20040728_908.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:JUNE 24, 2004
RE:CASE NO. IPC-04-15 (Idaho Power)
NW ENERGY COALITION PETITION TO INITIATE INVESTIGATION OF
FINANCIAL DISINCENTIVES TO INVESTMENT IN ENERGY
EFFICIENCY BY IDAHO POWER COMPANY
On June 18 , 2004, the NW Energy Coalition (NWEC; Energy Coalition) filed a
Petition with the Idaho Public Utilities Commission (Commission) to initiate workshop
proceedings to investigate financial disincentives which hinder Idaho Power s investments in
cost-effective energy efficiency resources. Reference IDAP A 31.01.01.033 and 053.The
Energy Coalition was an intervenor in Idaho Power general rate case IPC-03-13. The Energy
Coalition s Petition in this case is a follow-up to the Commission s final Order No. 29505 in the
Idaho Power rate case. Order No. 29505 provided, in relevant part:
The Commission has determined that a proceeding to assess financial
disincentives inherent in Company-sponsored conservation programs is
appropriate and should proceed by informal workshops. The Commission
specifically directs the parties to address possible revenue adjustment when
annual energy consumption is both above and below normal. The parties
should also consider how much adjustment is necessary to remove DSM
investment disincentives and whether (and to what extent) performance-based
incentives such as revenue sharing could or should be incorporated into the
resolution of this issue. The Commission is interested in proposals that could
provide Idaho Power the opportunity to share and retain benefits gained from
efficiencies, especially where efficiencies are derived from innovation and the
use of new technologies.... In short, the Commission believes opportunities
exist for improvements in operating efficiency that would benefit the
Company shareholders and its customers, and we encourage the parties to
creatively consider the options for a performance-based mechanism to present
to the Commission. The parties to the agreement are directed to propose a
workshop schedule and initiate a proceeding. (emphasis added)
DECISION MEMORANDUM
Order No. 29505 at pp. 68-69. The cited Order language was preceded in the Commission
Order by the following: "A proposal for a second workshop proceeding was sponsored by NW
Energy Coalition, which agreed that financial disincentives hinder Idaho Power s investments in
cost-effective efficiency and clean distributed generation. (emphasis added) In a footnote to its
Petition, NW Energy Coalition states: While the Commission s Order spoke directly to
removing barriers to "efficiency investment", NW Energy Coalition believes the same principles
apply to investment in "clean distributed generation." A copy of the underlying agreement for
Commission review is attached to this memo.
As reflected in the Petition, counsel for the Energy Coalition has conferred with Staff
Idaho Power, and the Industrial Customers of Idaho Power (ICIP) to obtain agreement
workshop timing and procedures. NW Energy Coalition, Staff, Idaho Power, and ICIP agree to
proceed as follows:
A series of three (3) informal workshops is anticipated, to be concluded by
December 15, 2004. The first workshop will be held starting at 9:30 a.
until approximately 12:30 p.m. on August 24, 2004, at Idaho Power
Company, 1221 West Idaho Street, Boise, Idaho. Dates and locations for
further workshops will be determined at this initial meeting. The Energy
Coalition will provide direct notice of such workshops to all parties to Case
No. IPC-03-13.
As reflected in the Petition, Idaho Power has generously agreed to underwrite the
costs of a facilitator for the workshops. In order to advance discussions, Idaho Power has also
agreed to circulate a "white paper" analysis of the issues identified by the Commission in Order
No. 29505 to Staff, NW Energy Coalition, and ICIP (and other parties that may request the
analysis), by July 24, 2004.
Apart from the initiation of this new proceeding, no specific actions or orders are
requested of the Commission at this time. If no party seeks specific actions or orders of the
Commission by December 15 , 2004, the Energy Coalition commits to provide a status report to
the Commission no later than that date to update the Commission on the status of the
investigative workshops.
COMMISSION DECISION
NW Energy Coalition requests, as more particularly described above, that the
Commission . grant its Petition to initiate an investigation of the financial disincentives to
investment of energy efficiency by Idaho Power Company. An initial workshop is proposed for
DECISION MEMORANDUM
August 24, 2004. Commission Staff recommends that a Notice of Investigation and public
workshop be issued. Does the Commission agree with the proposal to establish an investigative
docket and the proposal for workshops?
Does the Commission desire to expand the authorized investigation beyond the
Commission s Order to comport with the language of the underlying Agreement, i., to explore
also economic disincentives to investment in "clean distributed generation?" Staff believes that
the scope of the investigation should be kept narrow, focusing on decoupling and performance
based ratemaking mechanisms.
Scott Woodbury
Vld/M:IPCEO415 sw
DECISION MEMORANDUM
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS INTERIM
AND BASE RATES AND CHARGES FOR
ELECTRIC SERVICE
CASE NO.IPC- E-03 -
JOINT PROPOSAL TO THE IDAHO PUBLIC UTILITIES COMMISSION
REGARDING POTENTIAL APPROACHES TO REMOVING DISINCENTIVES
FOR IDAHO POWER COMPANY INVESTMENTS IN ENERGY EFFICIENCY
AND CLEAN DISTRIBUTED GENERATION
The undersigned agree as follows:
The record in this matter, including the Direct Testimony of Ralph
Cavanagh, includes evidence that Idaho Power faces financial disincentives to invest in
cost-effective energy efficiency and clean distributed generation as a result of the linkage
between fixed cost recovery and retail electricity consulTIption.
If the Commission determines that removing these disincentives is in the
public interest, the undersigned parties are prepared to work together to investigate
specific mechanisms for achieving this objective, to identify areas of consensus, and to
clarify alternatives where consensus is not possible.
Should the Commission agree, we recolTImend that the Commission
initiate a new investigative docket and convene workshops for this purpose, to COlTIlTIenCe
by August 31 , 2004.
Date William M. Eddie
Attorney for NW Energy Coalition
Date Barton L. Kline
Attorney for Idaho Power Company
Date Lisa D. Nordstrom
Attorney for Idaho Public Utilities
Commission Staff
Date Peter J. Richardson
Attorney for Industrial Customers of
Idaho Power