20040712Powell Rebuttal.pdf

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~J 'U./tJ t vV~. Hn l ' UDAVID J. MEYER ,: te'," ,('
VICE PRESIDENT AND CHIEF COUNSEL FOR I1:";
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L/ _I i.L vU, j ilVv REGULATORY AND GOVERNMENTAL AFFAIRS
VISTA CORPORATION
O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
FACSIMILE: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC AND
NATURAL GAS CUSTOMERS IN THE ST ATE~ ID~O
CASE NO. A VU-04-
CASE NO. A VU-04-
REBUTTAL TESTIMONY
JON POWELL
FOR A VISTA CORPORATION
(ELECTRIC AND NATURAL GAS)
Please state your name, employer and business address.
My name is Jon Powell and I am employed as the manager of Washington and
Idaho demand-side management (DSM) activities for Avista Utilities, at 1411 East Mission
Avenue, Spokane, Washington.
Would you describe your educational background and professional
experience?
I have a Bachelor of Arts degree in economICS from the University of
California, San Diego and a Master of Arts degree in economics from San Diego State
University.I have also completed coursework towards a Ph.D. in economics at the
University of California, Santa Barbara and towards a Master of Business Administration
degree at San Diego State University. I have been employed in the utility industry since 1985
beginning with the San Diego Gas and Electric Company. I was first employed by the
Washington Water Power Company in 1990.In my current capacity I also represent the
Company in several regional organizations and forums including the Northwest Energy
Efficiency Alliance and Regional Technical Forum.
What is the scope of your testimony in this proceeding?
My rebuttal testimony will respond to the direct testimony of Staff Witness
Lynn Anderson, and Teri Ottens and Larry Stamper of the Community Action Partnership
Association of Idaho. My testimony will describe Avista s proposal for revisions in, and
modifications to , the level of electric DSM funding.I also discuss implementation
parameters of DSM programs available for our limited income and vulnerable customer
segment.
Powell, Di-Reb
A vista Corporation
Staff witness Anderson has proposed a reduction in the DSM tariff rider
rate from 1.95% of revenue to approximately 1.250/0 of revenue, and has indicated that
A vista is in agreement with this reduction. Why is a reduction in the level of funding
for electric DSM appropriate at this time?
The current electric DSM tariff rider, equal to 1.95% of base rates, was
established when the Company was carrying a negative tariff rider balance resulting from the
Company s efforts to significantly increase DSM resource acquisition in response to the
2000-2001 energy crisis. The Idaho electric DSM tariff rider balance has returned to, and
passed, a zero balance and the Company is currently managing a positive electric DSM
balance in spite of the expansion of several existing programs and launch of new programs.
A tariff rider equal to 1.25% of current base rates and the projected positive balance is
anticipated to be sufficient to meet forecasted funding needs for the subsequent year.
What would occur if the Company s proposed level of funding is less than
that needed for DSM acquisition?
The Company is committed to acquiring all available cost-effective DSM
resources. If this resource acquisition requires more funds than are available from DSM tariff
rider revenues, then a negative tariff rider balance would be incurred. Energy-efficiency
programs would continue to be developed and implemented and the Company would
continue to participate in the funding and implementation of regional market transformation
activities.
We propose to correct for any negative or positive balances in the electric or gas DSM
tariff riders through annual revisions to these riders based upon the forward balance and
Powell, Di-Reb
A vista Corporation
projected funding requirements over the upcoming year. These periodic reassessments of the
tariff rider levels would also provide an opportunity for a timely review of the prudence of
the Company s investments in DSM resources.
Please explain what energy-efficiency programs are available to limited
income and vulnerable customers.
Limited income and vulnerable customers are eligible for our standard
residential rebates and additional DSM-funded programs offered in cooperation with
community action program (CAP) agencies. The Company enters into annual contracts with
these CAP agencies to provide an array of programs for this customer segment. These
programs are funded through the electric and gas DSM tariff riders and, since 2003 , have
been augmented with incremental BPA Conservation and Renewable Discount (C&RD)
funds for qualified energy-efficiency measures. The Company has sought to provide the CAP
agencies with as much flexibility as possible in applYing these funds to various measures to
include weatherization and related shell measures, electric to natural gas conversion of space
and water heat, other HV AC improvements, residential lighting measures and other
efficiency measures. A limited amount of funding is available for health and human safety
measures to ensure the continued habitability of the home, as is generally required under
CAP standards, and to protect the longevity of the DSM investments made in the dwelling.
CAP agencies receive compensation for the administrative expense incurred on behalf of the
program through a reimbursement equal to 15% of the installed measure cost.
Powell, Di-Reb
A vista Corporation
Is a revision in limited income DSM programs reasonable as suggested
within the testimony of the Community Action Partnership Association of Idaho
(CAPAI)?
Yes, we believe that some of the proposed changes are reasonable. The
Company does periodically reevaluate the limited income DSM portfolio and makes
revisions as necessary. In order to ensure the continuity of programs, commitments have
been made to the five system-wide CAP agencies currently under contract to A vista for
funding contracts through 2005. A reevaluation of the portfolio has been anticipated for
funding in 2006 and beyond, coinciding with the expected depletion of funding available
through the BP A C&RD program. We believe it is reasonable, at that time, to increase the
funding availability based upon historic, current and projected future customer needs.
What is the Company s response to the proposed program revisions and
funding levels calculated by Commission Staff and CAP AI?
The Company proposes an increase in the annual funding of Idaho electric and
gas DSM programs to $350 000 commencing in 2006. This is slightly higher than the
calculation appearing in Staff witness Anderson s testimony, but less than the $490 000
originally proposed by CAP AI. This amount will come from the Company s tariff riders
Schedules 91 and 191 , and represents a reallocation of the current tariff rider programs. This
program funding commitment has been discussed with CAP AI and we understand that this
funding level is acceptable to them.
The CAP AI calculation of a $490 000 annual funding level, comparable to that
incorporated into the Idaho Power order, is based upon the assumption that the demographics
Powell, Di-Reb
A vista Corporation
of the northern ten counties of Idaho is representative of Avista s Idaho service territory. The
Idaho panhandle is served by a total of nine electric utilities and it is the Company s opinion
that such an assumption is inappropriate.
The proposed $350 000 does, however, represent a substantial but justifiable increase
in both authorized and actual funding for this market segment. To place this funding level
into perspective, it is over three times higher than the current A vista combined electric and
gas DSM funding contracts, and is substantially more than double the combination of DSM
and C&RD funds currently allocated in annual contracts within Idaho, and approximately
two-thirds higher than the total funding authorizations after mid-year transfers of funds to
Idaho.
The Company has also discussed a revision to the implementation protocols applied
to the limited income program and concurs with the CAP AI position on the following
recommendations: the extension of funding eligibility to include energy-efficient doors
electric or natural gas appliances, an expansion of window measures allowable within the
program, and the extension of eligibility for shell measures to include any customer with
permanently installed electric or natural gas heating appliances regardless of the historic
electric usage of the home. Customers eligible under U.S. Department of Energy income
qualification standards would be eligible for any measure meeting a savings to investment
ratio of 1.0 or above. Additional vulnerable customers may be deemed eligible as the
program implementation parameters are developed.
Why does the Company desire to defer this increase in DSM funding to
2006?
Powell, Di-Reb
A vista Corporation
The Company is targeting the limited income segment for the expenditure of
approximately $1.2 million of BP A C&RD funds system-wide during the three years ending
in 2005. Per discussions with CAP AI and a review of funding availability the Company is
prepared to commit to a minimum of $350 000 in funding for Idaho limited income programs
in 2005 using a combination of electric and gas DSM funds and BP A C&RD funds. This is
possible while continuing to fulfill contract commitments to CAP agencies system-wide.
With these changes, is it your understanding that you have addressed the
concerns raised by CAP AI in this case?
Yes, based on our discussions with CAP AI, that is my understanding.
Could you summarize your testimony to the Commission?
Yes.My testimony provides an elaboration of our recommendations
regarding two issues:
1. We recommend that the Commission revise the Company s Schedule 91 electric
tariff rider rates on a cents/kwh basis be an amount equal to 1.25% of current base retail rates
with the understanding that A vista will file as necessary to revise electric and gas tariff rider
levels to provide sufficient funding for cost-effective DSM programs.
2. We propose an increase in annual limited income electric and gas DSM funding to
$350 000 and revisions in the program implementation parameters as described in my
testimony. This funding will come from the Company s tariff riders, Schedules 91 and 191
and will result from a reallocation of current tariff rider budgets.
Does this conclude your prefiled rebuttal testimony?
Yes.
Powell, Di-Reb
A vista Corporation