20131031final_order_no_32918.pdf

Office of the Secretary
Service Date
October 31,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION’S APPLICATION TO FUND )CASE NO.AVU-E-13-08
SELECTED RESEARCH AND )
DEVELOPMENT EFFICIENCY PROJECTS.)ORDER NO.32918
________________________________________________________________________________________
)
On August 30,2013,Avista Corporation (“Avista”or the “Company”)applied for an
Order authorizing it to accumulate and account for customer revenues that will fund selected
electric energy efficiency research and development (“R&D”)projects,proposed and
implemented by Idaho’s four-year universities.The Company seeks to fund up to $300,000 per
year of R&D from revenue collected through Avista’s Schedule 91,“Energy Efficiency Rider
Adjustment”(the “Rider”)effective November 1,2013.Application at 1,9.For a residential
customer using 930 kWh per month,the Company’s proposal represents about an P per month
bill increase.Id.at 3.
On September 23,2013,the Commission solicited input from interested persons on
the Application,and set an October 21,2013 comment deadline.See Order No.32895.
Commission Staff submitted the only comments in the case,and supported the Company’s
Application.The Company did not reply.
Having reviewed the record,the Commission enters this Order granting the
Company’s Application.
THE APPLICATION
In its Application,the Company explains that the utility industry has the lowest R&D
share of net sales among all U.S.industries.The Company explains that the average U.S.
industry R&D funding as a percentage of total sales is 3.5%,but that the average R&D funding
for the utility industry is 0.1%.Further,the Company’s spending for R&D included in Idaho
rates as a recoverable expense was $196,000 in 2012,or 0.8%of Idaho total electric retail
revenue.Id.at 2-3.This amount consisted of payments to the Electric Power Research Institute,
E-Source,and the Northwest Energy Efficiency Alliance.Id.at 3.
Avista now proposes to recover up to $300,000 per year of applied R&D costs from
Rider revenue.The Company explains that such R&D could benefit customers in the next one to
ORDER NO.32918 1
four years.The Company says that some,but not all,applied R&D projects would likely be
implemented on a utility’s system.Id.at 3.
The Company says its Application is consistent with Governor Otter’s Idaho Global
Entrepreneurial Mission “iGem”initiative,in which industry supplements university R&D
funding provided by the State.Id.at 1,3.The Company says its proposal would enhance
educational and training opportunities for future utility employees,and invest revenues from
customers into Idaho’s economy.Id.at 4.
The Company’s additional $300,000 per year of applied R&D funding would be a
ceiling and not a requirement that the Company allocate the funding to R&D in any given year.
Any remaining balance (not earmarked)would roll over to a future year and,if terminated,the
unallocated portion would be added back to the Rider balance.Id.at 5.
The Company says the process would begin with it issuing a “call for papers”(similar
to a “request for interest”).The Company would choose proposals for funding and would
contract with the selected proposal’s Principal Investigator (the lead scientist/engineer for the
proposal).A third-party project manager would be retained to oversee the project and serve as a
liaison to utility staff.The Company will use “stage gate methodology”and project assessment
points when structuring proposals and managing projects.Id.at 5.
The Company says it will file an annual report by March 31 for the preceding
calendar year.The report will include key events during the reporting period (e.g.,discussions
about the “call for papers,”project selection process,project descriptions,project manager,
associated contracts,project milestones,research in-progress summaries,etc.)and the accounting
for related expenditures.The Company will also include financial reporting in its annual
Demand Side Management Report,and will discuss R&D activity at its semi-annual energy
efficiency Advisory Group meetings and public interest webinars.Id.at 8.
STAFF COMMENTS
Staff recommended the Commission approve Avista’s request to fund up to $300,000
of selected electric energy efficiency research and development projects proposed and
implemented by the state of Idaho’s four-year universities from Schedule 91 annually.Staff
supports the Application for the following reasons.
First,Avista proposes to fund only applied research that would directly benefit
customers within a reasonable time period.Second,Avista’s Idaho-funded R&D will probably
ORDER NO.32918 2
benefit customers beyond Idaho,which could encourage other utilities to invest in research that
also benefits Avista’s Idaho ratepayers.Third,Staff is encouraged that the Company will
consider funding research related to Advanced Metering Infrastructure (AMI)data analysis and
the impact of human factors on energy efficiency acquisitions,and research to improve
Evaluation,Measurement,and Verification (EM&V)methodologies while reducing associated
costs.Staff notes that this R&D could directly benefit Idaho ratepayers.
Staff thus supports Avista’s Application.
FINDINGS AND DISCUSSION
The Commission has jurisdiction over Avista,an electric corporation,and the issues
in this case under the Public Utilities Law.See Idaho Code 61-119,61-129,61-501.The
Commission has reviewed the record,including the Application and Staff comments,and finds it
fair,just,and reasonable,and in the public interest to approve Avista’s Application.We find it
appropriate for Avista to fund applied,energy efficiency R&D through the Rider because that
R&D is intended to produce near-term,practical benefits for Idaho ratepayers.And,while the
Idaho-funded R&D could provide ancillary benefits outside of Idaho,those benefits could
prompt other utilities to build on the Idaho-funded R&D and conduct energy efficiency research
that benefits Idaho customers.
We caution the Company that our approval of the Company’s R&D funding request
is not an advance finding that any particular R&D expenditure is prudent.We will carefully
review the prudency of DSM expenditures,including R&D expenses,in the Company’s next
DSM prudency case.
ORDER
IT IS HEREBY ORDERED that the Company’s Application is granted.The
Company may accumulate and account for customer revenues that will provide funding for
selected electric energy efficiency R&D projects,proposed and implemented by Idaho’s four-
year universities.The Company may fund up to $300,000 per year of R&D from revenue
collected through Avista’s Schedule 91,“Energy Efficiency Rider Adjustment,”effective
November 1,2013.
IT IS FURTHER ORDERED that the Company shall file reports with the
Commission and discuss R&D activity at energy efficiency Advisory Group meetings and at
public interest webinars,as referenced in Section V of the Application.
ORDER NO.32918 3
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 §6 1-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 3/
day of October 2013.
PAUL K LA L5j,PRESIDENT
..
MACK A.REDFOD COMMISSIONER
A4 /f&4JL
MARSHA H.SMITH,COMMISSIONER
ATTEST:
Jaki D.Jewell (I
Co’mmission Secretary
O:AVU-E-I 3-08kk2
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