20220801Application.pdf

^iistsra
Avista Corp.
1411 East Mission P.O.Box3727
Spokane, Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
RECEIVED
2022 AUG -1 PM 4:53
IDAHO PUBLIC
UTI LITI ES CON,IMI SSION
August 1,2022
JanNoriyuki, Secretary
Idaho Public Utilities Commission
11331 W. ChindenBlvd.
Bldg. 8, Suite 201-A
Boise,Idaho 83714 *vw- e- L?- tJ
Re:Avista Corporation Application for Determination of 2020-2021 Electric Energy
Efliciency Expenses as Prudenfly Incurred
DearMs. Noriyuki:
Enclosed for filing with the Commission is the Application of Avista Corporation, dba
Avista Utilities (Avista or "the Company"), requesting a determination of prudence for the
Company's electric energy efficiency expenditures from January 1,2020 through December 31,
202t. Also included in this filing are Exhibit Nos. l-3 in zupport of the Applicatior5 containing
Avista's 2020 Annual Conservation Report, 2021 Annual Consenration Report, and Idaho
Ince,ntive Modification Methodology document.
If you have any questions regarding this filing, please contact Ryan Finesilver, Manager of
Energy Effrciency, at (509) 495 -487 3 or ryan. finesilver@avistacorp. com.
Sincerely
fi/-,fu!Y/*
Jaime Majure
Regulatory Policy Analyst
Enclosures
DAVID J. MEYE& Esq.
Vice President and Chief Counsel
Regulatory & Governmental Affairs
Avista Corporation
141I E. Mission Avenue, MSC 27
P. O.Box3727
Spokane, Washington 99220
Telephone: [phone]
davi d. m ever(@ avi stacorp. com
Attorney for Avista Corporation
BEFORE THE IDAHO PT]BLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION FOR A
DETERMINATION OF 2O2O-202 1 ELECTRIC
ENERGY EFFICMNCY E)(PENSES AS
PRUDENTLY INCURRED
cAsE NO. AVU-E.-zz- 13
APPLICATION OF
AVISTA CORPORATION
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In accordance with IDAPA 31.01.01 (Rules of Procedure, or RP), RP 052 and RP 201, et
seq., Avista Corporation, dba Avista Utilities ("Avista" or "Company"), at l4l I East Mission
Avenue, Spokane, Washington, hereby applies to the Idaho Public Utilities Commission
("Commission") for an order designating Avista's electric energy efficiency expenditures from
January t,2020 through December 31,2021, funded through the Company's Schedule 9l Energy
Efficiency Rider Adjustment in the amount of $13,236,234, as prudently incurred (hereinafter
"Application").
The Company also requests that this filing be processed under the Commission's Modified
Procedure Rules (RP 201-204) through the use of written comments.
APPLICATION OF AVISTA . 1
All communications, pleadings, and orders with respect to this Application should be directed to:
David J. Meyer, Esq
Vice President and Chief Counsel
Regulatory & Governmental Affairs
Avista Corporation
P. O.Box3727
1411 E. Mission Avenue, MSC 27
Spokane, Washington 99220-37 27
Telephone: [phone] I 6
E-mail: david.mever(davistacorp.com
Shawn J. Bonfield
Senior Manager, Regulatory Policy & Strategy
Avista Corporation
P.O.Box3727
l4l I E. Mission Avenue, MSC 27
Spokane, Washington 99220 -37 27
Telephone: [phone]
E-mail : shawn.bonfi eld(@avistacorp. com
Avista Dockets (Electronic Only) - AvistaDockets(a)avistacom.com
Avista has included the following attachments in support of this filing, which are also
referenced below:
a) Exhibit No. 1 - Avista 2020 ldaho Annual Conservation Report
b) Exhibit No. 2 - Avista 2021 Idaho Annual Conservation Report
c) ExhibitNo. 3 - Idaho lncentive Modification Methodology
I. BACKGROIJND
Avista has continuously offered energy efficiency services since 1978. Through these
offerings, the Company seeks to provide customers with programs and information that may help
them manage their energy use and to utilize cost-effective energy efficiency resources to meet the
energy and demand needs of the Company's electrical system. These efforts are funded through
Avista's Electric and Natural Gas Energy Efficiency Rider Adjustments (Schedule 9l and
Schedule 1 9 l, respectively), or "tariff riders".
The Company's Energy Efficiency Program (Program) consist of options for residential,
non-residential and low-income customer segments. These Programs are offered through
traditional prescriptive channels along with site-specific projects and upstream buy-down
programs. Each Program in the Company's electric Energy Efficiency Portfolio (Portfolio) is
designed to meet cost-effectiveness requirements and is evaluated by a third-party evaluator each
APPLICATION OF AVISTA - 2
year. The results of both the Company's and the third-party evaluator's annual assessments of the
Program are contained within Avista's Annual Conservation Report (ACR).
II. ELECTRIC PROGRAM EXPENDITURES
The Company requests Commission determination that the expenditures incurred during the
2020-21Program years, totaling $13,236,234 for its electric Program, were prudent and in the public
interest. Of the total amount spent, $7,730,146, or 58%o, of total expenditures were paid out to
customers in direct incentives.l This percentage does not include additional benefits such as
technical analyses provided to customers by the Company's Energy Efficiency engineering staff or
regional market transformation efforts through the Northwest Energy Efficiency Alliance (NEEA).
The Company reports the Schedule 9l balance on a monthly basis to Commission Staff
and its Energy Efficiency Advisory Group (EEAG or "Advisory Group"). As of June 30, 2022,
Avista's electric tariffrider balance was nearly $4.9 million ovegfunded, meaning that more tariff
rider funding was collected than actually needed to fund the ongoing Program operations. This
overfunded balance was driven by two main factors: l) the current rate was designed to recover a
significant underfunded balance resulting from the high level of conservation achieved during the
2016 and 2017 program years,2 and 2) the COVID-I9 pandemic's continued impact on the
Program, with lower levels of throughput lingering in the majority of Program offerings. To
remedy the overfunded balance and more closely match projected future revenue with budgeted
expenditures, the Company has filed revisions to its Schedule 9l rider concurrently with this
Application.
| $3,625,202 in incentives were paid to customers in 2020 and $4, 104,94 4 in 2021 .
2 This underfunding was addressed by an increase to Schedule 9l rates effective October 1,2017, approved by the
Commission in Order No. 33897 of Case No. AVU-E-I7-06.
APPLICATION OF AVISTA - 3
The following Table No. I illustrates the balances for the 2020 and202l Programyears on
a monthly basis.
Table No. I
Accounting
Period
Jan-20
Feb-20
IlIar-20
Apr-20
Ital'-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nor-20
Dec-20
Jq-21
Feb-21
Illar-21
Apr-21
Ma1-21
Jun-21
Jul-21
Aug-2I
Sep-21
Oct-21
Nor-21
Dec-21
Begiuuing
Balance
Program
Expenditures
s529,418
s314,861
s659.856
$511,992
s465,786
$48r,r26
s370,631
s584,493
s482,095
s773,356
$2e,135
s1,034,585
s537,859
s60?,4e4
$631,446
$490,147
$632,246
$362,643
$291,482
$1,161,203
$416,500
$393,240
$382,492
$862=148
Tariff
Collections
(s1,018,003)
(s942,438)
($893,159)
(s844,337)
(sile,3oo)
($73e,3e0)
(s7e4.l60
(seo1,766)
(s835=501)
(s708,75e)
(s850,650)
(sl,o25,e6o
(s1,014,857)
(se76,3s3)
(s1,035,763)
(s838,691)
(s739,552)
($816,730)
(s7e4,166)
(sl,l14,419)
($801,590)
(s74e,534)
($820,041)
(see8,686)
Euding
Balance
s3,886,702
$3,259,125
s3,025.822
s2,693,477
$2=439,963
s2.181.699
$3,886,702
$3=259,125
$3,025.822
s2,693=477
s2i439-.963
s2,181,699
s1.75&164
s1,.+40,891
s1,087,485
s1,152,081
s565.567
s574,186
$97,188
(s276,671)
(s680,e88)
($1,029,53?)
(s1,136,838)
(s1,590,9?5)
($2,0e3,610)
(s2,046,8_2I)
($2,431,e15)
($2,788,?08)
(s3,225,757)
s1.758.164
s1,440,891
s1,087=485
s1,152,q81
$_565.567
$574,186
(s276.671)
(s680,988)
(s1,029,532)
($1,136,8J8)
($1,590,925)
($2,093,6I0)
($2,0,+6,825)
($2,431,91_5) ,
($2,788,208)
III. 2O2O AND 2021 PROGRAM PERFORMANCE
The Company's energy efficiency targets are established on an annual basis through the
process of developing the electric Integrated Resource Plan (IRP). The targets derived through the
resource planning efforts provide a starting point for Program planning, which is accomplished
through the annual business planning process where Program offerings are optimized for the
Company's service territory based on current economic and market conditions. Program savings
7
APPLICATION OF AVISTA - 4
for2020 were 16,711 MWh, which surpassed the electric savings target of 15,387 MWh, achieving
109% of the target. For 2021, the Company accomplished 93o/o of its 14,504 MWh target,
achieving annual energy savings of 13,510 MWh. This represents 101% of the Company's two-
year IRP target of 29,891 MWh, which does not include the additional 6,994 MWh acquired
through NEEA. In support of these figures, Avista's 2020 and202l Electric Impact Evaluations
are included as appendices within each respective year's ACR (See Exhibit No. I for 2020 and
ExhibitNo.2 for202l).
Table No. 2
TimePeriod of
Renol{ed Szvirss
Locel Evaluated
Il,IWh Sevincs IRP Target Percent
Achieved
2020 16.711 15.387 109%
202t 13,510 14.504 93o/o
2t2o|202l 30J21 29.891 l0lo/o
As shown in Table No. 2 above, from January 1,2020 through December 31,2021 rhe
Company achieved 30,221 MWh of savings, excludine NEEA savings of 6,994 MWh. Table No.
3 below details the electric savings by residential, non-residential and low-income sectors, which
make up the Company's electric Ponfolio.
Table No.3
Pr,ogrem
Seclor
2020-'21 Verified Seviugs
(MWh)
Resid€rrtial 6.696
Non-Residential 23,156
Low-lncoare 369
Totd Porlfolio 30-22t
Avista evaluates the effectiveness of its electric Portfolio based upon a number of metrics,
including analyses utilizing four specific measurements to evaluate the cost-effectiveness of a
given program from both the Company's and from customers' perspectives: the Utility Cost Test
APPLICATION OF AVISTA - 5
(UCT),3 the Total Resource Cost (TRC), the Participant Cost Test (PCT), and the Ratepayer
Impact Test (RIM). The most commonly applied metrics to provide insight into the net value to
all customers are the UCT-a benefit-to-cost test from the utility perspective that includes
incentives and excludes net costs and non-energy benefits (NEBsfand the TRC, which
represents the customer perspective by including all measure costs and NEBs, excluding
incentives. For 2020, the overall Portfolio achieved a UCT ratio of 2.23 and a TRC ratio of 2.02
based on verified savings. For 2021, the overall Portfolio achieved a UCT ratio of 1.24 and a TRC
ratio of 1.1 I based on verified savings. The cost-effectiveness metrics are included in Table No. 4
below:
Table No.4
Cost-Effectivmess Test 2020 2021
Utilitv Cost Test ruCT)2.23 1.24
Total Resource Cost (TRC)2.02 l-lI
The primary reason for the shift in cost-effectiveness between the two periods is due to l) an
updated avoided cost for the 202I Program year and 2) a lower level of conservation achievement
lm2021than in 2020.
TV. PROGRAM EVALUATION
ln addition to the cost-effectiveness analyses conducted for the Program, Avista also
contracts with independent, third-party consultants to provide program Evaluation, Measurement,
and Verification (EM&V) activities each year. These EM&V activities are used to validate and
report verified energy savings related to the Company's energy efficiency measures and Program
3 Also known as the Program Administer Cost (PAC) test
APPLICATION OF AVISTA - 6
offerings, as well as provide viable recommendations to improve Program performance, enact
changes to Program components, and decide whether and when to phase out measures.
For both the 2020 and 2021 Program years, Cadmus (non-residential) and ADM
(residential and low-income) were retained by Avista to perform an impact evaluations on Avista's
electric Energy Efficiency Program. The primary goal of the imFact evaluations is to provide an
accurate summary of the gross electric and demand savings attributable to Avista's Portfolio.
Cadmus was also retained to perfonn process evaluations on all Avista electric Program offerings.
The main purpose of a process evaluation is to identifr any improvements needed at the Portfolio
level to increase program effectiveness and efficiency.
As part of its 2020-21 evaluations, the evaluators concluded that Avista's electric Program
achieved 30,221 MWh cost-effectively and the Program addressed all impact and process
evaluation needs in accordance with industry and regulatory standards.
V. ADDITIONAL PROGRAM ACTIYITMS
PerOrderNo.35129 inCaseNos. AVU-E-20-13 andAVU-G-20-08-Avista's requestfor
a prudence detennination of its 2018-2019 electric and gas energy efficiency programs-{he
Commission ordered Avista to take several actions intended to improve its Program and associate
processes. The below section provides an update on these action items and related activities.
NEEA Evaluation
In its Order, the Commission determined that Avista should pursue an independent EM&V
of the NEEA program in Idaho. The inte,nt of this evaluation is to clariff whether flrs savings
claimed by NEEA, the allocation of those savings to Idaho, and the cost-effectiveness are accurate
and ultimately benefiting Idaho customers.
APPLICATION OF AVISTA - 7
Avista began its EM&V vendor selection efforts early in 2022 and transitioned to pursing
a joint effort with Idaho Power for the NEEA review. Avista and Idaho Power have collaborated
to jointly issue a Request for Proposal (PiFP) for the review of the program and is currently
reviewing responses to the RFP. Avista's selection criteria is heavily based on attaining a vendor
that can demonstrate independence and provide an objective analysis of the NEEA program.
Avista will continue to update Commission Staffon the EM&V progress.
Idaho Incentive Modilication Process
ln response to concems that customers are negatively impacted by frequent incentive
changes, Avista was instructed to formalize an objective standard for changing rebate and
incentive levels. As a result of this request, Avista prepared a fonnal document to illustrate its
process and methodology for changing incentive levels in Idaho, meeting with Commission Staff
through the2A20-2021 period to review the document and gather feedback. Avista also circulated
the document to its Advisory Group to gain further input. This document, inclusive of all feedback
received, has been included as Exhibit No. 3 to this filing as well as an appendix to the 2021 ACR
(ExhibitNo.2).
Cost-Effectiveness
Commission Staffnoted in the 2018-2019 prudence review that errors existing in the cost-
effectiveness calculations conducted by Avista's third party evaluator would not have occurred
had Avista perfonned its cost-effectiveness testing intemally. As a result, Avista agreed to perfomr
its cost-effectiveness tests intemally and committed to providing intemally calculated cost-
effectiveness calculations for the 2021 program year and a combined 2020-2021 basis. This
analysis is included in the 2021 Atnual Conservation Report (Exhibit No .2) as Appendix I.
APPLICATION OF AVISTA - 8
Research and Development Fundinq
In their comments in Case Nos. AVU-E-20-13 and AVU-G-20-08,4 Commission Staff
provided a recommendation that future funding for the Research and Development (R&D)
program be discontinued or suspended until the program could be redesigned to focus on R&D
that provides near-term, practical benefit for Idaho customers. While Avista agreed to this
provision in its reply comments,5 the Commission, in its OrderNo. 35129, instead directed Avista
to propose an updated R&D program that includes measurable targets and metrics. To date, Avista
has not renewed its contracts with its existing R&D partners and continues to evaluate
opportunities for R&D projects that return benefits to Idaho customers.
VI. REOUEST FOR RELIEF
As described in greater detail above, Avista respectfully requests that the Commission issue
an Order designating Avista's 2020 and 2021 total electric Energy Efficiency Program
expenditures of $13,236,234 as prudently incurred, with this Application being processed under
Modified Procedure through the use of written comments.
DATED this l't day of August2022,
Respectfully submitted
Avista Utilities
By:/s/ David Mever
David J. Meyer, Vice President and Chiet
Counsel for Regulatory and Governmental Affairs
a https://puc.idaho.eov/Fileroom/PublicFilesiELEC/AVU/AVUE20l3/Staffl202 t 0505Cornments.pdf
5 https://puc.idaho.gov/Fileroom/PublicFiles/ELEC/AW/A\(JE20l3iCompany/20210520Rep1y%2OComments.pdf
APPLICATION OF AVISTA - 9