20190103Avista to Staff 1-10.pdf

Avista Corp.
1411 East Mission P.O. Box3727
Spokane. Washington 99220-0500
Telephone [phone]
TollFree 8OO-727-9170
January 3,2079
Aknsrfr
RECEIVID
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Corp,
Idaho Public Utilities Commission
472 W. Washington St.
Boise, lD 83720-0074
Attn: Diane Hanian
Re: Production Request of Commission Staff in Case No. AVU-G-18-08
Dear Ms. Hanian,
Enclosed is Avista's response to IPUC Staffs production request in the above referenced docket.
Included in this mailing are the original and two paper copies of Avista's response to production
request: Staff 01-10. Due to the voluminous nature of StaflPR_01 - Attachment A,
Staff PR_03 - Auachment A, and Sta[PR_Og - Attachment A, these files have been provided
separately on a thumb drive. The electronic version of the responses were emailed on
0U0312019.
Also included is Avista's CONFIDENTIAL responses to PR_06C, PR_08C, and PR_10C, also
provided on a thumb drive due to their voluminous nature. These responses contain TRADE
SECRET, PROPRIETARY or CONFIDENTIAL information and are separately filed under
IDAPA 31.01.01, Rule 067 and233, and Section 9-340D,ldaho Code. They are being provided
under a sealed separate envelope, marked CONFIDENTIAL.
If there are any questions regarding the enclosed information, please contact Paul Kimball at
[phone] or via e-mail at [e-mail].
Sincerely,
/o/-/*%r,""
Regulatory Policy Analyst
Avista Utilities
i aime.rna-i ure(i)avi staccup.com
509.49s.7839
Enclosures
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-18-08
IPUC Staff
Production Request
Staff - 0l
DATE PREPARED
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
r211912018
N/A
Amber Gifford
Energy Efficiency
(s09) 49s-2896
REQUEST:
Please provide a list in Excel tbrmat showing all expenses charged to the gas DSM Rider fi om
2014 to 2017. Please include the fbllowing information fbr each expense: the date, vendor.
amount, program. and the account to which the charges were accrued. Please include and
iderrtily any ad.justments tnade liom 2014 b 2A17 to previously booked expenses. Please
separate all expenses by program. If any amounts are allocatedto multiple programs and/or
.iurisdictions, please describe the allocation method. Please identifl, if each expense is an
iucentive payment, purchase, service, labor/admin. materials, or any other classification of
expense.
RESPONSE
Please See Sta[PR_01 - Attachment A for the transaction detail for the Idaho natural gas DSM
program during 2014 -2017.
Non-incentive expenditures are separated by sector (i.e. Low-lncome, Residential,
Non-Residential) and are not categorrzed by program. For general implementation costs, please
see task numbers 242609 through 242623. Incentive payments fall under Task numbers 242633-
242639. Please see the table below for the expenses by type and the associated task number:
Expense Type
Implementation Costs
DSM Incentive Costs
EM&V CosG
DSM Educational
Task Number
242609
2426t0
242612
242614
242615
242623
242633
242634
242639
242658
24266t
242663
242664
242688
242689
Task Description
DSM Residential
DSM Limited Inc Eff
DSM Regional
DSM General
DSM Non Residential
DSM Compliance
DSM Residential
DSM Limited Inc Eff
DSM Non Residential
DSM Residential
DSM Regional
DSM General
DSM Non Residential
DSM General
DSM Non Residential
Tariff Rider 242697 Tariff Rider
Erpense Type Task Number Task Description
ID University Research 242620
242622
242643
242@4
242645
242647
242648
242@9
242690
242692
242693
242695
RSVC
Super Hydrophobia
RSVC Phase 2 (DSVC)
Micro Grid
Smart Wires
RSVC Phase 3 (DSVC)
Micro Grid Phase 2
Energy Mgmt Phase 2
CAES Water/Engy Cons
RSVC Phase 4 (DSVC)
Energy Storage
Aerogel Insulation
Please see the tab "Adjustments" in StaflPR_00I - Attachment A for all adjustments made to the
Gas DSM program in20l4-2017.
In regards to allocations, implementation expenses are directly assigned when appropriate to do so.
For common costs that are allocated, the Company generally uses a70oA Washington30Yo Idaho
allocation between jurisdictions. For service allocations, a 90o/o Electric and l}oh Natural Gas
allocation is used.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-18-08
IPUC Staff
Production Request
Staff - 02
DATE PREPARED: 1211912018WITNESS: N/A
RESPONDER: Amber Gifford
DEPARTMENT: Energy Efficiency
TELEPHONE: [phone]
REQUEST:
Please provide copies of all internal audit reports for all audits completed on the Company's
gas DSM expenses and processes from 2014 through 2018.
RESPONSE:
Please see Staff_PR_O02 - Attachment A and Staff PR_002 - Attachment B for copies of the
Company's intemal audit reports.
E
AlT,ttsra
DATE:
TO:
CC:
FROM:
SUBJECT:
lnternal Audit Department
Audit Report
August 4,201,6
Dan Johnson, Chris Drake, Tom Lienhard
Kevin Christie, Dennis Vermillion, Scott Morris, Tracy Van Orden, Mike Dillon
Janice Gibler and Amy Parsons
Demand Side Management (DSM) Review
Purpose:
The objective of this review was to ensure that the DSM department has appropriate policies and
procedures in place in order to accurately process qualified customer rebates. lnternal Audit has limited
its testing to rebates issued in 2015 for both residential and non-residential customers.
Procedures:
lnternal Audit performed the following procedures:
o lnterviewed DSM management in order to determine areas of risk/concern within the
department, validate that the new organizational structure is operating as intended and verify
that communication within the department has improved since our last review.
o Obtained an understanding of the various reviews performed by third parties (Nexant,
WA/lD/OR commissions, etc.) and inquired of any material exceptions/findings observed in
recent reviews.o Reviewed the DSM Standard Operating Procedures (SOPs)to obtain an understanding of rebate
qualifications and procedures in place for processing rebates.
. Selected 15 residential and 15 non-residential rebates processed in 2015 and performed the
following procedures:o Verified the rebate qualifications were met and the amount calculated appeared
accurate.o Confirmed all required paperwork, signatures, approvals, etc. were obtained prior to
payment to the customer.
Results:
o The DSM department appears to be working as a cohesive group and the current organizational
structure appears to be operating as intended.
. Per inquiry of management and review of the Nexant report f or 2074-2015, no material
exceptions or findings noted from third party reviews.. Current SOPs appear to be robust and sufficiently outline qualifications for each rebate and
internal policies and procedures.
o Residential and non-residential rebates selected for testing appear to meet specified
qualifications and be accurately calculated. Further, with the exception of the observation
noted below, it appears that internal processing requirements were followed.
:v
Observation: One residential rebate selected for testing was not signed by the customer and
instead stated "Refer to File" on the signature line. Upon discussion with DSM staff, it was not
known if a customer signature was a legal requirement or an internal policy. Further, it was
noted that signatures are not obtained for rebates submitted electronically.
Recommendation: lnternal Audit recommends that the DSM department work with the Legal
department and determine what the appropriate operating policy should be in regards to
obtaining signatures from customers on submitted DSM rebate forms (both hard copy and
electronic) and update current SOPs.
Conclusion:
Other than the observation noted above, it appears that the DSM department has appropriate policies
and procedures in place to accurately process qualified customer rebates.
Internal A udit Department
Audit Report
T0: Bruce Folsom, Pat Lynch
CC: Jason Thackston, Dennis Vermillion, Karen Feltes, Scott Morris, Tracy Van Orden
FROM: Lauren Pendergraft
DATE: April3,2014
SUBJECT: Wild Rose Review and Demand Side Management Follow-up
Background and Purpose
The Demand Side Management (DSM) group is made up by two teams - the Policy, Planning,
and Analysis (PPA) team and the Implementation team. From an organizational perspective, the
teams report to different directors and executives; but are collectively referred to as the DSM
group. There have been organizational issues between the two groups as the roles,
responsibilities, purpose, and authority of each team are not understood and implemented by all.
In2013, the PPA team became aware of the Implementation team's activities associated with the
Wild Rose Church and evaluated the prudency of the time and expenses associated with this
project. The PPA team's review resulted in a $22K adjustment to move the associated time and
expense below the line. The review of the Wild Rose activities was not conducted in a
transparent manner and was not communicated to Implementation team management in a timely
manner.
The purpose of this review was for Internal Audit to provide an independent assessment of the
Wild Rose activities. Additionally, Internal Audit performed other procedures over DSM
including detail testing of the Top Sheet process, a review of the installation verification dates of
completed projects in20l4, and a review of third-party reports issued about DSM since July
2013.
Scope and Procedures
The following scope and procedures were performed during this review:
1. Wild Rose: Inquired of PPA and Implementation team employees in order to understand
the nature of the Wild Rose Church activities and calculate any necessary adjustments.
2. Top Sheets: The Top Sheet process was implemented in July 2013 to ensure compliance
with policy, procedures, and documentation in site-specific projects. Internal Audit
tested a sample of 25 site specific projects for the existence of Top Sheets. Projects were
randomly selected from the population of all site-specific projects with a contract start
date and payment date after July 2013.
3. Installation Verification: Reviewed all completed projects in2014 within Saleslogix to
determine installation verification rates in both prescriptive and site-specific projects.
4. Third-party Reports: Reviewed third-party reports issued since July 2013 including the
Cadmus 2072Process Evaluation memo and Idaho Staff Prudency Review Comments
(Case No. AVU-E-13-09 and AVU-G-13-02).
Observations and Recommendations
The following observations and recommendations were made based on the different procedures
performed:
1. Wild Rose: The activity associated with Wild Rose appeared to be more than incidental
and on a recurring basis. As such, an adjustment to move the direct labor hours below
the line is appropriate given Avista's Regulatory Accounting Guidelines related to
community involvement activities. A range of possible adjustments calculated by
Internal Audit are below:
Direct labor (total hours worked
on proiect)$ 20,944.59
Net Impact (direct labor less
additional "make-up" hours
worked (ie. weekends, after-
hours,etc.))
$ 12,279.63
Net Impact less 8 hours of team
building $ 7,235.89
The calculations above are loaded at October's total payroll loading rates of 100.25%.
The actual adjustment made for labor was S21,485.60, but was only loaded at the payroll
benefits rate of 63.5% (had it been loaded at the 100.25% it would have resulted in an
adjustment of $26,314). A $167.88 adjustment for expenses was also made; however,
Internal Audit did not find any needed adjustments for expenses associated with Wild
Rose.
The adjustments made for Wild Rose were conservative and more than covered all of
Internal Audit' s adj ustment estimates.
Recommendation: The employee or manager of employees responsible for the initial
charges of time and expense should be included in the evaluation and calculation of any
needed adjustments to ensure the accuracy of adjustments.
Management Response:
Director of PPA Team response: I agree with the recommendation as written. The "in a
transparent manner" (as described in the "Background and Purpose") would benefit from
providing or establishing a policy in this regard.
Aiivtsrr
Director of Implementation Team response: I agree with how the issue has been
presented and with the observations and recommendations.
2. Top Sheets: Out of a sample of 25 projects (75 top sheets total as each project should
have a Technical Review Top Sheet, Energy Efficiency Agreement Top Sheet, and an
Incentive Payment Top Sheet), 5 top sheets were missing or unable to be found.
Additionally, 1 other project was missing a Technical Review Top Sheet as the
engineering review was performed by an outside engineering firm. Based on inquiry of
DSM employees, it is unclear if there is a policy that requires Technical Review Top
Sheets for outside engineering analyses. All other Top Sheets were completed and saved
as attachments in Saleslogix.
There is evidence to suggest Top Sheets are implemented and being used on a consistent
basis. The timing and nature of the exceptions are reasonable given the recent
implementation of the Top Sheet process.
Recommendation: Perform an internal review in the next 6 months to test both the
effectiveness and existence of Top Sheets (as Internal Audit's review was limited only to
existence). Establish, communicate, and document the policy requiring Top sheets for
outside engineering evaluations for site-specific projects. Additionally, remind DSM
engineers that Technical Top Sheets are required for revised engineering evaluations.
Management Response:
We agree with the recommendations as written. The two areas noted could use clearer
guidelines. Any exceptions to current or revised policies should be communicated prior
to implementing those exceptions.
3. Installation Verification (IV): Based on Internal Audit's review of all projects
completed in20l4 within Saleslogix, the following IV rates in both prescriptive and site-
specific projects were calculated:
*The lV did occur the two projects missing the IV date in Saleslogix. The account executive has since
updated Saleslogix and input the IV date. The IV rate is now 100% for site specific projects within
Saleslogix.
The IV rate for site-specific projects in 2014 is considerable improvement from the 2012
rate of 66Yo presented in the 2012 Process Evaluation Memo by Cadmus. Based on
discussion with DSM employees, it is unclear what the policy or established goal of the
Number of
projects
completed
Number of projects
w/ IV date in Sales
Logix IV rate
56 54*96Yo*Site specific
Prescriptive 276 32 12%
^#vtsta
IV rate is for prescriptive programs.
Recommendation: Develop and document the policy or established goal for an IV rate
for prescriptive programs. Consider developing a specific goal for each prescriptive
program and include that information in the program plans.
Management Response:
We agree with the recommendations as written.
4. Third-party Reports: Internal Audit reviewed both the 2012Process Evaluation Memo
performed by Cadmus issued on August 2,2013 and the Idaho Staff Prudency Review
Comments issued on March 6,2014. Both reports contained observations, areas of
concern, and recommendations. There is not a centralized document utilized by both the
PPA and Implementation team addressing Avista's response to report findings or
recommendations.
Recommendation: Develop and implement a DSM "Issues Tracker" to document and
track all internal and external report's findings and recommendations in a centralized
location. The Issues Tracker should list the findings and recommendations, document
Avista's response to the finding or recommendation, and provide an update on the status
of the remediation efforts of the finding. The Issues Tracker should be owned by both
the PPA and Implementation team and clearly document the responsibility for addressing
the item. On a recurring basis (quarterly, semi-annual etc.) the Issues Tracker should be
presented to a third party,like Internal Audit, to ensure findings and recommendations
are being addressed.
Management Response:
We agree with the recommendations as written.
*vtsta
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
AVU-G-18-08
IPUC Staff
Production Request
Staff - 03
DATE PREPARED
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
r211912018
N/A
Amber Gifford
Energy Efficiency
(509) 4es-28e6
REQUEST:
Please provide invoices for all third party evaluators for 2016 and 2017. Please illustrate how
those costs were allocated among jurisdictions.
RESPONSE:
Please see StaflPR_03 - Attachment A for copies of invoices from Nexant, Avista's 3'd pa.ty
EM&V evaluator. Costs were directly assigned to each service and jurisdiction based on the work
performed by the evaluator.
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-18-08
IPUC Staff
Production Request
Staff - 04
DATE PREPARED: 1211912018WITNESS: N/A
RESPONDER: Amber Gifford
DEPARTMENT: Energy Efficiency
TELEPHONE: [phone]
REQUEST:
Please provide the gas taril'f rider revenue by rnonth and by class for 2016 and2017.
RESPONSE:
Please see the below table for the amount of revenue for the natural gas DSM programs in 2016
and20l7, net of revenue conversion factor.
NaturalGas 2016 2017
O1O1 - FIRM AND GENERAL SER S 825,688.06 s 1,145,959.50
0111- - FIRM-LARGE GEN SERV S rg4,7sz.ts s 243,360.86
01.T2 - FIRM-LARGE GEN SERV 5 2,643.L!S 3,952.20
Total s 1,013,083.32 5 1,393,272.56
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G- 18-08
IPUC Staff
Production Request
Staff - 05
DATE PREPARED: 1211912018WITNESS: N/A
RESPONDER: Amber Gifford
DEPARTMENT: Energy Efficiency
TELEPHONE: [phone]
REQUEST:
Please provide the calculation of any carrying charge on the gas Rider balance from 2014 to
20t7.
RESPONSE:
The DSM tariff rider balance did not incur any carrying charges during 2014 through2017.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-18-08
IPUC Staff
Production Request
Staff - 07
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
12119120t8
N/A
Amber Gifford
Energy Efficiency
(s0e) 49s-28e6
REQUEST:
Please describe how common costs are allocated among the services andjurisdictions
RESPONSE:
Common costs among services are generally allocated using a 90110 allocation factor, with 90%
going to electric afi l0o/o going to natural gas. Expenses related to EM&V were allocated based
on the activities performed by the third-party vendor and tend to vary. See StaflPR_03 -
Attachment A for copies of the invoices from Nexant for EM&V services.
Common costs are allocated between Washington and Idaho urisdictions using a 7 0130 allocation
factor, with 30% of those common costs being allocated to Idaho, and 70o/o being allocated to
Washington.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-18-08
IPUC Staff
Production Request
Staff - 09
DATE PREPARED
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
12119120t8
N/A
Amber Gifford
Energy Efficiency
(s09) 4es-28e6
REQUEST:
Please provide the amount of labor expense charged to the gas DSM tariff rider for the years
2013 to 2018. For each of those years. please include the number of Full Time Equivalent
positions funded by the rider. Please also provide the general wage adjustment percentage tbr
non-union personnel approved by the Compensation Committee of the Board of Directors fbr
each year.
RESPONSE:
Please see Staff PR 09 - Attachment A for the historic labor amounts.
DSM employees record labor related expenses under the ORG number T52. The table below
identifies the FTE for each requested year under that ORG number. The Compensation committee
of the Avista Board approved the salary/merit budget for non-union employees for the following
years and percentage increases:
Year Increase FTE
2013 3o/o 2t
2074 3o/o 28
2015 3o/o 2t
2016 3o/o 19
2017 3o/o 23
2018 3o/o 23