20130830Application.pdf

Avista Corp.
1411 East Mission P.O. Box3727
Spokane. Washington 99220-0500
Telephone [phone]
TollFree 8OG-727-9170
August 29,2013
Jean D. Jewell, Secretary
Idatro Public Utilities Commission
Statehouse Mail
W . 472 Washington Street
Boise,Idaho 83720
RE: Avista Utilities Application to
Projects
Dear Ms. Jewell:
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Fund Selected Research and Development Efficiency
Enclosed for filing with the Commission is an original andT copies of Avista Corporation's dba
Avista Utilities ('Avista or the Company") application requesting to accumulate and account for
customer revenues that will provide funding for selected electic energy efficiency research and
development (R&D) projects, proposed and implemented by the state of Idaho's four-year
Universities.
The Company requests that this filing be processed under the Commission's Modified Procedtre
rules.
Please direct any questions regarding this report to Bruce Folsom at [phone] or myself at
509-495-4975.
Sincerely,e*-L
Manager, Regulatory Policy
Avista Utilities
509-495-497s
linda. eervais@avistacorp. com
Enclosure
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DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
P.O.BOX3727
14I1 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: (s09)49s-4316
[e-mail]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
oF AVISTA CORPORATION TO FUND )
SELECTED RESEARCH AND DEVELOPMENT )
EFFICIENCY PROJECTS )
CASE NO. AVU-E-B-B
APPLICATION OF AVISTA CORPORATION
L INTRODUCTION
Avista Corporation, doing business as Avista Utilities (hereinafter Avista or
Company), at l4ll East Mission Avenue, Spokane, Washington, respectfully proposes to
accumulate and account for customer revenues that will provide frrnding for selected
electric energy efficiency research and development (R&D) projects, proposed and
implemented by the state of Idaho's four-year Universities. A key purpose of this
program is to provide a stable base of research and development funding that will allow
participating research institutions to sustain quality research programs that can be shaped
to benefit customers.
This application is intended to be consistent with Idaho Governor Butch Otter's
Idaho Global Entrepreneurial Mission "iGem" initiative in which industry would provide
R&D funding to supplement funding provided by the State of Idaho.r
Avista proposes $300,000 per year of revenue be allocated to research from the
Company's Schedule 91, "Energy Efficiency Rider Adjustment" tariff. Avista is not
requesting an additional change in the Schedule 9l funding.2 Avista's tariff Schedule 9l
is "trued up" on an annual basis to match revenues with expenses.
The Company is seeking authority to recover the R&D costs through Schedule 9l
pursuant to the terms included in this application.
I The purpose ofthe iGEM "is to leverage private-industry guidance and the talent and expertise ofldaho's
research universities to commercialize innovative and viable technologies that will strengthen Idaho's
economy. IGEM creates a platform to facilitate and accelerate the transfer of technology out of world-class
research facilities and into the private sector."
http://www.idahotechcouncil.ore/sites/alUsites/defaulVfiles/files/IGEM%20Flyeryo20Final.pdf
2 On August l,2}l3 the Company filed a request to increase Schedule 9l rider rates by l.2oZ, Case No.
AVU-13-05-E, as part of its annual true-up.
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This application consists of:
o A description of the need for this proposed program;
o a list of primary customer-service and secondary technical objectives;
. an overview of the proposed program; and
o progfttm govemance.
The Company requests that this filing be processed under the Commission's
Modified Procedure rules.
Communications in reference to this Application should be addressed to:
David J. Meyer, Esq.
Vice President and Chief Counsel for
Regulatory and Governmental Affairs
Avista Corporation
P.O.Box3727
14l I E. Mission Avenue, MSC-13
Spokane, WA 99220-3727
Phone: (509\495-4316
[e-mail]
Linda M. Gervais
Manager, Regulatory Policy
Avista Corporation
P.O.Box3727
l41l E. Mission Avenue, MSC-29
Spokane, WA 99220-3727
Phone: [phone]
I inda. gervai s@avi stacorp. com
II. BACKGROUND
In the 1990s, with the prospect of electric deregulation, utilities reduced or
eliminated budgets that would increase costs not included by third-party marketers for
sales of power to end-users. Research and development was one of those costs. This has
led to the utility industry having the lowest R&D share of net sales among all US
industries. The utility industry R&D funding as a percentage of total sales is 0.lYo;the
US industry average is 3.5Yo.3 Avista's spending for R&D included in Idaho rates as
recoverable expense was $196,000 in 2012, or 0.0802 of Idaho total electric retail revenue
3 National Science Foundation. Appendix Table 4-l4 "Company and other (nonfederal) R&D fund share of
net sales in R&D-performing companies, by industry and company siz.e:2003-2007" This is the most
recent available data.
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of $253,434,000. These costs are defined by payments provided to third-party entities
and do not represent time dedicated by Avista employees to monitor R&D in the
industry.
Research and development is defined, for the purpose of this proposal, to be
applied R&D that could yield benefits to customers in the next one to four years. This is
the period between "operationalizing" (or commercializing) new technology/systems and
basic (or theoretical) research which may produce benefits in a time period over four
years into the future. The nature of applied R&D is such that some projects would likely
be implemented on a utility's system, however not all. Avista's frrnding of $196,000 in
Idaho in 2012 was composed of payments to three organizations: the Electric Power
Research Institute, E-Source, and the Northwest Energy Efficiency Alliance.a Avista has
supported some research outside of customer rates; however this has been an exception.
The proposed additional funding of $300,000 per year would represent a customer
bill increase of approximately 0.lo/o or one-tenth of one percent for a residential customer
using 930 kWh per month. The monthly bill increase would be approximately $0.08 or
approximately $ 1 .00 annually.
In 2010, Govemor Otter announced Idaho would support university research as a
policy initiative with some funding provided by the state and supplemental funding
expected from other sources. This proposal would provide additional funding to selected
research.
Nationally, there a number of electric utility organizations - for both public and
private utilities - that promote electric efficiency research and development. The question
might be asked as to why additional resources should fund research and development
o EPRI budget is considered to be 100% research; E-Source is 50%; and NEEA is20Yo
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projects on a local scale, as proposed here, when these larger research programs could be
funded with little or no organizational effort. While we do see large-scale organizational
research as important on a national scale, there are limitations to what can be
accomplished through participation in these efforts alone. Large-scale solutions are often
generalized over broad issues that may apply to many regions at the highest level, which
may not be pertinent to electric customers in Idaho. Large-scale research programs and
solutions are often not 'off-the-shelf applicable' because they cannot be fully developed
or tailored to the unique nature and needs of a local utility. And, at times, the costs of
membership in these organizations are not justified by the research and development
retum on our customers' investment.
At the same time, there are benefits to organizing more-local and directed
research and development initiatives, which include the collaborative development of
tailored, long-term utility plans. Local programs can also better provide for the
identification and attainment of very specific research and evaluation needs, coupled with
the opportunity to enhance local university programs. This approach enhances
educational and training opportunities for future utility employees and invests the
revenues from our customers in the Idaho economy.
III. PROPOSED MECHANISM
Avista proposes to dedicate approximately $300,000 per year to fund applied
R&D. This funding would come from revenue collected through Avista's Schedule 9l -
Energy Efficiency Rider Adjustment. This amount would be a ceiling and not a
requirement to allocate this funding in any given year. Any remaining balance (not ear-
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marked) would be rolled over to a future year, and if terminated, the unallocated portion
would be added back to the tariff rider balance. The process would begin by Avista
issuing a "call for papers" (similar to a "request for interest"). Avista would select
proposals for funding and would contract with the selected proposal's Principal
Investigator (PI).s A third-party project manager would be retained (similar to existing
National Science Foundation protocols) to oversee the project. At the estimated l0% of
the project cost, the third party project manager would monitor project milestones and be
the liaison with utility staff.
o'Stage gate methodology" will be used for structuring proposals and for the
management of selected projects. Stage gates, common to other industries, are defined
points in which a project can be assessed regarding its progress. Stage gates consist of
three main elements: deliverables, criteria, and outputs. Stage gates are a logical
stopping point to assess project progress against these three elements. A research
proposal will require at least two stages in a year. The Principal Investigator is
responsible for defining a stage gate, based on the guidelines provided in the solicitation.
The intent of this application is to provide funding to solicit customer-benefitting
proposals from Idaho's research institutions. In this process, Avista does not intend to
specify projects in its "call for papers." Based on previous discussions with Dr. John
Gardner of Boise State University and Dr. Kevin Van Den Wymelenberg of the
University of Idatro, the following areas are representative of the type of projects that
may be considered:
5 The Principal Investigator, the lead scientist/engineer for the proposed, will be the University's primary
applicant, responsible for implementation and reporting of the proposal.
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Data. Information and Control
Increases in the availability of sensors and data logging devices from the
Advanced Metering Infrastructure to Home Energy Networks and modern
commercial building Energy Management Systems, have given rise to an
unparalleled expansion of data. Commensurate expansion of useful, actionable
information could employ multiple tools to help extract useful information, and
suggest optimal courses of action, from increased data inventory.
Data-Driven Modeling
Data mining and statistically driven techniques may uncover useful trends and
correlations. Model-based (so-called "Gray Box") approaches have the potential
to uncover useful engineering characteristics through analytical methods. For
example, this approach does not require significant computational resources but
has the potential for identifuing the thermal characteristics of homes by
examining energy consumption data.
Computational Intelli gence
Researchers at the Idaho National Lab, University of Idaho, and Idaho State
University are engaged in a project to provide add-on toolsets for commercial
building energy management systems. Using various computational intelligence
and data mining tools, they are developing algorithms to detect anomalies, create
concise user alerts and increase understanding of complex energy systems.
Evaluation. Measurement and Verifi cation (EM&V) Methodolo gies
EM&V, an important step for veri$ing claimed savings, may have the potential
for improving techniques and lowering costs on a wide range of energy efficiency
technologies, practices, and progrulms.
Hish Performance. Integrated Buildins Desiqn Processes
Designing highly energy efficient buildings include issues related to the dynamics
within the design teams, performance criteria development, demands for technical
information, and owner and operator education and training. Faculty, staff and
students (particularly at University of Idaho's Integrated Design Lab) have
provided technical design assistance and research support for over 500 buildings
in Idaho, the Pacific Northwest and around the United States. Involvement on
these projects spans both basic and applied research to outreach and education and
also encompasses the full range of design, construction and hand-off and
operations phases.
Human Factors: Comfort. Preference and Behavior
Energy efficiency research and practice touches a wide range of disciplines
including, but not limited to, architecture, economics, engineering, psychology,
and sociology. Therefore, a broad understanding of human factors is needed to
meet increasing expectations of energy efficiency technologies and programs.
The University of Idaho IDL team has developed expertise in human comfort
evaluation and its implications on energy efficiency through laboratory studies,
and field studies and case studies using both qualitative and quantitative methods.
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An example of results from Avista employees monitoring R&D is the Company's
efforts around grid modemization. In 2007, a feeder was modified and analyzed to
determine interactive effects of new technology. Called the Demand Response and
Energy Efficiency Project, this allowed Avista to be "shovel ready" for application of
economic stimulus awards through the American Recovery and Reinvestment Act
(ARRA). The Company received upwards of $40 million in ARRA funding based on
this work.
IV. ADDITIONAL BENEFITS
Evaluations of new and emerging technologies will better enable efficiency
approaches to occur through research and development. New and emerging equipment
can shape the development of program delivery. However, additional benefits should
result from this initiative, as discussed below.
The number of viable electric power engineering progrirms nationally, has
decreased to less than twenty, including the University of Idaho, which has one of the
best power engineering progftlms in the Country. The three universities, including Boise
State University and the Idaho State University, bring architectural and mechanical
engineering programs to the forefront which are instrumental for electric effrciency
improvement. University faculty and facilities offer a relatively untapped opportunity for
our utilities to gather critical research and development to better serve our customers,
while at the same time, strengthening of programs at these schools. As our Nations'
electrical systems are revitalized, students should be encouraged to pursue degree
programs that will support the industry.
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V. REPORTING
Avista will file an annual report by March 31't for the preceding calendar year.
This report will include key events during the reporting period and the accounting for
related expenditures.
The key events will include, at a minimum:
o documents regarding the "request for interest" and distribution list;o the process Avista followed for selection of projects, including Avista
staff involved;o description of the selected project(s) for funding;o selection of the project manager and related communications;o contract between Avista and the Principal Investigator and her/tris
academic institution including intellectual property, publication rights and
associated issues (similar to Avista's existing research agreements with
universities);o project milestones and related stage-gates;o for other than first-year projects, slmlmary of research in-progress and
anticipated completion milestones pursuant to contractual agreements and
project manager's administration; ando other, as appropriate, to inform the Commission of relevant activity.
Reporting on accounting will include:
o funds authorized for R&D projects;o funds expended for R&D projects;
o remaining balance of $300,000 (authorized and expended) if projects are
not subscribed up to the annual cap;o cost-recovery incurred of expended funds through Schedule 91, Energy
Efficiency Rider Adjustment; ando remaining, or accrued, balances for cost recovery as a true up.
Financial reporting will also be included in Avista's annual Demand Side
Management (DSM) Report due to the connection of both DSM and the R&D programs
to Schedule 91, although the latter will not be accompanied by the traditional cost-
effectiveness tests.
Avista hosts semi-annual energy efficiency Advisory Group meetings plus
Webinars on current topics of public interest, attended by the Commission Staff, among
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other interested stakeholders. The Company will include the R&D activity on the
regularly scheduled meeting agendas.
VI. CUSTOMER NOTIT'ICATION
Notice to the public of the proposed revisions, pursuant to IDAPA 31.21.02.102,
will be given simultaneously with the filing of this Application by posting a notice to the
Comoanv' s Website at www. avistautilities. com.
vrr. REQUEST
For the reasons provided above, Avista respectfully requests authorization by the
Commission to fund R&D up to $300,000 per year from revenue collected through
Avista's Schedule 91 (Energy Effrciency Rider Adjustment) effective on November l,
2013. Avista requests that this application be processed under Modified Procedure.
.74
DATED at Spokane, Washington, this 2_1_day of August, 2013.
AVISTA CORPORATION
David J. Meyer
Vice President and Chief Counsel for
Regulatory and Governmental Affairs
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