20130809Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: AUGUST 6, 2013

SUBJECT: AVISTA CORPORATION’S APPLICATION TO INCREASE THE RATES
CONTAINED IN ITS ENERGY EFFICIENCY RIDER ADJUSTMENT,
SCHEDULE 91, CASE NO. AVU-E-13-05

On August 1, 2013, Avista Corporation dba Avista Utilities filed an Application
asking to increase its “Energy Efficiency Rider” found in tariff Schedule 91. The Schedule 91
tariff rider is designed to “match future revenue with budgeted [energy efficiency] expenditures.”
Application at 1. The tariff rider mechanism includes a true-up that reconciles the previous
periods actual expenditures with Schedule 91 collections. Avista proposes to increase its
Schedule 91 rider rates by 1.2%. The proposed tariff rider is designed to recover a purported $3
million deficit in the rider account over a two-year period and provide approximately $6.4
million in annual revenues to fund ongoing energy efficiency programs.
THE APPLICATION
A. The Rider Programs
The Company reports that as of May 31, 2013, the fund balance in the Schedule 91
tariff rider account was approximately $3.0 million underfunded. The Company reports that the
underfunded amount is primarily the result of the Company’s efforts to accelerate the conversion
of “T12 fluorescent lighting fixtures to higher efficiency T8 fixtures.” Id. at 2.1 During 2012,
Avista operated a T12 conversion program where it issued 4,740 rebates to customers. The
1 Generally T12 fluorescent lighting fixtures use “older” magnetic ballast while T8 fixtures use newer electronic
ballast. T8 lamps with electronic ballast are more energy efficient than T12 lamps with magnetic ballast. Electronic
ballast will generally reduce the overall load on a circuit by reducing energy demand. See
www.UltraLuxLight.com/fluorescent_tube_faq.html .
DECISION MEMORANDUM 2
Company had budgeted approximately $1.2 million for this conversion program but issued
approximately $5.2 million in rebates.
The Schedule 91 rider funds a variety of demand-side management (DSM) programs
directed at improving the Company’s energy efficiency services. These programs include
rebates for: energy efficiency appliances, HVAC improvements, lighting measures, electric
motor measures, and participating in the Northwest Energy Efficiency Alliance (NEEA). The
Company has about 30 programs for customers to utilize. Application at 4. In addition, the
Company encourages its all-electric residential customers to convert to natural gas space and
water heating. Id.
The Company also assists in funding various NEEA programs. NEEA operates and
implements programs that promote electric conservation and efficiency in Avista’s service
territory. “Historically, Avista has received approximately 1.5 to 2 aMW of savings in its service
territory from NEEA programs.” Id. at 5. The Company also provides $700,000 for low-income
weatherization programs in 2012 and an additional $50,000 for conservation education in Idaho.
The low-income weatherization program is administered by the local community action agencies
in the Company’s Idaho service territory.
In determining the cost-effectiveness of its various DSM programs, the Company
applies several evaluation metrics. In particular, the Company utilizes the total resource cost
(TRC) test and the program administrator cost (PAC) test to evaluate the cost-effectiveness of its
DSM programs. The Company asserts that ratios over 1.0 illustrate that program benefits exceed
costs. “For 2012, the Company’s DSM portfolios were cost-effective with TRC and PAC ratios
of 1.58 and 2.69, respectively.” Id. at 6.
B. The Proposed Rider Increase
Increasing the Schedule 91 Energy Efficiency Rider by 1.2% in overall billed rates
would result in a proposed monthly rate increase in the rider of $0.92 for the average residential
electric customer utilizing 930 kWh per month. This represents an increase of 1.17% per month
for the average residential customer. The table below reflects the proposed increase to the
Energy Efficiency Rider for various customer classes:

DECISION MEMORANDUM 3

SCHEDULE
EXISTING
RATE
PROPOSED
RATE
–
–
–
–
–
–

The Company proposes that the Commission process this case under Modified Procedure and
request that the proposed tariff Schedule 91 rider be increased effective October 1, 2013.
STAFF RECOMMENDATION
Staff concurs with the Company’s recommendation to process this case via Modified
Procedure. Staff proposes the deadline for comments be set for September 10, 2013, and reply
comments (if any) be due September 13, 2013.
COMMISSION DECISION
1. Does the Commission wish to process this case under Modified Procedure with
comments due September 10, 2013, and the Company’s reply, if any, due September 13, 2013?
2. Does the Commission desire to hold public workshop(s) in Avista’s service
territory regarding the proposed 1.21% increase in the Schedule 91 tariff rider?

bls/M:AVU-E-13-05_dh