20170814_Daphne1.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DAPHNE HUANG
DEPUTY ATTORNEY GENERAL

DATE: AUGUST 9, 2017

SUBJECT: INTERMOUNTAIN GAS COMPANY’S APPLICATION TO IMPLEMENT
A DSM PROGRAM FUNDING MECHANISM, CASE NO. INT-G-17-03

On July 27, 2017, Intermountain Gas Company asked the Commission for authority
to implement a Demand Side Management (DSM) Program Funding Mechanism and DSM
Charge. Although the Commission has yet to formally accept a tariff filing from the Company, a
draft tariff was submitted as an exhibit during the Company’s recent rate case, in which the
Commission authorized the Company to implement a residential DSM program, but did not
approve the proposed fixed cost collection mechanism. Order No. 33757 at 37-38.
Intermountain asks that its Application be processed by Modified Procedure, and requests an
effective date of October 1, 2017, to coincide with the requested effective date for its annual
Purchased Gas Cost Adjustment filing.
THE APPLICATION
“DSM” generally refers to utility activities and programs that encourage customers
(thus, on the “demand-side” as opposed to the “generation side”) to use less overall energy or use
less energy during peak usage hours. Order No. 33188. The Commission authorized the
Company to implement a DSM program, finding that “DSM, as both a least-cost resource and an
important element of promoting energy efficiency, is an important part of any utility’s provision
of service.” Order No. 33757 at 37; see Application at 2. However, the Commission rejected the
Company’s proposal to use a fixed cost collection mechanism (FCCM), citing insufficient
“evidentiary quantification of the Company’s need for an FCCM and the benefits of its
developing DSM program, and what it hopes to achieve through energy efficiency programs and
fixed-cost recovery.” Order No. 33757 at 38.
DECISION MEMORANDUM 2
The Company seeks “to define and formalize a mechanism whereby the Company
can recover costs incurred in the administration and delivery of its Rate Schedule DSM” and
submits a proposed budget for recovery. Application at 3. The Company states that its costs for
administering its DSM program may include energy efficiency program rebates; administration
ramp-up expenses and incremental staffing; DSM outreach; local support for promotion of tariff-
approved DSM measures; and encouraging market transformation through adaptation of energy
efficiency technologies. Id. The Company reports that all DSM activities are designed for its
residential customers. Id.
The Company proposes a recovery mechanism in which it submits its “annual budget
of anticipated administrative and program costs related to the Company’s DSM program.” Id.
In its annual filing, the Company will request the Commission’s ruling that its “expenses are
both reasonable and prudent.” Id. Also, the Company’s budget will include “any surplus or
deficit associated with the collection of DSM funds and the incurrence of DSM-related
expenses.” Id.
The Company states its “DSM Charge shall be determined as the approved annual
budget to implement Rate Schedule DSM divided by normalized therm sales for Rate Schedule
RS, as determined in the Company’s annual Purchased Gas Cost Adjustment filing.” Id. “All
DSM funds collected will be allocated to costs incurred in the administration and delivery of its
proposed DSM program, and accounting records will be maintained to track actual expenses vs.
the DSM Charge collected from residential customers.” Id. at 4.
For the program year October 1, 2017 to September 30, 2018, the Company estimates
costs of $177,000 for program delivery and administration (personnel and ramp-up expenses),
and $600,000 in rebate payments for total costs of $777,000. Id. This proposed budget would
equal a per therm increase of $0.00367 (0.58%) for the Company’s residential class. Id.
The Company states it provided notice of its proposed rate increase associated with
its proposed DSM funding mechanism. Id. at 4-5. The Company filed its Application and
supporting documents, including its proposed annual DSM budget and proposed DSM Charge.
STAFF RECOMMENDATION
Staff agrees with the Company’s recommendation to process the case by Modified
Procedure. Staff proposes a comment deadline of September 15, 2017, and reply deadline of
September 20, 2017.
DECISION MEMORANDUM 3
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure with a
comment deadline of September 15, 2017, and reply deadline of September 20, 2017?

M:INT-G-17-03_djh