20180410Comments.pdf

BRANDON KARPEN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 7956
IN THE MATTER OF THE JOINT PETITION )
oF AVISTA CORPORATION, TDAHO PUBLIC )
UTILITIES STAFF, AND COMMUNITY )
ACTION PARTNERSHIP ASSOCIATION OF )
rDAHO (CApAr) TO TNCREASE LOW-TNCOME )
FUNDING UNDER TARIFF SCHEDULES 91 )
AND 191.
R[CEIVED
?B1B fiPR IO PH 2: 19
,',,' l,1f#id"'?h\8''o*
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIBS COMMISSION
CASE NO. AVU.E.18-02
AVU-G-I8-01
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission submits the following comments in
the above captioned matter.
BACKGROUND
On December 28, 2017, the Commission approved a settlement of Avista's general rate
case. See Order No. 33953. One provision of the settlement was that "[t]he Company and
interested parties will meet and confer to consider whether the Low Income Weatherization
Program and Energy Conservation Education Program funding should be increased from the
current Commission approved levels. .." See Stipulation and Settlement at 15. After extensive
examination into how the low-income funding has been utilized and conferring with the parties,
an agreement to increase the funding levels was reached.
On February 20,2018, Avista Corporation, Commission Staff, and Community Action
Partnership Association of Idaho (CAPAD ("the parties") filed a joint petition requesting
approval of a settlement that will increase funding to low-income programs. The agreement
ISTAFF COMMENTS APRIL 10,2018
includes $125,000 of additional funding for Avista's Low Income Weatherization Program and
$25,000 additional funding for Avista's Conservation Education Program in Idaho. This is
significantly less than the $225,000 and $50,000 originally requested for those programs. This
increase does not affect the revenue requirement established in Commission Order No, 33953,
the funding will come directly from Avista's Energy Efficiency Tariff Schedules 91 and 191.
STAFF REVIEW
Commission Order No. 32788
ln20l2, the Commission conducted an inquiry into the cost-effectiveness of low income
programs, and their place in the regulatory environment in Idaho. See Order No. 32788. The
Commission adopted recommendations from a Staff Report for improving the cost-effectiveness
of low income programs. Id. ln addition, the Commission also laid out factors that should be
considered when deciding whether a funding increase for these programs may be appropriate:
Recommendation 16: Staff recommends that no program should receive a
funding increase if it is not cost-effective according to the criteria outlined in this
report. After a program is determined to be cost-effective, at least five factors
should be analyzed to determine if a funding increase is appropriate.
1. Funding could be increased if the list of not-previously weatherized
homes waiting for weatherization (as indicated by the LIHEAP data) has
increased significantly since the last review.
2. Funding could be increased if a utility's program provides significantly
less funding on a per-capita basis than the cost-effective program of another
utility operating within the state of Idaho with comparable poverty levels in its
service territory.
3. Funding could be increased if the utility is awarded a significant base
rate increase. Rate increases impact low income customers more adversely than
other customers, therefore it could be appropriate to provide increased funding for
low-income weatherization when rates increase.
4. Funding could be increased if the utility does not have sufficient funds
to acquire the annually achievable low income energy savings potential as
indicated by the utility's most recent Conservation Potential Assessment (CPA).
This criterion is similar to how utilities fund other DSM programs.
2STAFF COMMENTS APRIL 10,2018
5. Funding should not be increased if a utility's CAP agencies have been
unable to spend all of the available utility funding in the previous year.
Id. at 10-12. The Commission stated that when deciding whether a funding increase might be
appropriate, "the recommended factors are merely a guide for when a funding increase may be in
order, and that the absence of one or more factors does not necessarily preclude a funding
increase." Id. at 12. Consistent with that Commission direction, Staff completed an
investigation that considered these factors a guide. Staff concluded that a funding increase in
this case is reasonable.
Stafls Investieatian
Stafls investigation in this case was extensive. Staff generated dozens of questions for
Avista, CAPAI, and the Lewiston Community Action Partnership (CAP) agency that were
answered in a series of conference calls, email exchanges, and meetings in Boise and Lewiston.
In this process, Staff determined the program is not cost-effective,l the weatherization waiting
list is extremely long, the program funds more on a per capita basis than the Idaho's other utility
low income programs, Avista has been granted over 8.9 percent electric and 12.3 percent natural
gas base rate increases since the last increase in low income funding, Staff found that there is not
sufficient funding currently to acquire the low income potential, and the Lewiston CAP has
consistently been able to spend all funds currently assigned. Staff established that Lewiston
CAP agency manages the funding it receives from Avista extremely well.
Cost Effectiveness
In addition to identifying funding increase factors, Order No. 32788 also aimed to
improve the cost-effectiveness of low income programs. Despite improvements, the Avista low
income program is not cost-effective. Staff found that cost-effectiveness remains challenging
because the two primary cost categories for weatherization (building materials and labor) have
increased while avoided costs have decreased.
Avista and the Lewiston CAP agency have proactively responded to these challenges by
funding measures based on their cost-effectiveness. Cost-effective measures are fully funded
I Avista's 2016 DSM reports states that the electric low income program had a 0.69 TRC and a 0.33 UCT. The
natural gas low income program had a I .18 TRC and a 0.09 UCT.
JSTAFF COMMENTS APRIL 10,2OI8
and measures that are not cost-effective are funded up the value of the avoided cost benefits they
provide. The funding for each measure is adjusted as avoided costs change. While this is a
reasonable approach, Staff discovered that Avista does not include CAP administrative expenses
or non-incentive utility funds in the measure screening process but instead included them in the
sector-level cost-effectiveness. This means that periodic updates to measure funding levels
consistently overestimated the actual cost-effectiveness of the program.
Avista has agreed to include the CAP administrative expenses and non-incentive utility
funds in the measure-level screening process going forward. Staff believes this will improve
cost-effectiveness, though low avoided costs will remain a concern. Staff notes that these
additional expenses will reduce the amount of funding Avista provides for each measure and
could therefore damage the Lewiston CAP's ability to deliver this program. However, the
Lewiston CAP reviewed the impact this change would have on the funding of each measure and
determined it is manageable because they can reallocate other funding to make up the difference.
Staff, Avista, and the Lewiston CAP will continue to monitor this approach to ensure it does not
negatively impact the program. Staff appreciates the Lewiston CAP's continued commitment to
understanding and adapting to utility cost-effectiveness constraints.
Yf/eatherization Waiting List
Staff asked the Lewiston CAP if the waiting list for weatherization has increased since
2012, the last time Staff reviewed low income funding levels. The Lewiston CAP does not
maintain historical waiting list records, so it is difficult to determine if the waiting list has
increased since that time. As of October 2017, the waiting list had 303 income-qualified Avista
customers on it. Based on the number of homes weatherizedin20l6, the Lewiston CAP
reported that if it was granted the entire $225,000 funding increase originally requested and no
other homes were added to the waiting list, it would take 5 years and 4 months to weatherize
these homes. Without any funding increase, it would take much longer to weatherize the homes
on the waiting list.
It is important to recognize that the list of 303 homes waiting for weatherization does not
include referrals from the federally funded Low Income Heating Assistance Program (LIHEAP).
LIHEAP provides the majority of weatheizationreferrals, so the pre-heating season estimate of
303 people on the weatherization list will likely grow significantly as LIHEAP referrals are
added through the heating season.
4STAFF COMMENTS APRIL 10,2OI8
P er-capita Funding for Weatherization
At the last review in2012, recent cases had established that Avista provided $6.69 for
low income funding on a per capita basis for its Idaho electric and natural gas residential
customers. By comparison, Rocky Mountain Power provided $5.32 per residential customer and
Idaho Power provided $3.06 per residential customer.
Updated for current customer counts,2 Avista now funds $6.50 per capita, and with the
proposed $125,000 increase would fund $7.70 per capita. Rocky Mountain funds $5.5 per capita
and Idaho Power pays $2.70 per capita. In other words, Avista pays more per capita than the
other utilities in the state.
Utility Base Rate Increases
Funding for Avista's low income program was last increased in September 2010 from
$465,000 to $700,000. Since then, the Company has had several rate cases resulting in 8.9
percent electric and 12.3 percent natural gas base rate increases. Another L7 percent electric
increase and I .8 percent natural gas increase will be effective January 1,2019. Staff continues to
believe that rate increases impact low income customers more than other customers, and
therefore it is appropriate to provide increased funding for low income weatherization at this
time.
Sfficiency of Funds to Acquire Low Income Savings Potential
A Conservation Potential Assessment (CPA) is a study that estimates energy efficiency
potential in a specified service territory. Avista reported that its CPA does not specifically
identify low income savings potential as a subset of residential savings potential. In the absence
of that information, Staff consulted with the Lewiston CAP to determine the need for
weatherization services among Avista's customers.
The Lewiston CAP serves the ten counties in Northern Idaho, from Riggins to Canada.
Seven of these ten counties have populations in which 40 percent of residents income-qualify for
weatherization services.3 The Lewiston CAP estimates need by starting with the census count of
2 Avista has l07,242Idaho electric residential customers, Rocky Mountain has 63,801 Idaho residential customers,
and Idaho Power has 440,978ldaho residential customers.3 Residents income-qualiff for weatherization if their household income equals 200 percent or less of the federal
poverty limit.
5STAFF COMMENTS APRIL IO,2018
people of who qualify for weatherization, minus those who receive weatherization and minus
those whose applications are deferred or denied. On that basis, it estimates that tens of thousands
of people are potential clients, 70 percent of whom are Avista customers.
The Lewiston CAP indicated many individuals in the counties they serve are not aware
that that weatherization services exist. Nonetheless, the CAP purposely spends almost no money
on outreach to potential clients because demand for weatherization already overwhelms available
funding. During the Staff site visit to the Lewiston CAP, the Weatherization Compliance
Manager disclosed that "Demand [for weatherization] is so much greater than the supply [of
funding], it is even so much greater than our ability to recognize the need." Staff meeting on
December 4.
CAP Spending of Curuent Utility Funding
The Lewiston CAP and Avista confirmed that it consistently spends the entire $700,000
that Avista provides annually for qualifying projects and measures. Based on the demand for
supply in its service territory, Staff believes that the Lewiston CAP will easily spend the
proposed $125,000 funding increase. In the event that those funds are not spent, the funds would
revert to the Avista tariff rider balance.
C ons erv oti on Education P r o gr am
In addition to investigating the need to increase funding for low income weatherization,
Staff also considered the request to increase funding for the Lewiston CAP's Conservation
Education Program. This program currently receives $50,000 funding annually from Avista,
which partially funds an employee who educates clients on how to manage their energy bills
with behavioral modifications and easy to install measures. When funding is available, the
Lewiston CAP also builds and distributes energy kits with CFLs, LEDs, showerheads, and
similar low cost items. These kits are distributed at brick and mortar food pantries, mobile food
pantries, and the CAP's l0 satellite offices.
The Lewiston CAP stated that the proposed $50,000 funding increase in education would
be spent on materials and energy kits to support the existing education initiative. The
Conservation Education program manager explained that distributing kits helps clients
effectively control their energy bills. In addition to providing funding for energy kits, the
increase would also be used to stock small, low cost measures at the CAP offices. The Lewiston
6STAFF COMMENTS APRIL 10,2OI8
CAP reported that they often get walk-in requests for do-it-yourself measures like plastic
window film, weather stripping, and caulk that the clients cannot afford but can install
themselves. Without funding for these low-cost measures, the only option the Lewiston CAP has
is to put these clients on the whole-house weatherization waiting list.
Staff was impressed with the Lewiston CAP during the course of its investigation. The
Weatherization and Conservation Education staff are very responsive, experienced professionals
who provided candid answers to hours of Staff questions on a range of issues. The
weatherization services are rigorously managed - it is clear that the CAP has a high regard for
the careful stewardship of federal funds and funds received from Avista's customers for these
programs, as well as a deep commitment to serving its clients. In addition, the Lewiston CAP
understands how to effectively ramp up a program by hiring additional crew members to install
weatherization measures when a large influx of funds becomes available, having done that
successfully when American Recovery and Reinvestment Act of 2009 funds were distributed.
CONCLUSIONS
Staff believes that increasing the funding for Avista's Low Income Weatherization
program by $125,000 and its Conservation Education program by $25,000 is justified under the
factors outlined in Order No. 32788. This is significantly less than CAPAI's original request to
increase weatherization funding by $225,000 and conservation education funding by $50,000,
and less than the Lewiston CAP estimates it can use immediately.
Staff believes that this is a conservative, but reasonable increase in consideration of
improvements to Avista's cost-effectiveness measure screening, robust CAP management
practices, significant base rate increases since the last low income funding increase, and the
demonstrated need for these services among Avista's customers. In addition, Staff believes it
fulfills the Commission directive that utilities provide a way for all customers to participate in
the energy efficiency programs which all customers fund. Without these programs, Avista's low
income customers would have no meaningful opportunity to participate in the program they help
fund.
7STAFF COMMENTS APRIL 10,2018
CUSTOMER COMMENTS
Customers were given until April 10,2018, to file comments regarding the proposed
increase in funding for both the Low Income Weatherization Program and Energy Conservation
Program. As of April9,2018, no comments had been filed by customers.
STAFF RE,COMMENDATIONS
Staff recommends that the Commission approve the Joint Petition filed by Avista, Staff,
and CAPAI to increase Avista's Low Income Weatherization funding by $125,000 annually and
Conservation Education Program by $25,000 annually.
Respectfully submitted this \OU day of April20l8.
Technical Staff: Stacey Donohue
Donn English
Johnathan Farley
Curtis Thaden
i:umisc/comments/avue I 8.2_avugl 8. I bkdejfct comme nts
8STAFF COMMENTS APRIL 10,2018
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS IOth DAY OF APRIL 20T8, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NOS. AVU-E-18-02/AVU-G-I8-01, BY MAILING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
LINDA GERVAIS
MGR REGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SPOKANE W A 99220-3727
E-mail: [e-mail]
BRAD M PURDY
ATTORNEY AT LAW
2OI9 N ITTH STREET
BOISE ID 83702
E-mail: [e-mail]
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE W A 99220-3727
E-mail: [e-mail]
Y
CERTIFICATE OF SERVICE