20100201_2839.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: WELDON STUTZMAN
DEPUTY ATTORNEY GENERAL

DATE: JANUARY 28, 2010

SUBJECT: IDAHO POWER COMPANY’S APPLICATION FOR APPROVAL OF
STIPULATION REGARDING PRUDENCY DETERMINATION OF
ENERGY EFFICIENCY RIDER FUNDS SPENT DURING 2002-2007,
CASE NO. IPC-E-09-09

In its 2008 rate case, Case No. IPC-E-08-10, Idaho Power requested that the
Commission find that its 2002-2007 expenditures on conservation programs, funded by the
Energy Efficiency Rider, were prudently incurred. Total Rider expenditures during the period
were approximately $33 million. The Commission deferred a determination on the prudency of
the expenditures pending additional information to evaluate the programs’ effectiveness. In
February 2009, Idaho Power and Staff filed a Stipulation in that case establishing the prudency
of a portion of the Rider funds the Company spent during the five-year period. The Commission
subsequently issued an Order finding that “the Stipulation identifying approximately $18.3
million in energy efficiency expenditures for 2002-2007 as prudent to be just, reasonable, and in
the public interest.” The Stipulation approved by the Commission also required the Company to
file a pleading with the Commission seeking a prudency determination for the balance of Rider
funds spent during 2002-2007. On April 1, 2009, the Company filed an Application requesting
the Commission find the remaining $14,657,971 in 2002-2007 Energy Efficiency Rider
expenditures to be prudently incurred expenses.
Following the filing of the Company’s Application, Staff and Idaho Power continued
to discuss ways to evaluate the effectiveness of the Company’s demand-side management (DSM)
programs. On October 5, 2009, Staff hosted a DSM evaluation workshop, including an
evaluation consultant retained by the Commission, to discuss appropriate levels of objective and
DECISION MEMORANDUM 2
transparent evaluation of DSM programs. As a result of the workshop and follow-up
discussions, Idaho Power and Staff agreed to terms for a comprehensive utility annual DSM
report, as set forth in a Memorandum of Understanding (MOU). The MOU provides terms for
Idaho Power to manage, plan, evaluate, and report its DSM activities to the Commission. In
addition, Staff and the Company signed a Stipulation agreeing that the remaining balance of
Rider funds spent during 2002-2007 ($14,657,971) were prudent expenditures and should be
approved for ratemaking purposes. The Memorandum of Understanding providing terms for
reporting and evaluation of DSM expenditures is attached to the Stipulation.
On January 25, 2010, Idaho Power filed a Motion to Approve Stipulation. In
addition, the Company specifically requests that the Commission confirm that the $14,657,971 in
Energy Efficiency Rider expenditures the Company made between 2002-2007 were prudent, and
that the Commission provide feedback regarding the DSM evaluations and prudency
determinations discussed in the Memorandum of Understanding. Because the 2002-2007 DSM
expenditures were made using tariff rider funds, a determination that the expenditures were
prudent will not affect customer rates.
This case is an outgrowth of the 2008 Idaho Power rate case, and so a separate Notice
of Application was not issued when the application was filed in this case. Staff recommends the
Commission now issue a Notice of Application and Notice of Idaho Power’s Motion to Approve
Stipulation resolving the prudency determination for the remaining 2002-2007 Rider
expenditures and approving the terms for future reporting and evaluation of DSM programs.
Staff recommends that the case be processed by Modified Procedure with a 21-day comment
period.
COMMISSION DECISION
Should the Commission issue, in a single document, a Notice of Application, Notice
of Motion to Approve Stipulation, and Notice of Modified Procedure to process the Company’s
Application?
Weldon B. Stutzman
Deputy Attorney General

bls/M:IPC-E-09-09_ws