20210520Reply Comments.pdf

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Avista Corp.
l4l1 East Mission Ave., P.O. Box3727
Spokane, WA 99220-0500
Telephone: [phone]
Toll Free: 800-227-9187
N,day 19,2021
Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd. Bldg. 8, Ste. 201-A
Boise,Idaho 83714
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Re: Case Nos. AVU-E-20-13 and AYU-G'20-08 - Reply Comments of Avista
DearMs. Noriyuki:
Pursuant to the Notice of Modified Procedure issued by the Idaho Public Utilities Commission
(PUC or Commission) on February 8,2021, Avista Corporation, dba Avista Utilities (Avista or
Company), respectfully submits the following reply comments in response to Commission StafPs
May 5, 2021 umrten comments. Avista appreciates Staffs review of its 2018-2019 Energy
Efficiency program and the finding that the Company's expenses were prudent. In general, the
Company finds StafPs comments to be agreeable and serve to further strengthen Avista's program.
We are grateful for Staffs ongoing commitnent to Avista's customers and their support as the
Company implemented various changes in observation of the prior Settlement Stipulation in Case
Nos. AVU-E-18-12 and AW-G-18-08 (Settlement). Staffdid note a handful of concems in their
comments, for which the Company provides the below responses.
1. Recommended Disallowance for 2016-2017 Evaluation. Measurement & Verification
(EM&V) Exoenses
Staffhas recommended "removing all expenses paid to Nexant, Inc. (Nexant) for the Company's
third-party evaluations in 2018 related to its 2016-2017 biennial EM&V reports."r This
recommendation would result in an additional disallowance of $155,123 beyond the $374,934
agreed to in the Settlement, making the overall disallowance of $530,057. Such a disallowance
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I staffs comments at page 3.
exceeds the total 2016-2017 Nexant engagement costs that could have been allocated to Idaho
customers, but for the agreement for Avista to absorb those costs. The table below summarizes the
2016-2017 disallowances from the Settlement, as well as the recommended disallowance in this
case.
Table No. 1- Total Proposed Disallowances.2016-2018
2016
Expenses
2017
Expenses
Settlement
Total
Recommended
Disallowance for
2018 Expenses
Grand
Total
Electric $178,835 $108,337 $287,172 $60,634 $347,806
Natural Gas $9,204 $78,558 $87,762 $94,489 $182,251
Total $188,039 $186,895 $374,934 $155,123 $530,057
As noted above, the Settlement reached by Avista and Commission Staff resulted in a $374,974
adjusfinent. These were costs paid in the2016-2017 time period, but unbeknownst to Staffuntil
recently and to Avista upon additional review of historical invoices, some of those costs paid in
2016-2017 were trailing charges booked in2016 related to the 2014-2015 EM&V activities (for
which there was no disallowance). EM&V expenses, by their very nature, often trail behind the
actual review period as the evaluator requires the year to be completed before it is evaluated. In
actuality, what Avista and Staffshould have done was review if any ofthe costs from apriorperiod
(2014-15) were in the current period (2016-17), and likewise whether any current period (2016-
17) costs were billed in 2018.
Upon reviewing Staff s proposed disallowance in this Case, we rcalizedthat the total disallowance
would actually exceed what Idaho's portion of those costs would even have been. The following
table disaggregates the disallowance amounts into the engagernent periods for which the expenses
actually apply. Highlighted in blue are the costs that were paid in 2016-17 yet were related to a
prior prudence review period. Likewise, highlighted in yellow are the payments made tn 2016,
2017 and 2018 related to the 2016-17 review period. As you will see higNighted in green, Avista
absorbed (wrote off) $374,974; this is almost $23,000 ry than the total Idaho-share of Nexant
costs of $352,075.
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Table No. 2 - Expenses Incurred vs. Year Applied
The Company believes that it has taken necessary steps to address StafPs concerns that led to the
Settlement to begin with, and that the prior disallowance was more than adequate. As such, the
Company respectfully disagrees with Staffs recommendation, and no further adjustments should
be made for the 2016-2017 Nexant engagement.
2. Rebates and Incentive Chanses
Avista acknowledges Staff s concern regarding the fluctuation ofincentive levels within its Energy
Efficiency program and, as common practice, strives to avoid unnecessary incentive level
adjustments. Avista's goal is to maximize the level of incentives and still remain cost-effective per
the Utility Cost Test (UCT), and the Company generally adjusts rebates downward only when its
recommendations from Impact Evaluations indicate doing so, or to align with revisions to the
Regional Technical forum (RTF). When per-unit savings estimates decrease, the Company still
atternpts to maintain an incentive level consistent with prior years.
Avista is open to collaborating with Staff on this issue and accepts StafPs recommendation for
working with its stakeholder group to formalize the process for evaluating and changing
incentives. Avista will work with Staff to determine how impact evaluation information should be
used and when incentive levels should be locked in.
3. Evaluation of Northwest Enersv Efficiencv Alliance (NEEA)
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EM&V
Period
2016 2017
nts
2018 Total
Electrb
2016-t7 $1 $1
1 10 7 6Total Elec
Gas
2016-t7 8 $18 04
Total Gas $e $7 1$
I 18 l5 23Combined Total
$3s2
Total for 2014-2015
Total for 2016-2017
AvbtaAbsorbed
l'istsra
The NEEA savings model includes Program Measures and Codes & Standards. These savings
benefit the Northwest region as a whole, rather than one state or region. Avista acknowledges
Staffs concem with the NEEA program and will include an evaluation of the program as part of
its overall EM&V process. Avista agrees to Staffs recommendation and will work with Staff on
the details of the EM&V forNEEA.
4. 2018-2019 Annual Conservation Reoort
As identified by Staff, the Annual Conservation Report (ACR) contained an error related to Health
and Safety (H&S) expenses and discount rates being applied inadvertently. Both of these errors
originated from the third-party impact evaluation workpapers and were missed in the Company's
review of its ACR. While the Company recognizes these errors and understands the need to be
meticulous in the review of all external reporting it conducts, the errors had minimal impacts on
overall program outcomes.
Table No. 3 below illustrates portfolio level cost-effectiveness (CE) as filed originally with the
Company's ACR, in comparison to the revisions made after identification of these erors. As noted,
the overall impact of these errors was minimal, with the 2018 UCT having no change and the 2019
UCT having a change of .01 for electric and .13 for natural gas.
Table No.3 - Portfolio Impact of H&S Errors
2018 Total Portfolio 2019 Total Portfolio
Electric Gas Electric Gas
TRC UCT TRC UCT TRC UCT TRC UCT
Filed 2.07 2.66 0.99 2.12 Filed 1.95 2.39 0.s8 1.50
Revised 2.08 2.66 1.00 2.12 Revised 1.93 2.38 0.61 1.63
Impact (0.01)(0.01)Impact 0.02 0.01 (0.03)(0.13)
Avista will continue to improve its review processes and overall reporting elements now and into
the future and is not opposed to performing an in-house CE assessment. However, the Company
would request that adequate time be allowed in order to develop a methodology, a formalized
process, and a technology plan-all of which will inform timely and accurate cost-effectiveness
analyses. Avista is currently contracted with Cadmus and ADM for the 2020-2021program years;
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for 2020, both Cadmus and ADM recently completed the cost-effectiveness work for the
Company's Idaho progftrms. The Company is concerned that if an in-house CE is to be performed,
the cost already incurred to utilize the existing third-party evaluators would also be considered not
used nor useful by Staff in the future. To address this concern, Avista respectfully requests that for
the 2020-2021 period, the Company perform a combined two-year cost-effectiveness analysis that
can then be submitted with the 2021Annual Conservation Report. This will allow adequate time
for Avista to implement a CE methodology into its planning and analytics work.
Additionally, the Company is currently developing the documents for its 2022-2023 EM&V
Request for Proposal (RFP) and will modifu the Scope of Work to exclude cost-effectiveness for
Idaho evaluation work.
5. Research and Development
Avista acknowledges StafPs concerns with its Idaho Research and Development (R&D) projects,
and agrees with the request that the Company discontinue the R&D program until such time that
the program can be redesigned to focus on projects that provide the o'near-term, practical benefits
for Idaho ratepayers"2 tbat Staffdesires. While the Company maintains that the work and findings
of the R&D program contibutes to the overall body of knowledge for the region, we understand
the expectation that there be tangible benefits for customers resulting from this work. While Avista
agrees to discontinue the R&D progftm at this time, and therefore has not issued an RFP for any
subsequent projects in 2021, the Company believes that it is appropriate that it be allowed to
continue with any R&D work already in progress, especially for projects already contracted.
Conclusion
Avista values the continued collaboration and insight provided by Staffas we endeavor to improve
upon our Energy Efficiency program each year. While we see merit in many of Staffs comments,
as discussed herein, the Company believes that it has taken necessary steps to address Staffs
concerns with regards to its prior EM&V engagernent with Nexant and that there should be no
further disallowance in this case. Additionally, the Company supports Staff s recommendation to
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2 Staffs Comments at page 18
bring its CE analyses in-house as well as to discontinue its R&D program, but requests additional
time to complete the necessary processes and meet its existing contract obligations, as noted above.
Please direct any questions regarding this filing to Ryan Finesilver at [phone].
Sincerely
lolslao,r, Sorr$th
Shawn Bonfield
Sr. Manager of Regulatory Policy & Strategy
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