20170914Comments.pdf

DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 8370
lii:C EIVED
i !-+ f,0.J
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 THE APPLICATION OF
AVISTA CORPORATION TO INCREASE ITS
ENERGY EFFICIENCY RIDER ADJUSTMENT
SCHEDULE 91.
CASE NO. AVU-E-17.06
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Daphne Huang, Deputy Attomey General, and in response to the Notice of
Application and Notice of Modified Procedure issued in Order No. 33842, submits the following
comments.
BACKGROUND
On August 1,2017, Avista Corporation applied to the Commission to increase its "Energy
Efficiency Rider" in tariff Schedule 91 (tariff rider), which would increase electric customers'
rates by 1.6%.1 Avista uses the funds collected by the tariff rider "to maintain and operate
programs to encourage customers to use electricity and natural gas efficiently." Order No. 32278
at I . The tariff rider is designed to recover Company costs associated with providing electric
I The Company filed a revision to the Application on August 4,2017. This Order refers to the Application, as revised,
as the "Application."
)
)
)
)
)
)
1STAFF COMMENTS SEPTEMBER I4,2OI7
efficiency services to customers, Order No. 3 09 1 8 at 1 , and to "match future revenue with
budgeted [energy efficiency] expenditures," Application at 1. The Company states that the
purpose of this filing is to "establish tariff riders that are sufficient to fund the following twelve
months of fDemand Side Management (DSM) programs] as well as amortize any tariff rider
imbalance, thus minimizing the amount of future under- or over-collections." Id.
The Schedule 91 tariff rider funds DSM programs described in Avista's Schedule 90, and
is applied only to electric efficiency service (as opposed to natural gas programs, which are funded
through Schedule l9l). Id. at 3; see Order No. 32650 at l. Schedule 90 includes about 30
programs that provide rebates for residential and non-residential energy efficiency measures, such
as appliance, HVAC, lighting, maintenance, weatherization and sustainable building measures;
and conversion from electric to natural gas space and water heating. Application at 3-4.
The Company also helps fund programs through the Northwest Energy Efficiency
Alliance, which promotes market transformation for energy efficiency through a regional
approach. Id. at 4. In addition, the Company provided about $750,000 for low-income
weatherization and energy efficiency conservation education in2016 through programs
administered by the Community Action Partnership.
In determining the cost-effectiveness of its DSM programs, the Company applies tests
including the Total Resource Cost (TRC) test and the Utility Cost Test (UCT). Id. at 5. The TRC
measures the net benefits of a program based on the total costs of the program, including the
participants' and utility's costs. Id., n. I . The UCT measures the net benefits of a program based
on the costs incurred by the program administrator (including incentive costs) and excluding any
net costs incurred by the partrcipant. Id.
STAFF ANALYSIS
Staff has reviewed the Company's Application along with additional information provided,
and supports the Company's request to increase the Schedule 9l Energy Efficiency Rider. The
current Schedule 91 rate has not provided sufficient revenues to cover the expenses incurred by
the Company in its pursuit of cost-effective energy efficiency. The proposed rates will generate an
additional $3.9 million per year in revenue (1.6% increase in billed electric rates) to fund cost-
effective energy efficiency measures while amortizing the underfunded balance over a 36-month
period.
STAFF COMMENTS SEPTEMBER I4,20I72
The following table shows the proposed increase to the tariff rider for various customer
classes:
SCHEDULE
EXISTING
RATE
PROPOSED
RATE
Residential Customers - Sch. 1 .2450 per kWh .395(, per kWh
General Service - Sch. 11&12 271(, perkWh .427( per kWh
Large General Service - Sch. 21&22 209p per kWh 340p per kWh
Extra Large Customers - Sch. 25 1421 per kWh 2191 per kWh
Clearwater Paper - Sch. 25P 13 1p per kWh .2$A per kWh
Pumping Service - Sch. 3l&32 2401 per kWh 396p per kWh
The Company currently has four cases in front of the Commission in which rate
adjustments will occur on October 1,2017. The cumulative impact of those cases can be seen on
Attachment A. Residential customers will see an increase of approximately 2.0Yo when the
Energy Efficiency Tariff Rider increase is combined with the proposed increase in the Fixed Cost
Adjustment (FCA) and credits from the Purchased Cost Adjustment (PCA) and Residential
Exchange Credit adjustment. The overall effect of all adjustments is an increase of I .1o/o of total
billed revenues.
Staff recognizes that rate increases are unpopular with customers. However, Staff is also
aware that even more expensive supply-side alternatives have been and will continue to be
avoided or delayed to the extent that customers use existing electricity resources more efficiently.
Cost-effective DSM, including energy efficiency programs and load management programs, is a
significant resource that helps customers control their utility bills, reduces the need for higher-cost
supply-side resources, and increases system reliability.
Staff expects that Avista's DSM program costs will continue to be prudently incurred and
that the programs will remain cost-effective. It is not Staff s intent to either validate or question
the Company's DSM prudency or its actual cost-effectiveness calculations for any of its programs
at this time. Such validation and additional review was not requested in this case and it will occur
during the course of a subsequent DSM prudency review, at which time the Commission will
determine whether or not Avista's past DSM expenditures remain recoverable from customers.
1JSTAFF COMMENTS SEPTEMBER 14,2OI7
Tariff Rider Balance
The Company currently spends more on its DSM programs than it has been collecting
through the tariff rider. As of July 3l , 2017 , the tariff rider had an underfunded balance of
approximately $10.1 million. Forecasted expenditures for the Company's DSM programs are
approximately $7 million next year, increasing slightly each year. The current annual revenue
received from the tariff rider is approximately $6.5 million, or approximately 2.60/o of billed
revenues. Though forecasted expenses are somewhat in line with actual tariff rider revenue,
without an adjustment to the tariff rider, the current deficit will continue to grow without the
opportunity pay down the balance.
The proposed increase in tariff rider funding will generate approximately $10.5 million in
annual revenues based on normal consumption, which equals approximately 4.2Yo of billed
revenues. The $3.9 million of additional funding will insure adequate revenues to meet the
forecasted expenses while amortizing the underfunded balance over 36 months. In previous cases,
underfunded tariff rider balances were amortized over periods fuom 12-24 months. Given the
significant size of the balance, Staff believes extending the amortrzationperiod to 36 months is
appropriate and mitigates the rate increases to customers. The underfunded balance is expected to
be completely amortized by September 30,2020, at which time Staff expects the Company to
reevaluate the tariff rider rate and expenses and potentially file for arate decrease.
CUSTOMER NOTICE AND PRESS RELEASE
Avista filed its Application on August 1,2017 . The Company filed a draft of its customer
notice with its Application on August 7,2077, and its press release covering four cases (AVU-E-
17-04, AVU-E-17-05, AVU-E-I7-06 and AVU-E-17-07) on August 4,2017. A hnal copy of the
customer notice was not filed in this case. Staff reviewed both documents and determined that,
with respect to this case (AVU-E-I7-06), the Company did not comply with Rule 125 of the
Commission's Rules of Procedure. IDAPA 31.01.01.125. Rules 125.04 and 125.05 require the
press release and customer notice to be filed with the Company's Application.
The notice was included with customer bills beginning August 8 and ending August 24.
On August 24,9,959 customers who would have received a bill after that date were sent a copy of
the customer notice by direct mail. Also on August 24th, electronic notices were emailed to
26,498 customers. Given the Company's efforts, customers will be made aware of the cases and
have an opportunity to file comments by September 14, 2017.
4STAFF COMMENTS SEPTEMBER 14,2017
CUSTOMER COMMENTS
As of September 14,2017 , the Commission has received zero comments from customers.
STAFF RE,COMMENDATION
After review of the Company's Application and workpapers, Staff recommends that the
Commission accept the Company's proposed tariffs as filed, increasing revenues by
approximately l.6Yo to fund additional DSM program costs and amortize the underfunded tariff
rider balance over 36 months. Staff notes that approval of the Company's proposed increase is not
a determination that tariff rider expenses are prudent, and such a finding will occur in a future
proceeding. Additionally, Staff recommends that, in the future, the Company not delay issuing
press releases and customer notifications.
Respectfully submitted this I tfb day of September 2017
Huang
Deputy Attorney
Technical Staff: Donn English
Daniel Klein
Kevin Keyt
i :umisc:comments/avue I T.6djhkkdedk comments
5STAFF COMMENTS SEPTEMBER14,2Ol7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 14TH DAY OF SEPTEMBER 2017,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E-17.06, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BO){ 3727
SPOKANE WA99220-3727
E-mail: [e-mail]
LINDA GERVAIS
SR MGR REGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SPOKANE W A 99220-3727
E-mail: linda. [e-mail]
S
CERTIFICATE OF SERVICE