08152001.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
GENE FADNESS
BILL EASTLAKE
LOU ANN WESTERFIELD
RANDY LOBB
DON HOWELL
LYNN ANDERSON
BEV BARKER
DAN GRAVES
TONYA CLARK
WORKING FILE

FROM: LISA NORDSTROM

DATE: AUGUST 15, 2001

RE: IN THE MATTER OF THE INVESTIGATION OF IDAHO POWER COMPANY’S DEMAND-SIDE MAMAGEMENT PROGRAMS AND FUNDING, CASE NO. IPC-E-01-13.

In Idaho Power PCA Order No. 28722 issued on May 1, 2001, the Commission opened a demand-side management (DSM) docket in IPC-E-01-13. Citing current market volatility and the opportunity to incorporate long-term conservation, the Commission directed the Company to “file a comprehensive DSM program by August 1, 2001 that details program structure, potential conservation measures to pursue and funding options that include a tariff rider.” Order No. 28722 at 21. In particular, the Commission directed the Company to “consider addressing conservation proposals for residential customers in the highest block rate that typically use electric space heating.” Id.
IDAHO POWER’S DSM COMPLIANCE FILING
On July 31, 2001, Idaho Power submitted a DSM Compliance Filing (Filing) as required by Order No. 28722. The Company reports that it expended almost $1.4 million for Energy Efficiency Programs in 2000 and anticipates funding over $2.25 million in existing energy efficiency related activities in 2001, including some non-efficiency programs such as advertising, Project Share and Green Energy puchases. Filing at 2-3. According to the Filing, the latter amount represents 0.43% of the Company’s 2000 Idaho retail revenue. Id. at 3.
The Company also noted that a June 2001 customer survey indicated that a majority of customers in all classes thought electric utilities should offer incentive programs to encourage efficiency. However, over half the customers surveyed indicated they would not be willing to pay a slightly higher rate to fund energy efficiency programs. Id. at 7.
That being said, the Filing lists potential conservation measures initially reviewed by the Company. Id. at 4. For residential customers, these measures include compact fluorescent (CFL) bulb coupons, Energy Star appliance incentives, high efficiency air conditioner/heat pump rebates, weatherization loan buy-down program, duct sealing, new construction market pull efforts and low-income assistance enhancements. In the commercial and industrial sectors, Idaho Power reviewed Vending Miser technology, commercial CFL bulb coupons, reduced air movement incentives, LED traffic lighting incentives, BacGen incentives, buiding tune-up programs, lighting acceleration programs, small retrofit programs and projects customized to individual customers. For irrigation customers, Idaho Power has considered existing system modifications and new system improvements. Estimated total resource costs for these programs range from 0.6 cents/kWh to 4.9 cents/kWh. A summary of costs and savings is attached. Appendix 3, p. 1.
Idaho Power believes a tariff rider that provides for the recovery of expenses on an ongoing basis is the appropriate mechanism for program funding because it provides energy efficiency continuity while eliminating budgeting concerns and regulatory risk. Id. at 6. The Company proposed a two-year Rider that would generate approximately $2.6 million in annual revenue, which would result in a 0.5% surcharge of operating revenues. Id. at 8. The Rider would increase the average residential monthly bill by approximately $0.28. Moreover, it would increase the Company’s total efficiency spending as a percentage of revenue close to 1.0%, as compared to the Northwest investor-owned utility average of 0.7% and Avista Corporation’s recently approved 1.95%. Id. at 7 and 9. The Company states that this funding would match all anticipated Program costs including education, incentives, administration, research and evaluation. Id. at 8.
In conjunction with the implementation of a Rider and its comprehensive Energy Efficiency Program, the Company recommends the creation of an “Energy Efficiency Advisory Group.” The primary purpose of this group would be to advise the Company on new measure recommendations, existing measure revisions, measure prioritization, and evaluation. This advisory group would be made of community members eligible for the Rider’s services, Commission Staff, Company Staff and technology specialists. Idaho Power states although the Advisory Group will provide recommendations, the Company will make all final decisions on energy efficiency programs. Id. at 11.
Finally, the Company submits that the issues raised in the Commission’s Order and this Filing can best be addressed and processed by modified procedure rather than by an evidentiary proceeding. Id. at 12.
STAFF RECOMMENDATION
The Commission Staff recognizes the need for quick implementation of DSM programs before the winter heating season. Consequently, Staff recommends that the Commission process this DSM Compliance Filing by Modified Procedure. Staff recommends that the Commission issue its notice of Modified Procedure requesting comments within the standard 21-day comment period. Although it perceives that workshops or hearings may be required at some point, Staff believes comments addressing desirable programs, funding amounts and funding methods will delineate the positions of the parties and expedite the process.
COMMISSION DECISION
How does the Commission wish to process this case?
Should the parties from Case Nos. IPC-E-01-7, -11, and –16 automatically be made parties to this proceeding, or should they petition individually for intervenor status?

Lisa D. Nordstrom
M:IPCE0113.memo_ln
DECISION MEMORANDUM 3