Loading...
HomeMy WebLinkAbout19990823.docDECISION MEMORANDUM TO: COMMISSIONER HANSEN COMMISSIONER SMITH COMMISSIONER KJELLANDER MYRNA WALTERS DON HOWELL STEPHANIE MILLER TONYA CLARK RON LAW BILL EASTLAKE RANDY LOBB LYNN ANDERSON WORKING FILE FROM: DATE: August 23, 1999 RE: CASE NO. AVU-E-99-4 (Avista) SCHEDULE 90 ELECTRIC ENERGY EFFICIENCY PROGRAMS PROPOSED REVISION On July 2, 1999, Avista Corporation dba Avista Utilities—Washington Water Power Division (Avista; Company) filed a complete revision of its Schedule 90 Electric Energy Efficiency Programs tariff with the Idaho Public Utilities Commission (Commission). The stated purposes of this tariff revision are: (1) to allow the Company to change its energy efficiency focus from specific technologies to various customer segments; (2) to modify and add to the list of available products and services; (3) to replace measure-specific customer incentives with a somewhat simpler table of incentives based on technology type and customer pay-back period; and (4) to allow greater management flexibility in spending the energy efficiency funds collected from customers through its energy surcharges under Schedule 91. One of the results of these proposed changes is that the number of tariff sheets in Schedule 90 are reduced by two-thirds, from 18 pages to 6 pages, even while increasing the number and type of technologies offered. The Company believes that providing a wide range of efficiency measures to each of ten customer segments rather than continuing to offer specific technologies in a fragmented manner to individual customer classes “will enhance energy efficiency promotion in an equitable and effective manner.” Customer segments are groups of customers defined by common characteristics such as facilities and energy usage. The customer segments identified are agriculture, education, food service, health care, hospitality, limited income, manufacturing/ public works, office, residential and retail. All customers buying electricity under the various customer class rate schedules would be eligible for efficiency measures under one or more customer segments. This filing modifies Schedule 90 existing products and services and adds several new efficiency measures of which two have not traditionally been included in utility demand side management (DSM) programs: (1) Assistive Technologies for physically or mentally challenged customers to improve the safety and efficiency of their electricity usage, and (2) Distributed Renewable Energy resources (based on solar, wind and geothermal) to be owned by customers and that would displace Company generated electricity load. This filing replaces measure-specific customer incentives and project caps with a single, somewhat simpler table of incentives and caps. Most customer incentives would be capped at 50% of project costs, but new technologies, including Distributed Renewable Energy, would have a higher cap at 75% of project costs. Within the caps, specific incentives are disaggregated by three broad measure types and three pay-back periods. The Company states that new technologies and longer pay-back periods require higher incentives. The proposed incentive amounts range from a low of $.01 per first year kWh saved for fuel conversion projects with a customer pay-back between 24 and 48 months to a high of $.14 per kWh saved for new technology projects with at least a 72 month customer pay-back. Increased management, budgetary flexibility can be achieved, the Company contends, by replacing existing annual caps for the various measures with guidelines that show an “expected” distribution of expenditures over broad categories. Avista says the budget is “intended to have some flexibility based upon the relative opportunities and successes in each program, customer segment or technology.” The categories and their expected shares of funding are as follows: Commercial and Industrial classes would get 50%; Residential (regular and limited income) customers would get 20%; Regional efforts such as the Northwest Energy Efficiency Alliance would get 20%; and Site-Specific Service Agreements, primarily industrial and commercial, would get 10%. The Company proposes no change in its overall cost-effectiveness evaluation standards. There is no revenue or rate change associated with this filing. The funding for programs is provided through Schedule 91. The Company acknowledges that it remains responsible for achieving and demonstrating through monitoring and evaluation, the cost-effective reduction of kilowatt hours based on the revenues obtained from Schedule 91. Commission Notices of Application and Modified Procedure in Case No. AVUE994 were issued on July 29, 1999. The deadline for filing written comments was August 20, 1999. The Commission Staff was the only party to file comments (attached). Of the new efficiency measures proposed by the Company in this case, Staff notes that two measures (i.e., Assistive Technologies used by the physically and mentally challenged and Distributed Renewable Energy) have not traditionally been included in the utility Demand Side Management (DSM) programs and therefore, introduce uncertainty regarding overall opportunity for savings, what these measures might cost, and how much savings might be achieved. In fact, Staff notes, the focus on energy efficiency opportunities and customer segments rather than on prescriptive energy efficiency measures all appear to increase uncertainty with respect to energy savings and funding levels. Of particular concern to the Staff is the Company’s proposal to provide incentives for customer-owned distributed renewable generation resources such as solar, wind and geothermal projects. While the Staff does not dispute the load reducing effect of these resources, Staff notes that the Company’s existing net metering tariff Schedule 62F essentially provides payment for generation from these types of projects at retail rates. Payment of retail rates that include recovery of non-generation costs or otherwise exceed the Company’s avoided cost, the Staff contends, already provides incentive to customers for these types of projects. At the very least, Staff contends that the Company should include incentives provided to customers under the net metering tariff in its determination of DSM measured cost effectiveness. The Company’s proposal to replace prescribed program funding levels with a table of incentives based on a measure type and customer payback, Staff states, provides a generic method of establishing customer funding levels. The trick as always, Staff contends, is accurately estimating costs and savings to determine simple payback. This will be particularly true, Staff contends, as the Company introduces new products that have not been traditionally provided through DSM programs, provides non-monetary incentives to customers and applies traditionally prescribed efficiency measures across to diverse customer segments. The Company, Staff notes, states that it is not proposing to change its overall cost effectiveness standards and has indicated through the Triple E Board that it will evaluate cost effectiveness by both customer segment and technology. Staff believes that the importance of program evaluation will significantly increase with the increased flexibility provided under the new tariffs. Noting that the Company continues to remain responsible for demonstrating that its DSM programs are a cost effective use of Schedule 91 revenues, Staff recommends that the revised Schedule 90 DSM tariffs be approved. Staff recommends that during the first year, the Company be required to provide quarterly reports to the Commission or through the Triple E Board detailing activities in each customer segment and for each measure. More specifically, Staff recommends that the Company include any incentives provided to customers through the Net Metering Schedule 62F tariff in its cost effectiveness determination of the Distributed Renewable Energy measures. Finally, Staff recommends that the annual budget table shown in the tariffs reflect Idaho-specific revenues from Schedule 91 rather than total Company revenues. Commission Decision Does the Commission continue to find it appropriate to process this case pursuant to Modified Procedure, i.e., by written submission rather than by hearing? Reference IDAPA 31.01.01.201-204. Does the Commission find the Company’s proposed changes to Schedule 90 to be reasonable? Does the Commission find Staff’s recommendations to be reasonable? Should the Company’s Application and Staff’s recommendations be approved? The Company has requested an effective date of August 30, 1999. vld/M: AVU-E-99-4_sw DECISION MEMORANDUM 4