.
For customers receiving a Minimum Charge, the CR&B system does not track
the revenue associated to the Minimum Charge and the Service Charge separately.
Using the same example as above, the customer requesting service for three days
would now reflect revenue in the CR&B system as $2.00 from the Minimum Charge,
and the Service Charge would be $0.00. This is no longer allowed for customers
receiving a Minimum Charge to be prorated in the customer count, requiring the
Company to modify its customer count methodology.
To remain consistent with how the customer count was derived in the Company's
most recently approved general rate case, Case No. IPC-E-11-08, and consequently
the same customer count that was used to determine the Fixed Cost per Customer
("FCC'), the Company began using a calculated customer count based on the number
of active USAs at the end of a month. To acknowledge customers that move in and out
of residences throughout a month and request service for partia! months, a ratio is
applied to the month-end active USA count to calculate an adjusted customer count.
The adjusted customer count is comparable to the prorated customer count based on
the Service Charge revenue.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 1O
The attachment provided with this response on the non-confidential CD is the
ratio used to adjust the month end USA count. This ratio was used in the Company's
most recently approved genera! rate case to convert the USA forecast for the test year
to a customer count comparable to the prorated count based on the Service Charge
revenue. The attachment for this demonstrates that the ratio results in a very modest
adjustment to the USA count and has a minor impact to the FCA calculation. Idaho
Power believes that this is the best method for estimating customer counts.
The response to this Request is sponsored by Zach Harris, Regulatory Analyst,
ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 11
REQUEST NO. 6: On page 7 of Zach Harris's testimony, he says: "the
difference between this year-end determination of the FCA balances and the sum of the
12 monthly reported estimates of the FCA balances required adjustments to arrive at
the annual FCA amount." Please explain each adjustment and its corresponding impact
on the deferral balance. Please provide all applicable workpapers in executable format
with this response.
RESPONSE TO REQUEST NO. 6: As explained on page 6 of Zach Harris's
testimony, a monthly FCA balance is estimated and recorded on the Company's
financia! books to maintain compliance with Generally Accepted Accounting Principles.
The Company sends a report each month to the Idaho Public Utilities Commission
reflecting the estimated FCA balance. Exhibit No. 1 accompanying Zach Harris's
testimony is a copy of the Monthly FCA Report for calendar year 2013. The sum of the
estimated monthly FCA balance for the Residential customer class is $14,784,040.43
as shows in column O, row 6, of Exhibit No. 1. The sum of the estimated monthly FCA
balance for the Small General Service customer class is $590,375.87, as shows in
column O, row 20, of Exhibit No. 1.
The attachment provided with this response on the non-confidential CD is the
calculation of the annual FCA balance, not including interest, as wel! as the adjustment
made to the sum of the estimated monthly FCA balances for each customer class. The
FCA balance for the Residential customer class was reduced by $559,075.87 and the
FCA balance for the Small Genera! Service customer class was reduced by $21,902.25.
These adjustments are also reflected in Exhibit No. 2 accompanying Zach Harris's
testimony in column O.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - ,I2
The response to this Request is sponsored by Zach Harris, Regulatory Analyst,
ldaho Power Gompany.
IDAHO POWER COMPANYS RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 13
REQUEST NO. 7: On page 8 of Zach Harris's testimony, he says: "As customer
grourth increases, fixed costs also increase, impacting the level of authorized fixed cost
recovery." Has the Company completed any recent studies to evaluate how other
factors such as weather, building codes and standards and schedule type effect the
fixed cost of serving customers? !f so, please provide a copy of each study to which
you refer.
RESPONSE TO REQUEST NO.7: No.
The response to this Request is sponsored by Zach Harris, Regulatory Analyst,
ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 14
REQUEST NO. 8: How many residentia! customers participated in ldaho
Powe/s DSM programs during the FCA defenal year?
RESPONSE TO REQUEST NO. 8: For the count of residential participants in
Demand Side Management (.DSM') programs during the 2013 FCA deferral year,
please refer to Appendix 5 on page 159 of the Company's Demand-Side Management
2013 Annual Report ("Report"), a copy of which is an attachment to this response
provided on the non-confidential CD. The Report identifies "participants" in the
residential programs such as, homes, bulbs, projects, and appliances/showerheads.
Due to the varying iyp", of participants, it is difficult to determine an exact count of
customers participating in these programs. The participant types of homes, projects,
appliances/showerheads, and refrigerators/freezers are reasonable approximations of
participating customers who received incentives during 2013. Both the Home Products
Program and Home lmprovement programs will have occurrences of multiple
appliances or projects at a unique customer site so the counts published in Appendix 5
of the Report will reflect those possible scenarios. ln preparation of the response to
Staffs Request No. 8, the Company realized that the 6,776 units listed for the Home
Products Program in Appendix 5, for the ldaho jurisdiction, mistakenly excluded the
6,645 appliances processed through the program in ldaho during 2013 and the tota! unit
count of appliances/showerheads should have been reported as 13,421. Appendix 3
and Appendix 4 of the Report reflect the correct number of participants in the Home
Products Program, including participants from Oregon.
The bulb units associated with Energy Efficient Lighting found in Appendix 5 of
the Report, the highest residentia! energy savings program, cannot be mapped to
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 15
individua! customer counts because the data is only captured down to a point-of-sale
location level.
While market transformation programs and initiatives administered by the
Northwest Energy Efficiency Alliance ("NEEA") impact ldaho residential customers,
NEEA savings are not generally reported at the participant level because not all
programs are verified at a service territory level.
Also excluded from participant counts is the number of residential customers that
participate in the programs where energy savings are not reported such as the
Company's education and outreach programs.
The response to this Request is sponsored by Pete Pengilly, Customer Research
and Analysis Leader, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 16
REQUEST NO. 9: What leve! of energy savings was generated by residential
customers who participated in ldaho Power's DSM programs during the FCA deferral
year?
RESPONSE TO REQUEST NO. 9: Annual quantifiable energy savings from
ldaho Power's residential DSM programs for the 2013 FCA deferral year were
16,596,173 kilowatt-hour ("kwh') for the ldaho jurisdiction as reported in the Demand-
Side Management 2013 Annual Report, Appendix 5, page 159, provided in response to
Request No. 8. The reported energy savings represent annual savings attributed to the
programs during 2013. The reported energy savings are not reflective of the full
spectrum of energy efficiency savings that may be impacting customer usage such as
accumulated savings of participation in DSM programs from prior years, market
transformation efforts, past and current changes in codes and standards, and customer
education and outreach.
Market transformation savings from residential programs and initiatives
administered by NEEA are estimated each year by NEEA, but because not all savings
are ldaho Power service territory verified, those associated savings are excluded from
the estimate of first year annual savings occurring during the 2013 FCA deferral year.
The response to this Request is sponsored by Pete Pengilly, Customer Research
and Analysis Leader, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 17
REQUEST NO. 10: How many small commercial customers participated in
ldaho Powe/s DSM programs during the FCA deferral year?
RESPONSE TO REQUEST NO. 10: Per a discussion with Staff, this response
will include the number of Small General Service customers participating in Idaho
Powe/s DSM programs during 2013 as well as the energy savings attributable to their
participation. There were 139 small general service customers, seryed under Schedule
7, that participated in ldaho Powefs DSM programs during the 2013 FCA deferral year
with associated reported annua! savings of 990,884 kwh attributed to the programs in
2013.
The reported energy savings are not reflective of the fu!! spectrum of energy
efficiency savings that may be impacting customer usage such as accumulated savings
of participation in DSM programs from prior years, market transformation efforts, past
and current changes in codes and standards, and customer education and outreach.
The response to this Request is sponsored by Pete Pengilly, Customer Research
and Analysis Leader, ldaho Power Company.
DATED at Boise, Idaho, this 18fr dayof April 2014.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REOUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 18
Attomey for ldaho Power Company
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 18th day of April 2014 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:
Gommission Staff
Karl T. Klein
Deputy Attomey General
Idaho Public Utilities Commission
472 W est Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
Boise, ldaho 83702
X Hand Delivered
U.S. Mail
,Ovemight Mail
FAXX Emai! [e-mail]
Hand DeliveredX U.S. Mail
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IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION
REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY - 19