20030106_357.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
COMMISSION STAFF
LEGAL
FROM:LISA NORDSTROM
DATE:JANUARY 3, 2003
RE:IN THE MATTER OF IDAHO POWER'S APPLICATION FOR AUTHROITY
TO IMPLEMENT A RESIDENTIAL AIR CONDITIONER CYCLING PILOT
PROGRAM AND TARIFF SCHEDULE 81. CASE NO. IPC-02-13.
On December 23 , 2002, Idaho Power Company filed an Application seeking authority
to institute a Residential Air Conditioner Cycling Pilot Program (AC Cycling Pilot Program or
Program) and implement proposed Tariff Schedule 81. In Idaho Power s 2002 Integrated
Resource Plan (IRP), the Company identified peak resource deficiencies facing its system in
upcoming years. To address those deficiencies, Idaho Power s IRP suggested targeting demand-
side measures that address peak-hour demand reduction. The proposed Program would enable
Idaho Power to begin testing reduction of summer peak loads by directly controlling residential
air conditioning load. This could potentially decrease Idaho Power s overall energy costs, which
would in turn result in savings for all customers.
THE PROGRAM
The AC Cycling Pilot Program is a voluntary program for residential customers that
would enable Idaho Power to directly address summer peaking requirements by reducing the
system s air conditioning load, which is a major contributor to the summer peak.The
Application described it as a dispatchable direct load control program, similar to the dispatch of a
peaking generation source, that would attempt to manage capacity. In exchange for an intelligent
programmable thermostat installed in their homes and a monthly monetary incentive
participating customers would voluntarily permit the Company to cycle their central air
DECISION MEMORANDUM
conditioners. The two-year Program would begin in the spring of 2003 and expire on September
, 2004.
Eligibility and Terms of Participation
The Program would be offered to residential customers in Boise and Meridian who
are homeowners with central air conditioning. The AC Cycling Pilot Program will be limited to
a total of five hundred customers. Idaho Power would solicit two hundred customers to
participate in the Program the first year and an additional three hundred customers for the second
year. The Application stated that the Company would solicit customers for participation based
on their energy usage, physical location, size of home or other factors aimed at creating a diverse
population for the Program. The Company might also solicit participants to fill any vacancies
caused by attrition in order to maintain the participation objectives. The Company would retain
the sole right to ultimately select or reject Program participants.
Participants would receive an intelligent programmable thermostat from the
Company, which would install it and set the thermostat's initial program. These programmable
thermostats would receive a signal from Idaho Power to initiate load control when peak load
reduction was needed for system reliability or economic reasons.Air conditioner cycling
wwould be limited to a maximum of four hours per day between the hours of 1 :00 p.m. and 9:00
m. for no more than 10 weekdays per month in June, July and August.
Participants would also receive a $5 credit on their July, August and September Idaho
Power bills for each month that they successfully participate in the Program. Each participant
would be allowed to temporarily "opt out" of the Program for one day each month after
providing Idaho Power with notification by 4:00 p.m. the preceding day.
Termination of Participation
The term of the agreement for Program participation is from the time the agreement is
signed until September 30, 2004, unless the customer notifies Idaho Power in writing that the
customer does not desire to continue Program participation. If a customer notifies the Company
that he/she wishes to cease participating in the Program before completing an entire Air
Conditioning Season (June, July, August), the customer may terminate participation and either
return the thermostat in working condition to the Company within a certain period of time or be
charged $100 for the thermostat. There would be no penalty for terminating participation if a
customer satisfactorily took part in a minimum of one complete Air Conditioning Season.
DECISION MEMORANDUM
Funding
The Application indicated that the Energy Efficiency Advisory Group ("EEAG") has
concurred with the Company s proposal to use Energy Efficiency Rider funds, collected under
Idaho Power Schedule 91 , to finance the AC Cycling Pilot Program. The cost of the Program
would be approximately $410 000 per year for each of the two Program years. Although the AC
Cycling Pilot Program may result in reduced revenues for Idaho Power, the Company
Application indicated that it would not request recovery of the reduced revenue.
Program Goals
The goal of the AC Cycling Pilot Program is to assess the effectiveness of air
conditioning thermostat control in reducing peak load. Idaho Power would also assess customer
participation, volunteerism, satisfaction and retention. Furthermore, Idaho Power would gain
operating experience in management of the Program itself, test the chosen equipment, and
evaluate different marketing strategies. Idaho Power s Application stated that the Company will
include the results of the AC Cycling Program in the annual report to the Commission detailing
the EEAG activities.This report will include the Company response to EEAG
recommendations, the associated program costs, the DSM accounting numbers and customer
response data.
The Application indicated that other electricity providers have reported load
reductions of approximately two-kilowatts per household with similar air conditioner cycling
programs. Because half of the participant houses will be cycled at anyone time, this number
would translate into one-kilowatt load reduction per participant. Idaho Power stated that it hopes
to achieve a 200-kilowatt load reduction per cycling episode the first year and a 500-kilowatt
load reduction the second year with full participation.
Procedure
According to the Application, the Company believes that the Commission can
properly consider the proposal with written submissions rather than an evidentiary proceeding.
Accordingly, the Company requested that this Application be processed under modified
procedure.
STAFF RECOMMENDATION
Staff recommends that this case be processed under Modified Procedure with a
comment period that will accommodate production requests and responses. Staff anticipates that
DECISION MEMORANDUM
interested parties will be able to conduct discovery and file comments by February 21 , 2003.
Idaho Power has indicated its desire to receive a Commission Order by March 14, 2003 to allow
enough lead-time to institute the program this summer.
COMMISSION DECISION
Does the Commission wish to process Idaho Power s Application for authority to
implement a Residential Air Conditioner Cycling Pilot Program under Modified Procedure?
M:IPCEO2I3 In
DECISION MEMORANDUM