20121123CAPAI Comments.pdf

Brad M. Purdy
Attorney at Law
2019N. 17' St.
Boise, Idaho 83702
[phone]
Cell: [phone]
Fax: [phone]
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HAND DELIVERED
November 23, 2012
Jean Jewell
Secretary, Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83702
Re: Case No. GNR-E-12-01: CAPAI comments
Dear Ms. Jewell:
Included herewith is the original and seven (7) copies of Community Action Partnership
Association of Idaho's comments in the above-referenced proceeding pursuant to the
Commission's Notice of Modified Procedure and Order No. 32673. Thank you for your
acceptance of this filing.
(z3ciQ
Brad M. Purdy
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
I • 10 r u
IN THE MATTER OF THE COMMISSION'S ) CASE NO. GR-E441
INQUIRY INTO THE COST-EFFECTIVENESS ) UL
AND FUNDING OF LOW INCOME ) COMMENTS OF THE
WEATHERIZATION AND ENERGY ) COMMUNITY ACTION
CONSERVATION PROGRAMS FOR ) PARTNERSHIP ASSOC-
ELECTRIC UTILITIES ) IATION OF IDAHO
I.INTRODUCTION
Pursuant to that Notice of Modified Procedure and Order No. 32673 issued by the
commission on November 2, 2012, CAPA! hereby submits its comments in response to the Staff
Report filed in this case on October 23, 2012. CAPAI notes that it previously addressed and
analyzed much of the subject matter at issue in this proceeding, (i.e., how to properly evaluate
the cost-effectiveness of low-income weatherization assistance programs, or "LIWA") through
comments filed by CAPAI in Case No. PAC-E-1 1-13 (the "11-13 case") in which Rocky
Mountain Power sought to terminate cost-effectiveness evaluations of LIWA on the basis that
the program is not cost-effective and the cost of evaluations would only exacerbate matters.
Though CAPAI's comments in the 11-13 case were directed toward the CADMLJS evaluation of
Rocky Mountain's LIWA program, much of the information and rationale contained in CAPAI's
comments in the 11-13 case are pertinent to the cost-effectiveness of LIWA programs on the
whole and, therefore, relevant to this proceeding.
CAPAI's comments submitted in the 11-13 case are extremely detailed and contain the
analysis of a nationally known expert in the field of LIWA evaluation, Mr. Roger Colton.
CAPAI will primarily respond to the Staff Report filed in this case on October 23, 2012 and the
potential consequences of that Repot. CAPAI agrees in whole or part with certain portions of
Staffs Report, and disagrees with others.
II.HISTORY OF LIWA
CAPAI is well aware that the Commission is familiar with the history of LIWA in Idaho,
but believes that several key historical facts will serve as useful in order to fully appreciate the
scope and nature of the issues presently before this Commission. Though CAPAI was
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT
instrumental in collaboratively establishing a LIWA program for Idaho Power in the late 1980s,
it did not become a regular, formal party before this Commission on all low-income issues until
its intervention and participation in Idaho Power's 2003 general rate case No. IPC-E-03-13. For
reasons unknown, the Idaho Power LIWA program established and approved by Commission
Order in the late 1980s had not been frilly funded resulting in significant underfunding of the
program for a period in excess often years. Though CAPAI did not believe it possible to
recover the considerable sum of money that had failed to be invested in LIWA, it did propose an
increase in funding that would put the utility on the right track on a going-forward basis with
respect to the substantial need for low-income DSM and the benefits provided by such a
resource. In its pursuit of this objective, CAPAI sought input and support from Staff. Though
Staff declined to specifically support CAPAI's efforts, it did not oppose them. Ultimately, the
Commission increased Idaho Power's LIWA funding from an average of roughly $200,000
annually, to $1.2 million annually.
Believing that other LIWA programs in Idaho were also significantly underfunded when
compared to Idaho Power's new funding level and when viewed from a regional perspective and
taking into consideration similarly situated utilities in other states, CAPAI subsequently
intervened in numerous cases, and has continued to do so, up to the present for a variety of
reasons resulting in LIWA increases and program design changes for all three electric utilities,
Idaho Power, Rocky Mountain Power and AVISTA. Though there have never existed specific
guidelines or principles enunciated by the Commission or any other authoritative entity regarding
how to properly design and fund LIWA programs, CAPAI has, over the years, relied on the
principles of consistency and fairness when making LIWA funding and program design
proposals to the Commission and has always strived to make its proposals relatively equal and
fair to the ratepayers of all three of Idaho's large electric IOUs. CAPAI has always provided the
Commission with data and rationale justifying the need for LIWA funding increases and has
attempted to remain consistent in that regard as well. Prior to 2011, CAPAI was never informed
by the Commission or Staff that the rationale and methodologies utilized by CAPAI in making
LIWA funding proposals was anything other than appropriate and ultimately proved to satisfy
the Commission who has generally granted CAPAI the reasonable LIWA proposals it has made.
CAPAI also believes that it has historically had a cooperative working relationship with
Staff and has always sought and welcomed any input Staff has had on matters relevant to LIWA
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 2
or CAPAI and its constituents. From the time that CAPAI first intervened in Idaho Power's 2003
rate case to last year the Commission Staff, with one exception, has taken the position of either
non-opposition to CAPAI's LIWA funding proposals, or one of subtle support for CAPAI's
proposals. The one exception occurred relatively recently in Case No. PAC-E- 10-7, when Staff
proposed an increase in RMP's LIWA funding from $150,000 to $300,000. CAPAI had only
sought an increase to $231,000 in the same proceeding, attempting to follow the concepts of
parity between funding of LIWA programs by Idaho's three largest electric IOUs. In Order No.
32196,' issued just last year on February 28, 2011, the Commission adopted Staffs position,
approving Staffs higher funding proposal to increase LIWA funding to $300,000. Aside from
the foregoing exception, Staff has largely allowed CAPAI to formulate and support its own
LIWA proposals in contested cases, only weighing in when it felt a specific reason to do so.
Thus, prior to the end of last year, CAPAI has never had reason to believe that any of its
significant LI WA-related proposals were anything but fair, just and reasonable. Based on all of
the foregoing, as well as Commission Orders mostly approving CAPAI's LIWA funding
requests, CAPAI has justifiably assumed that the rationale it has applied and methodologies it
has employed to pursue LIWA funding increases have been appropriate and acceptable.
Certainly, prior to 2011, Staff, the Commission, nor any non-utility party had argued to the
contrary.
Despite nearly 8 years of such intervention and advocacy by CAPAI, and successful
results before the Commission, matters came to an abrupt halt last year. As Staff itself notes on
page 1 of its comments: "The last year was challenging for Idaho's low income weatherization
programs." The year 2011 was certainly unique and based on numerous factors, quite
challenging for all parties and certainly the Commission as well. Though CAPAI has largely
been confused by precisely what prompted such a sea change in the positions of Staff and the
Commission, CAPAI has continued to cooperate with the processes outlined by the Commission
to the best of its abilities, to cooperate with Staff and other parties as much as possible, and to be
responsive to the concerns and criticisms of all.
Regarding the major turn of events that occurred last year, not only did Staff oppose
CAPAI's position regarding the specific amount of LIWA funding levels for all three electric
IOUs, Staff also opposed the rationale historically relied upon by CAPAI to support funding
'Case No. PAC-E-10-07.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 3
increases and, most importantly, argued for the first time that none of the three electric IOUs
LIWA programs were cost-effective, a position, that if adopted by the Commission, would likely
result in the complete termination of all LIWA programs and bring to an end the only DSM
program realistically available to low-income customers. This was the first time that Staff had
ever opposed CAPAI's attempts to increase LIWA on any basis. Ironically, all of this came
about just several months after the Commission had approved a LIWA funding increase for
Rocky Mountain proposed by Staff and that exceeded the funding level proposed by CAPAI, the
only time that such a scenario ever occurred. Coupled with these recommendations to the
Commission, Staff proposed that there be a workshop proceeding initiated to address and resolve
all related LIWA issues and not alter existing LIWA funding levels until such a workshop case
had been completed.
To say the least, Staffs position took CAPAI by surprise and created a procedural
conundrum for CAPAI that was quite difficult and costly to respond to. Not only did Staffs
position contradict positions it had taken implicitly or explicitly for nearly a decade, it
contradicted Staffs position taken earlier in the same year and was not even formally put before
the Commission until the latter half of 2011, shortly before four major electric cases, all of which
CAPAI was a party to, went to hearing thereby making a thorough response by CAPAI to Staffs
new posture very challenging, especially given the nearly simultaneous procedure of the four
major electric cases all coming to conclusion at the height of the holiday season. Ultimately, the
Commission rejected all of CAPAI's LIWA funding requests and adopted Staffs
recommendation to defer future LIWA funding changes, if any there be, to a separate
"workshop" proceeding. CAPAT objected to this procedure believing that it would cause
needless expense and delay but has fully cooperated in the workshop process ultimately initiated.
In its rulings, the Commission placed a hold on any LIWA funding changes pending the
outcome of the newly created workshop proceeding, Case No. GNR-E- 12-01. That workshop
proceeding is still in the comment phase and it is unknown what, if anything will come of it, let
alone when. To say the least, the future of Idaho's LIWA programs hangs in the balance.
Since last year, and despite the sharp differences in opinion as to facts as well as the
philosophical considerations behind the policy issues raised by Staff, CAPAI continues to place
considerable value on the insight and expertise of Staff and is deeply desirous of addressing any
and all concerns Staff has to the greatest extent possible and most certainly to that of the
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 4
Commission. In that regard, CAPAI extends its appreciation to Staff for the effort made to
address the many complex issues extant in this workshop proceeding.
III. CASE PROCEDURE
This case was initiated by virtue of the Commission's final orders in three 2011 cases,
Idaho Power's rate case (IPC-E-11-08), Rocky Mountain Power's rate case (PAC-E-11-12) and
what would become the lynchpin proceeding filed by Rocky Mountain, (PAC-E-11-13; the "11-
13 case)," seeking authorization to suspend further LIWA cost-effectiveness evaluations of its
LIWA program on the basis that the program is not cost-effective and the cost of evaluations,
when added to total program costs, only exacerbates the problem. Though Rocky Mountain
contended that its LIWA program was not cost-effective, and had previously opposed any
attempts to increase LIWA funding over the years, it has not yet proposed terminating the
program. In deferring all LIWA decisions to a separate workshop case, the Commission stated
its own expectations in each of the aforementioned cases as follows.
First, in the 11-13 case, the Commission ruled:
[t]here still exists a wide disparity in the evaluation criteria utilized by the
three main investor-owned utilities (IOUs), Idaho Power, Avista
Corporation, and Rocky Mountain Power, to assess their low-income
weatherization programs. Thus, the Commission finds that it is reasonable
and appropriate to defer any final decision regarding Rocky Mountain's
request to suspend its obligation to perform program evaluations of its
Schedule 21 - Low Income Weatherization Services Optional for Income
Qualifying Customers Program in order to conduct "public workshops to
examine the common issues of need and determine the appropriate
mechanisms to measure the cost-effectiveness of low-income
weatherization programs. [Quoting Order No. 32432 at 22]. Consistent with
our final Order following the Company's last general rate case, PAC-E-1 1-
12, the Commission directs Rocky Mountain to participate in the workshops
'with a goal of determining appropriate criteria for establishing funding
levels for the utilities' low-income weatherization programs.. .and submit a
report to the Commission outlining their findings and recommendations.'
Order No. 32440 at 9 [Emphasis added].
In the Rocky Mountain general rate case (PAC-E-1 1-12), the Commission held:
Thus, consistent with our ruling in IPC-E-1 1-08, the Commission finds that
it is reasonable to open a separate docket for all stakeholders and interested
Parties to participate in public workshops with a goal of determining
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT
appropriate criteria for establishing funding levels for the utilities' low-
income weatherization programs. In the public workshops, the Commission
envisions that the Parties will examine and discuss various methodologies
and tools to assess program cost-effectiveness, including the appropriate
measurement of non-economic benefits associated with the programs, and
submit a report to the Commission outlining their findings and
recommendations.
Order No. 32432 at 17 [Emphasis added].
In the Idaho Power general rate case (IPC-E-11-08), the Commission held:
We find it reasonable to open a case and convene public workshops for
stakeholders and other interested persons to discuss ways of determining the
relative need for low-income weatherization programs. The workshops will
also be an effective tool for allowing stakeholders to analyze and evaluate
the various cost-effectiveness measures and non-economic benefits derived
from low-income weatherization. Consequently, it is our intent to convene
public workshops as soon as possible, to discuss and resolve these
weatherization issues.
Order No. 32426 at 16 [Emphasis added].
In Case No. AVU-E-11-01, CAPAI joined in the AVISTA rate case global settlement
based on CAPAI's perception that AVISTA was already funding its LIWA program at relatively
higher levels than Idaho Power or Rocky Mountain and taking into consideration that AVISTA
agreed to substantially increase its low-income conservation education funding, a settlement
provision that no party, including Staff, opposed.
Regarding the Idaho Power and Rocky Mountain rate cases, the two utilities in question
refused to agree to a LIWA funding increase and early in the proceedings, Staff either tacitly or
explicitly agreed that such increases were not warranted. Thus, CAPAI chose to not join in the
global settlements in those two rate cases and the matters went to hearing in late 2011. Finally,
regarding Rocky Mountain's 11-13 case, there was considerable scrutiny by both CAPAI and
Staff of the CADMUS evaluation of Rocky Mountain's LIWA program involving
teleconferences, the retaining by CAPAI of an expert witness, Mr. Roger Colton, and
considerable discovery by Staff and CAPAI. Mr. Roger Colton reviewed the CADMUS study
and provided a very detailed report addressing the study and how to properly evaluate Rocky
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 6
Mountain's LIWA program and LIWA. Mr. Cotton's report was filed with CAPAI's comments
in the 11-13 case.
The 11-13 case was presented to the Commission under modified procedure, though
CAPA! argued that a hearing would likely become necessary to wade through the morass of
complex issues involved. Staff unsuccessfully proposed that the workshop proceeding could be
initiated as early as January and resolved expeditiously. CAPAI opposed such a proceeding for a
number of reasons, one being that it would lead to needless delay, uncertainty, and was not likely
to resolve the major issues in dispute.
On February 15, 2012, a Notice of Public Workshop was issued scheduling the workshop
to resolve all LIWA issues as described above for March 19-20, 2012. This Notice did not
provide for intervention or establish any particular agenda or schedule for the remainder of the
proceeding. The workshop was convened as scheduled and attended by numerous parties
including a number of representatives for CAPAI. During the workshop, parties weighed in on
numerous issues, concerns, and topics pertinent to their respective interests. In addition,
proposals were discussed regarding how to bring the case to a conclusion procedurally and how
to provide the Commission with the type of information it had requested. A procedure was
informally agreed upon by which Staff would circulate to the workshop participants a draft of its
Report by a certain date, the participants would have the opportunity to submit informal
feedback to that draft more with the hopes of finding common ground and providing clarity
rather than arguing their respective positions. Staff emphasized that while it would take these
informal responses into consideration, it was in no way obligated to agree with or even respond
to them. It was apparent that Staff had already formulated specific positions on numerous issues.
Finally, it was agreed that Staff, would issue its final report by a specified date. This would be
followed by responsive formal comments from the participants stating their respective positions,
also by a specified date. Staff would have the opportunity to issue reply comments to the
participants' comments by a specified date.
The foregoing procedure was effectively adhered to, though the proposed dates/deadlines
were pushed back several times and will not be completed until close to year's end. On August
10, 2012, Staff issued its initial draft report via email. On August 10, 2012, CAPAI submitted its
informal feedback to Staffs draft report also via email. It is not known if other parties also
submitted feedback because there was no intervention, no list of parties and no procedure
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 7
established for sharing informal feedback between workshop participants. In addition, the
informal feedback provided to Staff was never posted to the Commission's website for this case.
On November 2, 2012, roughly two weeks after the filing of Staffs Report, the
Commission issued a Notice of Modified Procedure, and Order No. 32673 in this case requiring
that all parties who desired to comment on Staffs Final Report do so by November 23, 2012.
Any parties objecting to the use of modified procedure were also directed to file said objection
by this date. The Commission further ruled that Staff would file a Reply to any comments filed
no later than December 7, 2012. Finally, the Commission ruled that "intervener funding
requests, if any, must be filed" by December 21, 2012. It is unclear whether the Commission
will entertain requests for intervener funding for work done during the course of this case, given
that there are no interveners, but CAPAI notes that the Commission granted it the right to renew
its request for intervener funding for expenses incurred in Case No. PAC-E- 11-13 in this case.
IV. RESPONSE TO STAFF'S REPORT
CAPAI disputes the Staff's conclusion that the low-income programs are not cost-effective and
that non-energy benefits should be excluded from the cost effectiveness test. PUC Staff has
concluded that if their suggestions are adopted and implemented, the low-income programs will
be cost effective. Most of the staff's recommendations are suggestions to rearrange expenditures
the utilities' programs show increased cost-effectiveness. Since historical cost information is
available, CAPAI requests that historical program cost data is utilized to test Staffs
recommendations prior to adoption and implementation.
The comments below are directed toward the Recommendations set forth in the Staff Report. No
discussion of the need for low-income weatherization is presented. This lack is not to be
construed as any indication of the merits of such a discussion. A "needs discussion" is simply
beyond the scope of these comments.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 8
Recommendation 1: Staff recommends that Idaho Power use its third-party impact evaluation
results to inform the savings estimates from the EA5 modeling software. After this adjustment,
all three companies will be using verified energy savings estimates in their cost effectiveness
calculations. Many, but not all, impact evaluations find that actual savings are lower than the
previous estimates. If this is the case for the energy saving produced by Idaho Power's program,
this adjustment will decrease the cost-effectiveness of Idaho Power's program.
CAPAI Response: This Staff recommendation is reasonable and should be adopted. Cost-
effectiveness evaluations tend to be better-served when supported by appropriate third-party
impact evaluations and billing analysis results. This is not to say, of course, that gn "third-party
impact evaluations and billing analysis results" are "appropriate." For example, the Cadmus
billing analysis in support of its "evaluation" of the Rocky Mountain Power low-income program
was seriously flawed. While the principle that savings estimates based on an actual billing
analysis is easy to agree to, the presentation of a "billing analysis" does not render the need for a
detailed review of the cost-effectiveness analysis unnecessary. The propriety of any particular
"billing analysis results" lies in the specific details of the individual analysis.
Recommendation 2: Staff agrees that customers who qualify for LIHEAP bill assistance and
who are then added to the CAP agency weatherization lists are extremely unlikely to have
sufficient funds to weatherize their homes. Staff further agrees that landlords have little incentive
to pay for energy efficiency measures when they are not responsible for paying the
energy bill. Therefore, Staff recommends that utilities claim 100% Net-To-Gross for this
program. This adjustment will benefit the cost-effectiveness of Idaho Power's program.
CAPAI Response: This Staff recommendation is appropriate and should be adopted. CAPAI's
expert, Roger Colton, has performed many assessments of the ability of low-income households
to pursue energy efficiency investments in the absence of a fully-subsidized direct install
program, both for non-profit low-income service providers and for public utilities. Mr. Colton's
findings have universally found that low-income households lack the capacity to engage in
energy efficiency investments in the absence of a fully-subsidized direct install program such as
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 9
the federal Weatherization Assistance Program (WAP) and utility weatherization programs. The
barriers to low-income investment include, but are not limited to:
> The lack of investment capital. It matters not how "cost-effective" an energy efficiency
investment might be from the perspective of the ratepayer if the customer does not have
the funds to make the investment with which to begin;
> The lack of dominion interest over the property. Tenants generally do not have the
authority to make decisions (known as "dominion interests") with respect to major energy
consuming systems, including space heating/cooling and domestic hot water. Frequently,
tenants even lack dominion interest over major appliances such as refrigerators. In the
face of this lack of dominion interest, and given the lack of incentive for landlords to
make improvements that would reduce bills for which the landlord is not responsible,
energy efficiency investments do not occur.
> Frequent mobility. Substantial data exists through the U.S. Census Bureau indicating that
low-income households are much more frequently mobile than non-low-income
households. Whether measured in terms of the extent to which households have lived in
the same housing unit the previous year, or in terms of the median "move-in" date for a
household, or in terms of the median number of years a household has lived in the same
housing unit, low-income households are found to be more mobile. This frequent
mobility impedes low-income investment in energy efficiency in that payback periods
tend to exceed the expected length of the tenancy period.
> High hurdle rates. Low-income households tend to have required internal rates of return
that exceed the ability of virtually all energy efficiency investments to achieve. Due to
the very fact of their lack of money, low-income households do not make long-term
investments. Instead, research that Cambridge Systematics performed for the Electric
Power Research Institute (EPRI) found that low-income energy efficiency hurdle rates
approach 100%, meaning that such households require a return on investment within one-
year in order to be inclined to make such an investment (assuming the finance
wherewithal and adequate dominion interest to be able to do so in the first place). Few
efficiency investments, and virtually no (if any) major weatherization investment, can
meet such high hurdle rates to support efficiency investments in the absence of a fully -
subsidized direct install program.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 10
Recommendation 3: Staff recommends that utilities claim 100% of the energy savings produced
by each low income weatherization project for which they provide funding. This adjustment will
increase the cost-effectiveness of Idaho Power's program.
CAPAI Response: This Staff recommendation is reasonable and should be adopted. CAPAI
agrees that leveraging federal funding is one of the primary purposes that utilities operate and
fund their low-income programs through CAP agencies. The use of CAP agencies does not only
gain utilities access to the federal funding, but also allows the utilities to gain access to the CAP
agency experience and expertise largely developed at federal expense.
Recommendation 4: Staff recommends that Idaho Power develop a method to include indirect
administrative overhead costs in its low income program cost-effectiveness in a manner that
approximates how these expenses are assigned to supply-side resources. This adjustment may
decrease the cost-effectiveness of Idaho Power's program.
CAPAI Response: This Staff recommendation is reasonable and should be adopted, with two
caveats. To the extent that a low-income weatherization program directly causes a utility to
incur an incrementally higher program administrative expense, that administrative expense
should be included in the cost-effectiveness calculation. There are two "tests" included in this
sentence to be applied to the overhead cost before inclusion in the cost-effectiveness calculation:
1)Incursion of the cost must be directly caused by the low-income program as determined
on a "but-for" basis. If, but-for the low-income program, the utility would not have
incurred the expense, the cost can be appropriately included in the low-income program's
cost-effectiveness calculation. If, however, the overhead cost would have been incurred
even in the absence of the program, it would be inappropriate to include it in the cost-
effectiveness calculation.
2)Only the additional (or incremental) costs incurred because of the low-income program
should be included in the cost-effectiveness calculations. This "incremental cost" test is
2 This comment would seem to apply to all other programs as well. Those programs are set aside simply because
they are not the focus of this proceeding.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 11
based on the same principle as the first test. If a given level of costs would have been
incurred even in the absence of the low-income program, no part of those costs should be
included in the low-income program's cost-effectiveness calculations, since the low-
income program did not cause those costs to be incurred.
Recommendation 1 Supplemental to Staff: For administrative costs to be included in the
cost-effectiveness calculation, the utility must demonstrate both that the cost is directly caused
by the low-income program as measured on a "but-for" basis and that the level of administrative
costs included is incremental to the level of administrative costs that would have been incurred
even in the absence of the low-income program.
Recommendation 5: Requiring low income programs, which often have smaller budgets and
energy savings relative to other DSM programs, to incorporate the full cost of an evaluation in a
single year could lead to extremely lean evaluation budgets, and possibly lower quality
evaluations. Staff recommends that utilities have the option to incorporate program evaluation
costs at the jurisdictional portfolio level rather than the program level. Alternatively, Staff
recommends that utilities have the option to amortize evaluation costs over the two to three years
between evaluations for program level cost-effectiveness calculations.
CAPAI Response: This Staff recommendation is reasonable and should be adopted. The
discussion and conclusions presented in the Staff Report appropriately support this
recommendation.
Recommendation 6: Staff does not oppose Rocky Mountain Power and Avista's use of a 10%
conservation preference adder in their low income DSM cost-effectiveness calculations. Use of
the adder is widely accepted by state utility regulatory commissions on a regional basis and its
use is included in the Northwest Power Act. Staff would not oppose Idaho Power's use of this
adder in its low income cost-effectiveness calculations. Including a 10% conservation preference
adder would increase the cost-effectiveness of Idaho Power's low income weatherization
program.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 12
CAPAI Response: This Staff recommendation is reasonable and should be adopted with one
caveat. The 10% "conservation adder" referenced by Staff in its discussion applies only to
environmental non-energy benefits (NEBs). The 10% "conservation adder" does not capture,
and is not intended to reflect, other NEBs. So long as the 10% adder is acknowledged as
intending to capture only this limited set of NEBs, this Staff recommendation is appropriate.
Recommendation 7: Staff recommends that payment-related non-energy benefits, such as
reductions in utilities' arrearages and bad debt, as well as collection, disconnection, and
reconnection expenses that may accrue when low income customers' bills are reduced through
weatherization, be quantified and included in cost-effectiveness analyses when possible.
Staff recommends excluding economic non-energy benefits and non-energy benefits that accrue
to program participants because they have not yet been rigorously quantified. These include
increased property values, extended lives of weatherized dwellings, health impacts,
takeback, and increased comfort.
Including quantifiable payment-related non-energy benefits will increase the cost effectiveness
of low income programs over what they otherwise would have been. However, excluding the
economic non-energy benefits already included in Rocky Mountain Power's Cadmus evaluation
will decrease that program's cost-effectiveness.
CAPA! Response: The Staff recommendation to include all payment-related non-energy
benefits in cost effectiveness calculations is appropriate and should be adopted with some
explication. The economic non-energy benefits and non-energy benefits that accrue to
participants should be included.
First, the inclusion of the identified non-energy benefits should be on the same basis as a
consideration of other "avoided costs" by the utility. These avoided utility costs are not a
"secondary" consideration, but are equal to avoided energy and capacity costs. The existence of
direct financial benefits to utilities arising from energy efficiency programs targeted specifically
to low-income households has been recognized for 25 years. The presence of such avoided costs
was first postulated in a 1987 article written by Roger Colton and Dr. Michael Sheehan. In that
analysis, they stated that targeted energy efficiency programs had advantages that went beyond
the traditional energy and capacity savings associated with energy efficiency measures:
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 13
The cost-effective reduction of system costs is relevant and important in every part of the
business operations of the utility, not simply to the power supply function. Accordingly, a utility
should be concerned with the problem of nonpayment, overdue payment, and partial payment of
utility bills. Bad debt arises when ratepayers demand power from the system and then do not pay
for it on a timely basis. * * * [A] new conservation program [can be proposed] that is justified on
an avoided cost basis. The proposal rejects the historical view that avoided costs include only an
energy and a capacity component. Instead, it introduces the notion of avoided bad debt. As long
as the energy efficiency program costs less than the bad debt it will avoid, the program is cost-
justified.3
This concern over providing an equal recognition of the identified non-energy benefits is based
in the treatment of non-energy benefits in the Staff Report. For example:
At page 1, Staff states that "Two of the three programs are not cost-effective without non-
energy benefits, and the third program's cost-effectiveness is in doubt."
At page 1, Staff states that "Of the three weatherization programs, only Idaho Power's
program claims to be cost-effective without non-energy benefits."
> At page 12, Staff states that "two of the three utility-funded low-income programs were
not cost-effective in 2010 and 2011 under the TRC or UCT." At page 12, Staff cites a
2010 cost effectiveness result for Rocky Mountain Power (RMP) of 0.70 (both TRC and
UCT) and a 2011 cost-effectiveness result for RMP of 0.81 (TRC) and 0.74 (UCT).
These Staff comments appear to place the consideration of non-energy benefits in a secondary,
or ancillary, position. The "cost-effectiveness result" cited for RMP, for example, are the cost-
effectiveness results excluding all NEBs. These "results" are incomplete and do not reflect the
Company's findings. When queried about its cost-effectiveness results, for example, RMP
explicitly disclaimed presenting a cost-effectiveness result that did not include non-energy
benefits.
The concept of "cost-effectiveness," as Dr. Sheehan and Roger Colton stated in 1987,
incorporates the notion that "the cost-effective reduction of system costs is relevant and
3Roger Colton and Michael Sheehan (1987). "A New Basis for Conservation Programs for the Poor: Expanding the
Concept of Avoided Costs," 21 Clearinghouse Review 135, 139. It should be noted that this article explicitly notes
that "bad debt" was a defined term, defined to include all aspects of costs associated with payment troubles. The
term was used to include not only written-off accounts, but credit and collection expenses, working capital expenses,
and the like.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 14
important in every part of the business operations of the utility, not simply to the power supply
function."
Recommendation 2 Supplemental to Staff: Adoption of Staff Recommendation 7(a) should
make clear that the concept of "cost-effectiveness without non-energy benefits" is no longer a
concept or a result to be presented or considered.
Second, adoption of the principle that the specified non-energy benefits be included in the cost-
effectiveness calculation does not address the methodological issues presented by such inclusion.
Rocky Mountain Power, for example, assumed that its low-income energy efficiency program
would result in only one year of arrearage reductions. If a low-income customer carried a $350
arrears, in other words, according to RMP, weatherization might reduce that arrearage by $x in
Year 1, but would have no impact at all on arrearages in subsequent years. Similarly, RMP
assumed that cost reduction associated with reduced arrearages would arise in Year 1 only, but
would not exist in subsequent years. The specified non-energy benefits should be treated on the
same plane as reductions in the Company's energy and capacity costs. The multi-year impacts of
improved payment patterns should be reflected in the cost-effectiveness calculations that include
the specified non-energy benefits.
Finally, the specified non-energy benefits should be specifically modified to include working
capital as a non-energy benefit. By definition, working capital is based on the number of dollar-
lag days experienced as a result of a utility customer being billed after-the-fact. It is evident on
its face that a $100 bill imposes a smaller working capital requirement than does a $150 bill
(whether or not that account is ever in arrears).
Moreover, to the extent that low-income bills might go unpaid for some period of time simply
expands the dollar-lag days that can be reduced through an investment in energy efficiency
measures. It is evident on its face that an account with a $200 arrears imposes a lesser working
capital requirement than an account with a $250 arrears.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 15
To the extent, therefore, that energy efficiency investments yield a reduction in customer bills,
both those that are timely paid and those that are paid in arrears, there is a corresponding
reduction in the number of dollar-lag days and, as a result, by definition, a reduction in utility
working capital requirements. To the extent that low-income arrears are reduced by
weatherization, the reduction in working capital will be even greater.
Recommendation 3 Supplemental to Staff: The list of specified non-energy benefits should be
modified to specifically include an assessment of the working capital savings associated with
avoided billings resulting from reduced consumption.
Staff Recommendation 7(b): Staff recommends excluding economic benefits, takeback, and
other ancillary non-energy benefits based on the justification provided to date.
CAPAI Response: This Staff recommendation should be rejected. By excluding the identified
"ancillary non-energy benefits," in effect, Staff is assigning a $0 value to these non-energy
benefits, a result that everyone, including Staff, concedes is in error. Importantly, Staff does not
deny the existence of these "ancillary non-energy benefits." Instead, Staff merely states that
"Staff does not support including non-energy benefits that cannot be valued and calculated with
reasonable certainty." (Staff Draft Report, at page 16). Staff has amended that statement to read
"Staff recommends excluding economic non-energy benefits and non-energy benefits that accrue
to program participants because they have not yet been rigorously quantified." (Staff Report, at
page 21).
While Staff acknowledges the seminal Oak Ridge National Laboratory (ORNL) report on low-
income weatherization programs performed in 1994 (Staff Draft Report, at note 18, page 15), it
fails to take into account the equally seminal ORNL study of non-energy benefits performed in
2002. Oak Ridge found the 2002 study to be particularly compelling. It states:
4Martin Schweitzer and Bruce Tonn (2002).Nonenergy Benefits from the Weatherization Assistance Program: A
Summa,y of Findings from the Recent Literature, ORNL/CON-484, Oak Ridge National Laboratory: Oak Ridge
(TN).
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 16
The primary research method used for this study was a comprehensive review of the literature on
non-energy benefits written since the national weatherization evaluation was completed in 1993.
Many different articles and reports have been written about the non-energy benefits of low
income weatherization activities since that time. Some present the findings from primary
research conducted on the subject, usually focusing on a weatherization program operated by a
given state or utility company (e.g., Magouirk 1995; Blasnik 1997; Hill et al. 1998). Others take
a meta-analysis approach and report the findings from a number of studies conducted in different
locations (e.g., Riggert et al. 1999; Riggert et al. 2000; Howat and Oppenheim 1999). One set of
articles that was especially useful for this study (Skumatz and Dickerson 1997; Skumatz and
Dickerson 1998; Skumatz and Dickerson 1999) focused on two low-income weatherization
programs operated by Pacific Gas and Electric Company (PG&E), using primary data pertaining
to those programs and also making use of important findings from a comprehensive review of
studies performed by other researchers elsewhere in the country. Because much of the
information analyzed by Skumatz and Dickerson came from a variety of locations, and because
the PG&E programs they studied are very similar to other full-scale weatherization efforts
undertaken throughout the country, the findings from the Skumatz and Dickerson articles are
considered broadly applicable to DOE's Weatherization Assistance Program.5
Contrary to the Staff suggestion that NEBs "cannot be calculated and valued with reasonable
certainty," the ORNL study concluded that "nearly all of the non-energy benefits addressed in
this report occur everywhere. ."6 Even the discount rate applied by ORNL was 3.2%, the same
as that recommended in the Staff Report (Staff Report, atl9). In sum, the 2002 ORNL Report
concluded that the following NEB point estimates could be justified based on the review
methodology stated above:
5Schweitzer and Tonn, supra, at 1-2.
6Schweitzer and Tonn, at 3. ORNL stated further that in those instances where certain NEBs did not apply to certain
types of households (e.g., those not receiving public benefits, those with gas heating), the value of the NEBs was
adjusted downward to take that into account. Id.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 17
Summary of Benefits for Each Major Category and Subcategory 7
Nonenergy Benefit: Category/Subcategory
Point Estimate of Benefits in 2001 $ per
participating household: Net Present Value
(2001$s)
Ratepayer Benefits
Payment-related benefit $181
Service provision benefit $150
Total for this category $331
Household Benefits
Affordable housing benefit $783
Safety, health and comfort benefit $123
Total for this category $906
Societal Benefits
Environmental benefits $869
Social benefits $117
Economic benefits $1,123
Total for this category $2,109
Total for all benefit categories $3,346
Moreover, contrary to Staffs assertion that the non-energy benefits from low-income programs
"cannot be valued and calculated with reasonable certainty" (Staff Report, at 16), is the ORNL
conclusion that "more important than the precise dollar figures is the indisputable fact that non-
energy benefits represent a significant addition to the energy savings benefit achieved by the
Weatherization Assistance Program."8 (emphasis added).
7Schweitzer and Tonn, supra, at 23.
8Schweitzer and Tomi, supra, at 23-24.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 18
It is inappropriate and unreasonable for Staff to assign a $0 value to a set of non-energy benefits
that ORNL reports, in fact, has a dollar value that as "an indisputable fact. . .represent a
significant addition to the energy savings benefit. . ."
If Staff believes that Idaho utilities have inadequately documented the non-energy benefits of
low-income energy efficiency, the appropriate response would be to use the authoritative figures
that have been developed elsewhere rather than assigning a $0 value to a set of benefits that
ORNL has found as an "indisputable fact [to] represent a significant addition to the energy
savings benefits. . ." The "harm" arising from Staffs approach does not inure to the detriment of
the utilities that have failed to develop an appropriate quantification of non-energy benefits. The
harm instead falls squarely on the shoulders of those low-income households that cannot be
weatherized because of the understatement of the cost-effectiveness of utility investments.
Even should Staff wish to discount the Oak Ridge National Laboratory's findings of non-energy
benefits by 50%, the Oak Ridge research would support a multiplier in the range of 25% to 30%
as recommended by the Northwest Energy Coalition. Incorporating low-income non-energy
benefits through use of a multiplier of 25% to 30% as recommended by the Northwest Energy
Coalition is reasonable. It isfar more reasonable than to assign a $0 value as recommended in
the Staff Report.
Recommendation 4 Supplemental to Staff: Rocky Mountain Power, Idaho Power and Avista
should adopt a multiplier of at least 25% to reflect the cumulative impact of non-environmental
NEBs. The Staff and other stakeholders should closely monitor the evaluation and quantification
of NEBs in the national assessment of the federal WAP program, which in part is specifically
designed to measure and quantify non-energy benefits from low-income weatherization,9 the
results of which are expected to be published imminently. 10
9Markelernes, et al. (2007).National Evaluation of the Weatherization Assistance Program: Preliminary Evaluation
Plan for Program Year 2006, Oak Ridge National Laboratory: Oak Ridge (TN). The specific research methodology
for identifying and quantifying non-energy benefits is set forth in Section 2.3, pages 37-66.
° Publication of the assessment of non-energy benefits is expected in the Fall of 2012. See, Congressional Research
Service (January 2012). DOE Weatherization Program: A Review ofFunding, Performance and Cost-Effectiveness
Studies, at 29, CRS: Washington D.C.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 19
Recommendation 8: Staff recommends that Avista continue quantifying utility-funded health,
safety, and repair measures as a dollar of non-energy benefits for each dollar of cost. Staff
recommends that Idaho Power and Rocky Mountain Power apply this methodology to their cost-
effectiveness calculations. This adjustment will increase Idaho Power and Rocky Mountain
Power's cost-effectiveness.
CAPAI Response: This Staff recommendation is reasonable and should be adopted. The Staff
explanation of its recommendation is adequate and appropriate without further comment.
Recommendation 9: Staff recommends that the utilities have the option to claim one dollar of
non-energy benefits for each dollar of federal funds invested in health, safety, and repair
measures. Staff recommends that this adjustment remain optional since utilities may have
difficulty collecting accurate data on federally funded measures and because cost-effectiveness
manuals provide discretion on whether federal funds should be included as a cost in the TRC.
Staff's recommendation is consistent with the attribution of federal funds in other DSM
Programs, TRC methodology, and treatment of energy savings. If adopted, this adjustment is
likely to increase all three programs' cost-effectiveness, although the exact impact is unknown
because the utilities have not previously tracked the amount of federal funds spent on health,
safety, and repair measures in utility-funded low income weatherized homes.
CAPAI Response: This Staff recommendation is reasonable and should be adopted. The Staff
explanation of its recommendation is adequate and appropriate without further comment.
Recommendation 10: Staff supports Avista's proposal to use and Idaho Power's current use of a
modified discount rate for participant benefits. However, the only type of participant benefits
Staff has supported for low income weatherization programs are health, safety, and repair
measures that, using Staff's recommended method, are already valued on a NPV basis.
Therefore, applying a modified discount rate to these benefits would have no effect on cost
effectiveness
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 20
CAPAI Response: This Staff recommendation is reasonable and should be adopted. The Staff
recommendation is supported by very recent technical reviews. A July 2012 review of the
determination of the cost-effectiveness of energy efficiency programs, for example, states quite
directly:
The different cost-effectiveness tests require the use of different discount rates because they
represent the perspectives of different decision-makers. The Societal Cost test requires the use of
a societal discount rate, which is typically very low due to society's (i.e., government's)
tolerance for waiting for future benefits, and its ability to access funds at relatively low
borrowing costs. '1
As the Synapse report notes:
The Societal Test, as its name implies, should use a discount rate based on society's preferences.
Compared to individuals and firms, society should have a broader tolerance for receiving
benefits in the future, and also be better able to access funds at a lower borrowing cost. In this
case, the discount rate should be relatively low.
***
The social discount rate should reflect the benefit to society as a whole, and should also take into
account both the reduced risk of energy efficiency investments, as well as society's reduced time
preference for a societal payback. This social discount rate is typically the lowest discount rate
that reflects increased value in future savings. The Societal Cost test also includes environmental
externality costs, which should arguably be discounted at a very low discount rate, if at all. 12
Tim Woolf, et al. (July 23, 2012). Best Practices in Energy Efficiency Program Screening: How to Ensure that
the Value ofEnergy Efficiency is Properly Accounted For, at 3, National Home Performance Council, Synapse
Energy: Cambridge (MA). The National Home Performance Council is a national non-profit organization created to
support whole-house energy efficiency programs through research and stakeholder engagement. NHPC's board of
directors includes a wide range of energy efficiency stakeholders including: state energy offices, non-profit
organizations, contractors, program implementers, real estate representatives, utilities, and manufacturers.
NHPC'smission is to address challenges that prevent the growth and expansion of the whole house energy efficiency
sector and communicate these solutions.
12Best Practices in Energy Efficiency Screening, supra, at 51 - 52.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 21
While this discussion references "societal benefits," and Staff Recommendation 10 references
participant benefits, Synapse notes that within the low-income context, the two discussions
should coincide:
Energy efficiency investments for special groups of customers, particularly low income and at-
risk populations could also be viewed with a societal discount rate for several reasons. These
customers are generally receiving some degree of support from society at large, so the
investment can appropriately be viewed in a societal context. It is society investing in society,
and should be analyzed using a discount rate appropriate to society as a whole. 13
In short, Staff Recommendation 10 is reasonable and should be adopted.
Recommendation 11: Staff does not recommend constructing a specific cost-effectiveness test
for low income programs.
CAPAI Response: If a cost effectiveness test it to be used, CAPAI supports having a specific
cost-effectiveness test for low-income programs to have a quantifiable standard for the programs
to achieve. If a specific cost-effectiveness test is not qualified, a program will never be certain if
it is cost effective.
This Staff recommendation should be rejected in the absence of adoption of both (1)
Recommendation 2 Supplemental to Staff, and (2) Recommendation 3 Supplemental to Staff
presented above. CAPAI appreciates and acknowledges the observation of Staff, when it states
that "Staff believes that low income weatherization programs should be viewed as an alternative
to supply side investments rather than as public assistance." (Staff Report, at 20). The question
is not whether low-income weatherization is to be "viewed as an alternative to supply side
13 Id.
CAPAI COMMENTS IN RESPONSE TO .STAFF REPORT 22
investments," 4 but rather whether low-income weatherization is to be viewed exclusively as an
alternative to supply side investments.15
Staff implicitly acknowledges that low-income weatherization programs include purposes in
addition to developing alternatives to supply side investments. Staff opposes the inclusion of
"secondary non-energy benefits" not on principle, but rather "based on the insufficient
quantification and justification provided thus far." (Staff Report, at 16).
In the event that Recommendation 2 Supplemental to Staff and Recommendation 4 Supplemental
to Staff are both adopted, Staff Recommendation 11 is appropriate. In contrast, if either
Recommendation 2 Supplemental to Staff or Recommendation 4 Supplemental to Staff is not
adopted, Staff Recommendation should be rejected. If the two identified Supplemental
Recommendations are not adopted, in effect what Staff proposes is to rely on a cost-effectiveness
analysis that includes all the costs but fails to include all the benefits.
In its review of "best practices" of energy efficiency screening for the Home Performance
Council, Synapse Energy identified a "hybrid" approach to accounting for the special benefits of
low-income weatherization:
Hybrid: A combination of the various options could be employed to create a hybrid approach.
For example, a state could include all readily measurable OPIs, and use an adder for hard to
measure OPJs.'6 As discussed above, Vermont uses an adder for OPIs in addition to readily
measurable OPIs, while Colorado requires an adder but also allows for readily measurable OPIs.
Further, a state could include readily measurable OPIs, and conduct a sensitivity analysis for
14 Staff appears to assert that the exclusive purpose of low-income weatherization is as a mechanism by which to
procure alternatives to supply side investments. See e.g., Staff Report at 7 ("when Idaho utilities fund DSM
programs, they are buying a resource to meet customer load. The amount of energy saved through a DSM program
is equivalent to a generation resource that does not have to be built or energy that does not need to be bought to meet
the load requirement for all customers"). See also, Staff Report, at 8 ("Avoided costs are the costs of resources that
the utility did not have to build or buy to meet load because the DSM program produced energy savings").
s While Staff focuses on the energy that need not be produced because of DSM programs, in fact, low-income
weatherization should also focus on the dollars that need not be collected. The energy production function, and the
revenue production function, of the utility are equally important business functions, the costs of both which can be
reduced by low-income weatherization.
16 Synapse refers to "OPIs" (other program impacts), which are being referred to in these comments as "non-energy
benefits."
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 23
additional OPIs. This approach is most consistent with the nature of OPIs, whereby some OPIs
are easily and readily quantified, while others require a more qualitative analysis on the potential
range of impacts that accrue to customers from efficiency programs. Additionally; this method
affords regulators flexibility in determining the most appropriate OPI policy for their state.
Finally, it allows consideration of all NEIs'7 believed to be most significant, with the choice of
methodology used to determine each NEI being made on the basis of available resources. 18
The bottom line is that the implicit assertion in Staff Recommendation 11 that low-income
weatherization is exclusively for the purpose of procuring alternatives to supply-side investments
is in error. One "purpose" of low-income weatherization is to increase the efficiency and
effectiveness of collection efforts. One "purpose" of low-income weatherization is to
supplement customer service activities, thus increasing the effectiveness and efficiency of
customer service programs such as budget billing, deferred payment arrangements, and the like.
One "purpose" of low-income weatherization is to supplement revenue protection activities, thus
reducing expenses such as bad debt and working capital. 19 Given that the purposes of low-
income weatherization programs extend far beyond the procurement of alternatives to supply-
side investments, to apply the same cost-effectiveness analysis to these programs as are applied
to programs that do have such procurement as their exclusive purpose is inappropriate
Recommendation 12: Staff recommends that the utilities incorporate additional
evaluation methods to inform or complement billing analyses for low income programs
whenever possible. If non-participants are used as the control group in a billing analysis, Staff
recommends rigorous controls between the two groups, which may include but not necessarily be
17 Synapse also refers to non-energy impacts (NEIs). Synapse makes clear that, in its report, non-energy benefits,
NEIs and OPIs are considered to be the same. See, Best Practices in Energy Efficiency Screening, supra, at note 1,
page 2. Synapse states that the only difference is that "In addition to non-energy impacts, OPIs also include "other
fuel savings," which are the savings of fuels that are not provided by the utility that funds the efficiency program."
Id.
18Best Practices in Energy Efficiency Screening, supra, at 38. 19 These "purposes" are not "social" in nature. They are extensions of a utility's fundamental obligation to provide
least-cost service. This obligation to provide least-cost service extends beyond the supply procurement function of
the utility. See generally, Colton and Smith (1993). "The Duty of a Public Utility to Mitigate 'Damages' from
Nonpayment through the Offer of Conservation Programs." 3 Boston University Public Interest Law Journal239;
see also, Colton and Sheehan (1987). "A New Basis for Conservation Programs for the Poor: Expanding the
Concept of Avoided Costs," 21 Clearinghouse Review 135.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 24
limited to, previously weatherized homes, service disconnections, economic decline and rate
increases, and households prioritized for weatherization, including emergencies. Incorporating
these controls and/or other evaluation and billing analysis methods may increase all three
programs' cost-effectiveness. Staff also recommends that utilities vary the independent
contractors hired to evaluate these programs.
CAPAI Response: This Staff recommendation is reasonable and should be adopted. As Staff
notes, CAPAI found "several places where the Cadmus evaluation [for RMP] failed to
adequately control for differences between the participant and non-participant groups," with
which Staff agreed with "some" of (Staff Draft Report, at 21). This Staff recommendation,
however, obviously depends for its implementation on the details of each utility's
implementation. The principle underlying Staff Recommendation 12, however, should be
absolutely emphasized for its appropriateness. Careful attention must be paid to the billing
analyses underlying the evaluation of low-income programs. Different factors (e.g., economic
declines) affect low-income customers differently than they affect non-low-income customers.
Moreover, Staff is absolutely correct when it "recommends that utilities vary the contractors
hired to evaluate these [i.e., low-income] programs." (Staff Draft Report, at 22). Indeed, this is
one reason that the Oak Ridge National Laboratory (ORNL) finding that it is "an indisputable
fact that non-energy benefits represent a significant addition to the energy savings benefit. 20
is so compelling. As ORNL notes, its conclusion is based on numerous studies by multiple
evaluators (e.g., Magouirk; Blasnik; Hill et al.; Riggert et al.; Howat and Oppenheim; Skumatz
and Dickerson) .2 1 ORNL notes that "some present the findings from primary research" while
"others take a meta-analysis approach and report the findings from a number studies conducted
in different locations."22 Not only does the Staff recommendation about using a variety of
contractors make sense, but in advancing this recommendation, Staff, itself, should abide by the
implications of its own recommendations (i.e., that similar findings by multiple evaluators leads
to a more robust and trustworthy conclusion) when it comes to the existence and quantifiability
of non-energy benefits.
20Schweitzer and Tonn, supra, at 1-2.
21 Citations to these evaluations by these specific evaluators are provided in the 2002 ORNL evaluation.
22 Id.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 25
Recommendation 13: Staff believes that Idaho Power should continue to comply with Order
No. 29505 which directs the Company to carry over unspent low income weatherization funding
from base rates into the following year. Staff also recommends that Avista and Rocky Mountain
Power continue to use any unspent low income funds for other DSM programs, consistent with
current practice for all programs funded through DSM tariff riders.
CAPAI Response: This Staff recommendation that would allow Avista and Rocky Mountain
Power to continue to use any unspent low income funds for other DSM programs is unreasonable
and should be disapproved. From a program perspective, the collection of ratepayer funds for
low-income programs has been justified on a basis other than the basis used for non-low-income
programs. Staff, for example, acknowledges that low-income programs are likely to be justified
on a cost-effectiveness determination that includes avoided costs associated with non-energy
benefits ("some non-energy benefits clearly accrue to either participants, ratepayers or the utility
and can often be quantified with reasonable certainty": (Staff Draft Report, at 15). Moreover,
Staff acknowledges that low-income programs are cost-justified using a different net-to-gross
ratio than non-low-income programs. (Staff Draft Report, at 11-12).
In addition, as noted above, while non-low-income DSM programs may have the procurement of
energy efficiency as their primary, if not exclusive, purpose, low-income programs have multiple
additional purposes. As noted above:
One "purpose" of low-income weatherization is to increase the efficiency and effectiveness of
collection efforts. One "purpose" of low-income weatherization is to supplement customer
service activities, thus increasing the effectiveness and efficiency of customer service programs
such as budget billing, deferred payment arrangements, and the like. One "purpose" of low-
income weatherization is to supplement revenue protection activities, thus reducing expenses
such as bad debt and working capital. Given that the purposes of low-income weatherization
programs extend far beyond the procurement of alternatives to supply-side investments, to apply
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 26
the same cost-effectiveness analysis to these programs as are applied to programs that iiq have
such procurement as their exclusive purpose is inappropriate. 23
Given that the collection of ratepayer funds for the low-income programs has been justified on a
basis different than the collection of ratepayer funds for non-low-income programs, and given
further that the purpose of the low-income programs is more multi-faceted than the purpose of
non-low-income programs, it would be inappropriate to allow utilities to divert unspent funding
from low-income programs to non-low-income initiatives. Instead, unspent funding from one
year should be carried over to the next program year.
What Staff has not done in its Recommendation 13 is to explain iiu program funding collected
in a particular time period must be matched with expenditures to exactly the same time period.
The benefits arising from a low-income weatherization investment are not unique to the time
period in which the investment is made; the benefits instead extend over fifteen years or more.
There are thus no particular "equity" considerations, therefore, in exactly matching time periods.
Moreover, unlike government funding, which may be collected in a lump-sum at the beginning
of a particular program year, ratepayer funding is collected incrementally over the course of a
program year. Assuming a 12-month January through December program year, there is no
equitable requirement that the funds collected in December rates be spent by the end of
December the same as funding collected in January rates.
Any number of reasons exist that low-income program funding might be "underspent" in any
individual given program year. As would be acknowledged by all, the delivery of low-income
weatherization requires an extensive and specific expertise. 24 The loss of a staffperson (or more)
would require the recruitment (or finding) of a qualified replacement and the provision of the
state-specific, service-territory specific, program-specific training for that replacement staff
person. This changing capacity may well affect the ability of a program to fully-utilize its entire
program budget in a particular year.
23 See, note 19, and accompanying text.
24 See, Staff Report, at 6 ("community action agencies [are] uniquely qualified to administer utility-funded programs
targeting low-income customers").
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 27
Moreover, it would be inappropriate to create an incentive for low-income weatherization service
providers to "exhaust its program budget" by the end of the year. Too often, to impose a use-it-
or-lose-it financial constraint leads private and public sector organizations to find ways to spend
its budget by year-end, rather than to continue to spend money in the most efficient, most
effective, most purpose-fulfilling manner possible.
Having said that, however, it is reasonable to acknowledge that should a utility experience a
grow in balance in unspent low-income program funding over a multi-year period, it might be
reasonable to conclude that those programs are over-funded. Such a conclusion, however, would
not be based on findings of cost-effectiveness or other related analytics, but rather because an
ever-increasing balance Of unspent low-income program funding, experienced over a multi-year
basis, would evidence that the budget exceeds the capacity of service providers to deliver. In the
absence of such a finding of a lack of long-term capacity, however, unspent low-income program
funding should be carried-forward for continued use as low-income weatherization investments
Recommendation 14: Staff recommends that Rocky Mountain Power continue the
pending and future upgrades to its low income weatherization data management system. Staff
also recommends that Avista and Rocky Mountain Power consider adopting Idaho Power's
scalable approach to paying for measures to allow for more strategic and cost-effective
investments, if Idaho Power's impact evaluation demonstrates that this technique was effective.
CAPAI Response: This Staff recommendation is reasonable and should be adopted. The Staff
explanation of its Recommendation is adequate and appropriate without further comment.
Recommendation 15: Staff recommends that Avista pay no more than 85% of the cost per
project and up to 100% of the cost per measure. This adjustment will increase the cost
effectiveness of Avista' s program and facilitate cost-effectiveness comparisons between the three
utilities.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 28
CAPAI Response: This Staff recommendation is reasonable and should be adopted. The Staff
explanation of its Recommendation is adequate and appropriate without further comment.
Recommendation 16: Staff recommends that no program should receive a funding increase if it
is not cost-effective according to the criteria outlined in this report. After a program is
determined to be cost-effective, at least five factors should be analyzed to determine if a funding
increase is appropriate.
1.Funding could be increased if the list of not-previously weatherized homes waiting for
weatherization (as indicated by the LIHEAP data) has increased significantly since the last
review.
2.Funding could be increased if a utility's program provides significantly less funding on a per-
capita basis than the cost-effective program of another utility operating within the state of Idaho
with comparable poverty levels in its service territory.
3.Funding could be increased if the utility is awarded a significant base rate increase. Rate
increases impact low income customers more adversely than other customers, therefore it could
be appropriate to provide increased funding for low income weatherization when rates increase.
4.Funding could be increased if the utility does not have sufficient funds to acquire the annually
achievable low income energy savings potential as indicated by the utility's most recent
Conservation Potential Assessment (CPA). This criterion is similar to how utilities fund other
DSM programs.
5.Funding should not be increased if a utility's CAP agencies have been unable to
spend all of the available utility funding in the previous year.
CAPAI Response: If total program cost-effectiveness is required, there needs to be an
achievable, quantifiable cost-effectiveness test that includes program costs and agreed-upon
benefits, including energy savings and nationally recognized non-energy benefits.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 29
a.If the low-income programs are not going to be funded to the levels of need, then need is
inappropriate to use as a funding mechanism. CAPAI recommends that need is used as an
indicator that the program should continue to be funded. CAPA! would request a quantitative
definition of "significant" should the Commission maintain this metric as written to reduce future
interpretation.
b.This Staff recommendation is reasonable and should be adopted. The utilities should provide,
at minimum, the same funding on a per-capita basis as other utilities.
c.This Staff recommendation is reasonable and should be adopted. CAPAI would like to note
that Staff agrees with CAPAI's assertion that low-income households are disproportionally
affected by increased utility rates. CAPAI would request a quantitative definition of
"significant" should the Commission maintain this metric as written to reduce future
interpretation.
d.This Staff recommendation is reasonable and should be adopted.
e.CAPAI believes that this should be the case if a utility's CAP agencies have been unable to
spend all of the available utility funding in the previous 2 years. Please refer to CAPAI's
response to Staff Recommendation 13 for further clarification on unspent low income funds.
Low-income program funding allocations should be informed by the housing stock, the number
living in poverty, utility rates, waiting lists, energy assistance applications and Conservation
Potential Assessments. PUC staff acknowledges that the need far exceeds the funding. Most
agencies have between five-hundred to one thousand people on their waiting lists. If each
agency was capable of doing just 100 homes a year, Idaho could have a 10-year rolling waiting
list.
CAPAI recognizes that utility funding is not going to be matched to the need, and recommends
the current funding level for each program should be considered the minimum level to maintain a
healthy Energy services network with automatic adjustments as deemed appropriate by the
Commission. For example, a significant event such as changes in unemployment and poverty
rates, and utility rate increases. Other funding adjustments could be made for the PUC
assessment of low-income need and Conservation Potential assessments.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 30
Recommendation 17: Staff recommends continued funding for Idaho Power, Avista, and Rocky
Mountain Power's low income weatherization programs at current levels. Staff believes that
funding increases requests for Idaho Power and Rocky Mountain Power could be considered
after both companies publish their annual DSM reports in spring 2013. Staff recommends that a
funding increase request for Avista be delayed until at least spring 2014 to allow time to
implement the more extensive program modifications and determine if those modifications
succeed and persist in improving cost-effectiveness.
CAPAI Response: This Staff recommendation should be disapproved. Staff begins its analysis
with two concessions: 25 (1) "by any measure," (Staff Draft Report, at 27), the need for low-
income weatherization exceeds current funding levels; and (2) "reductions in federal funding and
a continuing poor economy further increase the demand for utilities to expand their funding
commitments." (Staff Draft Report, at 27). The basis for Staffs Recommendation 16, however,
is Staffs assertion that "Staff cannot recommend increases in low-income weatherization
funding if these programs cannot reasonably be shown to be cost-effective without the addition
of broadly-defined non-energy benefits." (Staff Draft Report, at 27).
Several observations stand in contravention of Staffs implicit assertion that low-income
programs cannot reasonably be shown to be cost-effective without the addition of broadly-
defined non-energy benefits":
1. Oak Ridge National Laboratory found that it is "indisputable fact [to] that non-energy
benefits represent a significant addition to the energy savings benefits. . ." Despite this
"indisputable fact," not merely that non-energy benefits exist, but that they represent a
"significant addition to the energy savings benefits," in recommending no increase to
low-income weatherization funding, Staff assigns a $0 to these non-energy benefits, a
conclusion that few, if anyone, agrees with.
25 "Concession" is a derivative of Staff own language: "Staff concedes that by any measure, the need for low
income weatherization exceeds current funding levels." Staff Report, at 27.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 31
2.Staff asserts that it "believes that low income weatherization programs should be viewed
as an alternative to supply side investments rather than as public assistance." (Staff Draft
Report, at 20). Staff fails to acknowledge that serving as an "alternative to supply side
investments" is one purpose of low-income weatherization; it is not the exclusive purpose
of weatherization. As noted above: "One 'purpose' of low-income weatherization is to
increase the efficiency and effectiveness of collection efforts. One 'purpose' of low-
income weatherization is to supplement customer service activities, thus increasing the
effectiveness and efficiency of customer service programs such as budget billing,
deferred payment arrangements, and the like. One "purpose" of low-income
weatherization is to supplement revenue protection activities, thus reducing expenses
such as bad debt and working capital." As noted as early as 1987, "the cost-effective
reduction of system costs is relevant and important in every part of the business
operations of the utility, not simply to the power supply function.
3.Staffs proposal to neither increase nor decrease low-income weatherization funding is
not even consistent with Staffs own funding decision-rule. Staff recommended that for
purposes of determining parity of funding among the utilities that funding levels be
established "taking into consideration county level poverty rates and CAP production
capacity in each utility's service territory." (Staff Draft Report, at 27). Staffs
recommendation that funding in this proceeding be neither increased nor decreased take
into consideration neither of these factors (neither: [1] county level poverty rates; nor [2]
CAP production capacity in each utility's service territory). Instead, Staff explicitly sets
aside its own finding of a "continuing poor economy." Even aside from observation, the
increased poverty and deterioration of economic circumstances for the poor has been
recently documented .27 Moreover, the recent influx of ARRA funding for purposes of
low-income weatherization (see, Staff Draft Report, at 7; Staff Draft Report, at 22), has
allowed Community Action Agencies to increase their administrative and staff capacity
to deliver low-income weatherization investments. Staffs proposal to neither increase
26 See, note 3, and accompanying text.
27 Cotton (November 2011). Cite. xxx
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 32
nor decrease funding, will require these CAP agencies to lay-off fully-trained staff that is
currently available to deliver low-income weatherization and to thus decrease the
"production capacity in each utility's service territory."
4.Staff's proposal to neither increase nor decrease low-income weatherization funding does
not even accomplish what Staff appears to seek to accomplish, i.e., to hold low-income
weatherization funding constant. The ability of Idaho CAP agencies to deliver energy
efficiency measures will instead deteriorate to the extent that the cost of weatherizing
homes has increased since the low-income budget was last increased. At a minimum, if
Staff's intent is to maintain a "current level" funding of the low-income weatherization
program, funding for the program should be increased to allow CAP agencies to hold
constant the number of units that they would have served given the prior year's budget. 28
5.Finally, Staff's proposal is internally inconsistent. As utility costs increase, utility
avoided costs will increase. As utility bills increase, the non-energy benefits associated
with addressing payment problems will increase. As Staff's Recommendations are
implemented, the cost-effectiveness of low-income programs will increase. All this adds
to the Staff observation that, as of today, "Staff.. .believes that all three low income
electric weatherization programs will be either cost effective or close to being cost
effective" (Staff Report, at 27), even without a consideration of what Staff refers to as
"broadly-defined non-energy benefits." In light of its observation about the current status
of cost-effectiveness, and in light of increasing costs, and in light of increasing non-
energy benefits that Staff does accept (Staff Report, at 14-15), to respond by refusing to
increase budgets is unreasonable.
Recommendation 5 Supplemental to Staff: Staff Recommendation 16 should be disapproved.
For the interim, the Idaho PUC should approve a "level service" budget for low-income
weatherization rather than the level-funding budget proposed by Staff. This level-service budget
28 In the parlance of local government finance, this would represent a "level service" funding budget. See generally,
City of Boston, Budget Organization and Glossary of Terms, at 5 (Level Service Funding: A budget that describes
the funding required for maintaining current levels of service or activity) See also, Sudbury (MA): "What does a
level service budget mean: A budget that describes the funding required for maintaining current levels of service or activity."
www.sustainsudbury.org (last accessed September 2, 2012).
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 33
should be re-visited once the National Evaluation of the federal Weatherization Assistance
Program (WAP) is released (expected in Fall 2012).29 Stakeholders (including CAPAI) should
be willing to accept the findings of the Department of Energy's WAP evaluation, whether that
evaluation finds the presence or absence of non-energy benefits. No draft report has been
released and no insights can be provided at this time of what the results of that National
Evaluation might report.
If Staff's recommendation that there be a funding freeze for low-income programs with a re-
examination in the spring of 2013 for Idaho Power and Rocky Mountain Power are adopted,
specific deadlines should be set for utilities to provide their DMS reports. As stated previously,
CAPAI recommends that historical costs be utilized to make the expense adjustments described
in this report to determine if the utility programs are cost effective. CAPAI would also like to
note that this Recommendation does not list specific dates for completion of the DSM reports by
Idaho Power, Rocky Mountain Power or Avista.
CAPAI's understanding is that the workshop was ordered in order for program stakeholders to
discuss cost effective metrics and to determine a funding mechanism for the low-income
programs. Staff recommendations in this report do move in this direction, but do not provide
adequate detail or timelines for implementation.
Recommendation 18: Staff recommends that utilities' annual bSM reports separately address
their Low Income Energy Conservation Education Programs. At a minimum, Staff expects each
report to describe program design, identify target audience(s), gauge the program's success in
meeting its goals, indicate how utility funding was used, and describe how the program benefits
the utility's customers. As with other education programs in which energy savings are often very
difficult to determine, the Con-Ed programs should not be subjected to standard cost-
effectiveness tests like the TRC and UCT. Staff recommends maintaining the
current annual Con-Ed program funding level for Avista and Idaho Power. Staff recommends
adjusting Rocky Mountain Power's funding to $25,000 with the clear understanding that this
29 See, note 10, supra, and accompanying text.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 34
amount should be funded annually.
CAPAI Response: The Staffs Recommendation to separately address the Low Income Energy
Conservation Education Programs is reasonable and should be approved. However, CAPAI
disagrees that Rocky Mountain Power's funding should be cut to $25,000.
Recommendation 6 Supplemental to Staff: Notwithstanding the observations that Staff
Recommendation to separately address the Low Income Energy Conservation Education
Programs is reasonable, additional comment on the overall topic of the utility Low-Income
Conservation Education Program is appropriate. CAPAI recommends that the Low-Income
Conservation Education Program be expanded to include technical assistance to public housing
authorities to promote energy efficiency in low-income public and assisted housing
developments. 30
As noted above, low-income households face multiple barriers to the investment of their own
funds in energy efficiency measures. Quite aside from factors arising because of the mere fact of
their poverty (e.g., lack of investment capital, lack of access to financing, high hurdle rates),
several of these barriers arise because of the tendency of low-income households to be tenants
rather than homeowners (e.g., lack of dominion interest, frequent mobility). Idaho, while not
having tremendous numbers of public and assisted housing units, has a substantial number given
the size of its overall population. According to the Resident Characteristics Reports (RCR5)
published by HUD each month, as of July 31, 2012, Idaho had:
> 828 public housing units. Tenants occupying these housing units had an average income
of $12,279, with an average household size of 1.8 persons. In 2012, 100% of Poverty
Level for a two-person household is $15,130. On average, in other words, tenants of
public housing live at less than 100% of Poverty.
30
"Public housing" represents housing owned and operated by local Public Housing Authorities. "Assisted
housing" represents primarily Section 8 rental housing. It would include, also, affordable rental housing developed
through the federal Home Investment Partnership Program (HOME) and the Low-Income Housing Tax Credit
(LIHTC) programs amongst others.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 35
> 6,700 tenant-based voucher housing units (i.e., Section 8). Tenants occupying these
Section 8 housing units had an average income of $11,181, with an average household
size of 2.4 persons. Section 8 tenants in Idaho, in other words, had lower dollar incomes
and larger household sizes, meaning that they were, in fact, even poorer than public
housing tenants. 31
In addition, the State of Idaho has, since 1992, spent $98.2 million dollars of federal HOME
funds to produce 5,178 "affordable" housing units, while the City of Boise has spent an
additional $ 13.965 million to produce 457 more units. Any number of programs exist that would
bring external funding to public and assisted housing These programs include, for example,
Energy Efficient Utility Allowances (EEUAs)32 and the use of Energy Service Companies
(ESCO5) to provide performance-based guaranteed savings contracts.
The problem with these Housing Authority (HA) energy efficiency programs is that the local
(Boise in the State of Idaho) and state Housing Authorities generally lack the technical expertise
to engage the process necessary to introduce the third-party financing of efficiency measures.
Just as with the low-income tenants, given the lack of overall resources, the fact that the energy
efficiency is likely to be cost-effective from the perspective of the consumer becomes irrelevant
if the consumer (in this case, the Housing Authorities) lack the wherewithal to access the third-
party funding.
From the perspective of promoting alternatives to supply-side investments by the utility, from the
perspective of promoting the use of energy efficiency/usage reduction measures as a mechanism
to help control the expenses of nonpayment by Idaho's lowest income consumers, from the
perspective of helping to reach tenants that are otherwise often (if not generally) excluded from
low-income weatherization programs, a small investment of technical assistance funding through
a utility "Conservation Education" program would leverage substantial third-party low-income
31 Poverty Level is a measure of how "poor" a household is taking into account household size. For example, a 3-
person household with an income of $10,000 is considered to be "poorer" than a 2-person household with an income
of $10,000. In Idaho, a 1.8 person household with an income of $12,279 would be "poorer" than a 2.4 person
household with an income of $11.18!.
32 Enterprise Green Communities (201 1).Utility Allowance Options for Investments in Energy Efficiency: Resource
Guide, Enterprise Community Partners: Columbia (MD).
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 36
weatherization investment. 33 As well, please refer to CAPAI's response to Staff's
Recommendation 13 for further clarification on unspent low income funds.
V. POLICY CONSIDERATIONS
In addition to responding to Staffs technical recommendations contained in its final
Report, CAPAI has a number of other issues it wishes to put before the Commission for
consideration. The purposes of this section are to provide additional context to the technical
issues and to discuss what CAPAI believes are important policy considerations. For example,
CAPAI wishes to illustrate how quickly attitudes regarding LIWA have changed and issues
never even mentioned for many years suddenly became the basis for the indefinite denial of any
and all LIWA funding increases and potentially even result in the termination of LIWA in part or
in whole, as well as other possible ramifications.
As Staff notes in its Report, "[t]he last year was challenging for Idaho's low income
weatherization programs." Indeed, it was and was challenging for all concerned including Staff,
other stakeholders and certainly the Commission. For its part, CAPAI has felt caught in a
conundrum trying to support Staffs reasonable expectations of periodic evaluations of LIWA
while opposing any unnecessary costs that would reduce the cost-effectiveness of LIWA and
ensuring that any evaluations of LIWA take into account the unique nature, including system-
wide benefits, of that particular DSM program
From CAPAI's perspective, the 11-13 application was ill-conceived and essentially
sought relief from the Commission that was legally questionable and was based on an evaluation
that was facially deficient. Yet, CAPAI felt it had no choice but to invest considerable resources
in the 11-13 case given its potential for widespread and long-term damage. Meanwhile, CAPAI
could not afford to forgo the opportunity to seek LIWA funding increases in the three pending
rate cases which required prevailing in the 11-13 case. This conundrum, combined with the
simultaneous timing of all the pending cases coming to conclusion at the height of the holiday
season pushed CAPAI beyond its means. Further compounding the problem was the fact that
Staff seemed to have suddenly become highly skeptical of LIWA and was raising new issues late
See generally, Colton (2009). Energy Efficient Utility Allowances as a Usage Reduction Strategy in Pennsylvania,
prepared for the Pennsylvania Utility Law Project: Harrisburg (PA). In August 2012, Pennsylvania Power and Light
Company (PPL) agreed to a proposal advanced by myself, on behalf of the Pennsylvania Office of Consumer
Advocate (OCA), the state NASUCA office, to include a component of its "energy education" program directed
toward local housing authorities.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 37
in the proceedings and which could have been raised years earlier. Furthermore, the delineation
of the issues was unnecessarily blurred (i.e., whether LIWA is cost-effective versus how to
properly determine appropriate funding levels).
1. Opposition to CAPAI LIWA Proposals Based on Questionable Grounds
Staffs change of position regarding the viability and justification of continuing to fund
LIWA, and to occasionally increase that funding, especially when base rates increase, was
sudden, came with little or no warning, and possibly could have been addressed earlier without
the need to put a freeze on LIWA funding over the past year and into the indefinite future.
As of early 2011, Staff not only supported LIWA as a viable DSM resource but actually
proposed a greater increase in LIWA funding than that proposed by Staff in Case No. PAC-E-10-
07 which ended in April, 2011. At roughly the same time, Rocky Mountain filed the 11-13 case
(April 29, 2011), which, just months later, seems to have caused Staff to suddenly change its
assessment of LIWA concluding that not only is Rocky Mountain's program not cost-effective,
but that Idaho Power's and AVISTA's programs are also likely not cost-effective either, even
though they haven't yet been evaluated. Meanwhile, CAPAI was expending all of its available
resources in intervening in and strategizing its strategy for the Idaho Power, AVISTA and Rocky
Mountain rate cases. There is, of course, no reason Staff should maintain a position it ultimately
learns is based on erroneous factual beliefs or assumptions, but neither should positions
regarding matters of such importance be hastily changed as they seem to have been in 2011.
Throughout the 2011 cases and up to the present, Staff has referred to a Memorandum of
Understanding (MOU) signed by Idaho Power, Rocky Mountain and AVISTA agreeing to
evaluate all of their DSM programs and periodically provide such evaluations to Staff for review.
Because of severe budgetary limitations, and because CAPAI had no reason to believe that
LIWA, a program Staff had just shown considerable support for, was anything other than cost-
effective, CAPAI did not participate in the case from which the MOU arose. Even had CAPAI
intervened or participated in the MOU case, it is doubtful that such participation would have
given CAPAI any reason to not continue to pursue LIWA funding increases in 2011, especially
for Idaho Power whose program funding hadn't changed for nearly 8 years. The MOU case had
concluded by the time Staff proposed a greater LIWA increase for Rocky Mountain than even
CAPAI had proposed. The fact that Staff never specified its concerns about the cost-
effectiveness of LIWA until later in 2011 illustrates how CAPAI was put into a highly untenable
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 38
position quite late in the process. In spite of this, CAPAI did its best to justify its position in all
four pending electric cases, though it was met with considerable resistance by Staff and the
utilities during the late 2011 hearings and its position was thoroughly rejected by the
Commission in subsequent final orders issued in the 2011 cases.
CAPAI submits that the manner and timing in which all of this occurred is fundamentally
unfair because although Staff objected to CAPAI's funding proposals primarily on the basis of
how CAPAI formulated them, the real reason behind Staffs opposition was that it was reacting
to RMP's unfounded claims in the 11-13 case and extending that to other LIWA programs for
other utilities. As Staff argues in this case, the threshold issue in assessing LIWA is not how
much funding is appropriate, but whether the program is even cost-effective. If the answer to the
second part is no, then the issue of funding becomes moot.
Thus, although Ms. Ottens was being heavily criticized through cross-examination on
matters such as the perceived versus actual unemployment rates in Idaho, the perceived versus
actual number of eligible customers on the LIWA waiting lists, and the calculation of parity for
the three electric utilities, all the while, Staff was first and foremost basing its opposition to
LIWA based on its perceived failure to be cost-effective while offering no evidence of its own
supporting such a perception. Staffs concerns in this regard were first put in writing in rebuttal
testimonies in the 2011 cases making it very difficult for CAPAI to even respond. There was
little if any cross-examination of Ms. Ottens regarding the cost-effectiveness of the LIWA
programs in the rate cases for several reasons including the fact that Staff seems to have still
been formulating that position, and it is not CAPAI's responsibility to calculate and ensure the
cost-effectiveness of LIWA programs. Though the CAP agencies certainly cooperate with the
utilities in terms of providing some of the information necessary to make such evaluations, the
CAPs are not even trained to make the highly complex cost-effectiveness evaluations.
In short, CAPAI had been arguing for increased LIWA funding for the better part of a
decade using criteria such as LIWA waiting lists and the concept of parity, had received either
the implicit or explicit support of Staff and had its positions approved by the Commission in
most every case, had consistently utilized the same rationale to demonstrate the need for and
otherwise justify increasing LIWA funding, and, for no apparent reason other than that it
declined to join in the settlements in the Idaho Power and Rocky Mountain Power rate cases, was
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 39
suddenly treated as though it was proposing something novel and in contradiction to utility law
and policy.
Incidentally, the Rocky Mountain 11-13 case, the Rocky Mountain general rate case and
Idaho Power rate case were filed in April, May and June of 2011. Though CAPAT urged Staff to
begin processing the 11-13 case immediately so that it could potentially be resolved prior to the
other cases, for reasons unknown to CAPAI, it took a full two months for a Notice of
Application to be issued from the date the 11-13 case was filed. Almost immediately upon
receiving and reviewing Rocky Mountain's 11-13 case, CAPAI reached an initial conclusion that
the application was unfounded and that the CADMUS study filed in support was facially
specious at best. CAPAI continues to hold this opinion and even Staff has expressed serious
reservations over the technical shortcomings of the CADMUS study. In short, the 11-13 filing
certainly did not give CAPAI any legitimate reason to believe that Rocky Mountain's LIWA
program was not cost-effective, especially considering that the 11-13 filing followed
immediately on the heels of a rate case in which LIWA funding was contentiously disputed.
Had the 11-13 case been initiated sooner, it is possible that CAPAI could have assuaged
any concerns Staff had or the parties working together could have reached a compromise with
Rocky Mountain regarding its concern about the cost of evaluating its LIWA program, such as
was suggested by Staff in its Report in this case, i.e., to spread the costs out over a series of
years, increase the interval between evaluations, etc.
2. Confusion of Issues
The failure to cull out the cost-effectiveness issue of Rocky Mountain's program and
address it prior to going to hearing on the Idaho Power and Rocky Mountain rate cases resulted
in significant confusion during the hearings in late 2011. Specifically, it was often unclear
whether Staff was opposing an increase to LIWA funding because of the methodology CAPAI
employed to support a proposed LIWA funding level (e.g., "parity" or "waiting lists" for LIWA)
as opposed to whether a given program was cost-effective.
Proof of this can be found in the Commission's Final Order 32426, pp. 15-16, in which
the Commission rejects CAPAI's request for increased funding to Idaho Power's LIWA
("WAQC") program based on: 1) the shortcomings of CAPAI's parity argument; 2) the
implementation of Idaho Power's "Solutions" weatherization program which CAPAI had not
been involved with and hadn't even heard of leading up to the Idaho Power rate case hearing, and
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 40
which only partially serves Idaho Power's low-income customers, and certainly not the poorest
of those customers, yet the Commission attributed the entirety of the $700,000 supposedly
invested by Idaho Power in 2011 to low-income weatherization; 3) the fact that AARA provided
an infusion of money for low-income weatherization, although that was a one-time resource and
Idaho's CAPs were among the first in the nation to fully spend-out their AARA funds; 4) the
Commission's rejection of CAPAI's attempt to demonstrate how many otherwise eligible LIWA
customers were on Idaho Power's "waiting list," even though Staff fully concedes in its Report
that need exceeds resources as far as low-income weatherization is concerned, and; 6) only after
all of the foregoing does the Commission express concern about the cost-effectiveness of Idaho
Power's LIWA although not a single fact was cited by the Commission suggesting that Idaho
Power's LIWA was not cost-effective and the Company itself contended that it was.
3. Procedural Handlina of this Proceeding
CAPAI commends Staff for the work it performed in bringing together a disparate group
of parties to discuss what are undeniably very complex issues in the hope of reaching some form
of recommendation to better enable the Commission to make fully informed decisions. There
are several aspects to the manner in which the workshop case was handled procedurally,
however, that somewhat diminish the effectiveness and outcome of the proceeding. First, Staff
seemed to have come to the workshop with a fairly clear idea of what it intended to propose to
the Commission. This sentiment was made known by Staff to all participants early and often. It
was not Staffs idea to circulate a version of its initial draft of its report and when this was
proposed or supported by the majority of participants, Staff agreed to it but emphasized clearly
that it was in no way bound to any of the "informal feedback" it might receive from the
participants.
Finally, Staff did not post the informal feedback received to the case webpage and,
consequently, the participants had no idea what the others had said and what their positions on
any given issue were. This closed-door approach to resolving universal issues is far from
conducive to collaboration and compromise. One example of how this manifested is found in the
comments filed by Rocky Mountain on November 21, 2012 where Rocky Mountain claims that
CAPAI was "unable" and "unwilling" to "provide any data to support their claims" regarding the
waiting list of LI WA-eligible customers. RJ%'IP Comments atp. 4. This is a false statement and,
CAPA! COMMENTS IN RESPONSE TO STAFF REPORT 41
had CAPAI known that Rocky Mountain would make such an accusatory statement, it would
have preemptively responded to such a remark.
Though Rocky Mountain fails to provide a single fact explaining let alone supporting its
claim that CAPAI was unable or unwilling to provide information regarding the LIWA waiting
list, CAPAI notes that this involved a massive set of discovery requests submitted by Rocky
Mountain to CAPAI which amounted to many hundreds of separate requests filed in the midst of
all four cases pending at that time. Rocky Mountain's claim that CAPAI was unable or unwilling
to provide information is patently false. Attached hereto are the relevant pages of CAPAI's
discovery responses involving this issue. Rocky Mountain is referring to its Discovery Request
No. 17 and CAPAI's response thereto, the latter provided to Rocky Mountain on approximately
November 25, 2011. The request and response are as follows:
17. How many Rocky Mountain Power customers are on the
weatherization waiting list of EICAP and SEICAA as of December 31,
2010? How many are on the weatherization list of EICAP and SEICAA
as of October 31, 2011? Of these homes, how many have an electric
heating system, natural gas heating system, or other?
RESPONSE: CAPAI restates its responses and objections to requests
Nos. 6 and 11 through 14. Without waiving, CAPAI states as follows:
The number of eligible customers on the waiting list changes
constantly. It is not known what the exact number of customers on the
waiting list was on December 31, 2010 without unreasonable effort and
recalculation of data no longer current.
Rocky Mountain did not file a motion to compel with the Commission regarding this
request which would have been the appropriate course of action if Rocky Mountain felt that
CAPAI was inappropriately withholding information. As CAPAI's response makes clear,
waiting list data changes daily and there is no reason for CAPAI to track it every day of every
year. The waiting list information relied upon by CAPAI in the 11-12 case, and in all other
cases, was an attempt to provide information regarding waiting lists that are based on an average,
not daily fluctuation.
Though Rocky Mountain's false contention in its comments might seem relatively
insignificant, it is representative of how badly off course the parties had veered during the 2011
cases and how at least one participant has dragged something not probative to the issues at hand
into this proceeding. Much of the cross-examination in the 2011 cases was focused on
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 42
unemployment rates, waiting lists and the concept of parity. If the LIWA programs are found to
be not cost-effective as Staff suggested in those cases, then these secondary issues become
pointless. In any event, CAPAI notes that in the five criteria proposed by Staff on page 3 of its
Report to determine LIWA funding levels, the criteria of waiting lists and parity appear in point
Nos. 1 and 2, respectively. Thus, although Staff and Rocky Mountain went to considerable
effort to criticize Ms. Ottens' use of these criteria during the 2011 cases, after nearly a year long
workshop case, Staff is proposing these same criteria, among others
4. Deferral of LIWA Funding Decisions Under Current Economic Conditions is
Costly-LIWA is Only DSM Pro2ram Available to Low-Income Customers
Because funding levels are also at issue in this case, CAPAI notes that current economic
conditions are essentially as CAPAI predicted in the course of the 2011 cases. Federal
weatherization funding has been reduced by roughly 70% and there is no reason to believe that
this will change anytime soon. AARA funds have long been exhausted and nothing is expected
to take their place. Consequently, there is a greater need now than at any time CAPAI has
intervened before this Commission regarding utility-sponsored LIWA funding.
CAPAI believes that the utilities are sympathetic to the plights of their low-income
customers and well appreciate the considerable benefits that result from providing those
customers with the ability to reduce their utility bills, but it is critical to remember that LIWA is
the only DSM resource available to low-income customers. While most of us would not
consider weatherization measures to be a "luxury" they are typically beyond the financial means
of low-income customers to install. Thus, other non-low income, residential DSM programs are,
practically speaking, not an option for the poor. LIWA is unique for many reasons, not the least
of which is that low-income customers typically live in housing stock that is the least energy-
efficient and, therefore, most likely to benefit from weatherization measures.
Even though low income customers cannot avail themselves of any DSM resource other
than LIWA, assuming sufficient LIWA resources are even available, they still pay for all other
DSM programs like every other customer. CAPAI submits that by deferring any increases in
LIWA funding at a time when utilities are filing general rate cases nearly every year and the
economy continues to remain stagnant, this effectively results in a relative lowering of LIWA,
particularly given the increasing number of LI WA-eligible customers each year.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 43
Though it is unrealistic to think that utilities can satisfy all low-income weatherization
needs, the consequences of deferring funding increases until unspecified points in the future are
particularly acute based on current economic conditions and governmental budget cuts.
5. Staff Report and Recommendations Raise More Questions than they Address and, if
Approved, Will Result In Endless Delays As Backlo2 of LIWA-Eli2ible Customers
Continues to Mount.
As noted in Section IV of these comments, Staff acknowledges that all three LIWA
programs in question are likely cost-effective, especially when non-energy economic benefits are
factored in and certain other program adjustments are made. CAPAI is concerned, however, by
Staffs recommendation to defer any funding increases until undetermined points in the future.
For instance, Staff recommends that "a possible funding increase for Idaho Power be
reviewed after the results of its impact evaluation are published in spring 2013." Report at p. 4.
CAPAI notes that utilities have not always met their projected dates for the release of LIWA
information, whether evaluations, data compilations, or other information. Regarding Rocky
Mountain, Staff states that "a possible funding increase for Rocky Mountain Power be reviewed
after its new data collection system is fully implemented and after the 2012 program data has
been analyzed for cost-effectiveness under the recommendations in this report. Staff anticipates
that both of these requirements will be met when Rocky Mountain Power publishes its annual
DSM report in spring 2013." Id.
CAPAI notes that Rocky Mountain does not have a track record of meeting projected
timelines for LI WA-related tasks as was pointed out in last year's 11-13 and 11-12 cases.
Regarding Avista, Staff recommends that "a funding review for Avista's low income
weatherization program be delayed until at least 2014." This is possibly the least definite of all
three proposals for considering an increase to LIWA funding. In fact, with respect to all three
LIWA programs, Staff declines to recommend the imposition of any particular deadlines
preferring to "anticipate" or estimate actions that might be taken by the utilities at some future
date and not taking into consideration the amount of time that will be required to review the data
for which Staff estimates timing, analyze said data, make recommendations to the Commission
accordingly, for the Commission to consider the recommendations and render a ruling and for
the ruling to take effect could be far in excess of the time between now and when the
aforementioned information will be made available. In other words, if Staffs procedural
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 44
proposal is adopted, it could well be many years before there is ever another LIWA funding
resource for any of the three LIWA programs.
First, CAPAI questions whether it is necessary to wait a year or more to begin
implementing the program evaluation changes proposed by Staff. Regardless, CAPAI
respectfully submits that it is dangerous to adopt such an open-ended process. CAPAT submits
that there should be hard deadlines established to ensure that LIWA funding decisions do not
languish due to the failure of any party or occurrence to happen by the projected date.
Furthermore, CAPAI proposes that there be consequences to any utility who unjustifiably fails to
meet such deadlines.
VI. CONCLUSION
Though LIWA is clearly a very unique resource, CAPAI questions whether so much
scrutiny is applied to other DSM programs as is now being proposed for LIWA, even though that
program has a proven track record of providing energy savings to those customers least able to
pay their bills and essentially unable to provide weatherization on their own.
Regardless, CAPAI agrees that LIWA, like all other DSM resources, should periodically
be evaluated for cost-effectiveness and to identify areas where improvements should be made.
CAPAI submits, however, that it is not necessary to wait anywhere from roughly a year to
possibly several years before revisiting LIWA funding levels, especially when it has already
been deferred a year, Idaho Power's funding has not been increased in roughly ten years the
utilities have routinely been filing for and receiving regular general rate increases, and are filing
nearly every year. Add to this the fact that federal weatherization funding has nearly evaporated
and the economy remains stubbornly stagnant and LIWA is the only means that low-income
customers have to reduce their electric bills, it seems unconscionable to freeze LIWA funding
indefinitely. At a bare minimum, CAPAI urges the Commission to expedite the completion of
the evaluation process and establish firm deadlines to ensure that LIWA funding does not
languish indefinitely.
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 45
DATED, this 23rd day of November, 2012.
gra M. Purdy
CAPAI COMMENTS IN RESPONSE TO STAFF REPORT 46