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HomeMy WebLinkAbout20080820INT to Staff 5-8,12-15, 17, 20.pdfEXECUTIVE OFFICES INTERMOUNTAIN GAS COMPANY 555 SOUTH COLE ROAD · P.O. BOX 7608. BOISE, IDAHO 83707. (208) 377-6000 . FAX: 377-6097 iUUU L¡: 47 August 20,2008 Jean Jewell Commission Secretary Idaho Public Utilities Commission 472 West Washington St. P. O. Box 83720 Boise,ID 83720-0074 RE: First Production Request of the Commission Staff to Intermountain Gas Company Case No. INT-G-08-02 Dear Ms. Jewell: Attached for filing with the Idaho Public Utilities Commission are the original and seven copies of Intermountain Gas Company's initial response to the First Production Request of the Commission Staff, in the above referenced Case. If there are any questions regarding the attached, please contact me at (208) 377-6168. I P. Mc Director Gas Supply and Regulatory Affairs MPM/sc Attachments cc W. C. Glynn E. Book P. Powell M. Rich Request No.5: Within the 2004 Staff Comments "Staff notes that the Company does not track water and Space heater conversions separately and that migration from RS1 (space heat only) to RS2 (space and water heat) is not projected in the IRP. Furthermore, the Company no longer tracks gas appliance penetration yet it has indicated that there is anecdotal evidence of increased penetration of gas fireplaces, stoves, dryers, and barbecues" (2004 IRP Staff Comments page 3). How has IGC begun tracking water and space heater conversions separately, migration from RS1 to RS2, or penetrating gas appliances? Please explain your answer. (IRP page 19). Responder:Byron Defenbach Ph 208.377.6080 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208.377-6168 Byron Defenbach Record Holder: Witness:...i--1 Response: IGC tracks space and water heater conversions (electric appliances converting to natural gas appliances) via our marketing reporting system. (See attached "Request NO.5 Exhibit 5.1") The column headings on the attached Exhibit 5.1 that read "Existing" are sales to existing homes which were built with another heating energy source, and are converting to natural gas: . "Existing space heat" refers to a dwelling which is converting only to at a natural gas furnace. . "Existing multi-use" refers to a home switching to at least both a gas furnace and a gas water heater. Intermountain's existing price structure provides a lower price to the user of both natural gas space and water heating, so we track them. Since Intermountain doesn't go "past the metet' as part of our normal service work, it's possible that an RS-1 customer could add a natural gas water heater using a third party vendor without Intermountain's knowledge. Intermountain is currently working on a system to report those customers who call Intermountain to convert from RS-1 to RS-2 (which would then be reported as a "migration") and also continues to solicit the support of appliance vendors to encourage customers to make the call to Intermountain anytime a natural gas water heater is installed in addition to an existing natural gas furnace. We assume that there is increasing usage of other natural gas appliances such as stoves, barbecues, clothes dryers, etc. based on feedback from our representatives who work with homebuilders and HVAC/appliance dealers. Request No.6 Based on IGC's assumption that household growth drives small commercial customer growth (IRP page 20): a) How long a lag period is evaluated between residential growth occurring and commercial growth arriving to serve this residential population? b) How many years has this lag been researched or observed? c) How predictive has it been? Responder:Byron Defenbach Ph 208-377-6080 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Record Holder: Page 1 Witness: Boise, Id 83709 Ph 208.377.6168 Byron Defenbach Response: a) Based on the historic relationship between residential growth and commercial growth, our forecast employs a lag of one year between household growth, and the corresponding growth in commercial customers. That is the relationship employed in the IRP forecasts. b) This one year lag has been observed since 2003. c) It has been reasonably predictive tool (See attached "Request NO.6 Exhibit 6.1"). This chart shows that the recent annual increases in residential new construction were followed by increases in commercial new construction a year later. Request No.7: Within the 2006 IRP, Staff commented, "The Company may wish to consider modeling the RS-1, RS-2 and small commercial classes separately. It is reasonable to expect a different response to weather patterns for the three groups of customers based on their characteristics." (Staff Comments 2006, IRP page 6). a) What "slightly different data set" enabled IGC to model RS-1, RS-2 and small commercial classes separately during non-peak but not peak? (IRP page 28 and Exhibit 2, Appendix A). b) Are there technological or methodological advances being made in order to achieve more accurate modeling by customer class? (IRP page 27). c) What is IGC's plan to improve the results of a peak price variable previously derived from aggregating RS-1, RS-2 and small commercial? (IRP page 30). Responder:Lori Blattner Ph 208.377.6000 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208-377-6168 Michael McGrath Record Holder: Witness: Response: a) Intermountain collects monthly usage data by customer class coincident with its customer billing process. This customer class specific billing cycle information is then regressed against various predictive variables, not the least of which is the coincident weather, to arrive at a non- peak day related forecasting tool. During the non-peak months, usage for the total month was modeled based upon this customer class specific database. In order to measure daily (peak-day) responses to the weather (and other predictive variables), IGC collects daily usage data on the aggregate core market (or sales customers) as provided by and through the Company's Gas Control Department. Intermountain's "daily sendout" from Gas Control is measured in aggregate (not specific to each sales customer class) as the Company's distribution system is managed each day on an aggregate sendout basis level irrespective of each customer class's usage. Intermountain must meet its peak-day delivery to the aggregate core market as each of the separate sales customer classes have equal rights to firm deliveries on the peak day. b) Intermountain continually looks for methods to enhance peak-load modeling. However, Intermountain believes the current method of developing peak loads based upon aggregate daily reads using eighteen years of data is a sound one. As we move forward, technology may be helpful in allowing Intermountain to collect daily core market usage data by customer class which Page 2 can be used to test/benchmark the current modeling methods. A technological advance that may be of some help in the future is Intermountain's ERT system. This system may be able to collect daily usage data by customer class, although all the required infrastructure pieces are not currently in place to do so. One issue yet to be resolved is the problem that more frequently interrogating the ERT devices may accelerate the need for costly capital improvements to the ERT system. As is always the case, Intermountain works to balance the cost to our customers of acquiring more specific data with the benefits that data may provide. As technology improves, however, we hope to resolve these issues and continue to move toward additional types of data collection. c) Intermountain is very interested in the results of price elasticity upon usage per customer. Because of this, Intermountain continually tests for the effects of price elasticity to help develop better forecasting models. Although price remained in the non-peak month models as a significant variable for the RS-1 and RS-2 customer classes in this IRP filing, some testing done this summer has shown that this may not be the case by the time the next IRP is filed. The data is showing a declining customer response to price changes. As customers have responded to higher prices by making equipment upgrades and installng permanent conservation measures, there is less of an opportunity for price response than there was during the first major increase in prices after 2000. The permanent responses to higher prices become part of the constant of the model and are thus incorporated in future models not as a response to price, but as a more permanent decrease to usage. Because of this, it may not be possible for Intermountain to improve the results of a peak price variable in the peak month models, and we may find that the price variable becomes insignificant in the non-peak models as welL. Because price is an important variable to consider, however, Intermountain will continue to employ statistical methods to test for price elasticity in the development of the usage models. Request NO.8: Please provide more insight as to IGC's goals or milestones in achieving "Usage per Customer by Geographic Area." Specifically (IRP page 30): a) What effort has been made in initiating a sampling meter program aside from the website provided to commercial customers for tracking consumption? b) How many sampling meters are currently installed by lateral or region? c) Is a customer sample plan in place by lateral or region? Please explain. d) How were the "targeted areas" chosen for sample? e) What level of statistical significance is IGC targeting? f) How many more meters are expected to be put in per year to keep the sample up to date? g) When will you have actionable results to incorporate into an IRP? Responder:Lori Blattner Ph 208.377.6000 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208-377-6168 Michael McGrath Record Holder: Witness: Response: a) The Sun Valley and Idaho Falls Laterals are unique regions on Intermountain's system in that correctly placed meters can measure and recall the total daily usage for the entire lateraL. Intermountain has installed a meter on both the Sun Valley and Idaho Falls laterals that measures the total daily usage for each lateraL. Then by removing the industrial customer's telemetered daily usage, Intermountain is able to arrive at a very accurate core market daily usage for each lateraL. So, Intermountain is not sampling the usage, it is measuring all the usage on these two Page 3 laterals and then regressing this usage against the coincident weather as well as other predictive variables. b) There is one large meter on each of the Idaho Falls and Sun Valley laterals to measure the total daily usage for each lateraL. c) Since Intermountain is able to accurately capture the entire (100%) core market daily usage on both of these laterals, there wil not be a need for any sampling meters. d) The "targeted areas" are areas within Intermountain's system that are known for robust growth. The growth in these areas creates the potential need for enhancements on these laterals to serve the growing demand. Careful attention to these "targeted areas" ensures that any necessary enhancements are made in a timely manner. e) The models derived (data used) during this IRP process included too few data points (not enough history). Intermountain is hopeful that greater than 5 years of data wil begin to yield statistically significant results at the 95% confidence level (poeO.05) for the next IRP filing. f) Again, since Intermountain is able to capture all the usage data on the laterals, no additional meters wil be necessary. g) Even though Intermountain was not able to develop statistically significant lateral specific models for this IRP, the small amount of data that has been collected did provide actionable results for the Sun Valley Lateral (IRP page 30). Studying the Sun Valley Lateral data led Intermountain to conclude that the Total Company models may not be accurately accounting for what appears to be a higher peak day usage per customer on the Sun Valley Lateral, an area that includes a housing stock with significantly larger average square footage per household. To account for this difference and based on more anecdotal evidence, the peak day period usage was adjusted upward by three therms for the Sun Valley lateraL. Intermountain will continue this fine-tuning process for the Idaho Falls and Sun Valley laterals in the next IRP filing. Request No. 12: Please provide the Order number and specific Order language where "the IPUC ordered IGC not to deploy any new core-market DSM programs". (IRP Page 64). Responder:Michael McGrath Ph 208.377.6168 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208-377-6168 Michael McGrath Record Holder: Witness: Response: Per Case No. INT-G-96-4, Order No. 26546, the Commission denied Intermountain's proposal to implement a new faucet aerator program and in the same proceeding ordered Intermountain to discontinue its water heater rebate. This Order highlights how changing market trends can affect the need for these types of programs. It also highlights the necessity for Staff and Company to continue to communicate regarding the availability of applicable technologies in the marketplace and the appropriate implementation of these technologies within Intermountain's service territory. Request No. 13: IGC has offered to consult and help direct leak detection and corrosion control efforts on the natural gas piping systems within the industrial customer's facilities: how often have these services been utilized and what is IGC's estimated anual savings in therms? Page 4 Responder:Brent Wilde Ph 208.377.6053 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208.377.6168 Brent Wilde Record Holder: Witness: Response: Intermountain Gas Company has performed leak survey and/or corrosion control activities at three industrial customers in the past. Intermountain has and will always respond to an emergency or safety situations. Most inquiries, now, for both conservation and system integrity are referred to outside contractors who perform these surveys and maintenance on a fee basis. The savings in therms is impossible to accurately document, however, it would be minimal compared to the overall customer's usage. Probably more important is the greenhouse gas savings by stopping direct release of methane to the atmosphere. Request No. 14: With regards to customers located along the Idaho Falls Lateral having the ability to use Non-traditional Supplies in lowering their natural gas requirement during peak (IRP page 51): a) Is IGC currently engaged in any negotiations with specific industrial customers operating within the Idaho Falls Lateral having the ability to use non-traditional resources during peak, and if so, how many? b) What overall positive or negative responses has IGC received in negotiations? Responder:Brent Wilde Ph 208.377.6053 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208-377-6168 Brent Wilde Record Holder: Witness: Response: a) Prior to each winter heating season, Intermountain re-confirms all alternate fuel customer's ability to use their alternate fuel and the length of time their alternate fuel supplies might off-set their natural usage. Customers with alternate energy capabiliies (3 on the Idaho Falls Lateral) have always been responsive if the need to use an alternate fuel arises. b) It is very expensive to build, operate, and maintain storage facilities to keep alternate fuels on hand - not to mention the requisite government permitting. However, as was stated above, customers with alternate energy capabilities have always been responsive if the need to use their alternate fuel arises. Request No. 15: When targeting residential customers for DSM programs, has IGC engaged in end-use studies? If so, please provide them (IRP page 30). Responder:Byron Defenbach Page 5 Record Holder: Witness: Ph 208-377.6080 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208.377.6168 Byron Defenbach Response: IGC has not performed any end-use studies in its DSM analysis. When Intermountain engaged Navigant Consulting, Navigant provided a group of already-established DSM programs being utilized by other similar utilities which embedded end-use statistics. The end-use studies and other analysis of the programs had already been performed as a prerequisite to their inclusion in the group. Request No. 17: With regards to the Gas Equipment Financing Program in place on previous IRPs (2004 IRP Staff Comments page 4 and 2006 IRP page 61): a) Has IGC considered reinstituting a gas equipment financing program through Wells Fargo Bank which provided current and prospective customers with an equipment financing avenue that included competitive rates and an expedited approval process? If not, why not? b) Why was this program eliminated? Responder: Record Holder: Witness: Byron Defenbach Ph 208.377-6080 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208-377-6168 Byron Defenbach Response: Intermountain has not considered reinstituting a gas equipment financing program through Wells Fargo that would include competitive rates and an expedited approval. The Wells program did not appear to provide any significant advantage over manufacturer or dealer financing over the years, and its utilization level never reached expectations. Based on these low participation levels, Wells Fargo decided, on their own, to eliminate the IGC Finance Program. Request No. 20: What milestones are in place for IGC to evaluate, consider, reach a decision, and implement the following (IRP page 66): a) $30 rebate when a homeowner converts to a natural gas water heater from another energy source, and installs a .64-or-greater energy factor (EF) gas water heater? b) $200 rebate when an existing customer replaces a below 90% efficiency natural gas furnace with a 90%-or-greater efficiency natural gas furnace? c) $30 rebate when an existing customer replaces a .59-or-below EF natural gas water heater with a .64-or-greater EF natural gas unit? Responder: Record Holder: Byron Defenbach Ph 208-377-6080 Michael McGrath Intermountain Gas Company 555 S. Cole Rd. Boise, Id 83709 Ph 208-377-6168 Page 6 Witness:Byron Defenbach Response: Regarding the three DSM programs cited, some milestones considered by IGC include the determination of a specific geographic area in which to perform the pilot programs. In this case, the Idaho Falls lateral has been selected. Establishing the "technical potential" for DSM along that Lateral was also an important milestone in determining costs and therm savings. Another important milestone is whether the equipment covered by the DSM program is widely available in the proposed area, and the proposed equipment is available. The outcome of further discussions with IPUC Staff, and the direction provided by that interaction will be important for setting further milestones in the DSM process. Page? .. 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