20120917Comments.pdf

KARL T. KLEIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
P0 BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5156
V Li
20I2SEP17 PM 14:f3
AC PUL"Lo Jill ilE CMlSSOJ
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION'S APPLICATION TO REVISE ) CASE NO. AVU-E-12-07
ITS ELECTRIC ENERGY EFFICIENCY RIDER)
ADJUSTMENT, SCHEDULE 91. ) COMMENTS OF THE
) COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission comments as follows on Avista
Corporation's Application.
BACKGROUND
On July 31, 2012, Avista Corporation dba Avista Utilities applied to the Commission for
an Order allowing Avista to decrease Schedule 91 rates.' Specifically, Avista requests authority
to adjust the portion of Schedule 91 that funds electric demand-side management (DSM)
programs described in Schedule 90. Id. at 4. Avista says its proposed changes will reduce billed
electric rates by 1.3%. Id. at 1.
'Avista filed a single, combined Application in Case Nos. AVU-E-12-07 and AVU-G-l2-06. The Commission
subsequently consolidated AVU-G- 12-06 with another case, AVU-G- 12-03. See Notice of Application, Case Nos.
AVU-G-. 12-03 and AVU-G- 12-06. Accordingly, the instant case, AVU-E- 12-07 is being processed by itself.
STAFF COMMENTS 1 SEPTEMBER 17, 2012
Avista says for 2010-2011, its energy efficiency programs and measures resulted in
electric savings of 59,002 MV/h (115% of the Integrated Resource Plan (IRP) goal) in Idaho. Id.
at 2.
The Company states that in 2011, its electric DSM portfolio was cost-effective with a
Total Resource Cost (TRC) test and Program Administrator Cost (PAC) ratios of 1.80 and 2.88,
respectively. Id. at 6-7.
Avista maintains that the revenue expected to be generated by the Schedule 91 surcharge
at its present level, would exceed the requirements necessary to fund the DSM activities during
the next 12-month cycle, including adjustments for the disposition of rider imbalances. Through
June 2012, Avista's Idaho electric DSM tariff rider balance was $316,231 (Company owes
ratepayer). Id. 2-3.
The Company further maintains that only 55% of the currently projected electric DSM
tariff rider surcharge revenue is needed to fund the expected DSM operations for the 12 months
following October 1, 2012, given a projected balance of $886,761 at the end of September 2012.
Thus, the Company requests a 45% reduction in the electric DSM tariff rider surcharge effective
October 1, 2012. The Company says the surcharge reduction would not impact the Company's
ability to fund and pursue cost-effective DSM resources; it will merely adjust revenues to move
the tariff rider balance towards zero. Id. at 3. The Company says the proposed reduction to
Schedule 91 rates and charges will decrease the Company's estimated annual revenue by
$3,464,000 (a decrease of 1.3% of billed rates). The Company says the proposed rate decrease
will have an average monthly bill impact to residential electric customers using 939 kWh of
$1.05. Id. at 7.
STAFF REVIEW
Staff has reviewed the Company's Application and supplemental information and
supports the Company's proposal to reduce the Schedule 91 electric energy efficiency tariff rider
("Rider"). Staff does not believe the Company's proposal will impair the Company's ability to
continue pursuing all cost-effective DSM. Rather, the decrease serves to gradually align Rider
revenues to expenditures over the next twelve months, with a zero balance forecasted for
September 2013.
Staff recognizes several factors have contributed to the Company's proposal to decrease
the Rider. First, the end of federal American Recovery and Reinvestment Act (i.e., ARRA or
STAFF COMMENTS 2 SEPTEMBER 17, 2012
Stimulus) tax incentives for energy efficient measures has contributed to declining customer
participation. Second, a persistent sluggish economy continues to curtail customer behavior to
voluntarily invest in energy efficient appliances. Staff believes it is reasonable for the Company
to return an over-collected Rider balance to customers now given the difficult economic
conditions.
Staff has verified that the Company's Rider balance is $316,231 (over collection) as of
June 2012 and will likely achieve the $887,000 surplus balance by October 1, 2012. The
Company submitted a Rider balance report based on an October 2012 to September 2013 test
year. For October 2012 thru September 2013, the Company has forecasted the following Rider
balance with the proposed Rider adjustments:
Expenditures: $5,028,751
Revenues: $4,190,189
Accumulated 2012 Rider balance to be applied to 2013 revenues: $886,761
September 2013 Rider balance: $0
Staff considered spreading the Rider balance over more than twelve months. But Staff
ultimately believes it is reasonable for the Company to return the Rider balance to customers
within twelve months due to the decreased amount of forecasted Rider expenditures over the
period. The Company has informally said it intends to file an annual true-up of Schedule 91 to
coincide with other annual filings (e.g., the Power Cost Adjustment and Purchased Gas Cost
Adjustment). While Staff does not necessarily support annually changing the Rider rate, Staff
continues to support the Company's pursuit of all cost-effective DSM. Should actual cost-
effective DSM expenditures exceed Rider revenues, Staff expects the Company to ask for a
corresponding Rider increase.
Expenditure Levels
Staff has reviewed the Company's expenditure levels from calendar year 2009-2012 to
determine how DSM program expenditures have changed over time, what factors have impacted
those expenditures, and what level of finding will be necessary in the future. The following
chart shows the expenditures:
STAFF COMMENTS 3 SEPTEMBER 17, 2012
Calendar Year 2009
Expenditures
2010 2011 2012 2013
(Res/Non-res/Low $5,335,907 $5,381,473 $7,268,052 $4,641,789 $5,016,058
income/NEEA!EM&V (*$6,068,052 (forecast) (forecast)
/Implementation) excluding
one-time
CFL
expenditure)
The chart demonstrates the variable nature of DSM funding from 2009— 2012:
• For calendar year (CY) 2009 —2010, the Company's expenditures were fairly
comparable.
For CY 2011, the significant increase in expenditures of $7,268,052 was primarily
driven by a large growth in customer incentives and a one-time "CFL
Contingency Program" expense. Absent the CFL (Compact Fluorescent Light)
program, 2011 expenditures would have been $6,068,052 as reflected in the chart.
The Company was required to meet an energy efficiency target under
Washington's 1-937 energy efficiency legislation. This resulted in the Company
distributing large amounts of CFL's to its entire service territory at about a $1.2
million cost to Idaho customers.
• For CY 2012, a significant decrease in expenditures is overwhelmingly due to
decreases in customer-driven residential incentives. Most of the ARRA tax
incentives have expired, and forecasted participation is expected to remain flat.
• For CY 2013, an increase in expenditures is driven by a $300,000 expected
CEERI (CAES 2 Energy Efficiency Research Institute) expense that depends on
Commission approval and a 1.6% ($74,000) forecasted increase in load growth
and DSM services. If these expenditures were netted out, 2013 expenditures
would equal 2012 expenditures.
Staff notes that in Case No. AVU-E-09-06, the Company asked to increase the Rider
primarily to eliminate a large Rider deficit. The increase subsequently was approved in Order
No. 30918. The decrease in DSM participation due to the end of ARRA tax incentives and a
2 CAES, the Center for Advanced Energy Studies, is a research and education partnership between Boise State
University, Idaho National Laboratory, Idaho State University, and University of Idaho.
STAFF COMMENTS 4 SEPTEMBER 17, 2012
continuing stagnant economy, combined with an over-funded Rider designed to reduce prior
deficits, makes the Company's proposal to decrease the Rider reasonable.
Electric to Natural Gas Conversions
In light of the Company's proposal in Case No. AVU-G-12-03 to suspend funding gas
DSM, and because the Company funds electric to natural gas conversions through the electric
Rider, Staff reviewed the Company's funding level and future expectations for electric to natural
gas measure conversions. Considering the current affordability of natural gas, Staff expects
some growth in fuel switching. For 2012, the Company budgeted $34,307 for space and water
heat conversion. The Company will continue to fund conversions and is planning to increase its
incentive offerings for some conversion measures. Staff supports the Company's intent to
reevaluate its current incentive offerings.
STAFF RECOMMENDATION
Staff recommends that the Commission accept the Company's proposal in this
Application to reduce the electric energy efficiency Rider, Schedule 91, by 1.3% of billed
revenue effective October 1, 2012.
Respectfully submitted this day of September 2012.
Karl T. Klein
Deputy Attorney General
Technical Staff: Nikki Karpavich
Donn English
i:umisc/eomments/avue I 2.7kknkde comments
STAFF COMMENTS 5 SEPTEMBER 17, 2012
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 17 " DAY OF SEPTEMBER 2012,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E-12-07, BY E-MAILING AND MAILING A COPY THEREOF,
POSTAGE PREPAID, TO THE FOLLOWING:
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
P0 BOX 3727
SPOKANE WA 99220-3727
E-MAIL: [e-mail]
LINDA GERVAIS
MANAGER, REGULATORY POLICY
AVISTA CORPORATION
P0 BOX 3727
SPOKANE WA 99220-3726
E-MAIL: 1inda.gervais(avistacorp.com
SECRETARY
CERTIFICATE OF SERVICE