20221220Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO.9917
IN THE MATTER OF AVISTA'S
APPLICATIONS FOR DETERMINATION OF
ITS 2020.2021 ELECTRIC AND NATURAL GAS
ENERGY EFFICIENCY EXPENSES AS
PRUDENTLY INCURRED
,'.r:ili:!VED
::.. ;.l iil Pil 3' 59
,' ,' -',i,;]uiSuo*
Street Address for Express Mail:
1 I33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. AVU.E-22-I3
AVU-G-22-05
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attomey of
record, Dayn Hardie, Deputy Attomey General, submits the following comments.
BACKGROUND
On August 1,2022, Avista Corporation dba Avista Utilities ("Company") filed two
Applications, each requesting the Commission issue an order finding that the Company's
$13,236,234 in electric and$4,928,907, in natural gas energy effrciency expenditures from
January 1,2020, through December 31,2021, were prudently incurred (referred to collectively as
the "Applications"). The Applications summarize the Company's Energy Efficiency ("EE")
activities and their cost-effectiveness. The Applications include the Company's2020 and202l
Annual Conservation Reports and Idaho Incentive Modification Methodology document. The
Applications also include the 202012021 impact evaluation reports of the Company's electric and
natural gas EE programs.
ISTAFF COMMENTS DECEMBER20,2022
STAFF ANALYSIS
Staff reviewed the Company's Application; Annual Conservation Reports; Evaluation,
Measurement, and Verification ("EM&V") Reports; and additional information provided by the
Company. Based on its review, Staff recommends the Commission approve $13,206,688 in
electric EE expenditures and $4,919,548 in natural gas EE expenditures as prudently incurred
from January I,2020, through December 31,2021.
The comments below detail Staff s analysis of the Company's program financials,
portfolio performance, cost-effectiveness analyses, program offerings, and on-going projects.
Absence of any discussion on additional points should not be construed as Staffls support or
endorsement for the Company's position without a full evaluation in the future.
Financial Review
Staff audited the Company's Demand Side Management ("DSM") expenses which
included a sampling and review of 125 transactions across all the Company's programs. Staff
determined the Company correctly documented expenses and instituted controls designed to
eliminate improper payment of program incentives. Additionally, the Company's internal review
process identified and corrected mistakes prior to the filing of its DSM reports. Based on Staff s
audit and review, most of the Company's DSM rider expenses appear to be prudent.
During its audit of EE expenses, Staff identified two mileage reimbursements paid in
2021 for Washington site visits totaling $76 that were incorrectly allocated to both Washington
and Idaho. Idaho's portion of that expense is $23. Staff removed this expense from the
Company's prudency request.
In addition to the mileage adjustment, Staff recommends the Commission disallow the
Company's third-party natural gas and electric cost-effectiveness evaluations for 2020. Staff
believes the evaluations provided lacked both usefulness and Company oversight; therefore,
were not prudently incurred expenses. Staff discusses this in greater detail in the Third-party
cost-effectiveness analysis section of these comments.
Table No. I below provides a summary of the Company's Idaho Electric rider revenues,
expenses and ending balance. Table No. 2 provides a summary of the Company's Idaho Natural
Gas rider revenues, expenses and ending balance. The referenced tables have incorporated the
2STAFF COMMENTS DECEMBER20,2022
mileage reimbursement adjustment and Stafls disallowance of third-party cost-effectiveness
evaluations.
Table No. l: Electric Tariff Rider Reconciliation
Beginning Balance, as of January 1,2020 - (Underfunded)$(4,375,287)
Reported Tariff Rider Revenue 2020 $10,273,434
Reported Tariff Rider Expenses 2020 $(6,472,333)
Ending Balance, as of December 31, 2020 - (Underfunded)$(574,186)
Reported Tariff Rider Revenue 2021 $10,700,382
Reported Tariff Rider Expenses 2021 $(6,763,901)
Staff Proposed Mileage Adjustment $23
Staff Proposed Electric S ector Co st-effectiveness Adj ustment $29,524
Ending Balance, as of December 31, 2021 - Overfunded $3,391,842
Table No.2: Natural Gas TariffRider Reconciliation
Beginning Balance, as of January 1,2020 - Overfunded $78,073
Reported Tariff Rider Revenue 2020 $1,382,684
Reported Tariff Rider Expenses 2020 $(2,482,258)
Ending Balance, as of December 31, 2020 - (Underfunded)$(1,021,500)
Reported Tariff Rider Revenue 2021 $1 ,40 I )1 03
Reported Tariff Rider Expenses 2021 $(2,446,649)
Staff Proposed Gas Sector Cost-effectiveness Adjustment $9,359
Ending Balance, as of December 31, 2021 - (Underfunded)$(2,057,687)
As of December 31,2021, the Company's electric tariff rider was overfunded. On July
29,2022, in Case No. AVU-E-22-09, the Company filed for approval to decrease its electric
tariff Schedule 91, o'Energy Efficiency Rider Adjustment" rates, by l.4o/o, effective October 1,
2022. In that Application, the Company stated that the balance of the electric tariff rider was
overfunded by nearly $4.9 million as of June30,2022. The Commission approved a decrease to
the EE Rider Adjustment rates effective October 1,2022. Order No. 35545 at 3. This change is
expected to bring the forecasted tariff balance to $0 by September 30,2025. OrderNo. 35545 at
2.
Table No. 2 shows that as of December 31, 2021, the Company's Natural gas tariff rider
was underfunded. On September 2,2022, in Case No. AVU-G-22-07, the Company applied for
approval to increase its natural gas tariff Schedule 191, "Energy Efficiency Rider Adjustment"
JSTAFF COMMENTS DECEMBER20,2022
rates, by 3.\yo, effective November 1,2022. In that Application, the Company stated that the
balance of the natural gas tariff rider was underfunded by approximately $2.1 million as of July
31,2022. The Commission approved an increase to the Energy Efficiency Rider Adjustment
rates effective October 1,2022. Order No. 35575 at 3. This change is expected to bring the
forecasted tariff balance to $0 by September 30, 2025. OrderNo. 35575 at 2.
The Company's internal audit department audited the EE processes for adequacy of
controls and adherence to industry best practices. In response to StafPs Production Request No
7, the Company stated that the "Internal Audit noted no significant findings, and it appears the
DSM department has appropriate internal controls in place to accurately process qualified
customer rates." Staff agrees with the assessment and discovered that the Company's use of
internal controls and approvals eliminate improper payments of program incentives.
Energy Efficiency Portfolio Overview
In support of its filing, the Company submitted the 2020 Annual Conservation Report
(*2020 Annual Report") and the 2021 Annual Conservation Report(*2021Annual Report")
along with attached appendices and exhibits. These reports and attachments provide detailed
overviews of the Company's electric and natural gas EE portfolio performance as well as
progftlm and measure level performance details.
For the 2020 program year, the Company reported a cost-effective electric portfolio with
aUtility Cost Testr ("UCT") ratio of 2.09. 2020 Annual Report at14. The electric sector
captured annual savings of 16,711 MWh, surpassing the Integrated Resource Plan ("IRI"'1
electric savings target of 15,387 MWh. Despite the success of the Company's programs, 2020
annual savings decreased by 34% when compared to2019. Much of the reduction in electric
savings can be attributed to the discontinuation of the Simple Steps, Smart Savings program at
the end of third quarter of 2020. ln202l, the annual electric savings decreased by an additional
l9Yoto 13,510 MWh or93o/o of the Company's 14,504 MWh IRP target. The202l electric
portfolio was cost-effective with a UCT ratio of 1.24. 2021Annual Report at 14.
1n2020 atd202l, the Company's natural gas portfolios achievedS4% of its IRP targets.
1n2020, the natural gas portfolio savings increased 62%o from20l9, saving 352,548 therms
t The UCT considers cost-effectiveness from the perspective of the utility. The UCT presents as a ratio of the
benefits of avoided supply costs to costs incurred by the program administrator. Any ratio above I is cost-effective
4STAFF COMMENTS DECEMBER20,2022
compared to the 421,270 therm savings IRP target. Most of this increase originated from the
Company's residential programs which experienced a significant increase in participation. The
Company reports that the 2020 natural gas EE portfolio was cost-effective with a UCT ratio of
1.64. 2020 Annual Report at 13. In202l, both the residential and the commercial and industrial
("C&I") sectors saw a slight decrease in savings with 300,000 therms compared to the 358,160
therm savings IRP target. The 2021natural gas portfolio is reported as cost-effective with a
UCT ratio of 1.24. 2021 Armtal Report at 14.
In early 2020, the onset of the COVID-I9 pandemic created multiple limitations on the
Company's EE programs. Social distancing requirements, shutdowns, and other restrictions led
to many programs being temporarily suspended. The Company was proactive in adjusting its
programs to incorporate virtual and contactless procedures to accommodate these restrictions.
On-site work programs such as the Multi-Family Direct Install and Home Energy Audit
programs were placed on hold but have since resumed operations in2022. While most programs
saw decreases in participation, some programs, including the residential HVAC program,
experienced increased performance as customers reprioritized their investments. In 2021, the
Company's programs continued to see the effects of the COVID-I9 pandemic with reduced
participation and labor shortage challenges impacting the Company's EE programs. Staff looks
forward to reviewing the Company's EE progftrms as work begins to resume in the Company's
next prudency filing.
Residential Sector
The Company's residential sector is designed to encourage customers to improve their
homes' EE through a variety of interventions including upstream buy downs, direct installation
programs, and customer rebates. Programs and rebates can be separated into programs that focus
on specific EE opportunities such as HVAC systems, envelope improvements, and load
reductions.
In2020, the Company states the residential electric sector was cost-effective with a UCT
ratio of 1.47 and 5,283 MWh of savings. 2020 Annual Report at72. While the program was
reported as cost-effective, the residential electric sector experienced a significant decrease in
savings, most of which can be attributed to the end of the Simple Steps, Smart Savings program
on September 30, 2020. The program was administered by the Bonneville Power Administration
5STAFF COMMENTS DECEMBER20,2022
("BPA") and sunset because the lighting market transformed to high-efficiency bulbs. This
program accounted for 56%o of residential electric savings while only being active for the first
three quarters of 2020. The full effect of this discontinuation can be seen in202l where the
savings decreased another 73o/o to a total I ,41 3 MWh. With savings from the Simple Steps,
Smart Savings progftrm entirely absent, the fuel efficiency progftlm became the top performer,
accounting for 4lo/o of sector savings. The 2021 residential electric sector continued to be cost-
effective with a UCT ratio of 1.52. 2021 Anrntal Report at 73. With the residential lighting
sector's transformation to high efficiency bulbs now complete, Staff looks forward to reviewing
the Company's efforts to expand residential sector savings in future prudency filings.
In2020, the Company reports the residential gas sector was cost-effective with a UCT
ratio of 2.46. 2020 Annual Report at 72. In contrast to the reductions in electric savings, the
2020 residential natural gas sector savings increased by 176% from 2019 to a total of the
317,550 therms. Most of these savings were part of the HVAC program which saw a significant
increase in participation due to an increased natural gas fumace incentive and consistent
replacement rates despite the impact of COVID-I9. In 2021, the residential gas sector savings
decreased to276,057 therms and remained cost-effective with a UCT ratio of 1.47. The HVAC
program continued to see high participation and savings in 2021 while other programs
experienced decreased participation.
Non- Re s ident iol Se ctor
The non-residential sector focuses on capturing energy savings for the C&I customers of
the Company's Idaho service territory. The C&I programs make use of prescriptive measures
for common installations with predictable savings, and site-specific measures that calculate
savings for unique or complex projects. The non-residential sector also includes the Business
Partner Program initiated in the fall of 2019. Since its launch, the Business Partner Program has
connected with 1,926 small businesses in rural Idaho and helped them implement energy saving
opportunities offered by the Company.
In2020, the Company reports that the Non-Residential electric sector was cost-effective
with a UCT ratio of 2.01. 2020 Annual Report at27. Compared to 2019, the sectors electric
savings decreased by 33% to an annual savings of ll,2l3 MWh. In202l, despite a slight
increase in savings to 1 1,943 MWh, the UCT ratio dropped to 1.34. The Company reports that
6STAFF COMMENTS DECEMBER20,2022
the benefits of the program were reduced by about one million dollars while the costs remained
relatively consistent contributing to the decrease in cost-effectiveness. This can be attributed to
the Company's Prescriptive Exterior Lighting Program.
[n2020, the Company reports the C&I natural gas program was cost-effective with a
UCT ratio of l.0l . 2020 Annual Report at27 . In202l, the Company reports the C&I natural
gas program UCT ratio dropped to 0.64. The Company states that the program is sensitive to its
participation rate, and low participation significantly reduced savings while operating costs
remained consistent. The Company expects that due to the significant size of C&I projects, even
a minor increase in participation will increase the cost-effectiveness. 2021 Annual Report at 30.
Staff will continue to monitor the programs participation and cost-effectiveness.
Low-Income Weatherization Sector
The Company partners with the Lewiston Community Action Partnership ("CAP") to
administer its EE programs to its low-income customers. The Company provides the CAP
agency with a list of measures deemed cost-effective from the Total Resource Cost2 ("TRC")
perspective that the Company fully funds. For measures that are not cost-effective, the Company
provides the CAP agency a partial reimbursement equal to the avoided cost for each measure.
In2020, the Company reports that the Low-Income Weatherization program was not
cost-effective from either TRC or UCT perspectives with UCT ratios of 0.5 and 0.1 for the
electric and natural gas sectors, respectively. 2020 Annual Report at 109 and I10. While the
program has traditionally struggled with cost-effectiveness, the Company reports the success of
146 electric projects and 149 natural gas projects in 2020, capturing 215 MWh of electric savings
and 5,495 therm savings. For both natural gas and electric savings, the program achieved
realization rates of ll0%. [n2021, the program funded 158 electric projects and 133 natural gas
projects capturing 154 MWh and3,217 therms of energy savings. The202l Low-Income
program again did not achieve cost-effectiveness from either the TRC or the UCT perspective
with UCT ratios of 0.29 and 0.35 for the electric and natural gas sectors . 2021 Annual Report at
2 The TRC considers cost-effectiveness from the perspective of the service territory, which includes the utility and
customers. The TRC presents as a ratio of the benefits of avoided supply costs to costs incuned by the program
administrator and customers. Any ratio above I is cost-effective.
7STAFF COMMENTS DECEMBER2O,2022
102. Regardless, the progftrm continues to capture energy savings with an electric realization
rate of 140%.
Cost-Effectiveness Analysis
For the current filing, the Company provided two sets of cost-effectiveness workpapers
for 2020, one for the Company's intemal cost-effectiveness analysis and one for the contracted
third-party cost-effectiveness analysis. See Response to Production Request No. l. The UCT
results for both the internal and third-party cost-effectiveness analyses are summarized in Table
No.3.
Table No.3: 2020 Intemal and Third-party Electric and Gas Portfolio Cost-effectiveness Results
2020 Electric Portfolio 2020 Gas Portfolio
Sector
Internal
UCT
Third-
partv UCT
Internal
UCT
Third-
party UCT
Portfolio 2.23 2.t6 1.26 1.64
Low Income 0.49 0.50 0.19 0.10
Residential 2.59 3.01 1.77 2.46
Non-Residential 2.39 2.01 I 0 I 0.92
In the Company's previous prudency filings, Case Nos. AVU-E-20-13 and AVU-G-2O-
08, Staff recommended the Company conduct its cost-effectiveness analysis internally instead of
through a third-party. By the time of Commission Order No. 35129 recommending intemal
analysis, the Company had already contracted with third-party evaluators who had completed
work on the 2020 cost-effectiveness analysis. In its Reply Comments, the Company expressed
concern that if an in-house cost-effectiveness analysis is conducted, the completed third-party
work may not be considered useful. In response, the Commission allowed the Company to
provide a combined 2020-2021cost-effectiveness analysis to be included in the202l Annual
Conservation Report. OrderNo. 35129 at5,7, and 9. Staff understands the Company's concem
over the usefulness of the contracted third-party 2020 cost-effectiveness analysis and believes
that both cost-effectiveness analyses have the potential to provide useful insights, both
STAFF COMMENTS DECEMBER20,2022
independently and in comparison with each other. However, each analysis, third-party and
internal cost-effectiveness analysis, must justifr their expense by providing quality work with
meaningful, relevant, and accurate results.
In Response to Production Request No. 1, the Company noted that its intemal cost-
effectiveness analysis used methods independent of its third-party contractor. Staff believes that
while this is appropriate in certain instances, the internal and third-party analyses are based on
the same data and should produce similar results with any differences clearly explained by
differences in method. The following sections discuss Staff s analysis of the Company's internal
and third-party co st- effectivene ss analy ses.
Int ernal co s t-ffi c tiv ene s s analy s i s
Staff believes that the Company's cohesive internal cost-effectiveness workpapers
demonstrate a marked improvement in quality over third-party workpapers, however they are not
without error. Staff analysis discovered that important reporting metrics including cost-test
ratios, benefits, and costs, were clearly formulated and directly related to relevant input values.
While the clarity of the workpapers are improved, the Company's internal workpapers do contain
several labeling and calculation errors. Additionally, while reconciling errors in the third-party
worksheets the Company also corrected several input errors for its internal workpapers. A
summary of all reconciled errors can be found in Attachment A. Staff believes that errors in the
Company's internal cost-effectiveness are likely artifacts of the Company's first attempt to run
these calculations in-house. However, ensuring that fundamental cost-effectiveness input values
correctly reflect program performance is of the utmost importance. Additionally, while greatly
reduced in volume, these types of errors are consistent with Staff discoveries in previous
prudency fillings. Staff recommends that the Company continue to develop its quality control,
internal knowledge, and review processes to avoid the possibility of Staff recommending future
adjustments on cost-effectiveness analysis labor hours in future cases.
One specific area of improvement highlighted by the Company's corrections is in its
input values used as a basis for calculations. Staff is concerned that the Company's intemal cost-
effectiveness workpapers use hard-coded, lump-sum inputs for several important calculated
values like cumulative electric avoided costs, total year one energy savings, and total incentives.
Using hard-coded inputs for calculated values prevents Staff from verifuing the accuracy of cost-
9STAFF COMMENTS DECEMBER2O,2022
effectiveness calculations and has the potential to invalidate all subsequent calculations. Even
minor differences from actual program performance can be scaled and produce exponentially
inaccurate results. Staff believes that the Company should base calculations on fundamental
program reporting values like units served, unit energy savings, and unit incentive. For the
avoided cost calculations, the Company was able to provide cumulative avoided cost calculations
with formulas enabled. See Response to Production Request No. 24 - Attachment A. Staff
encourages the Company to continue to link all calculations with formulas whenever possible.
The residential sector's HVAC Natural Gas Furnace measure in the Company's internal
cost-effectiveness worksheet provides an example of how hard-coded values can easily produce
unusable results. In the workpapers, the "Y1 Therm Savings" are input as a cumulative value
representing the sum therm savings of all2,012 participants. The "Yl Therm Savings" are used
to calculate the present value of avoided costs ("PV of NG AC") and therefore represents total
gas avoided costs. This is inconsistent with the labeling convention which implies it is for an
individual project through a later cell labeled "Gas Avoided Cost Total". In "Gas Avoided Cost
Total," avoided costs are calculated using the "PV of NG AC" multiplied by measure
participation. In this way, the calculation has scaled measure savings by participation twice.
The result is "Gas Avoided Cost Total" in excess of $3.7 billion, more than 1000 times the
avoided costs of the Company's entire natural gas EE portfolio. Staff was able to veriff that this
example and similar calculation errors were not used to calculate UCT values and reporting
metrics. However, if these errors are not corrected, some of these values could impact future
calculations if used by the Company. The Company should have intemal controls in place for
validating accuracy of Company workpapers.
Third-party c o s t -ffi ctivene s s analys is
Staff believes that the Company continued to provide inadequate oversight and quality
control to its third-party contractors. Specifically, Staff found a lack of oversight on the cost-
effectiveness calculations conducted by the third-party contractors. These issues are like the
Company's previous prudency filings which ultimately led to Commission Order No. 35129
which ordered the Company to conduct intemal cost-effectiveness calculations.
During its review, Staff noted inconsistent program savings, benefits, and cost values
between the Company's internal cost-effectiveness analysis, third-party cost-effectiveness
STAFF COMMENTS l0 DECEMBER20,2022
analysis, and the 2020 Annual Report. Some differences in benefits are expected as explained by
the Company's independent method for calculating avoided costs; however, program savings and
costs should remain constant between analyses. In the Company's Responses to Production
Request Nos. 23-31, the Company provided reconciliations for the following sectors: (1) Low-
Income Gas sector savings benefits and costs; (2) Residential Gas sector benefits; (3) Non-
Residential Gas sector benefits and costs; (4) Low-Income Electric sector benefits and costs; (5)
Residential Electric sector savings, benefits and costs; and (6) Non-Residential Electric sector
benefits and costs. A comprehensive list of the errors corrected in both the intemal and third-
party cost-effectiveness analyses can be found in Attachment A.
Of the six sectors evaluated by a third-party, the residential, low-income, and non-
residential gas programs had fundamental errors in their avoided cost calculations and were
unable to provide meaningful or reliable results. Additionally, all electric sector analyses had
significant input and calculation errors. Staff believes that these fundamental input and
calculation errors should have been corrected by the Company's quality control process. While
the third-party cost-effectiveness analysis had already been completed when the Company
prepared its own analysis, a comparison could have provided adequate indication of issues with
the third-party analyses or discovered in a quality review process.
Lack of the Company's oversight for third-party contracts has been an ongoing issue;
Staff noted similar concerns in the 2013,2014,2016,2018, and2020 prudency filings. While
the cost-effectiveness analysis is being brought in-house, Staff believes Impact and Process
evaluations are best conducted by independent third-parties. The Company bears responsibility
for ensuring the quality and accuracy of calculations provided by all third-party contractors. Due
to these ongoing issues, Staff does not believe the Company's expenses for third-party cost-
effectiveness evaluations were prudently incurred and therefore recommends the Commission
remove these expenditures. In Supplemental Response to Production Request No. 8, the
Company provided breakdowns of all EM&V expenses incurred in2020 and202l by task. The
Company identifies 529,524 of electric and $9,359 of gas cost-effectiveness calculation expenses
from its third-party contractors, Staffrecommends removing these expenses.
Moving forward, Staff recommends the Company actively manage and review the results
of all third-party contracts, like the Impact and Process evaluations, to ensure the results are
accurate, relevant, and useful to avoid the potential of future disallowances. Staff intends to
STAFF COMMENTS ll DECEMBER20,2022
closely monitor the Company's third-party contracts in the future to ensure the expenses are
prudent and have adequate oversight by the Company.
Rebates and Incentives
In Case Nos. AVU-E-20-13 and AVU-G-20-08, Staff stated its concerns over the
fluctuation of rebates and incentives offered by the Company. The Commission directed the
Company, Staff, and interested parties to develop a process to evaluate and update rebates and
incentives based on objective criteria. OrderNo. 35129 at8-9.
In the current filing, the Company submitted the Idaho Energy Efficiency Incentive
Methodology document as Exhibit No. 3 and as appendix F in the 2021 Annual Report. In the
document, the Company outlines its incentive standards, factors that influence incentive
revisions, sources used to determine savings, and the process for evaluating rebates. Staff
believes the Company's document clearly describes the objective criteria, standards, and
processes for evaluating and changing program incentives, satisfuing the Commission's order.
Staff looks forward to reviewing future incentive changes.
Northwest Energy Efficiency Alliance ("NEEA")
In Case Nos. AVU-E-20-13 and AVU-G-20-08, Staffstated its concerns over NEEA
claimed savings for code changes in neighboring states. The Commission directed the Company
to conduct an independent EM&V to verify the savings and cost-effectiveness of the NEEA
program. Order No. 35129 at 9. To date, the Company, in collaboration with Idaho Power, has
selected a vendor, developed the scope of work, and is currently evaluating the workplan. At its
October 2022EEAG meeting, the Company stated it expects to have results from the study in the
first quarter of 2023. Staff looks forward to reviewing the results of the study and validating the
savings NEEA claims for the Company's service territory. Staff continued to find evidence of
claimed savings by NEEA for out of state code changes in the current filing.
STAFF COMMENTS 12 DECEMBER20,2022
Research and Development Projects
In the Company's previous prudency filing, the Commission directed the Company to
update its Research and Development ("R&D") program to include measurable targets and
metrics for programs that prioritize benefits for Idaho customers. Order No. 35129 at 8. To
date, the Company has not proposed an update to the program but has continued to seek research
projects that align with the Commission's order. In Case No. AVU-E-21-13, the Company
applied to fund two electric transportation pilot programs using Schedule 9l R&D funding. The
Commission did not approve the programs use of R&D funding. Order No. 35361 at 3 and 8.
Currently the Company has no new R&D projects selected. In its October 2022 EEAG meeting,
the Company stated it is reaching out to universities for research topics that satisf,, the
Commission's Order for projects with measurable metrics and provide direct benefits to Idaho
customers. Staff looks forward to reviewing the projects the Company proposes. Staff verified
that the Company's expenses in2020 and202l contain only expenses for projects that were
under contract prior to Commission's Order No. 35129.
Verification of Avoided Energy
Staff believes that the Company used justified estimates of avoided energy savings for
both its electric and gas EE programs. These estimates are important, because - when combined
with the avoided cost per unit of energy - they provide the basis for determining the overall
avoided costs for each measure and ultimately the cost-effectiveness of the entire program.
Staff reviewed the Appendices of both Annual Reports, which contained the details for
each avoided energy saving estimate, as well as the third-party verification of those estimates.
Staff agrees that the per-unit estimates are reasonable, and therefore, the overall avoided cost
estimates are also reasonable.
STAFF RECOMMENDATION
Staff recommends that the Commission approve $13,206,688 in electric and $4,919,548
in natural gas expenditures as prudently occurred from January 1,2020, through December 31,
2021. These amounts reduce the Company's request by making adjustments to its third-party
cost-effectiveness analysis expenditure and other misallocated expenses. Additionally, Staff
recommends the Company actively manage and review the results of all third-party contracts,
STAFF COMMENTS 13 DECEMBER20,2022
such as Impact and Process evaluations, to ensure that the results are accurate, relevant, and
useful to avoid the potential of future disallowances.
2/bRespectfu lly submitted this day of December 2022.
Dayn
Deputy Attoruey General
Technical Staff: Jason Talford
Laura Conilogue
Matt Suess
i:umisobomments/avq22.l3_evug22.5dhijt commm8
STAIIF COMMENTS l4 DECEhdBER 20,2022
ATTACHMENTA
TO
STAFF COMMENTS
IN CASE NOS.
AVU-E-22-13 I
AVU-G-22-05
Attachment A: Summary of errors reconciled in the interna! and third-party cost-effectiveness
calculations by sector.t
lssues with third-party lssues with internal
Residential Gas
o Benefits calculation included 10%
conservation adder
o Avoided costs used different discount
rate
Residential Electrico Double counted 5602,830 of incentive
expenses
o Did not include $77 ,768 of general
implementation expenses
Non-Residential Gas
r Benefits calculation used prior CPA
avoided cost values (2015 vs 2018)
o Benefits calculation included 10%
conservation adder
r ldaho avoided costs understated by
subtracting Washington Carbon Adder.
o Double counted Transmission &
Distribution avoided costs
o Did not use winter avoided costs for
heating equipment
o Avoided costs used different discount
rate from internal calculation
Non-Residential Electric
o lncentive value overstated by 5L76,477
Low-lncome Electric
o Excluded 590,905 ofgeneral
implementation expenses.
Low-lncome Gas
o Benefits calculation included 10%
conservation adder in addition to the
10% adder already included in the TRC.
o Avoided costs used different discount
rate
o Benefits calculation did not include
Health and Safety benefit
o Used wrong savings value
Residential Electrico Double counted 5262,550 of third-party
costs
Non-Residential NGo Non-lncentive utility costs understated
by S30,049
Non-Residential Electrico lncentive values understated by S271,515
Low-lncome Gaso Used wrong savings value
I See Company's Response to Production Request No. 23-31
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 2OTH DAY OF DECEMBER 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU.E-22-I3IAVU.G-22.05, BY E.MAILING A COPY THEREOF, TO
THE FOLLOWING:
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-mail : [e-mail]
dockets@avi stacorp.com
SHAWN J. BONFIELD SENIOR MANAGER
REGULATORY POLICY & STRATEGY
AVISTA CORPORATION
P.O.BOX 3727
14I I E. MISSION AVENUE, MSC 27
SPOKANE,W A99220
E-mail : [e-mail]
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CERTIFICATE OF SERVICE