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HomeMy WebLinkAbout20060724_1624.pdfDECISION MEMORANDUM TO:CO MMISSI 0 NER KJELLAND ER COMMISSIONER SMITH COMMISSIONER HANSEN COMMISSION SECRETARY LEGAL WORKING FILE FROM:BE VERY BARKER DATE:JULY 19, 2006 RE:SCHEDULE 21/LOW INCOME WEATHERIZATION SERVICES PACIFICORP TARIFF ADVICE NO. 06-03. PacifiCorp proposes to make several revisions to its Schedule 21 , Low Income Weatherization Services. The requested effective date (June 1 2006) was postponed on two separate occasions in order to gather more information. Both PacifiCorp and the Community Action Partnership of Idaho (CAP AI) responded recently to questions posed by Staff; those responses are attached. The latest suspension period expires July 31 2006. The Company is revising Schedule 21 in order to comply with commitment 1- (attached) of the PacifiCorp/Mid-American settlement agreement approved by the Commission in Case No. P AC- E-05-, Order No. 29998. Consistent with that commitment, PacifiCorp proposes to revise Schedule 21 to specify that community action agencies will be reimbursed 50% ofthe cost of approved energy conservation measures when federal funds are available and 100% of approved costs when federal funds are not available. The commitment also required PacifiCorp to address "the costs and benefits" of increasing the 50% match in the Company next general rate case. As a party to the settlement, the Community Action Partnership Association of Idaho (CAP AI) agreed to this provision with the understanding that there would be an opportunity to have the Commission resolve outstanding issues regarding the 50% cap on reimbursement within the context ofthe next (i., April 2006) rate case. Since PacifiCorp recently filed rate adjustment case (Case No. PAC-06-4) is more limited in scope than previously contemplated, the Company now plans to file a stand-alone case to address this issue rather than do so within the context of Case No. P AC-06- DECISION MEMORANDUM - 1 -JULY 19 2006 The Company is also proposing to eliminate the existing requirement that the average weatherization cost per home per year not exceed $1 500. This change was not part of the settlement agreement and is further discussed below. In addition to these two substantive revisions, PacifiCorp proposes to make some housekeeping changes. Staff also recommended and the Company agreed to a minor change in the Company s proposed tariff wording. The Company will file a revised Sheet No. 2l.2 reflecting this change upon approval of the proposed tariff advice. STAFF ANALYSIS & RECOMMENDATION 1. Coverage of 100% of cost when federal funds not available. Staff agrees with the proposed revision to allow for coverage of 100% of the cost of approved energy conservation measures when federal funds are not available. 2. Increasing the 50% match when federal funds are available. PacifiCorp proposes to address in a separate docket to be filed at a later date the issue of increasing the reimbursement percentage to an amount greater than 50% of the cost of approved measures when federal funds are available. Staff s understanding is that both community action agencies operating in PacifiCorp s Idaho service territory (SEICCA and EICAP) signed contracts this year that specify a 50% cap on reimbursement. Staff agrees that it would be appropriate to address this issue in a separate, stand-alone proceeding. 3. Removal of annual average cost cap . Staff supports removal of the annual average weatherization cost per home as proposed by PacifiCorp. The current average cost cap of 500 does not constitute an upper limit on what can be spent on any single weatherization project. However, taken with other constraints imposed by PacifiCorp and other funding sources such as DOE, the $1 500 average cost cap complicates community action agencies ' budgeting process and makes it more difficult to piece together the funds necessary to complete whatever weatherization, repair and/or replacement is required on any given project. DECISION MEMORANDUM - 2 -JULY 19 2006 PacifiCorp s current cap appears to be too low, potentially reducing the opportunity to install cost-effective measures in low-income homes in southeastern Idaho. According to CAP AI, DOE's maximum average investment is $2 826, almost double that ofPacifiCorp Idaho Power currently has a $2 200 average cost cap. Avista does not have a cap, but closely monitors program costs. Avista reports that the current average cost for low-income weatherization measures is $1 977. Eliminating the cap will allow the Company and local community action agencies more flexibility in administering the program without sacrificing accountability. Staff anticipates that PacifiCorp s future DSM reports will include a thorough analysis of the low-income weatherization program, including a calculation of the average cost per home and a determination of the cost-effectiveness of the program. 4. Housekeeping items.Staff agrees with the proposed housekeeping changes. 5. Effective date of tariff revisions. If the Commission approves the proposed changes PacifiCorp suggests and Staff recommends that the revised tariff pages become effective August 1 , 2006. COMMISSION DECISION Does the Commission wish to approve the proposed revisions to PacifiCorp s Schedule 21? If so, should the effective date be August 1 , 2006? Does the Commission wish to address anything else? Attachments i:udmemos/pacificorp advice 06 03 july vrs 1 PacifiCorp funds can be used only for designated efficiency measures on electrically-space heated homes. DOE funds are fuel blind, and can be used for efficiency measures as well as such things as furnace and water heater repairs or addressing health and safety issues such as fixing broken windows. DECISION MEMORANDUM - 3 -JULY 19 2006 ..., ""' ..'- ," , '/';- O:Y Brad M. Purdy Attorney at Law 2019 N. 17th St. Boise, Idaho 83702 (208) 384-1299 Cell: (208) 484-9980 Fax: (208) 384-8511 RECEiVED 200G JUL 12 PM 3: 09 A! "qi IMi'11 , \,; I- UTILITIES COMMISSION July 11 2006 Beverley Barker Re: Commission Staff's inquiry into PacifiCorp s low-income weatherization program. Dear Ms. Barker: In response to its filing of Tariff Schedule No. 21 (Tariff Advice No. 06-03), inwhichPacifiCorp proposes lifting the existing $1 500.00 project investment cap for low- income weatherization, the Commission apparently inquired of Staff about details of the . OJ.ili Power low-income weatherization program. The Commission suspended Tariff No. 21 pending a response to these questions which Staff sent to PacifiCorp. My client, Community Action Partnership Association ofIdaho (CAP AI) was, inturn, requested by PacifiCorp to respond to the questions. Please consider tl1is to beCAPAI's response to your questions. Please also note that we have sent a copy to DonHowell and Becky Eberle at Utah Power. In light of recent events regarding PacifiCorp, as well as my client, I wish topreface our response to your questions as follows. As is public knowledge, PacifiCorp isattempting to settle .with all ofthe parties to Case No. P AC- E-06-, in order to proceedwith a limited issue rate proceeding. CAP AI has executed a stipulation with the company in that regard and will file for intervention later this week. In addition, in PacifiCorp s last Idaho general rate case, Case No. PAC-05-PacifiCorp stipulated to file testimony in the current general rate case regarding the company s policy of limiting its investment in low-income weatherization projects to a purported 50%, with the balance coming ITom federal funding. In its attempt to honorthis agreement, PacifiCorp has stipulated to initiate a separate docket later this summer for the sole purpose of resolving the 50% issue. Because the questions submitted by you to the company involve not only the 500.00 project cap, but also the company s 50% policy, and because that policy will be tested in a future proceeding before the Commission, CAP AI needed to answer your questions thoroughly. Thank you for your patience in awaiting my client's response. Very truly yours ~ ' 1/./Brad . Purdy Don Howell Becky Eberle For your most recent fiscal year (April 1, 2005 - March 31 2006): 1. What is the average total weatherization investment (including all funding sources) per household served by Utah Power in Idaho? ANSWER: EICAP $2 985.00 SEICAA $2 781.00 (ITom January 6 2006). This is total average funding ITom all sources. As explained below, Utah Power average investment in each project is substantially less than 50%. 2. What is the average total weatherization investment funded by Utah Power under its low income weatherization program in Idaho (Schedule 21)? ANSWER: Utah Power s average investment per home is broken down as follows. EICAP - $1 320.00 SEICAA - $1 000. Bear in mind that, unlike A VISTA, Utah Power does not provide any funding for weatherization projects on homes that do not use electricity as their primary heat source with the limited exception of compact fluorescent light bulbs and reITigerator replacements. Those homes are automatically ineligible to receive weatherization funds ITom Utah Power. Furthermore, Utah Power will not provide funding for repair and maintenance of electric furnaces. 3. How many low-income customers' homes served by Utah Power in Idaho were weatherized? ANSWER: EICAP - 86 homes served by Utah Power were weatherized, but Utah Power only provided funding for 40 of these homes because ofthe restriction on heat source. SEICAA - 14 homes since the beginning of January, 2006. SEICAA is attempting to determine how many total homes were weatherized for the time period requested and will provide this information as soon as possible. 4. How many low-income customers' homes served by Utah Power in Idaho were on the waiting list for weatherization? ANSWER: EICAP currently has 424 homes on the waiting list. SEICAA has 231 homes. At the current rate of weatherization using Utah Power funds, and with the current restrictions contained in Utah Power s program, the waiting list can range up to at least 7 years. 5. What effect does Utah Power s current maximum average investment per household of$I 500 have on the ability ofSEICAA and EICAP to install in each qualifying weatherization job in Idaho all necessary eligible conservation measures approved in Utah Power s Schedule 21? For example, is it possible some measures might not be installed on an individual jo b because it would have the potential to raise the average investment per household? ANS WER: There are several effects caused by the low maximum average investment authorized by Utah Power. These include: a) If Utah Power does not remove the $1 500.00 per project limit, the company is, in effect, only "matching" about 34.6% of each job, as opposed to the perceived 50%. The Department of Energy average allowed on each home is $2 826.00. Utah Power s current limit per household is $1 500.00. ($2 826.00 + $1 500.00 = $4 326.00. 500.00/$4 326.00 = 34.6%). By contrast, Idaho Power s per project limit is 200.00. b) Furthermore, unlike Idaho Power and A VISTA, Utah Power does not adhere to DOE rules and guidelines regarding eligible weatherization measures. This means that the company will not fund certain measures resulting in an even lower "matching percentage. The DOE-approved measures that Utah Power will not fund include all health and safety measures (replacement of items that pose a threat to health and safety including items such as a broken valve on a furnace or broken window), furnace replacements or repairs, and hot water replacement or repair. Because Utah Power will not fund these measures, the community action agencies must utilize federal funds instead reducing flexibility in reaching other homes. There is a limited amount offederal funds available each year and it is CAP AI's belief that those funding levels might be reduced in the near future. Because Utah Power service territory is interspersed with municipals and cooperatives the community action agencies encounter difficulty in finding enough houses to weatherize each year due to the 50% restriction imposed by Utah Power. This means that Utah Power weatherization funding might be left on the table because the community action agencies must budget only for enough homes that liniited federal funds eruible them to weatherize. Because community action agencies must provide weatherization to all counties within their service area, and they will have to limit the federal funds that can be invested in Utah Power s service area, this limitation dictates that less weatherization work is performed on Utah Power homes because ofthe investment limitation. c) Idaho Power only requires that an average of 15% in federal weatherization funds be spent on each project that its funds are invested in. VISTA has no matching requirement at all. Both of these two utilities recognize the value oftheir respective weatherization programs and the need to spread the utility and private dollars as far as they will go. The customer value of the program is recognized by these utilities because more customers can be served is there is not a high "matching" requirement. Though Idaho Power and A VISTA's customers also fund DOE through their tax dollars Utah Power customers reap a far greater advantage leveraging federal funds to a de facto matching requirement of65.4% as explained above (100% - 34.6% = 65.4%) 6. What effect would eliminating Utah Power s maximum investment per household of 500 have on the total number oflow-income homes weatherized in Utah Power Idaho service territory? ANSWER: This limitation often is the cause for essential work not to be completed- Weatherization programs around the country, and supporting national studies, have shown that it is more cost efficient and results in higher energy savings if all identified measures can be completed at once. This limitation means that, at times, measures will not be completed and removes flexibility on the part of the weatherization teams to maximize their resources. Because homes are only eligible for weatherization funding one time, any potential energy savings that are not captured due to Utah Power s various program restrictions are effectively lost forever. 7. What effect would increasing the maximum average investment per household to 200 have on the total number of low-income homes weatherized in Utah Power Idaho service territory? ANSWER: There would allow greater flexibility on the part of the weatherization program to utilize all resources to their maximum potential. Some homes need more than 500.00 in weatherization measures, others less. It would somewhat alleviate the unfair advantage that Utah Power customers receive with DOE funds since, under the current 50% matching restriction, it is inevitable that more DOE funds will be spent on a Utah Power household than Utah Power funds. Though increasing the cap to $2 200.00 would help, it still would not bring Utah Power into parity with A VISTA or Idaho Power. 8. Is eliminating the maximum $1 500 average investment per household preferable to increasing it? If so, why? ANS WER: The community action agencies believe that it would for all of the reasons stated elsewhere herein. 9. How many homes were not weatherized specifically due to the current limitation that Utah Power will only fund 50% of the installed cost of all eligible energy conservation measures approved in its Schedule 21? ANSWER: EICAP and SEICAA did not receive contracts with the 50% matching requirement until the middle of January, 2006. Thus, answering this question requires some degree of speculation and the information provided below might change. Jl,lst the same, the following should be noted: As pointed out, the "50%" matching requirement is in reality closer to a 65.4% matching requirement. Not all DOE-approved measures are eligible for Utah Power funding. Thus a true 50% will not be reached overall or specifically in homes requiring ineligible measures. Utah Power contends that the 50% restriction is needed to assure that its customers receive their fair share of DOE funding. Because of the previous $1 000. per project funding limit and the current $1 500.00 limit, Utah Power s customers are actually receiving more than their fair share of DOE funding. The community action agencies will never purposely be in any situation where they would use 100% of utility funding on any weatherization project. If they did so they could not count the home toward their DOE goals which would have a negative impact on their federal funding. As Idaho Power and A VISTA have recognized, there will always be DOE funding applied to every home weatherized. Removing or adjusting the 50% restriction will allow the agencies to better spread the funds where they are most needed. 10. How many homes were weatherized but not all eligible energy conservation measures were installed due to Utah Power s current 50% funding limitation? ANSWER: Because the 50% matching requirement is new, the information necessary to answer this question is not available. It is, however, a virtual certainty that there will be eligible energy conservation measures that will not be installed due to the 50% limit. 11. What is the total federal funding amount for low-income weatherization available to Utah Power s customers? ANSWER: EICAP - $243 036.00 SEICAA - $75 000. These answers are based on last year s history but in no way reflect what the current year s funding will be. The reasons for this are that funding is dependent uponthe eligible applications that are received in the various service territories and the outcome of negotiations with PacifiCorp over numerous issues. 12. Under what circumstances would federal funds for low-income weatherization beexhausted, allowing Utah Power, under its proposed tariff, to fund 100% of the costs associated with installation of eligible energy conservation measures for Idaho customers? ANSWER: The community action agencies currently only schedule the number of homes that available DOE funds allow for each year. The agencies could add to that number with greater flexibility, but would always utilize some federal funds on every project as stated above. 13.Were federal funds exhausted during the most recent fiscal year? ANSWER:No. 14.Have federal funds ever been exhausted? ANSWER:Yes. 15. What criteria is used to determine the allocation of federal funds for low-income weatherization distributed by the State ofIdahoio local community action agencies and tribes? ANSWER: 2000 Census Guidelines which are based on percentages of population in relation to poverty. 16. Does each local community action agency further subdivide the amounts allocated to it? For example, are funding targets set by each agency for certain fuel types or customers served by particular utilities? ANSWER:The federal funds are further divided by county based upon poverty levels. 17. Does SEICAA and EICAP designate how many federal program dollars goes to Idaho Power s customers and/or Utah Power/s customers? ANS WER:No. ~~~t~!~Q~ Pacific Power I Rocky Mountain Power 20 I South Main, Suite 2300 Salt Lake City, Utah 84111 July 17 2006 Idaho Public Utilities Commission 472 West Washington Boise, ID83702-5983 Attention:Beverly Barker Re:Advice No. 06- Schedule 21 Low Income Weatherization Services Response to Commission Inquiries In response to the Commission s inquiries regarding PacifiCorp s proposed revisions to Schedule No. 21 PacifiCorp (the Company) solicited the input of its partnering agencies (Eastern Idaho Community Action Partnership and SouthEastern Idaho Community Action Agency) with the coordination of Community Action Partnership Association of Idaho (CAP AI). CAP AI subsequently provided responses to the Commission s inquiries by mailing information directly to the Commission on July 11, 2006. The purpose of this letter is for the Company to make clarifications to the responses provided by CAP AI. The changes to Schedule No. 21 proposed by the Company in Advice No. 06-03 are to increase agency reimbursement to 100 percent of approved Energy Conservation Measure costs when matching federal funds are exhausted (compliant with commitment Il3a ofthe MidAmerican Energy Holdings Company transaction, Order No. 29998), eliminate the $1 500 limit on average reimbursement cost per home, and make minor housekeeping changes. As further agreed to in commitment Il3b and as mentioned by Mr. Purdy (legal representative of CAP AI) in his July II, 2006 letter to the Commission, the Company will make a filing with the Commission later this year for the sole purpose of addressing the reimbursement limit of 50 percent of approved Energy Conservation Measure costs while matching federal funds are available. The enclosed pages list the Commission s inquiries and comments the Company wishes to make to the responses previously provided by CAP AI. PacifiCorp believes the changes proposed to Schedule No. 21 are appropriate and will enhance the ability of its partnering agencies to implement approved Energy Conservation Measures for customers in its service territory. ~tj" .-- D. Douglas Larson Vice President, Regulation Enclosures For your most recent fiscal year (April I , 2005 - March 31 2006): I. What is the average total weatherization investment (mcluding all funding sources) per household served by Utah Power in Idaho? PACIFICORP COMMENT: PacifiCorp s investment is limited to 50 percent of the cost of approved electric efficiency measures for its electric service customers; Schedule No. 21 does not apply to investment made for gas conservation and other measures, 2. What is the average total weatherization investment funded by Utah Power under its low income weatherization program in Idaho (Schedule 21)? PACIFICORP COMMENT: PacifiCorp s database indicates that during the period January through June 2006, it processed invoices on 53 completed homes. Total installed costs reported to us were $151 134 and our payment to the agencies including the agency administrative payment was $78 057, which is 52% of total installed costs. In the calendar year 2005 our data base shows that we processed invoices on 34 homes-PacifiCorp paid $36 850 for measures plus administration, and total mstalled costs were $66 198 (the program changed in January 2006 so these figures are no longer pertinent). The total installed costs refer only to those related to electric efficiency measures mstalled as PacifiCorp does not ask for information on any gas efficiency measures, The program is funded through the system benefits charge because it is a cost-effective energy efficiency program, Costs related to the repair and replacement of a furnace is not an efficiency measure and addmg such costs to the program would make it more difficult to design a cost effective program. 3, How many low-income customers' homes served by Utah Power in Idaho were weatherized? PACIFICORP COMMENT: Schedule No. 21 is intended for homes with an electric heating system as the primary heat source. 4, How many low-income customers' homes served by Utah Power in Idaho were on the waiting list for weatherization? P ACIFICORP COMMENT: PacifiCorp assumes that many of the homes on the waiting list are gas heated so will not receive rebates on shell measures. The Company s Energy Decisions 2004 survey results indicate that 31 % of its Idaho residential customers have electric heat and 55% have electric water heat. 5. What effect does Utah Power s CUlTent maximum average investment per household of$1 500 have on the ability of SEICAA and EICAP to install in each qualifying weatherization job in Idaho all necessary eligible conservation measures approved in Utah Power s Schedule 21? For example, is it possible some measures might not be mstalled on an individual job because it would have the potential to raise the average investment per household? P ACIFICORP COMMENT: PacifiCorp filed to eliminate the maximum average investment per household requirement recognizing that some homes require a larger investment m order to install all cost-effective measures. 6. What effect would eliminating Utah Power s maximum investment per household of$I 500 have on the total number ofIow-income homes weatherized in Utah Power s Idaho service territory? PACIFICORP COMMENT: No additional comment. 7. What effect would increasing the maximum average investment per household to $2 200 have on the total number ofIow-income homes weatherized in Utah Power s Idaho service territory? PACIFICORP COMMENT: PacifiCorp s investment is limited to 50 percent on electric efficiency measures for its electric service customers; Schedule No. 21 does not apply to investments made for gas conservation and other measures. As such, raising the limit would have no impact on customers with heat sources other than electricity. Increasing the cap to $2 200 would make it equal to Idaho Power s cap; however, PacifiCorp would prefer eliminating the average investment per household requirement because some homes require a larger investment in order to install all cost-effective measures. 8. Is eliminating the maximum $1 500 average investment per household preferable to increasing it? If so, why? P ACIFICORP COMMENT: No additional comment. 9. How many homes were not weatherized specifically due to the current limitation that Utah Power will only fund 50% of the installed cost of all eligible energy conservation measures approved in its Schedule 21? PACIFICORP COMMENT: PacifiCorp believes all DOE approved "electricity" energy efficiency measures are included in its program. 10. How many homes were weatherized but not all eligible energy conservation measures were installed due to Utah Power s current 50% funding limitation? P ACIFICORP COMMENT: PacifiCorp believes all electricity related efficiency measures are installed including shell measures. Our contract with the agencies read as follows: To the extent that a u.s. Department of Energy approved audit detennines that a Major Measure is cost effective and such Major Measure qualifies for installation, it must be installed or financial assistance will not be offered. Major Measures are ceiling, floor and wall insulation and replacement windows. 11. What is the total federal funding amount for low-income weatherization available to Utah Power s customers? PACIFICORP COMMENT: No additional comment. 12. Under what circumstances would federal funds for low-income weatherization be exhausted allowing Utah Power, under its proposed tariff, to fund 100% of the costs associated with installation of eligible energy conservation measures for Idaho customers? P ACIFICORP COMMENT: No additional comment. 13. Were federal funds exhausted during the most recent fiscal year? ACIFICORP COMMENT: No additional comment. 14. Have federal funds ever been exhausted? ACIFICORP COMMENT: No additional comment. 15, What criteria is used to determine the al1ocation offederal funds for low-income weatherization distributed by the State ofIdaho to local community action agencies and tribes? ACIFICORP COMMENT: No additional comment. 16. Does each local community action agency further subdivide the amounts allocated to it? For example, are funding targets set by each agency for certain fuel types or customers served by particular utilities? P ACIFICORP COMMENT: No additional comment. 17. Does SEICAA and EICAP designate how many federal program dollars goes to Idaho Power s customers and/or Utah Power s customers? P ACIFICORP COMMENT: No additional comment. 110. On January 31 , 2005 , the Commission accepted PacifiCorp s proposal to eliminate its Network Perfonnance Standard relating to Momentary Average Interruption Frequency Index (MAIFI) in light of the Company s commitment to develop an acceptable alternative to MAIFI as soon as possible. The Company has developed its proposed measurement plan and is scheduled to present to the Commission Staff at its next reliability meeting (scheduled for December 20, 2005). Within 60 days after this meeting, the Company will file the plan with the Commission. MERC and PacifiCorp commit to implement this plan and provide the results of these calculations to Commission Staff and other interested parties in reliability review meetings. I 11. PacifiCorp is required to apply to the Commission for approval of security issuances pursuant to Idaho Code Title 61 , Chapter 9. PacifiCorp will not seek an exemption from this requirement for twelve months following the closing of this transaction. Staff will evaluate the "all-in-cost" of issuances for inclusion in rates and as it relates to the Reduced Cost of Debt. I 12. MERC and PacifiCorp acknowledge that the Commitments being made by MERC and PacifiCorp are binding only upon them and their affiliates where noted (and upon Berkshire Hathaway where specifically mentioned). In this proceeding Applicants are not requesting a detennination of the prudence, just and reasonable character, rate or ratemaking treatment, or public interest of the investments, expenditures or actions referenced in the Commitments. In other appropriate proceedings, the parties may take positions regarding the prudence, just and reasonable character, rate or ratemaking treatment, or public interest of the investments, expenditures or actions referenced in these Commitments as the parties deem appropriate. I 13. With respect to the Low Income Weatherization Program managed by community action agencies in Idaho, PacifiCorp commits to the following: Within 30 days of completion of the transaction, PacifiCorp will file proposed revisions to its Schedule 21 Tariffto effect a change in funding of conservation measures from 50% of measure cost to 100% of measure cost when federal matching funds are no longer available to fund measures at PacifiCorp customer s premise subject to the $150 000 annual funding limit in the tariff. In PacifiCorp s next Idaho general rate case, PacifiCorp will include in its direct testimony an analysis of the costs and benefits of changing its current practice of matching 50% of federal contributions to matching at a higher percentage amount. I 14. IvIERC and PacifiCorp commit to a total contribution level for Idaho low income bill payment assistance in the amount of $40 000 annually, for a five-year period beginning July 1 2006. The contributions may be comprised of contributions from corporate, employee, other sources, and customer donations, The corporate contribution will be recorded in non-utility accounts. Before the end of the five-year IDAHO COMMITMENTS CASE NO. P AC-05- ORDER NO. 29998