Order No 28750.pdf

Office of the Secretary
Service Date
June 15, 2001
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION DBA AVISTA
UTILITIES—WASHINGTON WATER POWER
DIVISION (Idaho) FOR APPROVAL OF
REQUESTED CHANGES IN ELECTRIC
TARIFF SCHEDULE 91 ENERGY EFFICIENCY
RIDER ADJUSTMENT—IDAHO AND
SCHEDULE 90 ELECTRIC ENERGY
EFFICIENCY PROGRAMS.

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CASE NO. AVU-E-01-07

ORDER NO. 28750

On March 30, 2001, Avista Corporation dba Avista Utilities—Washington Water
Power Division (Idaho) filed a request for approval of proposed modifications to Electric Tariff
Schedule 90—Electric Energy Efficiency Programs and Schedule 91—Efficiency Rider
Adjustment (Idaho). The tariff filing proposes to increase the Schedule 91 funding level for
Electric Energy Efficiency Programs from 1.0% to 1.95% of revenue. The Company anticipates
that the increase will generate approximately $1 million of additional revenue in Idaho for the
Schedule 90 programs. This will allow the Company to acquire an additional 2,500,000 kilowatt
hours through energy efficiency. The Company states that residential customers should expect to
see an average increase of approximately 60¢ per month. There is no margin to Avista
associated with this filing. The Company requested a May 2, 2001 effective date. The Company
proposed effective date was suspended by Commission Order No. 28719.
As reflected in its filing, the Company states that its Energy Efficiency Programs are
experiencing increased customer demand and participation. Dramatic rises in the wholesale cost
of power have increased the cost effectiveness level of conservation allowing the Company to
increase its energy efficiency activities. The additional revenue generated under Schedule 91
will be expended under Schedule 90, Energy Efficiency Programs, including support for the
Demand Side Management (DSM) bids accepted under the Company’s recent Request for
Proposals (RFPs). Avista has prioritized DSM programs as a key response to high-energy prices.
Acquiring lower cost energy efficiency resources, rather than buying from the market, the

ORDER NO. 28750 1
Company states, benefits all customers. The proposed Schedule 90F shows a budget increase for
the residential sector, increasing the allocation from 20% to 25% of the total program budget.
On April 24, 2001, the Commission issued Notices of Application and Modified
Procedure in Case No. AVU-E-01-7. The deadline for filing written comments was May 30,
2001. Comments were filed by Commission Staff, and joint comments by the Northwest
Energy Coalition, Idaho Rivers United and the Land and Water Fund of the Rockies. All parties
support the Company’s Application to increase funding for its electric Schedule 90, Energy
Efficiency Programs. The filed comments can be summarized as follows:
COMMISSION STAFF
As reflected in Staff comments, the Company has adopted the following approach in
implementing its electric tariff Schedule 90, Energy Efficiency Programs:
Project Approach
Avista has several means of delivering programs within the tariff
guidelines. The vast majority of non-residential projects are pursued on a
site-specific basis. These projects are individually evaluated and
incentives are calculated based upon the application of the tiered incentive
structure within Schedule 90. The more unique the project application, the
more customized the site-specific analysis becomes.

Regardless of the engineering approach to the measurement of energy
savings, each site-specific project is evaluated by an incentive calculation
model to ensure a consistent calculation of the customer incentive under
the terms of the tariff and the written policies in place at that time. In the
last full trimester for which customer counts are available, Avista has 372
site-specific projects in progress.

In addition to the site-specific programs, Avista has also developed
prescriptive approaches to specific energy-efficiency measures. This
approach is typically employed when the volume of projects is large, the
saving per project is relatively small and the energy savings per device is
reasonably predictable in the aggregate. Under these circumstances, a
steamlined prescriptive approach enhances the program cost-
effectiveness.

A limited-income residential program is conducted in cooperation with
local community action agencies. By leveraging the infrastructure of these
agencies Avista has been able to install multiple energy efficiency

ORDER NO. 28750 2
measures for 114 customers in the last reported trimester. These measures
are, most frequently, electric to natural gas space and water heating
conversions and various shell measures (predominantly weatherization,
infiltration and replacement of compromised windows). An allowable
health and safety component of the program permits the community action
agency to make structural repairs or appliance replacements as necessary to
ensure the long-term habitability of the structure (and consequently
persistence of the energy savings).

Budget
The following is the budget for Idaho with the proposed increases:1

Categories Expected Budget % Expected Budget $
Commercial & Industrial 56% $1,369,019
Residential
(Regular & Limited Income)
22% $547,608
Regional 11% $270,000
Site Specific Service
Agreements
11% $273,804
Total 100% $2,460,431

As reflected in Staff comments, forecasted Schedule 90 revenue per year is actually
$2.495 million when street and area lighting revenues are included. The tariff filing proposes to
increase the funding level of the existing electric Energy Efficiency Programs from 1.00% to
1.95% of revenue. The proposed increase, Staff estimates, will generate approximately $1.4
million of additional revenue for the programs.
Examples of DSM residential programs for 2001 include efficient heat pumps, water
heaters, weatherization and thermostats and fluorescent light bulbs. In response to a Staff
production request, the Company estimates that these new programs would save 6.7 million
kilowatt hours in their first year of which about 1/3 would be saved in Idaho. The energy saving
from these new residential programs are about 84% of the total 8 million kilowatt hours the

1 Application, Tariff Sheet 90F, revised 5/30/01.

ORDER NO. 28750 3
Company’s Application said that it expects to achieve as a result of the proposed funding
increase.
The Company’s revised budget includes increases for residential, commercial and
industrial classes and cites specific programs while maintaining its funding for the Northwest
Energy Efficiency Alliance (NEEA). Staff notes that the percentage increases for most customer
classes are greater than the mathematical 95% that would be expected from increasing the
surcharge from 1% to 1.95%. This occurs, Staff states, because of changes in rates and the
proportion of revenue from various tariff elements. Current Schedule 91 rates were established
in 1999 based on rates and the revenue mixture at that time. The total revenue rider increase is
effectively a true-up for the aforementioned changes and a 95% increase in funding over 2001
revenue projections. The following tables are based on information provided by the Company
and indicate the total increases from current rates and the funding level anticipated from this
request.

Customer Schedule
Current
Sch. 91 Rate
Proposed
Sch. 91 Rate
Percent
Increase
Residential, Sch. 1 $0.00045/kWh $0.00104/kWh 131%
Gen. Serv. Sch., 11/12 $0.00069/kWh $0.00140/kWh 103%
Lrg. Gen. Serv., Sch. 21/22 $0.00048/kWh $0.00100/kWh 108%
Ex. Lrg. Gen. Serv., Sch. 25 $0.00028/kWh $0.00068/kWh 143%
Pumping Service, Sch. 31/32 $0.00042/kWh $0.00102/kWh 143%
Lighting Services 1.00% of bill 1.95% of bill 95%
Total Percent of Rev. Basis 1.00% 1.95% 95%

Customer Schedule
Current Forecast
Sch. 91 Revenue
Proposed Forecast
Sch. 91 Revenue
Dollar
Increase
Percent
Increase
Residential, Sch. 1 $ 473,061 $ 1,096,210 $ 623,149 131%
Gen. Serv. Sch., 11/12 169,452 344,720 175,268 103%
Lrg. Gen. Serv., Sch. 21/22 352,600 734,180 381,580 108%

ORDER NO. 28750 4
Ex. Lrg. Gen. Serv., Sch. 25 94,697 228,540 133,843 141%
Pumping Service, Sch. 31/32 23,398 56,780 33,382 143%
Lighting Services 34,668 67,603 32,935 95%
Total Sch. 91 Rev. Forecast $ 1,147,896 $ 2,528,030 $ 1,380,157 120%

Staff recommends that the Company continue to evaluate programs to assure its
customers and the Commission that only cost effective programs are funded. Staff states that it
will continue to participate in the Company’s ongoing review of Schedule 90 DSM programs by
Avista’s Triple-E Board. Staff is mindful that the Company cannot rely upon the Board or any
of its individual members to determine whether or not its DSM activities will be judged by the
Commission to be reasonable and prudent.
Staff recommends that the Company continue with its current accounting procedures
and reporting requirements.
Northwest Energy Coalition, Idaho Rivers United
and Land and Water Fund of the Rockies

Joint comments were filed by the Northwest Energy Coalition, Idaho Rivers United
and the Land and Water Fund of the Rockies.
Northwest Energy Coalition states that in testimony before the Washington Utilities
& Transportation Commission, the Coalition urged the Company to ramp its energy conservation
efforts once the tariff level reached a funding balance close to zero, especially given current
market volatility and supply deficits.
While the joint commenters support the proposal, they state that they would like to
see an increase in low-income assistance funding for both electric and gas customers and a
greater overall commitment to clean energy efforts. The commenters believe that a stable
statewide energy efficiency and low-income investment standard is a more effective way to
capture this resource than through a utility by utility approach with varying levels of activity.
A consistent, stable source of state and local funding, the commenters state, is critical
for low-income energy assistance, particularly with the declines in federal funding over the past
decade. Other utilities, they note, have found that low-income energy assistance programs
decrease overall costs by reducing arrearages, credit and collection efforts and disconnections.

ORDER NO. 28750 5
Commenters believe that all ratepayers will benefit from increased energy efficiency
investments. Direct benefits accrue to program participants through lower energy bills, as well
as increased comfort, productivity and in some cases safety. All customers benefit indirectly by
the Company acquiring the cheapest energy available, delaying the need to build additional
generation, and reducing potential harm to the environment from increase generation.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. AVU-E-01-07
including the filed Comments and the Company’s Reply. The Commission continues to find it
reasonable to process the Company’s Application pursuant to Modified Procedure. Reference
IDAPA 31.01.01.204.
The Commission notes that all parties support the Company’s Application. Funding
the Company’s Schedule 90 Electric Energy Efficiency Programs through a customer surcharge
carries with it a concomitant Company obligation to administer the program in a responsible
fashion and to ensure through continued oversight that the funded programs remain cost
effective. The Company is to be commended for its commitment to conservation. We find that a
well administered program will benefit the Company, its customers and the region.
Joint commentors state that they would like to see an increase in low income
assistance funding for both electric and gas customers and a greater overall commitment to clean
energy efforts. This Commission recognizes that as energy prices continue to increase, the issue
of affordability among those of limited means may require more creative solutions. With respect
to the suggestion that a uniform standard for low-income investment and energy efficiency be
established, the Commission notes that a “one size fits all” approach fails to recognize the
specific economic constraints and customer demographics unique to each utility’s service
territory.
Based on our review, the Commission finds it reasonable to approve the Company’s
Application.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Avista Corporation dba
Avista Utilities—Washington Water Power Division (Idaho), an electric utility, pursuant to the

ORDER NO. 28750 6

Public Utilities Law set forth in Idaho Code, Title 61 and the Commission’s Rules of Procedure,
IDAPA 31.01.01.000 et seq.
O R D E R
In consideration of the foregoing and as more particularly set forth in our Comments,
the Commission approves the proposed modifications to Electric Tariff Schedule 90—Electric
Energy Efficiency Programs and Schedule 91 efficiency rider adjustment (Idaho) for an effective
date of June 14, 2001.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
_______ day of June 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary
vld/O:AVU-E-01-07_sw2

ORDER NO. 28750 7