20091218final_order_no_30966.pdf

Office of the Secretary
Service Date
December 18,2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'
CONSIDERATION OF FOUR
AMENDMENTS TO SECTION 111 OF THE
PUBLIC UTILITY REGULATORY
POLICIES ACT OF 1978 (PURP
CONTAINED IN THE ENERGY
INDEPENDENCE AND SECURITY ACT OF
2007
CASE NO. GNR-08-
ORDER NO. 30966
On December 19, 2007, the President signed into law the Energy Independence and
Security Act of 2007 (EISA, the Act). EISA amends the Public Utility Regulatory Policies Act
of 1978 (PURP A) by adding four new federal standards that address: (1) integrated resource
planning (IRP); (2) rate design modifications to promote energy efficiency investments; (3)
consideration of smart grid investments; and (4) smart grid information. 16 U.C. ~ 2621(16),
(16), (17), and (17).1 EISA also adds a new section (374) to the Energy Policy Conservation Act
(EPCA) establishing a standard for the disposition of excess power from waste energy recovery
projects.
The EISA generally requires the Commission to review the new federal standards
and decide whether to adopt the standards by December 19 2009. EISA ~ 1307(b)(1). Pursuant
to the mandates prescribed within the Act, the Commission initiated this proceeding to consider
the four new PURP A standards The new section of the EPCA added by the EISA will be
addressed in separate proceedings.
BACKGROUND
This is not the first time that Congress has required state commissions to examine
national regulatory standards. In 1978, Congress enacted PURP A to encourage: (1) the
conservation of energy supplied by electric utilities; (2) the optimum efficiency of electric utility
facilities and resources; and (3) equitable rates for electric consumers. PURPA ~ 101 , 16 U.
~ 2611. The 1978 regulatory standards included: (1) cost of service; (2) declining block rates;
I A technical error occurred in the drafting of the Act that caused the creation of two subsection 16's and two
subsection ITs.
2 The EISA provision amending the Energy Policy and Conservation Act regarding waste energy recovery does not
require an implementation proceeding by a specified date. On the contrary, the new EPCA provision requires that
the state hold a separate proceeding for each request made by a project owner or sponsor. EPCA ~ 374(a)(1).
ORDER NO. 30966
(3) time-of-day rates; (4) seasonal rates; (5) interruptible rates; and (6) load management
techniques. 16 U.C. ~ 2621(1) through 2621(6). The Energy Policy Act of 1992 added four
more standards. 16 U.C. ~ 2621(7) through 2621(10). Finally, the Electricity Modernization
Act of 2005 added five more federal ratemaking standards for electric utilities. 16 U.C. ~
2621(11) through 2621(15). In response to PURPA, the 1992 Energy Policy Act, and the
Electricity Modernization Act of 2005 , this Commission initiated proceedings to review the
federal standards. Order Nos. 17586, 16611 24729 30108.
The Commission invited our three applicable utilities/ interested stakeholders, and
the public to participate in this review process. Wal-Mart was the only party to request
placement on the Commission s service list. After the utilities filed an initial response to our
inquiry, the Commission convened a public workshop wherein all interested parties were invited
to participate. Additional comments followed the workshop.
A. The Commission s Responsibilities
Although the Act requires the Commission to undertake a review of the new federal
standards, the Act does not compel the Commission to adopt the standards. PURP A recognizes
that nothing "prohibits any State regulatory authority. . . from making any determination that i!
is not appropriate to implement any such standard. . .." 16 U.C. ~ 2621(a) (emphasis added).
The Act also recognizes that a State regulatory commission may have already implemented the
new federal standards or comparable standards in prior proceedings. 16 U.C. 92622(d)-(f). If
a State commission has already reviewed a new standard - by implementing the standard (or a
comparable standard) or has considered the standard but declined implementation, then no
further action is necessary. Id.; 16 u.S.C. ~ 2621(c)(1).
PURP A outlines the procedural requirements that the Commission must follow in its
consideration and determination of the four new federal standards. The Commission shall issue
a public notice of its review proceeding and make its determination regarding each of the four
standards for each regulated utility: (1) in writing; (2) based upon findings and evidence
presented in the proceeding; and (3) available to the public. 16 U.C. ~ 2621(b).
3 The three regulated utilities are A vista Utilities, Idaho Power Company and PacifiCorp dba Rocky Mountain
Power. Atlanta Power does not meet PURPA's threshold requirement of retail sales of 500 million kilowatt hours
a calendar year. 16 U.C. ~ 2612(a).
ORDER NO. 30966
B. Procedural History
In its Notice of Inquiry issued December 16, 2008, the Commission directed the three
largest electric utilities (Avista, Idaho Power and Rocky Mountain Power (RMP)) to address
what steps, if any, they had considered and/or implemented regarding each new standard. The
Commission s questions are contained in prior Order No. 30705. Besides inviting public
participation, the Notice required that the utilities serve their comments on a service list of
interested persons.
1. The Public Workshop. A Notice of Public Workshop was issued by the
Commission on April 9 , 2009. The workshop was convened on May 6, 2009, at the
Commission s office. The purpose of the workshop was to review the utilities' responses to the
Commission s questions set out in its initial Notice. The Commission also sought to determine
whether there was consensus among the participants about whether the Commission: (1) should
adopt the federal standards or comparable standards; (2) had already adopted the standards; or
(3) should not implement the federal standards.
The following parties attended and participated in the public workshop: A vista, Idaho
Power, Rocky Mountain Power, and the Commission Staff. The participants reviewed each of
the four federal standards and the utilities' responses to the questions. As set out in greater detail
below, the participants generally reached consensus that the Commission had already
implemented the same or comparable standards to those set out in the EISA.
2. Further Comments. Along with the Notice of Public Workshop, the Commission
invited any person to file a written comment regarding the federal standards no later than May
2009. No public comments were filed with the Commission.
THE NEW PURPA STANDARDS
AND THE COMMENTS
The Commission noted in its initial Notice that many of the concepts embodied in the
four new federal standards are not new to this Commission. Order No. 30705 at 3. The
Commission, the three electric regulated utilities and other interested parties have previously
addressed the issues encompassed in the new standards. Indeed, the utilities and the workshop
participants agree that the Commission has already essentially adopted the four new PURP
standards. The federal standards and comments for each standard are discussed below.
ORDER NO. 30966
A. Integrated Resource Planning
(16) INTEGRATED RESOURCE PLANNING.Each electric utility shall-
(A) Integrate energy efficiency resources into utility, State, and regional
plans; and
(B) Adopt policies establishing cost-effective energy efficiency as a
priority resource.
Utilities' Responses All three utilities noted that the Commission has already
adopted comparable standards. A vista asserted that its resource acquisition policies
fundamentally pursue all cost-effective electric and natural gas efficiency resources that can be
realistically achieved or facilitated by utility intervention." A vista Comments at 1. Idaho Power
acknowledged that it has implemented energy efficiency and demand-side measures in every
Integrated Resource Plan since the Commission s directives in the late 1980s. IPC Comments at
2. Rocky Mountain Power stated that it has been conducting integrated resource planning for
nearly two decades guided, in part, by the Resource Management Requirements stated by the
Commission. RMP Comments at 1.
Commission Findings: On January 9, 1987, the Commission initiated a case to
determine the direction, future, and scope of electric utility conservation and weatherization
programs in Idaho. Order No. 22299. The Commission determined that "electric utilities under
its jurisdiction, when formulating resource plans, should give consideration to appropriate
conservation and demand management measures equivalent to the consideration given
generating resources.Id. at 8. Since that time, electric utilities in Idaho have filed integrated
resource plans with the Commission every two years. See also 2007 Idaho Energy Plan ~ 4.3.1
1. Ongoing review of utilities' resource planning assures that reasonable, balanced
consideration is being given to conservation and energy efficiency measures and resources.
Therefore, we find that the integrated resource planning standard has already been adopted by
this Commission.
B. Rate Design Modifications to Promote Energy Efficiency Investments
(17) RATE DESIGN MODIFICATIONS TO PROMOTE ENERGY
EFFICIENCY INVESTMENTS.
(A) IN GENERAL.- The rates allowed to be charged by any electric
utility shall-
4 In 2009 our Legislature enacted Idaho Code ~ 61-541 which, among other things, allows "non-traditional
ratemaking treatment" for certain generation or transmission facilities. Before a facility is eligible for such
ratemaking treatment, the utility must have "a commission accepted integrated resource plan.
ORDER NO. 30966
(i) align utility incentives with the delivery of cost-effective
energy efficiency; and
(ii) promote energy efficiency investments.
(B) POLICY OPTIONS.In complying with subparagraph (A), each
State regulatory authority and each nonregulated utility shall
consider-
(i) removing the throughput incentive and other regulatory and
management disincentives to energy efficiency;
(ii) providing utility incentives for the successful management of
energy efficiency programs;
(iii) including the impact on adoption of energy efficiency as one of
the goals of retail rate design, recognizing that energy
efficiency must be balanced with other objectives;
(iv) adopting rate designs that encourage energy efficiency for each
customer class;
(v) allowing timely recovery of energy efficiency related costs;
and
(vi) offering home energy audits, offering demand response
programs, publicizing the financial and environmental benefits
associated with making home energy efficiency improvements,
and educating homeowners about all existing Federal and State
incentives, including the availability of low-cost loans, that
make energy efficiency improvements more affordable.
Utilities' Responses. The three utilities noted that they each have separate and
distinct programs that they believe meet the federal standards for rate design modifications that
promote energy efficiency. Avista utilizes a two-block inverted residential electric rate structure
in Idaho to encourage energy efficiency and provide a pricing signal regarding the higher cost of
new generating resources. Although A vista does not have inverted rate structures for its other
customer classes, it has been increasing the demand charges for commercial and industrial
customers in an effort to improve load factors and reduce peak demand. A vista Comments at 2.
The Company is also considering a time-of-use rate structure for its largest industrial and
institutional customers. Id. A vista recently increased customer incentives and implemented a
comprehensive customer outreach effort to support new and existing programs. Id. at 3.
Idaho Power maintains that it is committed to providing customers cost-based price
signals which encourage the efficient use of energy. Idaho Power Comments at 4. In the
Company s last several general rate cases the Commission approved seasonal rates for all
metered service schedules, tiered summer rates for residential and small business customers, and
two-tiered blocked rates for large general service customers taking secondary service. In its
ORDER NO. 30966
most recent general rate case (IPC-08-10) the cost-based rate proposals were designed to
encourage increased energy efficiency among the Company s residential, large general service
and irrigation customer groups. Id. Idaho Power asserts that it manages an active customer
education program through which it promotes the financial and environmental benefits
associated with making home energy efficiency improvements. Id. at 5.
Rocky Mountain Power offers seasonal rates to residential, general service, and large
general service customers in Idaho. Rocky Mountain Power Comments at 3. RMP also offers
(among other programs) optional time of use rates to residential and general service customers.
The Company maintains that these rates give customers clear signals about the cost of energy
which promotes energy efficiency and allows customers to mitigate the cost of their energy bills.
Id. RMP has also committed to filing a tiered rate design proposal as part of its next general rate
case.
Commission Findings: This Commission has or is presently considering energy
efficiency programs such as fixed-cost adjustments, tiered rates, time of use rates, seasonal rates
and decoupling. In addition, the Commission has approved tariff riders for A vista, Idaho Power
and Rocky Mountain Power to offset the costs of offering energy efficiency and demand
response programs on a sustained basis. All three electric utilities offer varied rebates and low
cost/no cost suggestions for greater energy efficiency. Therefore, we find that this Commission
has already adopted comparable standards for rate design modifications to promote energy
efficiency investments by the utilities.
C. Consideration of Smart Grid Investments
(16) CONSIDERATION OF SMART GRID INVESTMENTS.
(A) IN GENERAL.-Each State shall consider requiring that, prior to
undertaking investments in nonadvanced grid technologies, an
electric utility of the State demonstrate to the State that the electric
utility considered an investment in a qualified smart grid system
based on appropriate factors, including-(i) total costs;
(ii) cost-effectiveness;
(iii) improved reliability;
(iv) security;
(v) system performance; and
(vi) societal benefit.
(B) RATE RECOVERY.Each State shall consider authorizing each
electric utility of the State to recover from ratepayers any capital
operating expenditure, or other costs of the electric utility relating to
ORDER NO. 30966
the deployment of a qualified smart grid system, including a
reasonable rate of return on the capital expenditures of the electric
utility for the deployment of the qualified smart grid system.
(C) OBSOLETE EQUIPMENT.Each State shall consider authorizing
any electric utility or other party of the State to deploy a qualified
smart grid system to recover in a timely manner the remaining book-
value costs of any equipment rendered obsolete by the deployment
of the qualified smart grid system, based on the remaining
depreciable life of the obsolete equipment.
Utilities ' Responses.Avista and Idaho Power are presently deploying advanced
metering technology throughout their Idaho service territories. Rocky Mountain Power
maintains that it has investigated and considered the merits of smart grid technology, but
ultimately determined that smart grid programs and projects are still in the developmental stages
and were not currently in the best interests of the Company or its customers. RMP Comments at
4. However, RMP acknowledged that it would continue to evaluate the viability of smart grid
technology as it continues to develop. Id.
Commission Findings: A vista began deployment of advanced meter reading in
2005. In February 2009, the Commission issued Idaho Power a Certificate of Public
Convenience and Necessity to install Advanced Metering Infrastructure (AMI) technology. With
regard to Idaho Power, this Commission specifically found that "the deployment of AMI
technology will also offer substantial future benefits by providing an essential platform for
remote connect-disconnect capabilities, time-of-use pricing and other 'smart grid' operations.
Order No. 30726 at 8. Moreover, the Commission authorized Idaho Power to depreciate its
existing meter reading equipment over an accelerated three-year period. Id.While Rocky
Mountain Power has declined to make smart grid investments presently, it has committed to
monitoring the development of smart grid technologies. Based on the foregoing, we find that
this Commission has already adopted and implemented the consideration of smart grid
investment standards.
D. Smart Grid Information
(17) SMART GRID INFORMATION.
(A) ST ANDARD.All electricity purchasers shall be provided direct
access in written or electronic machine-readable form
appropriate, to information from their electricity provider as
provided in subparagraph (B).
ORDER NO. 30966
(B) INFORMATION .Information provided under this section, to the
extent practicable, shall include:
(i) PRICES.Purchasers and other interested persons shall be
provided with information on-
(1) time-based electricity prices in the wholesale electricity
market; and
(II) time-based electricity retail prices or rates that are
available to the purchasers.
(ii) USAGE.-Purchasers shall be provided with the number of
electricity units, expressed in kwh, purchased by them.(iii) INTERVALS AND PROJECTIONS.Updates of
information on prices and usage shall be offered on not less
than a daily basis, shall include hourly price and use
information, where available, and shall include a day-ahead
projection of such price information to the extent available.
(iv) SOURCES.Purchasers and other interested persons shall be
provided annually with written information on the sources of
the power provided by the utility, to the extent it can be
determined, by type of generation, including greenhouse gas
emissions associated with each type of generation, for
intervals during which such information is available on a cost
effective basis.
(C) ACCESS.Purchasers shall be able to access their own information
at any time through the Internet and on other means of
communication elected by that utility for Smart Grid applications.
Other interested persons shall be able to access information not
specific to any purchaser through the Internet. Information specific
to any purchaser shall be provided solely to that purchaser.
Utilities' Responses . Avista states that while it does not have any specific plans to
implement systems that could provide interval data to its customers, it continues to monitor these
types of rate structures and the impact of providing customers access to their interval data.
Further, the advanced meter reading technology that A vista is currently deploying has the
capabilities to provide interval data addressed by this new PURP A standard. A vista Comments
at 3. Idaho Power s AMI technology will also have the ability to measure the usage information
specified in this standard. Idaho Power Comments at 6. Residential and commercial customers
who currently have AMI installed have the ability to access their hourly and daily usage
information through the Company s web site. Id. at 7. Rocky Mountain Power asserts that
while it does not utilize smart grid technology, its customers receive usage information in
monthly billing statements. In addition, usage information is available to customers
electronically through the Company s web site.
ORDER NO. 30966
Commission Findings: Smart grid technology is developing at a rapid pace. Idaho
electric utilities and this Commission are committed to investigating and implementing smart
grid programs that are cost-effective and that offer benefits to both the utility and its customers.
While smart grid technology will allow for greater flexibility in the type of information
available, the utilities already provide price, usage, and energy source data to their customers.
2007 Idaho Energy Plan ~ E-18. Consequently, we find that this Commission has adopted
comparable standards for providing information to the utilities' customers as the federal smart
grid information standard.
ORDER
IT IS HEREBY DECLARED that the Commission has previously adopted the same
or comparable standards contained in 16 U.C. ~ 2621(16), (16), (17), and (17) of PURPA as
amended by the Energy Independence and Security Act of 2007. Accordingly, this case is
hereby closed.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30966
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this Ilff4-
day of December 2009.
Q/l. D. KEMPTON, RESIDENT
CSWlAL 11
~;,
Ii
MARSHA H. SMITH, COMMISSIONER
ATTEST:
O:GNR-O8-ks2
ORDER NO. 30966