20021206Advanced Energy Comments.pdf

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Advanced Energy Strategies, Inc.
Jeffrey C. Brooks [phone]
1027 Cayman Drive
Meridian, ID 83642 !D l\ ;: l, ;
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In the Matter of Idaho Power Company
Time-of-Use (TaU) Study
Case No, IPC-02-
These comments are submitted in general support of the NW Energy Coalition comments with
several amendments and caveats which suggest that there is no single answer to meeting our
energy and peak energy demands, but that Demand-Side Management (DSM) that includes both
load shifting, as well as elimination of waste (conservation), insightful load management (for
appropriate end-use applications where gains are not outweighed by losses), and strategic pricing
signals are all various tools in the overall DSM toolkit. The other extremely critical issue for
Tau rates is the target market segment for TaU application.
Time-of-Use Rates are best suited to Medium and Large Commercial and Industrial
Customer Application
Many electric utilities have forwarded studies, or have tried pilot programs, which attempt to
apply Time-of-Use rates to the residential customer group. This is intrinsically the wrong target
market for TaU applications and is unlikely to enjoy the economies of scale necessary to
outweigh the necessity of personal convenience for the average customer. Some enlightened
residential customers may be able to schedule their washing machine for off-peak operation-
and that is laudable-however, it is unlikely that sufficient numbers can easily be marshaled to
provide the magnitude of benefit necessary to impact utility-scale needs. Commercial and
industrial customers are a different matter altogether and represent the most fertile application of
Time-of-Use rates. Small commercial customers less than 25 kW (for 15-minute average high
demand read per month) may not have sufficient threshold end-use loads to make TOU rates an
appropriate application, in the same way TOU does not apply well to residential applications.
TOU rates are a part of the overall DSM solution matrix, but TaU rates do not replace efficiency
programs. Rather, commercial and industrial Time-of-Use rates work in conjunction with
efficiency improvements, Load Management, and Load Shedding strategies to provide an
integrated portfolio of DSM load shaping tools.
If high On-Peak Demand and Energy charges promote load shifting, then they simultaneously
promote energy efficiency improvements which would lower on-peak demand and on-peak
energy use. However, not all customer end-use activities that consume on-peak energy (and help
create the aggregated on-peak load constrained condition) are most conducive to efficiency
improvements alone. Depending on the specifics of each situation, perhaps load shifting is the
most feasible and cost/resource effective in one situation, while efficiency improvements, or
even radical process changes represent the answer that yields the greatest overall benefit in other
situations. Each specific situation in the customer-driven arena must be evaluated with an open
mind toward the best and most feasible solution. Thus, Time-of-Use rates and efficiency options
should be only two of the many tools in the DSM repertoire. Other tools or strategies would
include Load Management, and Load Shedding programs for situations where these lend value to
an overall demand management plan as part of an Integrated Resource Portfolio.
Critical Period Pricing (CPP) Does Not Provide Lasting Value
Energy buy-back programs tend to manifest themselves as wealth redistribution schemes that
often proven to have undesirable economic ripple effects in small and/or agricultural
communities. Further, there is no lasting DSM value with CPP other than the momentary value
of idled equipment and energy not immediately consumed. The funds used to "buy-back"
energy (or idle equipment) do nothing to improve our future energy situation. The money is
doled out to the few prime participants who literally get 'money-for-nothing' while the mass-
market (of residential and small commercial) customers are asked to shoulder the burden of the
buy-back plus administration costs in the next year s annual PCA (Power Cost Adjustment)
proceeding. CPP is truly is a fiscal black hole approach to DSM that seeks to never improve or
solve our energy situation at the highest ongoing cost the market can bear.
Recommendation
I recommend that this Commission:
Order Idaho Power to begin formulating Time-of-Use rate designs for application to
various commercial and industrial customer size groups, such as; 26 kW up to 49 kW
demand; 50 kW up to 499 kW demand; 500 kW up to IMW demand; and:;. 1 MW
demand customers. Note that small commercial
(.:::
25kW demand) and residential
customers should be exempted from TOU rate participation.
Order Idaho Power to formulate TOU demand and energy rates in a revenue neutral
fashion to the utility, in order to provide appropriate customer price signals, which
simultaneously promotes both improved energy efficiency options, and/or load shifting,
load management, or load shedding techniques.
Order Idaho Power Company to integrate TOU and other rate design options into, and
with, an overall Demand Side Management strategy designed to accrue and quantify
utility-scale benefits for inclusion in an Integrated Resource Plan portfolio of solutions
and in the next General Rate Case proceedings, rumored to commence in the fall of2003.
I do not think it is necessary for the Commission to wait until another study is completed to order
Idaho Power to formulate TOU rates for application to medium up to very large commercial and
industrial customers. Waiting unnecessarily is what has gotten us to this point and while I am
not an advocate of rushing to judgment, I believe this situation is already sufficiently revealed
that we can proceed in the correct application of TOU rates for commercial, industrial, and
perhaps irrigation customers groups with little fear of have erred.
I hope the Commission will find these comments to be pragmatic and useful; and that in total
these comments lend a perspective that provides value to all ratepayers of Idaho Power
Company.