20140812Drake Direct.pdf

DAVID .f. MEYER
VICE PRESIDENT AND CHIEF COT]NSEL OF
REGULATORY & GOVERNMENTAL AFFAIRS
AVISTA CORPORATTON
P.O. BOX 3727
]-4].]- EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: (s09) 495-43L6
EMAIL: david. meyer@avistacorp . com
BEFORE THE IDAIIO PT'BIJIE UTIIJITIES EOI{MISSION
rN THE MATTER OF THE APPLICATION ) CEST WO. AW-E-IA-O7
oF AVTSTA CORPORATION FOR A ) CASE NO. AW-G-A -O>
FTNDING OF PRUDENCE FOR 2013 )
EXPENDTTURES ASSOCIATED WITH )
PROVIDING ELECTRIC AND NATURAL GAS ) PTNECT TESTIMONY
ENERGY EFFICIENCY SERVICE IN THE ) OT
STATE OF fDAHO ) CHRIS D. DRAKE
)
FOR AVISTA CORPORATION
(ELECTRTC AND NATURAL GAS)
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I.ITiITRODUCTION
a. Please state your name, employer and business
address.
A. My name is Chris Drake. I am employed by Avista
as Manager of Demand Side Management (DSM) Program
Delivery. My business address is East L4l-L Mission
Avenue, Spokane, Washington.
A. Would you please describe your education and
business experience?
A. I graduated from Gonzaga University in L992 with
a Bachelor of Arts degree in Communj-cations. I completed
my Project Management. certificate in 2005 from Washington
State Universj-ty and Gonzaga University.
I joined the Company in 1-996 in the Hydro Licensj-ng
and Safety Department. In 1-999 I accepted a program
coordinator position and later became a program manager
within the Marketing Department in 2000. After Ehe 2001-
energy crisis, r assumed responsibilities for the majority
of t,he resident j-a1 portf olio that included prescrJ-ptive
rebate offerings and later became responsible for the Low
Income Weatherization program. I began my current position
in August of 20J-0. I am responsible for design and
implementation of in-house and third-party implemented
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program delivery which includes Avj-sta's prescriptive
residential and some commercj-aI and j-ndustrial DSM program
offerings.
Prior to joining Avista, I served as an Infantry
officer in the United St,ates Army from 1-992 until 1995,
finishing my service as the battalion logistics officer
deployed to Panama.
O. What is Lhe scope of your testimony in this
proceeding?
A. I will provJ-de an overview of the Company's DSM
program offerj-ngs available to Idaho customers in the 201-3
program year.
O. Are you sponsoring any exhibits to be introduced
in this proceeding?
A. Yes. I am sponsoring Exhibit No. 2,
"Confidential" Schedules L and 2, Schedule l- includes
documentation relat,ed to energy efficiency projects
delivered through the Office of Energy Resources (OER).
Schedule 2 ls the documentat j-on relat,ed to energy
efficiency projects at Lewis-C1ark State Co11ege.
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II. OVERVIEW
A. WouLd you pJ.ease provide a brief overview of
AviEta's DSM programs?
A. Yes. Avista's core objective has historically
been to provide cusEomers with cost-effective energy
ef f iciency servj-ces. Avista is in its 35th year of doing
so. Avj-sta's approach is to use the most effective
"mechanism" to deliver energy efficiency services Lo
customers. These mechani-sms are varied and include: 1)
prescriptive programs (or "standard offers" such as high
efficiency appllance rebates); 2) site-specific or
"customized" analyses aE customer premises; 3) "market
transformational, " or regional, efforts with other
utilities through NEEA; 4) Iow-income energy efficiency
services t.hrough local Community Action Agencies; 5) Iow-
cosE/no-cost advice through a multi-channel communj-cation
effort.; and 6) support for cost-effective appliance
standards and building codes. I will be describing all of
these program delivery mechanisms as they apply to
residential, nonresidential and low-j-ncome customers later
in my testimony.
A. How doee Avist,a make available its DSM program
offerings and educate customera about energy savings?
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A. Avista continually provides opportunities for
customers to learn about 1ow cost/no cost ways to manage
their home and busj-ness energy usage. The "Every Little
Bit," Campaign has been the primary driver of this effort.
We also provide t,ips through the Avj-sta Utilities'
website, oD billboards, as well as radio and television
spoEs throughout both the heating and cooling seasons. A
variety of tips are provided throughout the year to help
encourage efflcient use of space heating and cooling,
appliances and electronics as well as linking to and
promoting related rebate opportunities as applicable. The
campaign is reinforced by website tools and information
including a comprehensive onlj-ne Home Energy Analyzer
where customers can see a representation of how their
energy is being used and sign up for savings plans that
fit their lifestyles. Similar broad-based techniques are
used for both residential and nonresidential.
In addition, both residentlal and nonresidential
customers have access to direct outreach activities.
Avista offers energy fairs for residential customers, with
emphasis given to low-income customers. Dj-rect outreach
for nonresidential customers is delj-vered through account
executives and efficiency engineers who provide on-site
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information regarding energy savings opportunities and
available program informat,ion.
III. DSU PROGRAM OVERVIEW
O. Please describe
offerings provided in 2013.
the residential DSM program and
A. The Company's residential portfolio provides a
variety of measures, Ehrough different delivery channels,
offering energy efficiency improvement opportunities to
Avista customers. The majority of the residential
portfolio is j-mplemented through prescriptive rebat,es and
processed in-house by Avista. New construction and
existing residential homes (up to four-plex) that heat
with Avista electric or natural 9as, select from a list of
energy efficiency measures with rebates for consideratj-on
of installation in their homes. Customers must purchase
and install the equipment or qualifying energy efficlency
measure and submit a rebate application with the
appropriate documenEat. j.on within 90 days of installation
in order to receive an incentive.
In the 2013 program year Avista offered the following
residential programs to Idaho electrj-c andfor natural gas
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customers noted in Illustration l-:
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Illustration No. L:
RESIDENTIAI,
High Efficiency Heat Pump
Ductless Heat, Pump
High Efficiency Varlable Speed Motor
High Efficiency Tanked Water Heater
Space Heat Conversion (Direct Use of Natural Gas)
Water Heat Conversion (Direct Use of Natural Gas)
Multifamily Natural Gas Market Transformation (Direct
Use of Natural Gas)
Ceiling, Attic, F1oor, WaI1 Insulation
ENERGY STAR@ Homes
ENERGY STAR@ Appliances
CFL (and CFL Recycling) Promotions
"secondI Refrigerator/Freezer Recycling Program
Community Events and Workshops
Low-cost / no-cost informat.ion
On-Iine Home Energy Audits and Analysis
Simple Steps Smart Savings (Cff,s and Showerheads)
The residentj-a1 programs shown above are primarily
standard offerings, otherwise known as prescriptive
programs.
Idaho residential customers also received Avista-
sponsored programs in t,he form of manufacturer buy-downs
for compact fluorescent lighting and 1ow-f1ow showerhead
measures (Simple Steps Smart Savings). These products
have a lower retail price point at the tj-me of purchase
and are usually part of a regional, multi-sEate program
offering.
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O. Please deecribe the
provided during this time.
nonresidential DSM offerings
A. Within the nonresident,ial segiment, programs are
offered to reEail electric and natural gas customers
through a combination of prescriptive rebates and site
specific assessments.Prescriptive rebates are geared
toward relatively uniform measures, applications and
energy savj-ngs. This delivery method reduces
implementation expense while simplifying participation for
both cusEomers and trade aIlies. The site specific
offerings are available for all other efficiency measures
and applications that, are unique to a customer's business.
fn these situations, each energy efflciency project is
individually analyzed based on the measure being installed
and considers other variables that may be present in the
building or in the process operation.
Illust,rati-on No. 2 below i-ncludes a list of
nonresident,ial rebates available for electric customers in
the 201-3 program year:
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Illustration No. 2z
NONRESIDEMIIAL (COMMERCIAIJ & IIIDUSTRIAL)
EnergySmart Grocer
Power Management for PC Networks
Premium Efficiency Motors
Food Service Equipment
Commercial HVAC Variable Frequency Drives
Retro- Commj-ssioning
Commercial Clot,hes Washers
Vending Machine Controllers
Lighting and Controls
Green Motors Rewind Program
Commercial Windows and Insulation
Standby Generat,or Block Heater
Site Specific Offerings in Varj-ous End Uses
Avista offers site-specific j-ncentives for commercial
and industrial customers for custom projecEs. The site-
specific program provides incentives on cost-effective
commercial and industrial energy efficiency measures that
meet reguired simple payback and measure life
requirements. This is implemented through on-site audj-ts
and analyses, customized project evaluation, and dual fuel
incentive calculators for energy savings generated
specific to the customer's premise or process ("project")
Incentives were offered for any measure that had greater
than a one-year and less than an eight-year simple payback
for lighting measures or less than a thirteen-year simple
payback for non-lighting measures.
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A. How doeg Avigta address energy efficiency
programs for Low-income cugtomers?
A. The residential low-income program is comprised
primarily of sit.e-specific offerings delivered by local
Community Action Agencies (CAA) to benefit. income-
qualified, residential customers. Avista contracts with
agencies to utilize exlsting infrastructure currently in
place as a result of delivering the Federal Weatherlzation
AssisEance and Low fncome Home Energy Assistance Programs
(LfHEAP). The customer lntake process includes potential
consideration of part,iclpation for energy ass j-sEance and
other income-gualitied programs that can also serve as
referrals for weatherization services.
Low-income efficiency measures are similar to
measures offered under the traditional residential
prescriptive programs .
The program targeted to low-income customers is
provided by Ehe Community Action Partnership of Lewiston.
The agency receives a set amount of funding each year to
make energy efficiency improvements to income-qualified
homes that are heated by Avista electric or natural gas
services (natural gas funding for low-income programs was
suspended at t.he end of 201-2). These improvements may
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include upgrades to heating and water heating eguipment,
ceiling, wa11 and floor insulation, replacement of
windows, doors, and conversions from electric heating Eo
natural gas heat,ing.
IV. EVAIJUATION, MEASUREMEMT AI{D VERIFICATION
O. Wou1d you please describe the engagement of
CadmuE for Avista's evaluation, meagurement, and
verif ication (E}I&V) ?
A. Yes. A central component, of Avist,a's EM&V
Framework and Annual EM&V Plan is independent, or t.hird-
party, verificaEion of the Company's claimed efficiency
savr-ngs.Cadmus was retained, after a competitive
Request-for-Proposal process, to perform impact and
process evaluations. Impact evaluation independently
estimates and/or measures realized savings at the customer
premises through a variet,y of means, including metering
equipment, billing analyses and quanti-t.at j-ve methods.
Process evaluations examj-ne pot,entlal for program delivery
J-mprovements based on part.icipant and nonparticipant
surveys, among other means.
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A. With regard to the impact evaluation, what is a
realization rate and how does thig affect claimed savings?
A. Energy efficiency savings are estimated based
on the per-measure or unit (e.9., T-8 commercial lighting,
ENERGY STAR@ Dishwashers, or ceiling insulation) accepted
value mulEiplied by the number of units installed.
Thereafter, the number of units installed is verified for
accuracy and proper installation and the actual savings
value per measure and operation can be tested by data
loggers, billing analysis and other analytical means. If
the realized or verified savings estimate per measure are
conf irmed wit.hout change and if the number of
installations, upon verification, are found to be properly
j-nstal1ed and equal to those claj-med, then the realization
rate is L00?. If the actual savings 1eve1 per measure is
less or if the installed unj-ts are less, then the
reali-zation rate would be Iess.
O. What accomplishments during 20L3 would you like
to highlight?
A. Yes. Avist.a has established processes and
procedures in order to support ongoing achievement of both
energy savlngs and cost-effectiveness goa1s. Positive
savings results are the goal of implementation processes,
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1 and those results were improved in 201-3. Realization
2 rates continue to be high including a tighter clusEer of
3 precision in 201-3 representing continued focus on process
4 improvement. The implementation team of program managers
5 and coordinators, engineers, account executives and
6 analysts worked hard to ensure reliable and consi-stent,
7 processes, and those efforts produced positive results.
8 por example, Avista has taken steps Eo improve data
9 tracking, such as integrating additional program data into
10 a central database.
11 From the process perspective, customer satisfaction
12 with energy efficiency programs is very high. Customer
13 satisfaction with implementation staff is also very high.
14 a. What is the Company's reEponse to the
15 reeommendations made in the Cadmus 20L2-20L3 Process
l6 Evaluation Report,?
17 A. The purpose of a process evaluat j-on is f or
l8 continued program improvement. The Company has
19 historically reviewed and modified its DSM programs for
20 improved use of customer funds and better service to
2l customers. Cadmus' approach is to provide real-time
22 feedback to aIIow for continuous improvements and course
23 corrections as needed.
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Q. What efforts are being made to improve project,
documentation related to nonresidential programs?
A. Avista agrees that process improvements can be
made in it,s nonresident,ial project document,at,ion as not,ed
by Cadmus. In an ef f ort to address t.his f inding, the
Company began est.abl j-shing a new procedure and program
implementation to assure that fuII documentation was in
place at various sEages of nonresidential site-specific
projecEs. For example, two checklists, one prior to
contracting and one prior to payment, were developed and
implemented mid-20L3 and accompany site-specific projects
for documentation and review purposes. This was coincident
with arrroles and responsibilities" initiat,ive to assure
accountabilities will be properly aligned and
communication channels clearly open. These actions are
intended to be responsive to Cadmus' recommendations on
the Large Project, Review Process.
O. What efforts are being made to improve project
documentation within Avista's current databaEe?
A. Again,Avista agrees that documentation
improvemenEs within our nonresidential database should be
made and these improvements are in progress. Additionally,
Avista has recently completed SEandard Operating
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Procedures (SOP) for Idaho DSM programs and will continue
to work towards consistent understanding of processes and
procedures.
Another area of emphasis is existing database fields
that, are used differently by different programs and work
groups. Fields will be reviewed to confirm they are a
value-added field for reporting and evaluati-on,
consistently used by all work groups, ot eliminated if
appropriaEe. The goa1, again, is to improve documentation
and data fields in order to further ease reporting and
evaluation.
Another example ls the post-verification date fieId,
which includes prescriptive projects that are randomly
sampled for post-verification, cusEomers who did multiple
installations of sj-milar measures and a percentage of like
measures that, were posE-verified, as well as users who
documented post-verification in notes or attachments
rather than the data fie1d. Avista acknowledges that we
need Eo clarify our procedures around installation
verifj-cations and ensure that documentation (e.9. pictures
and dates) are consistently recorded within Ehe
nonresidential database, and we wj-I1 take steps to do so.
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A. Cadmue recommended additional notation of
"Iegacy" or "market t,ransformation" tlrye pro jects within
the database for ease of aceeEs, reporting and evaluation.
PIeaEe provide descript,ion of "market transformation"
programs and how "markeE transformation" progrErms compare
with other energy ef f iciency progr€rms.
A. These classifications arose from unique
circumstances where particular types of measures were
affected by code changes or projecEs requiring transition
management due to tariff updates. Avista will identify
such items in order to accommodate ease of reporting and
evaluating when t,hese unique situations occur in the
future.
Market transformation programs are different from
loca1 DSM acquisition programs in that they int.ervene in a
market for a defined period of time and are then
terminated with the impact of the transformed market
continuing on past that terminat,ion. Loca1 DSM acquisit.ion
programs are subject, to change based on qualifying
technologies changing, but there isn't a built-in
termination of the program. The Company's working
definition of market transformaLion can be generally
described as follows:
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Market transformation is a specifically defined
intervenEion int.ended to shif t the adoption of a
cost-effective efficiency measure towards a higher
long-term Lrajectory for a defined period of time,
after which point the intervention ends, however
the impact of the intervenEion continues.
In comparison to the
efficiency programs:
o Market transformation
Generally availabLe
usually offered with
availability.
remainder of Avista's energy-
o The intent of market transformation programs is to
create a sustainable change in the market rather than
to acquire individual resources from individual
customers.
Frequently, market
performed on a regional
programs have an exit strategy.
incent,ive-granting programs are
the expectation of cont j-nuing
transformation programs are
basis, because individual
utilities don't have the critical mass necessary to impact
mosL markets. Typically these regionally cooperati-ve
programs are performed as part of the Northwest Energy
Efficiency Alliance's (NEEA) portfolio;1 however, other ad
hoc regional cooperative programs may also form around
specific measures.
O. Please explain the "Top Sheets" that, were
introduced in 20L3.
' NEEA leverages
Lransformation byproducts, services
its strong regionalaccelerating Ehe
and practices.
partnerships to effect market
adopEion of energy-efficient
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I A. The Top Sheet procedures accomplish multiple
2 improvements. This provides a structured documentation
3 protocol for each project.. It ensures second review, at a
4 minimum, for each project. This procedure places quality
5 assurance aE the source, oE beginning, of a project. as a
6 "best-pracEice" wit,h the int,ent of increasing quality
7 control.
8 to complement the deployment, of the Top Sheet
9 procedures wit,hin the implementation team for project,
10 policy, and conEract review, the DSM analysts also perform
ll an internal review of a subset of completed site-specific
12 and prescriptive projects. The projects selected for
13 internal review are randomly selected. The information
14 resulting from the int,ernal review is communicated back to
l5 Ehe fmplementation Team to be incorporated into Ehe
16 continuous process improvement activities.
17 V. Deferred Project Costg
18 O. In Commission Order No. 33009, the cogtE
19 associated wit,h t,he Office of Energy Regources (OER) and
20 t,he Lewis-Clark Stat,e College (LCSC) pro jects were
2l deferred to alIow the Company an opportunity to
22 demonstrate prudency. Does the Company have the evidence
23 to support prudency of these two projects?
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A. Yes. The Commission Staff notes in their
comments filed March 6, 201-4 t,he following related to the
OER and LCSC projects:
Staff believes that these measures were
purchased and installed. But Staff cannot
recommend recovery of Avista program
expenditures without sufficient documentation.
Therefore, Staff recommends that recovery ofthese expenses be deferred until l-) Avista
receives invoices confirming the purchase and
i-nstallaEion of these measures and 2) Avista
has verified the installation of these
proj ects.
The Company believes it has gathered all available
and relevant documentation to support prudency of both the
OER and LCSC projects.
Office of Energy ResourceEs
All OER installat,i-on verif icat.ions have been
completed and recorded. Exhibit No. 2, Confidential
Schedule 1 includes:
o Commercial Lighting Incentive Agreement (to
illustrate incentives were based on 20ll Tl2
program guidelines in effect at the time of OERproject completions) pp. L-4
. OER Energy Efficiency Agreement and EvaluationReport (included tor original scope reference) ff
Projects varied s1lght1y, DFIC and Prescriptive
Calculators were revj-sed to match final pp. 5 -
15
. Copy of Incentive check to Idaho Office of Energry
Resources - p. 15
o Copies of Master invoi-ces - pp . 17 -23
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Pp. 24-L05 Include (in order as shown on
incentj-ve check) :r Installation Verifications. Final DFIC and/or prescriptive calculator! Bid Proposal Worksheet (which was used as
final document to verify quantities
included are contract administraEor notes
from original verification)
After the projects were completed and the Company
began to gaEher invoices, OER inf ormed Avista t,hat. the
light.ing contract,ors did not, submit invoices with guantity
and a cost breakdown per school, therefore, the Company
accepted the invoice in aggregate provided by the OER for
final payment,. Avista confirmed, however, that the
incentives paid for lighting matched the number of units
installed.
O. Regarding Lewis-C1ark State College project, has
the Company recorded project invoices and instalLation
verification?
A. Yes. Exhibit 2, Confidential Schedule 2 provides
invoi-ce documentation and the installation verification
for the Lewis-Clark State College project, that shoes that
proper payments were made for the measures installed.
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O. DoeE this complete
testimony?
A. Yes.
pre-filed direct
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