20070706Decision Memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:JUNE 28, 2007
SUBJECT:CASE NO. A VU-07-04 (Avista)
LOAD MANAGEMENT PILOT PROGRAM
On June 2007 Avista Corporation dba Avista Utilities (Avista; Company) filed an
Application in Case No. A VU-07-04 requesting authority to offer residential and commercial
demand response programs in portions of Sandpoint and Moscow for a two-year period. Internet
protocol thermostats, direct control units and related technology will be installed to reduce
energy usage at peak times of the year and gain experience with customer acceptance, program
design, operational components and cost effectiveness. The costs of this pilot are anticipated
to be approximately $123 000. Based on the assumed incremental costs of power during callable
events of $150 000, this program is expected to be cost effective.
As reflected in its Application, the Company would call a minimum of four "events
during the year to test the technology, impacts on load and customer acceptance. These events
will be performed at times of critical peak demand periods. Duration of the events will typically
be four hours but can be extended to a six-hour time frame depending on power price market
conditions. This pilot includes presentation of information to selected customers through the use
of a web portal. Other customer features will be examined to test customer responsiveness.
Customers who are on Schedules 1 11 and 21 are eligible for participation.
Qualifying participants must be homeowners or business owners occupying the premises for at
least one year on a full-time basis. This will allow a comparison of energy consumption with
previous summer/winter usage. The targeted participants are all electric load. Customers can
DECISION MEMORANDUM
have an alternate non-electric back-up heat source. An alternate heat source will be required if
demand response units are to be installed on baseboard electric load.
Participating customers will be assessed no incremental costs. The "incentive" for a
customer to participate is to receive upgraded equipment and the associated features. Customers
opting in for a programmable controllable thermostat (PCT) will receive a thorough inspection of
their HV AC system and a state of the art PCT. Participating customers with demand response
switches will also receive an audit on all equipment controlled via the switch plus a $10 a month
credit for the months July, August, December, January and February.
This program will examine some of the following directly controllable appliances:
Air conditioning
Complete HV AC system (electric heat pump with air conditioning)
Water heater
Pool pump
Electric forced air heating system
Electric baseboard heating system
Irrigation pump (if any)
Due to A vista system capacity issues and seasonal spot power prices, air conditioning
load will be given priority in customer selection. However, the Company intends to explore the
effects of demand responses on both winter and summer peaks. Therefore, customers with a
HV AC system (for heating and air conditioning) will be given equal priority. Additionally, in
order to gain knowledge and experience with a variety of demand response technologies, the
Company will install demand response equipment in the above listed applications.
Measurement & evaluation (M&E) is integral to defining benefits of a pilot program
and identifying areas for improvement or modification. A vista s M&E will examine four
components: (1) kilowatt savings, (2) technology, (3) customer acceptance, and (4) interactions
of peak demand on the Company s distribution system.
A vista requests that the Commission approve the proposed Schedule 96 tariff and
related tariff changes for an effective date of July 15 , 2007.
On June 6, 2007, the Commission issued Notices of Application and Modified
Procedure in Case No. A VU-07-04. The deadline for filing written comments was June 27
2007. Comments were filed by Commission Staff and two of the Company s residential
customers. Both customers support the Company s Application. Commission Staff recommends
DECISION MEMORANDUM
that the Application by approved with a requirement of periodic updates to the Company
External Energy Efficiency (EEE) Advisory Board and a final report to the Commission
following the end of the pilot.
The proposed pilot effort, Staff contends, is limited in scope, yet is designed to obtain
considerable information for a relatively modest investment. The proposal, Staff states, appears
to have been designed to minimize the duplication of efforts previously conducted by other
utilities, focusing on verifying the results of other utility programs and their applicability to
Avista s service area and system, and examining new issues and technologies. The Application
identifies a broad range of objectives for the measurement and evaluation of this pilot program.
In addition to measuring peak kilowatt reductions, Staff encourages the Company to measure
kilowatt hours (kWh) as well to examine whether energy use is reduced or shifted to other times.
Staff notes that on June 21 , 2007, A vista filed additional comments clarifying that
a pilot program
, "
the program includes flexibility to allow for modifications based upon market
conditions and/or findings." The comments include the example of expanding the program
beyond two feeders initially identified by the Company for the program, should it be necessary to
achieve the desired level of participation or to reduce interactive effects of similar equipment.
Staff agrees that such flexibility should be included in the implementation of pilot programs.
Staff believes that failure to adjust a change in market conditions or program findings during the
pilot period would be unreasonable.
In conversations with the Company, Staff notes that Avista indicates it plans to book
the expenditures for load management devices used in the pilot as expenses to be funded by
Schedule 91 , the Company s DSM tariff rider rather than capitalization and amortization of its
investment. Staff finds funding through the DSM tariff rider to be a reasonable approach for a
pilot program of this duration and for the limited number and types of devices to be purchased
for use in the proposed pilot.
COMMISSION DECISION
A vista Corporation requests Commission authority to implement load management
pilot programs in the Sandpoint and Moscow areas. The duration of the pilot program is two
years.The cost of the pilot is anticipated to be $123 000.The commenting customers
recommend that the Application be approved. Staff recommends approval with notification and
reporting requirements.Does the Commission find it reasonable to approve the proposed
DECISION MEMORANDUM
demand response pilot program and to require periodic updates to the Company s EEE Advisory
Board and a final Staff report to the Commission following conclusion of the pilot?
Scott Woodbury
bls/M:A VU-O7-04 sw2
DECISION MEMORANDUM