20091007final_order_no_30918.pdf

Office of the Secretary
Service Date
October 7, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR
AUTHORITY TO INCREASE ITS TARIFF
SCHEDULES 91 AND 191 - ENERGY
EFFICIENCY PUBLIC PURPOSE RIDER
ADJUSTMENTS
CASE NOS. A VU-09-
A VU-09-
ORDER NO. 30918
On June 30, 2009, Avista Corporation dba Avista Utilities (Avista; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of an
increase to tariff Schedules 91 and 191 rates, Energy Efficiency Public Purpose Rider
Adjustment. Schedules 91 and 191 are designed to recover the costs incurred by the Company
associated with providing electric and natural gas energy efficiency services to customers. The
proposed increase in Schedules 91 and 191 rates, the Company contends, is necessary to
continue to fund ongoing electric and natural gas efficiency programs consistent with the
Company s most recent electric and natural gas integrated resource plans (IRPs). It will also
serve to amortize a deficiency balance within the electric and natural gas efficiency tariff riders
resulting from the Company s response to higher than expected customer demand for services.
Also included in the Company s filing are proposed procedural modifications to reduce the
likelihood of significant positive or negative balances in the future.
To coincide with other rate changes occurring on August 1 2009, the Commission by
Interlocutory Order No. 30870 authorized the proposed increases in Schedules 91 and 191
Energy Efficiency Public Purpose Rider Adjustments for an August 1 , 2009, effective date and
established a procedural schedule for investigation and comments. The Commission in this
Order finds the proposed changes to Schedule 91 and 191 rates reasonable and approves
continuation ofthe previously authorized increases.
Electric Schedule
The proposed net increase above rates authorized for an August 1 , 2009, effective
date by service schedule for electric customers is as follows:
Residential Service-Schedule 1
General Service-Schedules 11 & 12
Large General Service-Schedules 21 & 22
73%
73%
73%
ORDER NO. 30918
Extra Large General Service-Schedule 25
Potlatch-Schedule 25P
73%
73%
Pumping Service-Schedules 31 & 32 73%
The proposed 2.73% increase in the existing efficiency tariff is equivalent to a $1.77 a month
increase for a residential customer using an average 1 000 kilowatt hours per month.
Natural Gas Schedule 191
The proposed net increase above rates authorized for an August 1 , 2009 , effective
date by service schedule for natural gas customers is as follows:
General Service- Firm-Schedule 101
(Residential & Small Commercial)
Large General Service Firm-Schedules 111 & 112
Interruptible Service-Schedules 131 & 132
1.01 %
1.01 %
1.01 %
The proposed 1.01 % increase in the existing energy efficiency tariff for natural gas customers is
equivalent to a $0.90 per month increase for residential customers using 65 therms per month.
As reflected in the Company s Application, customers continue to look to Avista
DSM programs for assistance in responding to increased retail electric and natural gas prices.
Existing and planned programmatic expenditures are exceeding tariff rider revenues. As of the
close of May 2009, Avista s electric DSM tariff rider balance for Idaho is a negative $2 361 178
and the natural gas DSM tariff rider balance for Idaho is a negative $1 036 753. The proposed
tariff rider increase is estimated to eliminate this current negative balance by the end of 20 1 0 and
to fund estimated future expenditures. The proposed increase in the DSM surcharge is
approximately 2.73% at present electric rates and 1.01 % at present natural gas rates.
Schedules 91 and 191 funds support DSM programs described in Schedules 90 and
190. These programs include but are not limited to the following measures:
. Appliance Measures
. Compressed Air Measures
HV AC Measures
. Industrial Measures
. Lighting Measures
ORDER NO. 30918
. Maintenance Measures
. Motors Measures
. Renewable Technologies
. Northwest Energy Efficiency Alliance Participation
. Shell Measures
. Sustainable Building Measures
The Company s DSM programs are based on providing financial incentives, or
rebates " for cost-effective efficiency measures installed by customers with a simple payback of
greater than one year. This includes more than 300 measures that are packaged into more than
30 programs for customer convenience.
A vista has long encouraged the direct use of natural gas by its electric customers.
The Company is continuing this effort with residential rebates for the conversion of electric-to-
natural-gas space and water heating loads as well as a broad program for any non-residential
electric-to-natural-gas conversions meeting specified criteria for relative British Thermal Unit
(BTU) efficiency. The cost-effective potential for these measures has been incorporated into
Avista s IRP effort and is contained within the identified acquisition goal. Avista s residential
programs include high efficiency equipment, electric-to-natural-gas conversions, compact
florescent lights (CFLs), "second" refrigerator recycling, weatherization and rooftop dampers, as
well as providing educational assistance through various community events.
For non-residential customers, in addition to prescriptive programs, Avista offers
site-specific" programs. Site-specific programs are customized to the customer premise. The
site-specific offering provides incentives on commercial and industrial energy efficiency
measures with a simple financial payback exceeding one year. This is implemented through site
analysis, customized diagnosis, and incentives determined for savings generated by the
customers' premise or process. Commercial and industrial programs available to Avista
customers include:
. Energy Smart Commercial Refrigeration
. Lighting and Controls
. Commercial Food Service Equipment
. Building Retro-commissioning
ORDER NO. 30918
. Premium Efficiency Motors
. Power Management for Personal Computer (PC) Networks
. LEED Certification, Commercial HV AC Variable Frequency Drives (VFDs)
. Refrigerated Warehouses
. Vending Machine Controllers
. Demand Controlled Ventilation
. Side-stream Filtration
. Steam Trap Replacement and Repair
. Multi-family Development
. LED Traffic Signals
. Electric-to-Natural-Gas Water Heater Conversions
. Commercial Clothes Washers
In addition to Avista s prescriptive and site-specific programs, the Company funds
and participates in the activities of the Northwest Energy Efficiency Alliance (NEEA). NEEA
focuses on using a regional approach to obtain electric efficiency through the transformation of
markets for efficiency measures and services. An example of NEEA-sponsored programs that
benefit A vista customers is decreasing the cost of CFLs and high efficiency appliances by
working through manufacturers. For some measures, a large scale, cross-utility approach is the
most cost-effective means to achieve energy efficiency savings. This approach is particularly
effective for markets composed of large numbers of smaller usage homogenous consumers, such
as the residential and small commercial markets. The results from NEEA programs are reported
in March of the following year. For 2008, Avista s portion of the regional savings from NEEA
programs amounted to 2.1 aMW or more than 18 million kWh.
Effective October 1 , 2008 , in Order No. 30647 in Docket Nos. A VU-08-01 and
A VU-08-, $465 000 was directed to Idaho electric and natural gas low-income customers
and $25 000 was provided to Idaho Consumer Assistance Program (CAP) agencies for the
purpose of underwriting agency personnel assisting in low-income outreach and conservation
education.The low-income weatherization portfolio represents approximately 8% of the
Company s total energy efficiency budget.
ORDER NO. 30918
Avista also actively participated in the energy affordability workshops in Case No.
GNR-08-01. In that case, workshop participants are exploring ways to address energy
affordability and the difficulties some customers experience in paying their energy bills. A vista
supports the Commission s Order No. 30724 in that case and favors legislation that would allow
utilities to propose "programs, policies and rates" that may assist low-income customers in their
efforts to pay energy bills. The Commission specifically identified A vista s Low Income Rate
Assistance Program (LIRAP), as a means to provide funds to help low-income residents in
Washington and Oregon pay their energy bills. The LIRAP program (if implemented in Idaho)
would allow A vista to collect, through a small monthly charge to all customers, additional
dollars that would be directed to customers least able to pay their energy bills. The local
community action agencies that are already in place would administer these dollars. The
Company is committed to working with the Commission Staff and interested parties to support
this legislation in 2010.
Stakeholder EnrollmentslRevised Procedures
The Company has regularly convened a stakeholders' forum known as the External
Energy Efficiency Board (Triple E). These meetings have included customer representatives
Commission Staff members, and individuals from the environmental communities. These
stakeholder meetings review the Company s program offerings as well as the underlying cost-
effectiveness tests and results. The programs have been cost-effective from both a Total
Resource Cost (TRC) and Program Administrator Cost Test (PACT) (formally known as the
Utility Cost Test) (UCT)) perspective. The increased funding requested in the Company s filing
will continue to be subject to the cost-effectiveness test prescribed by the Commission.
To reduce the likelihood of significant positive or negative balances in the future
A vista proposes that a schedule be established for the revision of the DSM components of
Schedules 91 and 191. Avista proposes to file on or before February 15th of each year to revise
the DSM portions of the Schedule 91 and 191 tariff rider mechanisms to establish tariff riders
that are sufficient to fund the following twelve months of DSM as well as amortizing any tariff
rider imbalance. It is understood that discussions with interested parties may, from time to time
lead to modifications of this process in the event that the projected change to the tariff rider is
very small or when changes to the period of time that an imbalance is to be recovered are
deemed appropriate.
ORDER NO. 30918
Further, Avista commits to circulate drafts of any tariff revision affecting the
Company s DSM portfolio to its Triple E board at least 30 days prior to filing said revision.
Avista also proposes to provide the Triple E board with a quarterly report on the Schedule 91 and
191 tariff rider balances. Triple E board members will receive an e-mail alert if either of these
balances exceeds 20% of the forecasted annual revenue, either positive or negative, at any
month-end. A vista has not and does not currently earn any interest upon any positive (customer
owes shareholder) balance in the tariff rider. A vista will complete and circulate an analysis of
the results in the prior calendar year to the board by March 31 st of each year.
The protocols described above, the Company contends, will manage the balances of
the tariff rider mechanism and ensure that sufficient funding is available for the completion of
programmatic measures. The reasons that the tariff rider balances have been negative are
because A vista has acquired, and will continue to acquire, cost-effective energy-efficiency
resources as an important component of its overall resource portfolio. This includes meeting
customer demand for energy efficiency financial rebates in advance of tariff rider recovery.
On July 31 2009, the Commission issued Notice of the Company s Application and
Interlocutory Order No. 30870 authorizing implementation of the proposed increases to tariff
Schedules 91 and 191 for an effective date of August 1 , 2009. The Commission also on said date
issued Notice of Modified Procedure and established a comment deadline of August 28 2009.
Comments were filed by Commission Staff and 18 of the Company s customers.
Public Comments
Of the 18 customers submitting written comments, 17 express opposition to the
proposed increase and 1 recommends implementation of a program to remotely control the use of
air conditioners during times of peak demand.
A wide range of concerns were expressed as to why the Commission should disallow
an increase to the Energy Efficiency Tariff Riders with the most mentioned concerns being the
poor state of the economy and recent rate increases granted to the Company. Of 17 customers in
opposition, 10 referenced either the current state of the economy, unemployment or financial
challenges with paying utility bills. Eight customers cited the Company s recent general rate
increase and questioned the need for another increase.Five comments were made about
ORDER NO. 30918
Company executive pay and profits. Concerns about the future viability of small businesses
were also mentioned.
Commission Staff
Staff audited A vista s energy efficiency expenditures from January 1 , 2008 through
May 31 , 2009 , and verified the reported balance on May 31 , 2009 , to be as follows:
Electric Natural Gas
Interest
Expenditures
Residential Programs
$ 384 396
465 578
296
$ (407 643)
2,481 719
January 1 , 2008 Rider Balance
Contributions
Regional Programs
General Programs
052 941
352 990
925 832
310 300
593,383
$(2 361 177)
031 663
201 000
592 643
(98)
285 607
$(1,036 740)
Low Income Programs
Non-Residential Programs
May 31 , 2009 Rider Balance
Staff recommends that the increases in A vista s Schedules 91 and 191 , Energy
Efficiency Public Purpose Rider Adjustment effective August 1 , 2009, as authorized by
Interlocutory Order No. 30870, remain in effect. Staff recommends that the Commission reject
the Company s proposal to require annual reviews of Rider balances and adjustments and instead
continue with the existing policy of allowing the Company to file proposed changes to Schedules
91 and 191 at the Company s discretion whenever it is necessary and appropriate to do so , either
within or outside general rate case filings.
Staff recognizes that rate increases are especially unpopular during hard economic
times. However, Staff states that cost-effective DSM, including energy efficiency programs and
load management programs, is a significant resource that helps customers control their utility
bills, reduces the need for higher cost supply-side resources, and increases system reliability.
The least costly electricity resource for A vista, Staff contends, is customers
increasing the efficient use of their buildings, appliances, lights, irrigation systems, and industrial
ORDER NO. 30918
processes without utility intervention and administration. Staff believes the second least costly
resource is when utilities or other entities prudently administer cost-effective programs that
provide monetary incentives and educational opportunities for customers to increase their
efficiencies. The most expensive resources, Staff notes, are additional generation, transmission
and distribution facilities , regardless of whether the generation facilities are thermal, hydro,
wind, solar or other alternatives.
Even though program administration creates additional costs, Staff contends that
efficiency programs can be cost-effective to the extent that cash incentives and/or educational
efforts result in customers improving their efficiencies beyond what they would do without such
programs in amounts sufficient to cost-effectively recoup the administration costs.Post-
implementation evaluations, Staff contends, should be completed to further improve the
programs, to reassess all assumptions including baseline trends, and to show the actual cost-
effectiveness achieved.
Staff expects that Avista s energy efficiency program costs will continue to be
prudently incurred and that the programs will remain cost-effective. However, Staff believes
that Avista s tariff Schedule 91 potentially over-emphasizes reliance upon the Total Resource
Cost (TRC) cost-effectiveness test. Staff continues to favor broader cost-effectiveness analyses
for utility DSM from the additional perspectives of all customers, program participants and non-
participants. Although A vista currently performs such additional analyses, Staff is concerned
about the Company s tariff language limitation to the TRC perspective. An additional concern
of Staff is the tariffs emphasis on portfolio cost-effectiveness, which inappropriately suggests
that cost-effectiveness for individual programs and measures is not important. Conceivably,
Staff contends that there are some non-cost-effective measures for which it may be prudent for
A vista to provide incentives if such measures can be shown to help sell cost-effective measures
to customers; but the burden of proof is on the Company to show how the overall net benefit to
customers is increased, rather than decreased.
All electric customer classes, Staff contends, are recelvmg benefits from the
Company s electricity DSM programs. Staff has reviewed the Application s proposed funding
level and supports continuation of the rate increase in Schedule 91 , Energy Efficiency Rider
(i., from approximately 1.25% of base revenues to approximately 3.98% of base revenues
resulting in a 2.7% rate increase for all customer classes).
ORDER NO. 30918
Staff notes that the primary economic differences between electric and gas resources
are that wholesale gas costs are much less time-variant and consumption reductions by customers
of individual utilities have less effect on wholesale prices. As a result of these differences, cost-
effectiveness from the non-participant perspective is even more difficult. Nevertheless, Staff
notes that Avista historically has achieved cost-effectiveness from the other major perspectives
, TRC, UCT and participant, for its natural gas efficiency programs.
All natural gas customers, Staff contends, are receiving benefits from the Company
natural gas DSM programs. Staff has reviewed the Application s proposed funding level and
supports continuation of the rate increases in Schedule 191 , Energy Efficiency Rider, (i., from
approximately 1.6% of base revenues to approximately 2.6% of base revenues, resulting in a 1 %
rate increase for all customer classes).
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case Nos.
A VU-09-and A VU-09-including the Application and comments and
recommendations of customers and Commission Staff.We have also reviewed our prior
Interlocutory Order No. 30870 authorizing the proposed increases in Schedules 91 and 191 for
an August 1 2009, effective date.
Energy efficiency measures and cost-effective demand-side management programs
have long been utilized to reduce the need for higher cost, supply-side resources. While
implementation of energy efficiency measures by customers without utility participation is the
least costly electricity resource, the next is prudently administered cost-effective DSM programs
some providing monetary incentives to customers, others providing educational opportunities. It
is this second set of measures that we address in the Company s gas and electric Energy
Efficiency Public Purpose Rider tariffs. We authorize the funding. The Company provides the
implementation. All customers benefit, participants and non-participants alike.
Reviewing Staffs audit results, we are satisfied that the Company has accrued deficit
balances in both its Schedule 91 and 191 rider accounts. We find it reasonable to continue with
the previously authorized and implemented increases to allow the Company to recover its prior
expenditures and to provide continued funding for energy efficiency and DSM programs.
ORDER NO. 30918
We expect the Company to follow through with post-implementation evaluation of its
energy efficiency and DSM programs, to reassess initial assumptions and to demonstrate the
cost-effectiveness of both the total portfolio and individual programs and prudence of
expenditures.
We agree with Staff that a Commission-mandated filing by the Company of annual
true-ups in Schedules 91 and 191 tariff rider balances is not required. Instead, filings with the
Commission are left to the discretion of the Company.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corporation dba
A vista Utilities, a combination electric and natural gas utility, pursuant to the authority granted
by Title 61 of the Idaho Code and the Commission s Rules of Procedure, IDAPA 31.01.01.000
seq.
ORDER
In consideration of the foregoing and as more particularly described above, the
Commission hereby authorizes continued implementation of the increases to the Company
tariff Schedules 91 ( electric) and 191 (natural gas) Energy Efficiency Public Purpose Rider
Adjustments previously approved in Interlocutory Order No. 30870 for an August 1 , 2009
effective date.
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.
ORDER NO. 30918
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
-H..
day of October 2009.
4'.
D. ;;rRESIDENT
g~.
d&~L
MARSHA H. SMITH, COMMISSIONER
~NER
ATTEST:
fj ra..
.AJJe D. Je
Commission Secretary
bls/O:A VU-09-06 A VU-09-04 sw2
ORDER NO. 30918