20161123INT to Staff 163-199.pdf

WILLIAMS · BRADBURY
ATTO R NEYS AT LAW REC -1\/ED
November 23 , 2016
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83 702
RE: IGC Response to Staffs Eighth Request for Production
Case No. INT-G-16-02
Dear Ms. Jewell:
2016 IJuV 23 PM 2: 40
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Enclosed for filing with the Commission are one original and three conformed copies of
Intermountain Gas Company's Response to Staffs Eighth Request for Production, and one
CD-ROM that contains the answers and attachments.
By separate confidential CD, please find the responses to Staffs Request No. 173 and
Request No. 178.
Please direct any questions related to the transmittal of this filing to Mike McGrath at
208-377-6168.
Sincerely,
Ronald L. Williams
Attorney at Law
RLW
1015 W. H ays Street -Boise, ID 83702
Phone: [phone] -www.williamsbradbury.com
Ronald L. Williams, ISB No. 3034
Williams Bradbury, P.C.
1015 W. Hays St.
Boise, ID 83 702
Telephone: [phone]
Email: [e-mail]
Attorneys for Intermountain Gas Company
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BEFORE THE IDAHO PUBLIC UTILITES COMMISSION
IN THE MATTER OF INTERMOUNT AIN GAS )
COMPANY'S APPLICATION TO CHANGE )
ITS RA TES AND CHARGES FOR NATURAL )
GAS SERVICE )
)
) _________________ )
Case No. INT-G-16-02
RESPONSE OF INTERMOUNTAIN
GAS COMPANY TO EIGHTH
PRODUCTION REQUEST OF THE
COMMISSION STAFF
COMES NOW, Intermountain Gas Company, and in response to the Eighth Production
Request of the Commission Staff to Intermountain Gas Company dated November 2, 2016,
herewith submits the following information:
REQUEST NO. 163: Please explain how gas storage inventory levels are determined.
Furthermore, please explain if the thirteen month average gas storage inventory reflects normal
conditions. If the thirteen month average does not reflect normal conditions, please explain why
the inventory level was not adjusted to reflect normal conditions.
RESPONSE TO REQUEST NO. 163:
For the Company 's inventory in the Northwest Pipeline Plymouth Liquid Storage facilities,
the monthly gas storage inventory levels included in rate base are determined by the Company 's
actual capacity owned and the forecast schedule for nominating gas to reach each storage contract 's
full capacity less "boiloff". This gas storage level provides for a readily available supply of gas
should (1) Northwest Pipeline system constraints or operational flow order requirements cause a
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page I
disruption in contracted flowing gas supplies from suppliers, (2) a severe weather event occurs
requiring a significant amount of natural gas to be delivered quickly onto lntermountain 's
distribution system, or (3) a force majeure event occurs whereby other avenues for supply have been
cut off
For the Company 's Rexburg storage facilities, the monthly gas storage inventory levels
included in rate base were determined based on the actual monthly level of storage, and the
forecasted amount of gas injections, necessary to fill the mobile facility in preparation for winter.
Rexburg LNG inventory is then available during the winter should an unforeseen disruption in
service occur on the Company 's Idaho Falls lateral. Additionally, the monthly level of gas storage
included an amount of gas needed to maintain operational training at the facility.
For the Company 's Nampa storage facilities, the monthly gas storage inventory levels
included in rate base were determined based on the actual monthly level of storage as well as a
forecast of the gas storage injected and withdrawn. The Company included in rate base only the
amount of storage gas dedicated to the service of the Company's utility customers. For the
foreseeable winter periods, the monthly storage gas balance dedicated to its utility customers should
not exceed 2 million gallons. The 2 million gallons was determined based on the Company 's
requirement to 1) maintain operational and training requirements at the Nampa and Rexburg LNG
Facilities, 2) maintain an adequate supply of LNG to provide for the annual "boilojf'' gas that
naturally occurs with the warming of LNG and 3) maintain minimum LNG levels to ensure the
integrity of the storage tank. Whereas the Company 's Plymouth and Rexburg LNG supplies provide
essential backup to both supplies and deliveries should system disruptions occur, the Nampa LNG
facility is surrounded by alternate methods of supply and delivery during non-peak day events.
The Company 's thirteen month average does reflect normal conditions.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 2
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Jacob Darrington, 208-377-6000
REQUEST NO. 164: Please describe the composition of gas storage inventory to
include an explanation of how operational and contractual obligations impact inventory levels.
RESPONSE TO REQUEST NO. 164:
As described in the response to Request No. 163, the composition of the Company's gas
storage inventory included in the determination of rate base includes liquid natural gas stored at
the following facilities: Northwest Pipeline's Plymouth LNG facility, Rexburg LNG facility, and
the Nampa LNG facility. The Company 's most significant LNG storage is that held under
contract with Northwest Pipeline at their Plymouth LNG facility. The Company prefers to insure
the Plymouth LNG inventory level is always at or near its maximum level prior to the start of
each winter withdrawal season. This is important for several reasons to insure uninterrupted
firm service to the Company 's sales customers. First, Plymouth can provide a large amount of
gas during a given day. As mentioned in the Company 's response to Request #163, this need/or
a large amount of gas can occur due to a system constraint or operational flow order affecting
the flow of other firm gas supplies, a significant arctic express weather event (which occurred as
recently as the winter of 2013/2014), or a force majeure event. Another important factor in
maintaining the inventory levels at Plymouth is the facilities unique ability to do a "post gas
day " nomination. This is extremely valuable in the instance where one of the above conditions
happens after the end of a gas day. Essentially said another way, we are allowed to withdraw
gas from Plymouth today to cover a nomination shortfall that occurred in yesterday's gas day.
As such this allows the Company to potentially avoid an imbalance penalty that may otherwise
have been assessed.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 3
The Company 's gas storage inventory at the Rexburgfacility is driven by the need to 1)
maintain an adequate supply of gas should a disruption in service occur on the Idaho Falls
lateral, and 2) maintain operational and training requirements.
The Company 's gas storage inventory at the Nampa facility is driven by the need to l)
maintain operational and training requirements, 2) maintain an adequate supply of LNG to provide
for the annual system "boiloff" gas that naturally occurs with the warming of LNG and 3) maintain
minimum LNG levels to ensure the integrity of the storage tanks.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Jacob Darrington, 208-377-6000
REQUEST NO. 165: Following up to Staff Production Request No. 7, please provide
the amounts for each salary category that were applied to capital projects as well as the amounts
allocated to affiliate companies.
RESPONSE TO REQUEST NO. 165:
Please see file labeled "PR # 165, "for raw data related to Production Request No. 7,
165. Capital Projects may be identified by Object Accounts (spreadsheet header "Obj Acct")
that begin with a leading "O " (column Q). There were no labor costs for capital projects
allocated to affiliate companies.
Record Holder:
Location:
Preparer:
Sponsor:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Craig Pulley. 208-377-6000
Ted Dedden. 208-377-6000
REQUEST NO. 166: Following up on Staff Production Request No. 66, please provide
copies of the sources used as mentioned in the Compensation Program Audit -Summary of
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 4
Findings, as well as all surveys used since the publication of the document, used in determining
compensation structure and salary increase budgets.
RESPONSE TO REQUEST NO. 166:
The salary surveys used are proprietary to the companies from when they are purchased.
lntermountain 's salary data used in the matching to those surveys is highly confidential. Because
lntermountain Gas Company does not have permission to distribute the survey information it
will be made available onsite to staff for review.
Record Holder:
Location:
Preparer:
Sponsor:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Craig Pulley, 208-377-6000
Linda Murray. 208-377-6000
REQUEST NO. 167: Please provide a copy of the "Total Rewards Philosophy"
document mentioned in the response to Staff Production Request No. 66, confidential
attachment.
RESPONSE TO REQUEST NO. 167:
Please see CD file labeled "PR #167."
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Linda Murray. 208-377-6000
REQUEST NO. 168: Please provide all risk management policies and procedures
surrounding the issuance and use of company owned visa cards. Please include the policy
determining which employees should have Company owned visa cards.
RESPONSE TO REQUEST NO. 168:
Please see file labeled "PR#l68 Policy." Employee 's manager request the card and card
limits and it's approved in accordance with the employee reimbursable expenses policy AD
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 5
102.1. Purchasing levels are established based on business need. All requests are authorized by
the Director of Finance and Accounting.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
REQUEST NO. 169: Please provide a list of all training events or other classes that
employees attended from 2011 to present. Please include an explanation of the event, number of
employees that attended, and costs associated for each event.
RESPONSE TO REQUEST NO. 169:
Intermountain Gas Company has not established an internal tracking mechanism for
training events attended by employees and is unable to provide the information as requsted. The
registration fees for training is accumulated in object code 5851-seminars and meeting
registrations. Other costs associated with training, such as airfare, hotels, or meals, are
recorded in other object accounts. Intermountain does not have a means to link all of the costs
associated with a specific training event.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
REQUEST NO. 170: Fallowing up on Staff Production Request No. 17, please provide
detail of which controls were tested and the methods used to test those controls.
RESPONSE TO REQUEST NO. 170:
Please seejile labeled "PR #170."
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Ted Dedden, 208-377-6000
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 6
REQUEST N0.171: Following up on Staff Production Request No. 18, please provide
the detail write-up of Audit No 119-Corporate Plane.
RESPONSE TO REQUEST N0.171:
Please see file labeled "PR # I 7 I Audit. "
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
REQUEST NO. 172: Please provide a listing of all expenses of the Corporate Plane for
2013 to present, both in total and the amount allocated to the Company. Please also include all
flights for the plane and purpose of each flight.
RESPONSE TO REQUEST N0.172:
Please see file folder labeled "PR #I 72."
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
REQUEST NO. 173: Please provide a schedule showing all costs of the Customer Call
Center by FERC category for 2014 to present. Please break out 2015 and 2016 by month.
Please breakout the salary expense by employee category similar to the format done in Staff
Production Request No. 7.
RESPONSE TO REQUEST NO. 173:
Please see conjidentialfilefolder labeled PR #173.
Record Holder:
Location:
Preparer:
Sponsor:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Craig Pulley, 208-377-6000
Linda Murray. 208-377-6000
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 7
REQUEST NO. 174: Following up on Staff Production Request No. 1, please provide
the following amount for each of the Companies that receive allocations according to the Manual
for 2011 to present by year:
• Plant in Service
• Revenues
• Customer Counts
• Employee Counts
• Total Salary Expense
• Number of Connections
• Net Operating Income
• Income Taxes
• Operation and Maintenance Expense
RESPONSE TO REQUEST N0.174:
Please see file labeled "PR # 17 4 Financial Statistical. "
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
REQUEST NO. 175: Following up on Staff Production Request No. 71, please provide
all policies and procedures for risk management for injuries and damages as well as all insurance
policies active during the times these events happened.
RESPONSE TO REQUEST NO. 175:
Please see file folder labeled "PR #175 "for procedures. Jntermountain Gas Company
(JGC) is self-insured/or auto and general liability for the first $500,000 per accident.
Auto: If the auto accident is determined to be JGC 's fault, the accident is reported to
Helmsman (JGC's 3rd party administrator) and the administrator takes it to resolution. Jfthe
accident is the other party's fault, then JGC handles the case by contacting the liable party's
insurance.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 8
General liability: If JGC estimates the damage is going to exceed $500,000, than the
accident is reported to Helmsman to resolve. If the accident is estimated to be less than the
$500,000 retention, JGC makes the determination if the Helmsman 's adjuster needs to be
involved based on estimated costs and liability. If JGC handles the claim, there is an internal
investigation and if JGC is determined to be at fault it settles the claim. If Jntermountain Gas
Company resolves the claim without the adjuster, a release of liability from the damaged party is
obtained.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Ted Dedden, 208-377-6000
REQUEST NO. 176: Following up on Staff Production Request No. 80, please
reconcile the amounts by FERC Accounts to the Actual Data Ending as provided in Exhibit No.
08, page 1.
RESPONSE TO REQUEST NO. 176:
Please see file labeled "PR #176 Exh 8 FERC Recon."
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
REQUEST NO. 177: Following up on Staff Production Request No . 7, please explain
the reasons for increasing the employee count from 219 to 239 in 2016.
RESPONSE TO REQUEST NO. 177:
The increase in employee count is due to a mix of regulatory compliance and growth. 13
of the 20 positions added are for Atmospheric Corrosion Survey and Pipeline Safety. The
remainder is growth-primarily Service Technicians and construction positions.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 9
Record Holder:
Location:
Preparer:
Sponsor:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Craig Pulley, 208-377-6000
Linda Murray. 208-377-6000
REQUEST NO. 178: Please provide actual data by FERC Account as of September 30,
2016. Also, please provide updated forecasts for the months of October, November and
December.
RESPONSE TO REQUEST NO. 178:
Please see confidential file folder labeled "PR #178." The Exhibits were updated to
incorporate 1) actual data as of September 20, 2016 as well as updated forecasts for October­
December 2016; 2) an adjustment to rate base and the income statement to remove assets and
expenses related to Ketchum/Sun Valley Area Hook-Up Fee Tariff; and 3) increased expenses
associated with the Company's new Union Agreement.
Thefollowingfiles labeled "PR"178" are updates to Exhibit Nos. 6-9 of Mr. Dedden 's
testimony and Exhibit Nos. 12-16 of Mr. Darrington 's testimony: see sub files "Exhibit 6-7
Updated.xlsx ", "Exhibit 8-9 Updated.xlsx ", and "Exhibit 12-16 Updated.xlsx ".
Additional files in support of the Exhibits mentioned above can be found in the folder
labeled "Additional Supporting Detail".
As a part of the updated exhibits above, the Company has removed the cost, accumulated
depreciation, and depreciation expense on uncollected assets related to the Ketchum/Sun Valley
Area Hook-Up Fee Tariff The calculation of these adjustments can be found in the file folder
labeled "Sun Valley Fee RB & IS Adj". Please note that the Company 's depreciation software
does not track individual assets. The Company manually calculated the monthly depreciation
from the asset 's placed-in-service date through December 2016 using depreciation rates
approved by the Idaho Public Utilities Commission.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 10
The Company recently signed a new Union Agreement, which became effective October
1, 2016. On Exhibit 15, p. 27, the Company annualized the salary, standby time, and pension
expense for the first nine months of 2016 to reflect the higher level of expense the Company will
incur as a result of this Agreement. The file labeled "Union Contract 2016 Final.pd/'' provides
the support for this adjustment.
Record Holder:
Location:
Sponsor/Preparer:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
Jacob Darrington, 208-377-6000
REQUEST NO. 179: Please provide a listing of all expenses removed on Exhibit 15,
page 22, line 13, totaling $256,321.
RESPONSE TO REQUEST NO. 179:
Please see the CD file labeled "PR # 179. "
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Jacob Darrington, 208-377-6000
REQUEST NO. 180: Please provide the paper titled: "Natural Selection: The Evolution
of DSM Valuation and the Use of the UCT," referenced on page 2 of Ms. Spector's testimony.
RESPONSE TO REQUEST NO. 180:
Please see CD file labeled PR # 180-Natural Selection. "
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Allison Spector, 206-310-1120
REQUEST NO. 181: Please provide the workpapers used to calculate the cost­
effectiveness ratios for each measure in Exhibit 26. The workpapers should identify the
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 11
amounts, values, assumptions, and sources for all calculation inputs, including natural gas and
non-natural gas benefits.
RESPONSE TO REQUEST NO. 181:
Please see file folder labeled "PR #181." The workpaper found in Exhibit 26 under the
testimony of Ms. Spector contains all of the formulas and inputs used in the calculation of the
cost-effectiveness ratios.
The annual therm savings for all measures with the exception of the 70% AFUE hearth
can be found in the CD file labeled "PR #181 Annual Therm Savings." These savings have been
averaged across all end-uses identified in the spreadsheet. This approach was taken in order to
reflect the varied applications of installed equipment (new construction; energy efficiency
upgrade; emergency change-out, etc.) that the Company may experience in our first program
year. A more refined distribution will take place, if necessary, following on-the-ground program
findings.
It is the Company's understanding that Nexant savings numbers were derived from the
consultant's analysis of baseline energy usage for standard-efficiency equipment compared
against the anticipated usage of the higher efficiency upgrade. These numbers were developed
based on an analysis of regional per-captia energy consumption, people per household, housing
stock assumptions, and other key variables derived from the Lawrence Berkeley National
Laboratory, NEEA, International Energy Conservation Code, and other similar sources, as well
as from pre and post measure analysis performed for Cascade Natural Gas. Intermountain
based its assumed savings from those that were developed for Climate Zone Three in the Nexant
analysis since the climate zone was comparable to Intermountain 's blended service area.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 12
The annual therm savings for 70% AFUE hearths, a high-efficiency alternative to the
typically less-efficient fireplace insert models on the market, were taken from Cascade Natural
Gas, having been developed by Cascade with the support of their program contractor, Lockheed
Martin.
The measure lives for all portfolio measures (with the exception of the 70% AFUE hearth
and Energy STAR certified homes) can be found in the spreadsheet "PR #181 Annual Therm
Savings. " Measure life for the 70% AFUE hearth and Energy Star Homes is 20 years, and was
derived from CNGC assumptions for the hearth. Consistent with Cascade and other programs '
assumptions about Energy STAR homes, the Company is utilizing a lifespan of 30 years.
Estimated admin per measure, found in Exhibit 26 is assigned by spreading program
costs across all measures proportionate to annual energy savings. This analysis is performed in
order to help ground program design in a measure-by-measure understanding of cost­
effectiveness with admin assigned. However, this distribution does not impact the levelized cost
of the total portfolio which remains the same regardless of how total admin is divided on an
individual measure level.
The discount rate was based from 20 year mortgage rate APR of 3. 689% as of the time
our analysis was developed and scenarios modeled. This APR can be found in "PR #181 APR."
The Company 's program target was set based on discussions with lntermountain district
staff regarding anticipated participation levels from customers, as well as from discussions with
area contractors, and prior experience with utility run rebate programs.
No benefits external to the avoided cost of gas, used as the program cost-effectiveness
threshold, were programmed into the model.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 13
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 182: Please explain why fuel switching is considered demand-side
management for IGC when it increases natural gas consumption.
RESPONSE TO REQUEST NO. 182:
As described on page six in the testimony of Mr. Kirschner, the Northwest Power and
Conservation Council recognizes that it requires about 7,100 Btu 's of gas to generate 3,413
Btu 's of electricity (1 KW). This only converts about 48% of the available energy to useful
energy. When combined with line losses from transmission and distribution, about 40% of the
available energy makes it to homes and businesses while 60% is wasted. Mr. Kirschner further
notes that using natural gas directly for space and water heating is the most efficient use of this
resource. More than 90% of the available energy that comes from natural gas makes it from the
well-head to the home where it is burned. Since a natural gas water heater or furnace typically
uses half the energy of its electric counterpart, fuel-switching to natural gas results in a
significant upgrade to source efficiency. This is important because the Federal Environmental
Protection Agency (EPA) has determined that source energy is the most equitable unit for
evaluating energy efficiency. Information regarding this standard can be found on the
EnergyStar website at (https://www.energystar.gov/buildingslfacility-owners-and­
managerslexisting-buildings/use-portfolio-manager/understand-metrics/difference).
It is also important to acknowledge that dual-fuel utilities have long-recognized the
benefits that come from the direct use of natural gas, and have encouraged electric-to-gas
migration as an energy conservation measure. For instance, Puget Sound Energy has partnered
for several years with natural gas utilities in its overlapping service area to convert customers
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 14
from electricity to gas as an electric DSM measure. Information regarding this effort can be
found at (b_ttp:llwww.pse.com/savingsandenergycenter/Rebates!Pages/Converting-to-natural­
gas.aspx). Leveraging Cascade Natural Gas' rebate for high-efficiency equipment, paired with
the fuel-shedding rebate from PSE, had proven itself a cost effective means of optimizing the fuel
mix in the overlapping service area.
In summary, Intermountain 's direct use option results in demand reduction for less
efficient electric end-uses, while letting natural gas do what it does best-serve as a direct fuel
for space and water heating. This is a win-win for both the area electric utilities and for
customers that may be independently seeking natural gas options for their home, but need
assistance with the additional cost of upgrading to energy efficient natural gas models.
Incentives for Energy STAR homes help mitigate a lost opportunity to achieve the greatest levels
of efficiency through the direct use of natural gas paired with best practices in energy-efficient
new home construction.
Ultimately, pairing direct use with energy efficiency is a highly efficient and
environmentally beneficial choice for residential households.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 183: Please explain why IGC did not include many standard DSM
offerings, including shell/weatherization measures (such as insulation or duct-sealing), smart
thermostats, NEEA' s natural gas market transformation effort, a home energy reports program,
or low income weatherization, in its DSM proposal.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 15
RESPONSE TO REQUEST NO. 183:
For the purposes of achieving effective DSM ramp-up, lntermountain has decided to
begin with an equipment and Energy STAR home based program, which are standard DSM
offerings throughout the region.
The Company has in-house experience with the delivery of an equipment-based rebate
program (the Company 's High-Efficiency Natural Gas Furnace Rebate Program), and also has
existing knowledge of the HVAC, equipment, and builder communities in lntermountain 's service
area.
Because lntermountain is familiar with the aforementioned technologies and their
associated builders and HVAC equipment dealers, the Company is confident it will be able to
effectively ramp-up a qualified network of trade-allies for Energy STAR and equipment
incentives. This will allow us to hit the ground running with these efforts in a way that would not
be possible if we were to engage in programs outside our existing expertise.
It is also the Company 's intention to hire additional program staff following approval of
our DSM proposal, and we will be specifically seeking individuals with an expanded familiarity
with DSM offerings.
At this time, the Company does not have sufficient data on behavioral-based conservation
efforts to build them into a preliminary energy conservation program portfolio. However, it is
the Company's understanding that savings that result from smart thermostats are dependent
upon the homeowner programming the device correctly. At any time, the settings on the
thermostat can be adjusted to favor comfort over efficiency, resulting in anticipated savings not
being achieved. Home energy reports also rely on customer behavior and can incur significant
costs if a third party is assigned to developing these reports on behalf of the Company.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 16
Furthermore, behavioral savings are not always persistent and thus such programs must be
replicated on an ongoing basis in order to continue achieving usage reductions.
While JGC is not currently engaged in market transformation through NEEA 's natural
gas market transformation effort, we are active members of the Gas Technology Institute (GTI).
The Company is involved in two areas of research with GTJ; Operations Technology
Development (OTD) and Utilization Technology Development (UTD). Through this partnership,
the Company has made ongoing investments in high-efficiency gas heat pump space and water
heater technology, and micro CHP testing and demonstrations. The Company has also engaged
with GTJ in cold-climate field demonstrations, and other research and development efforts.
These investments are, and will continue to be made separate from any investments in our DSM
efforts, as this is a pre-existing program. It is however our intention to continue these efforts and
explore synergies with other Jntermountain conservation efforts as they develop.
The Company is also receptive to participation in NEEA market transformation efforts.
However, the costs associated with such an investment can be significant, so balancing against
savings acknowledged at the regulatory level is important for properly quantifying the cost­
effectiveness outcomes of the program. Furthermore, reductions to usage associated with large­
scale market transformation (and engagement in order related areas such as building code
standards) paired with a portfolio of equipment-based conservation incentives, can be
substantial, meaning that revenue decoupling will be even more essential if the Company were to
engage in these areas.
Regardless of whether or not the Company engages in market transformation and codes
efforts, we maintain that incentives for proven, physical conservation measures with known
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 17
energy savings are an extremely important DSM tool and additional efforts should supplement,
and not supplant, a conservation measure rebate program.
The Company has not included low income weatherization in our residential DSM
portfolio because the cost-effectiveness of energy-savings achieved through this program can be
difficult to quantify. This is due to the higher upfront costs of weatherizing natural gas homes
paired with fluctuations in energy savings achievements due to take-back once a home has been
weatherized. The program would not be viable from a TRC perspective, and incentive levels
would not be high enough to provide meaningful support to the LI-WAP under the UCT
Therefore, from a strict energy-savings perspective, it would be difficult to justify inclusion of
low income weatherization within a regulatory environment that requires cost-effective energy
savings to be achieved through this program.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 184: Commercial and Industrial programs are often more cost-effective
than residential programs because the savings per customer are often larger. With that in mind,
please explain why IGC chose to start with residential DSM.
RESPONSE TO REQUEST NO. 184:
As stated in the Company's response to Request # 183, the Company is choosing to first
launch residential DSM programs because our goal is to leverage as many existing resources as
possible during our ramp-up phase. This will allow us to manage costs as we build our in-house
expertise.
It is also important to recognize that while commercial-sector conservation will be
aggressively pursued following the launch of our residential efforts, a significant portion of
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 18
lntermountain 's industrial sector is comprised of transport customers. The Company currently
has 121 large-volume customers. Of these facilities, 18 are direct lntermountain customers, and
103 are transportation customers. Unlike a vertically integrated electric company, these same
customers procure their own independent supplies (electric counterpart "generation '') and their
own interstate transportation (electric counterpart "transmission "). Avoided costs for these
transportation customers simply don't stack up to provide an effective DSM opportunity.
The Company agrees that once residential programs are in place, commercial programs
will be an excellent means of achieving cost-effective energy savings. However, at this time, the
Company is not positioned to "hit the ground running" with these efforts. We will first need to
build more comprehensive contacts with the hospitality and foodservice sectors, and other
critical sectors where energy savings can be achieved. We will also need to mature further in­
house capacity to support custom commercial offerings, which often have the deepest potential
for cost-effective DSM achievements.
Long-term success in all sectors means beginning with what we know best-residential
rebate efforts, while concurrently cultivating the knowledge and community relationships to
launch commercial efforts once we 're ready.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 185: Please provide the TEAPot tool in executable electronic format.
If the TEAPot tool cannot be provided, please make it available to Staff.
RESPONSE TO REQUEST NO. 185:
The TEAPot modeling tool is proprietary to Nexant, which allowed the Company to make
its own updates to the model inputs, in the limited capacity of determining conservation potential
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 19
for a select set a residential measures. Intermountain has spoken with Nexant regarding our
ability to provide the tool in executable electronic format. The Company is able at this time to
offer a live demonstration of the tool for Staff and to model various scenarios as requested.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 186: Please provide the total list of measures analyzed in the TEAPot
model.
RESPONSE TO REQUEST NO. 186:
The total list of measures analyzed in the TEAPot model can be found on the CD labeled "PR
#181 Annual Therm Savings." For convenience, they have also been listed out below:
Condensing High Efficiency Natural Gas Tankless Water Heater (0.91 EF)
Conventional High Efficiency Natural Gas Water Heater (EF=.67)
High efficiency combination domestic hot water and hydronic space heating system using
pre-approved tankless water heater
High Efficiency Furnace 95 AFUE
High Efficiency Hearth -80% AFUE
Energy Star Homes
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 187: Did the TEAPot study include an analysis of Commercial and
Industrial savings potential? If so, please provide those results. If not, please explain why not.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 20
RESPONSE TO REQUEST NO. 187:
No. The Company's primary focus at this time was in the development of a residential
DSM program, for the reasons discussed in the Company 's response to Request numbers 183 &
184. If residential program efforts are approved, the Company will then perform an analysis on
DSM potential in the commercial and industrial sectors for non-transport customers.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 188: Please provide the complete TEAPot study, including narrative
and workpapers, used to develop the technical, economic, and "Achl" results in Exhibit 25
(DSM Potential Assessment).
RESPONSE TO REQUEST NO. 188:
The TEAPot modeling tool was designed by Nexant in 2014 with a compiled database of
information on utility loads and sales forecasts, market data, energy uses, energy use intensities,
technology shares, and measures characteristics from existing primary and secondary sources.
The primary load and sales forecasts were updated by lntermountain staff with
Company-relevant data in order to provide afirmed understanding of the Company 's
conservation potential under a given portfolio of residential conservation measures. It was also
used as a means of identifying stretch targets for the Company 's fledgling DSM efforts.
However, a formal full-length potential assessment has not been conducted at this time. Instead
an analysis of a particular subset of measures has been performed by lntermountain in order to
give the Company perspective on viable early-year potential for a set portfolio from which we
can grow more robust energy-efficiency efforts.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 21
The Company is currently in process of determining our ability to share the TEAPot
model as all formulas in the design of the modeling tool are priority to Nexant. The Company is,
however, always available to walk Staff through the tool and model scenarios in live
demonstrations as required.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Allison Spector, 206-310-1120
REQUEST NO. 189: On page 11 of Ms. Spector's testimony, she states the TEAPot
tool was developed in 2014 by Nexant for Cascade Natural Gas Corporation. Please provide a
full reconciliation for all the updates made to this model in order to make the study relevant to
Intermountain Gas in 2016. As part of the response, please include updates made to available
technologies, load forecasts, and market segments.
RESPONSE TO REQUEST NO. 189:
The TEAPot modeling tool was developed by Nexant as a fully programmable, updatable
model with specific areas allowing flexibility for ongoing updates and changes to scenario runs.
It is a dynamic vehicle through which the Company may model various rebate portfolios on an
ongoing basis.
The following Intermountain-specific inputs were placed into the TEAPot model in order
to make the study relevant to Intermountain Gas in 2016 as demonstrated to Staff during on
meeting on November 8th, 2016. (Cell numbers are included as a courteously to staff as JGC
guides staff though an onsite model review and discussion, however all numbers that were
modified for JGC purposes are provided.)
Main Input Tab:
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 22
Utility Cost Test selected for UCT modeling; Total Resource Cost test selected for TRC
modeling (C45-C49.)
-Incentive Level set to 30% per Achl modeling (E44)
-BIC Threshold set at 1.0 (G44)
Discount Rate set a 3. 69% (G48)
-Inputs for Zone 3 (most closely reflective of JGC 's HDD) confirmed for End Use
Saturation (B-G 62, 63, 64)
-Inputs for Zone 3 confirmed/or End Use Fuel Share (B-G 83,84, 85)
Forecast Input Tab:
Residential Sector Forecast
(Thm1
2016 227,521,380
2017 234,742,301
2018 242,227,419
2019 250,037,327
2020 258,010,605
2021 264,582,135
2022 271,321,042
2023 278,231,589
2024 285,318,148
2025 292,585,201
2026 300,037,346
2027 307,679,297
2028 315,515,889
2029 323,552,078
2030 331,792,950
2031 340,243,716
2032 348,909,724
2033 357,796,454
2034 366,909,530
2035 376,254,716
2036 385,837,924
Input energy forecast here
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 23
Premise Forecast Inputs cells 833 -150
Start Year (2016) Premise Count
Single CZl -
Multi CZl -
Mfg CZl -
Single CZ2 -
Multi CZ2 -
Mfg CZ2 -
Single CZ3 289,690
Multi CZ3 23,617
Mfg CZ3 1,584
TOTAL 314,891
Premise Ct. for Res, Stock for Comm/Ind
Equipment Measures Tab
The Company identified viable residential conservation measures for its desired portfolio mix.
These measures were pulled from a list of wide-ranging conservation measures with inputs
previously identified by Nexant (please see CD file labeled "PR #181 Annual Therm Savings. ")
These measures identified in Request No. 186 were selected for the reasons described in
response to Request No. 183. All inputs were run under Climate Zone 3, which most consistently
matches with Intermountain 's total Company heating degree day average of 6,085.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 190: Most utilities, even those with extensive DSM experience, hire
consultants to run their Conservation Potential Assessment (CPA) models. Please explain how
the IGC staff had sufficient previous experience with DSM modeling to run the TEAPot model,
and why that was preferable to Nexant running the model.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 24
RESPONSE TO REQUEST NO. 190:
The Company agrees that the from-scratch development of a Conservation Potential
Assessment model is a complex feat of programming. That's why Cascade Natural Gas
Corporation sought proposals from specialists in 2014 to develop a wholly customizable and
updatable modeling tool for use by the Company.
Nexant was selected for this task because they were able to offer a user friendly,
programmable model that could be used by the company to run dynamic custom scenarios
independently and to test the sensitivity of all model inputs and assumptions. The entire purpose
of the custom tool was to allow Company staff to operate and update it as necessary.
Ms. Spector was trained by Nexant staff over both in-person and remote sessions on the
operation of the model. Clear guidance was given to her over which fields were dynamic and
which should remain unchanged as to not compromise the integrity of the analysis. When Ms.
Spector first decided to utilize the TEAPot model for the purposes of running a residential DSM
analysis for a select portfolio of measures for lntermountain Gas Company, she contacted
Nexant staff to confirm her approach to adjusting inputs and analysis for the Company. The
response was in the affirmative.
Ms. Spector has now operated the TEAPot for both Cascade Natural Gas and
lntermountain Gas Company and is confident in her ability to utilize this tool, which was
custom-designed to her specifications when she ran the day-to-day operations of the Cascade
Conservation Incentive Program. The Company is confident that the model as designed is more
than capable of providing a viable starting point for the launch of lntermountain DSM efforts in
the residential sector. Furthermore, by taking this approach, the Company has also avoided
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 25
incurring unnecessary costs in having a third-party operate a tool specifically designed for in­
house operation.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Allison Spector, 206-310-1120
REQUEST NO. 191: Please explain why the TEAPot study only included a 5-year
forecast of technical, economic, and "Ach 1" savings when most Conservation Potential
Assessments include a 20-year forecast.
RESPONSE TO REQUEST NO. 191:
The Company has provided a five-year forecast of savings for Technical, Economic, and
Achievable potential in order to maintain consistency with Intermountain 's Integrated Resource
Plan. However, the TEAPot results offered savings over an 18 year planning horizon. It is the
Company's intention to adjust and refine inputs in the model on an ongoing basis to integrate
new information and findings that organically occur as a result of program operation. As we
begin to actively implement DSM, the planning horizon will expand to reflect the lifespan of
DSM measures, but at this time it is the Company 's intention is to have a 5 year planning
horizon as acknowledged by the Commission.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 192: What assumptions did IGC use to decrease the Economic
potential to Achievable potential? Please provide all workpapers and supporting analysis.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 26
RESPONSE TO REQUEST NO. 192:
The process utilized by Nexant to factor for conversion from Economic to Achievable
potential in the TEAPot modeling tool is described in the file labeled "PR #192 ". It is important
to note that this narrative came directly from the report generated for Cascade Natural Gas
Corporation when the TEAPot model was first developed in order to describe how the model
operates. That said, it should help provide a clearer understanding of how the different potential
levels were developed.
Achievable analysis refines the Company 's conservation potential (Ach scenarios) to take
into account rebates offered at 30% of incremental measure costs. The analysis also factors for
real-world barriers such as convincing end-users to adopt energy efficiency measures and the
capability of programs and administrators to ramp up program activity over time. This approach
was taken to appropriately model cost-effectiveness under the parameters of the Utility Cost
Test.
Under the UCT, the rebate amount paid to a customer is one of the factors which impact
overall program cost-effectiveness. A higher rebate may help to drive greater program
participation, but the higher a rebate is set, the greater the impact on the UCT. Thus a higher
rebate might attract more customers, but it could drive down the total program cost-effectiveness
thus limiting overall achievable potential.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 193: According to page 14 of Ms. Spector's testimony, the "Achl"
targets on page 3 of Exhibit No. 25 were developed as a "number blended between the
Achievable Potential estimates modeled in its analysis and further refined by in-depth
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 27
discussions with IGC [district] staff regarding the on-the-ground realities oflntermountain's
service area." Please provide a detailed explanation about how the "Achl" targets were
developed, including all supporting workpapers, analysis, and industry best practice citations.
This explanation should fully account for the 96% reduction from Economic to Ach 1 potential.
RESPONSE TO REQUEST NO. 193:
On page 14 of Ms. Spector 's testimony she notes that Intermountain has developed,
"initial programmatic targets as a number blended between the Achievable Potential estimates
modeled in its analysis and further refined by in-depth discussions with JGC district staff
regarding the on-the-ground realities of Intermountain 's service area. " For clarification, she
made no alteration whatsoever to the Ach1 targets that were derived from the model. The Ach1
targets were taken verbatim from the results of the TEAPot model Ms. Spector ran after entering
inputs relevant to Intermountain 's service area as detailed under the Company's response to
Request No. 189. Programmatic potential was then developed separately with the input of
Intermountain district staff
As stated in response to Request No. 190, Nexant was specifically hired by Ms. Spector in
2014 to provide a custom, and customizable model through which the Company could gauge
various conservation scenarios. The structural design of the TEAPot modeling tool was
developed by Nexant based on industry best practices. The energy efficiency potential
methodology utilized in Nexant 's design of the TEAPot model was centered on "levels of
opportunity. " First, all potential regardless of feasibility was explored in the model. Potential
was then revised to reflect real-world market constraints such as cost-benefit considerations,
market barriers, and budget and planning constraints. In order to ensure adherence to industry
best practices, Nexant utilized the Environmental Protection Agency 's (EPA) National Action
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 28
Plan for Energy Efficiency (NAP EE) in the apportionment of these levels of energy efficiency
potential.
--
Not
Technically
Feasible
-
Not
Technically
Feasible
EPA -National Guide for Resource Planning
Technical Potential
Achievable Potential
: .. ~
A high-level overview of the approach used by Nexant in the design on its TEAPot tool can be
found below:
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 29
•
Basellne EneriY
Use
The only changes made by Intermountain to the analysis tool were those outlined in the
Company 's response to Request No. 189, which were areas in the model specifically color-coded
as updatable in the TEAPot modeling tool.
A full description of the original equations utilized by Nexant in the design of the TEAPot
model have been takenfrom Volume II, section 2.25 through 2.2.54 of the Cascade Natural Gas
MPS Report and provided on the CD fil labeled "PR # 19 2. "
This reflects the methodology ut lized by Nexant in the formation of the modeling tool.
Utility sales forecasts were changed to eflect Intermountain. The examined portfolio of
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 30
measures were refined per the process described in the Company 's response to Request No. 183.
The cost-effectives screen was increased.from .90 to 1.0 to remove the 10% environmental
benefit adder that was used as part of the analysis for Cascade Natural Gas. Rebates were
assumed to be at the 33% level and avoided costs and discount rate were adjusted as described
in the Company's response to Request No. 189.
Additional information regarding the development of Technical, Economic, Achievable
and Programmatic potential can be found in the file labeled "PR#l 93-Potential Assessment
Overview, " which was presented to Cascade Natural Gas as part of their full potential
assessment analysis conducted in 2014. This provides a clearer understanding of how the
modeling tool was developed. It is important to note that for the purposes of Intermountain 's
fledgling program, the model was used to run a particular portfolio of residential measures from
which deeper analysis can be conducted once programs and budgets have been ramped up.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 194: On page 20 of Ms. Spector's testimony, she states that IGC set a
first year target of 65,000 therms. This does not align with the "Achl" first year target of
97,825. Please provide the quantitative analysis justifying this reduction.
RESPONSE TO REQUEST NO. 194:
Intermountain intends to aggressively pursue the Achl first year target o/97,825 therms.
However, the Company ultimately decided to set a threshold of therm savings based from
an estimated number of measures, which the Company realistically thought would be installed as
a direct result of the Company's residential conservation efforts. This could be accomplished
through an achievement of approximately 450 successfully completed rebate applications with a
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 31
varied mix of measures selected and installed by customers as part of the program. This results
in an estimated savings of 65,000 therms. The Company characterizes this estimate as its
preliminary Program Potential.
Nexant describes Program Potential as reflecting "the realistic quantity of energy
savings the utility can realize through DSM programs. " They note that "savings delivered by
program potential is often less than achievable, due to real-world constraints, such as utility
program budgets, cost-effectiveness thresholds, regulatory and policy statements, and decisions
on which subset of cost-effective measures a utility ultimately decided to include in its portfolio. "
The Company is committed to investing in DSM at a level that does not exceed the following:
Commodity Cost of Gas (WACOG) = $0.32764
Fixed Cost of Gas (pipeline+ storage,fixed +commodity)= $0.20418
Total= $0.53182
In order to achieve a levelized cost-effectiveness threshold of $0.531, the administrative
budget must be balanced against rebate levels, and overall potential therm savings. If the goal is
to drive as much cost-effective conservation as possible, which it is, then the program design
must prioritize incentives to be at levels adequate to attracting customer participation. This
means designing an administrative program budget that is robust enough to support the
necessary staffing and outreach to drive program participation while being streamlined enough
not to inhibit reasonably designed incentives, or risk pushing the program past the levelized cost
threshold if savings are lower than anticipated. Furthermore, if the program design is based
from a conservation achievement target that is unrealistically high, actual therm savings
achievements will fall short and the cost-effectiveness of the entire program may be
compromised.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 32
It is for the reasons described above that the Company has, strictly for budgetary
purposes, utilized a programmatic target lower than the Achl target identified in the TEAPot
model. Once the Company has acquired a full year of on-the-ground program data, it will
continue to refine its analysis and adjust its budgetary-planning targets accordingly.
That said, the Company stands by its desire to achieve the Achl target of97,825 therms and will
do all it can to make this goal a reality, while safeguarding ratepayers from the risk of investing
at the stretch target level before direct program experience is acquired.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 195: Please explain the differences between the "real-world
conditions" used to determine the Achievable Potential and the "real-world constraints" used to
determine Programmatic Potential referenced on page 13 of Ms. Spector' s testimony. Please
include all supporting workpapers, analysis, and sources.
RESPONSE TO REQUEST NO. 195:
A full description of each potential type as described by Nexant in Vol II of the report
they had developed in 2014 for Cascade Natural Gas Corporation can be found below.
Technical Potential is the theoretical maximum amount of energy and capacity that could
be displaced by efficiency, regardless of cost and other barriers that may prevent the installation
or adoption of an energy-efficiency measure. Technical potential is only constrained by factors
such as technical feasibility and applicability of measures.
Economic Potential is the amount of energy and capacity that could be reduced by
efficiency by measures that pass a cost-effectiveness test. It is at this screen, that utility discount
rates and avoided costs are considered when valuing the costs and benefits of saved energy. The
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 33
Total Resource Cost (TRC) Test estimates the measure costs to both the utility and customer,
while the Utility Cost Test (UCT) estimates the measure costs to the utility. Like Technical
Potential, Economic Potential is a theoretical number that assumes immediate implementation of
efficiency measures, with no regard for the gradual "ramping up " process of real-life programs.
Market barriers are ignored, and only the costs of the efficiency measures themselves are
considered.
Achievable Potential is the energy savings that can feasibly be achieved with cost­
effective measures through program and policy interventions. For this analysis, Nexant assessed
the achievable savings potential given various utility-provided incentive levels of an energy
efficient measure 's incremental cost. Real-world barriers are also taken into account, such as
convincing end-users to adopt energy efficiency measures and the capability of programs and
administrators to ramp up program activity over time. Taken together, the incentive level
corresponds to a market adoption curve for all applicable measures.
Program Potential reflects the realistic quantity of energy savings the utility can realize
through DSM programs during the horizon defined in the study. Savings delivered by program
potential is often less than achievable potential, due to real-world constraints, such as utility
program budgets, cost-effectiveness thresholds, regulatory and policy statements, and decisions
on which subset of cost-effective measures a utility ultimately decides to include in its portfolio.
Most notably, utility program budgets and cost effectiveness thresholds are not included as part
of Achievable Potential and must be further refined at the Programmatic level.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Allison Spector, 206-310-1120
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 34
REQUEST NO. 196: Did IGC study the potential for commercial and industrial electric
to gas conversions as it developed its DSM proposal? If so, please provide the results of that
study.
RESPONSE TO REQUEST NO. 196:
No. The Company has not assessed the potential for commercial and industrial electric to
gas conversions as part of its DSM efforts at this time. If the residential DSM program is
approved, Intermountain Gas Corporation will conduct an assessment of this potential and will
prepare for expansion into this area once residential programs have been adequately ramped up.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 197: On page 22 of Ms. Spector's testimony, she referenced "on-the­
ground market research performed by the Company." Please provide a detailed explanation of
the market research performed by the Company. Furthermore, please provide all analysis
showing how this market research was used to determine the incremental cost levels.
RESPONSE TO REQUEST NO. 197:
Incremental costs are fluid and can vary over time with the evolution of the market. In
order to ensure the use of reasonable cost inputs in our analysis, the Company worked with its
district staff to perform a call-down of local builders and HVAC contractors as needed to help
refine our understanding of incremental costs for each measure. This information was taken into
consideration when determining the most relevant installed cost for each measure.
The following procedure was utilized:
1) Priority was given to inputs from the Nexant potential assessment which reflects the NW
market. Costs were averaged across all end-uses identified in the spreadsheet. These
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 35
were compared to the feedback given by our district staff If the numbers seemed
unusually high or low based on our understanding of Intermountain 's market and
feedback from our district staff, we utilized the assumptions under #2.
2) CNGC assumptions were developed from both prior shared analysis with the Energy
Trust of Oregon, and Lockheed Martin. These were used where the assumed costs from
Nexant appeared inconsistent with the Company 's understanding of the region 's HVAC
market.
3) When both Nexant and Cascade cost assumptions appeared outside of the Company 's
understanding of the region 's HVAC market, the Company then refined its understanding
of incremental costs with additional feedback and figures for cost assumptions from area
contractors. This was how the Company developed its incremental cost assumptions for
Energy STAR homes.
Ultimate ly, incremental costs were derivedfrom the following sources:
Energy STAR Certified Homes: Value taken from the results of a call-down to local
builders in order to gauge current incremental market costs for Energy STAR homes as
compared to standard construction. The Company also spoke with Intermountain District Staff
most familiar with the local Energy Star market. These conversations indicated that incremental
costs for Energy STAR homes were in the $4,000 -$5,000 range. Intermountain chose to set the
incremental cost at the low end of the range for planning purposes, commensurate with the
incremental cost utilized by sister company Cascade Natural Gas due to similar market
characteristics.
95% AFUE Gas Furnaces: Value taken from TEAPot model as an average of costs associated
with all end-uses identified in the spreadsheet. A more refined distribution will take place, if
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 36
necessary, following actual program findings.
High Efficiency Combination Radiant Heat: Value consistent with incremental cost utilized by
sister company Cascade Natural Gas due to similar market characteristics.
80% AFUE Hearth: Value consistent with incremental cost utilized by sister company Cascade
Natural Gas due to similar market characteristics.
70% FE Hearth with Int Ignition: Value consistent with incremental cost utilized by sister
company Cascade Natural Gas due to similar market characteristics and replication of measure
based on CNGC program measure and inputs .
. 67 Water Heater: Value taken.from TEAPot model as an average of costs associated with all
end-uses identified in the spreadsheet. A more refined distribution will take place, if necessary,
following actual program findings .
. 91 EF Tankless Water Heater: Value taken from TEAPot model as an average of costs
associated with all end-uses identified in the spreadsheet. A more refined distribution will take
place, if necessary, following actual program findings.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Allison Spector, 206-310-1120
REQUEST NO. 198: Please provide the trade ally and rebate eligibility guidelines
referenced on page 3 of Ms. Imlach's testimony.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 37
RESPONSE TO REQUEST NO. 198:
Below are the DRAFT guidelines in development by the Company regarding the trade
ally program that will be associated with our residential effort:
Dra(t Trade Ally Requirements and Benefits (Terms and Conditions)
1. Trade Ally is responsible for properly assisting participants in applying for cash
incentives for energy efficient equipment under the rebate program.
2. Trade Allies who are ENERGY STAR verifiers shall furnish the appropriate certification
as applicable.
3. Trade Allies and any subcontractors must comply with laws applicable to them (such as
workers compensation and employment laws) and maintain appropriate licenses and
certifications for the work they are performing.
4. Trade Ally understands that there will be random quality control and verification of
Trade Ally work by or on behalf of lntermountain so that performance can be evaluated.
Trade Ally must cooperate with these inspections and verification and must perform
conservation program services at standards set by lntermountain at their sole discretion.
Inspections will verify the project for program purposes only, and do not represent any
inspections to verify safety or building codes.
5. New Trade Allies will be targeted for inspections until they establish a precedent.
6. All residential incentives in excess of $2,500 will be inspected.
7. Trade Allies who fail one or more inspections will be selected for quality assurance
mentoring and possible termination.
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 38
8. Trade Ally may discontinue participating as a Trade Ally by notifying Intermountain in
writing of that decision. Intermountain may end Trade Ally 's participation at any time, at
their sole discretion, by notifying Trade Ally in writing of that decision.
Below are the draft rebate eligibility guidelines in development by the Company that will be
associated with our residential effort:
Draft Eligibility Requirements
1. Rebates for qualifying natural gas equipment must be submitted and postmarked within
ninety (90) days of installation.
2. ENERGY Star home rebate applications must be submitted and postmarked within ninety
(90) days following certificate of occupancy.
3. Applicant must be a rate-schedule qualified residential customer of Intermountain Gas
Company.
4. Fuel for the home 's heat source must be exclusively provided by Intermountain Gas for
all heating rebates.
5. Fuel for the home's water heating needs must be exclusively provided by Intermountain
Gas for all water heating rebates.
6. Customer must not use a heat pump for space heating, even if a natural gas furnace is
utilized as back-up.
7. Energy-savings equipment must meet the requirements of the tariff and associated Terms
and Conditions effective at the date the equipment was installed.
8. All equipment must be installed by a licensed contractor, unless self-installed. Self-install
work must be pre-approved by the Company in order to qualify for a rebate. All work
must be performed according to code.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 39
9. lntermountain Gas Company does not provide rebates for energy efficient equipment or
upgrades already mandated by Idaho state code.
10. Rebates may be subject to change based on the most recently approved Energy Efficiency
Rebate Program tariff offered by the Company.
11. Rebates shall only apply to energy efficiency upgrades that were available under tariff at
the time of installation. The rebate application must be submitted within the timeframe
specified on the most recently dated rebate application.
12. Energy Star Homes must be certified by an ENERGY STAR verifier.
Again, it is important to recognize that the guidelines for both the trade ally and rebate
programs are still in draft form and are subject to additional edits and modifications following
approval and implementation of a residential DSM program.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Allison Spector, 206-310-1120
REQUEST NO. 199: For each Large Volume or Transportation customer, please
calculate monthly bills under current and proposed rates based on actual billing determinates
from January 2015 through September 2016 ( e.g., MDFQ, therms by block). Please break
current and proposed bills into demand, cost of gas, and distribution components, as defined in
the respective tariffs. Please state the percentage change in the total annual bill for each
customer. Additionally, please indicate the rate schedule ( current and proposed) under which the
customer is served. Please provide the calculations in executable electronic format, and include
all assumptions.
RESPONSE OF IGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 40
RESPONSE TO REQUEST NO. 199:
Please see the attached file folder labeled "PR #199." Due to confidentiality concerns,
the customer names have been redacted and replaced with Customer 1, Customer 2, etc. An
analysis of T-3 was not included because no change has been proposed to the rate structure of
that customer class. The current bill calculations used October 1, 2016 approved prices based
on the INT-G-16-03 PGA filing. Because the tariffs filed with the General Rate Case were based
upon October 1, 2015 approved prices, the following adjustments were made to keep the
comparison on the same footing in regard to cost of gas for the proposed rates. Intermountain
began with the Distribution Costs proposed in the General Rate case. To these Distribution
Costs, Intermountain added the Cost of Gas components that were recently approved in PGA
Case INT-G-16-03. This resulted in Revenues and Cost of Gas that include the same cost of gas
which allows just the change in the Distribution Costs to be compared.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Dave Swenson, 208-377-6000
DATED at Boise, Idaho, this 23rd day of November, 2016.
Respectfully submitted, ...
/rvtt1LV~
Ronald L. Williams
Williams Bradbury, P.C.
Attorneys for Intermountain Gas Company
RESPONSE OF JGC TO EIGHTH PRODUCTION REQUEST OF COMMISSION STAFF Page 41
CERTIFICATE OF DELIVERY
I HEREBY CERTIFY that on this 23rd day of November, 2016, I caused to be served a
true and correct copy of the Response of Intermountain Gas Company to Eighth Production
Request of the Commission Staff upon the following individuals in the manner indicated below:
Hand Delivery: (original and 3 copies)
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83720
Michael P. McGrath
Intermountain Gas Company
555 S. Cole Road
Boise, ID 83707
E-Mail: [e-mail]
Brad M. Purdy
2019 N. 1 J1h Street
Boise, ID 83 702
E-Mail: [e-mail]
Attorney for Community Action
Partnership Association of Idaho (CAP Al)
Benjamin J. Otto
Idaho Conservation League
710 N. 6th Street
Boise, ID 83 702
E-Mail: [e-mail]
F. Diego Rivas
NW Energy Coalition
1101 81h Avenue
Helena, MT 59601
E-Mail: [e-mail]
Edward A. Finklea
Northwest Industrial Gas Users (NWIGU)
545 Grandview Drive
Ashland, OR 97520
E-Mail: [e-mail]
D Hand Delivery
D US Mail (postage prepaid)
D Facsimile Transmission 0 Federal Express
~ Electronic Transmission
D Hand Delivery
~ US Mail (postage prepaid) D Facsimile Transmission
D Federal Express
~ Electronic Transmission
D Hand Delivery
~ US Mail (postage prepaid) D Facsimile Transmission
D Federal Express
~ Electronic Transmission
D Hand Delivery
~ US Mail (postage prepaid)
D Facsimile Transmission
D Federal Express
~ Electronic Transmission
D Hand Delivery
~ US Mail (postage prepaid) D Facsimile Transmission
D Federal Express
~ Electronic Transmission
Chad M. Stokes
Tommy A. Brooks
Cable Huston LLP
1001 SW Fifth Avenue, Ste. 2000
Portland, OR 97204-1136
E-Mail: [e-mail]
[e-mail]
Attorneys for NWIGU
Electronic service only:
Michael C. Creamer
Givens Pursley LLP
E-Mail: [e-mail]
Attorneys for NWIGU
Scott Dale Blickenstaff
The Amalgamated Sugar Company LLC
1951 S. Saturn Way, Ste. 100
Boise, ID 83 702
E-Mail: [e-mail]
Peter Richardson
Gregory M. Adams
Richardson Adams, PLLC
515 N. 2?1h Street
Boise, ID 83 702
E-Mail: [e-mail]
[e-mail]
Attorneys for The Amalgamated Sugar
CompanyLLC
Ken Miller
Snake River Alliance
223 N. 6th St., Ste. 317
P.O. Box 1731
Boise, ID 83701
E-Mail: [e-mail]
2
D Hand Delivery
~ US Mail (postage prepaid) D Facsimile Transmission
D Federal Express
~ Electronic Transmission
~ Electronic Transmission
D Hand Delivery
~ US Mail (postage prepaid)
D Facsimile Transmission
D Federal Express
~ Electronic Transmission
D Hand Delivery
~ US Mail (postage prepaid)
D Facsimile Transmission D Federal Express
~ Electronic Transmission
D Hand Delivery
~ US Mail (postage prepaid) D Facsimile Transmission
D Federal Express
~ Electronic Transmission
Andrew J. Unsicker
Lanny L. Zieman
Natalie A. Cepak
Thomas A. Jernigan
Ebony M. Payton
AFLOA/JA-ULFSC
139 Barnes Drive, Suite 1
Tyndall AFB, FL 32403
E-Mail: [e-mail]
Lanny .zieman. l @us.af.mil
[e-mail]
[e-mail]
[e-mail]
Attorneys for Federal Executive Agencies
(FEA)
3
D Hand Delivery
~ US Mail (postage prepaid) D Facsimile Transmission
D Federal Express
~ Electronic Transmission
Ronald L. Williams