20030205Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:LISA NORDSTROM
DATE:JANUARY 31, 2003
RE:IN THE MATTER OF IDAHO POWER'S REPORT ON TIME-OF-USE
PRICING. CASE NO. IPC-02-12.
In Case Nos. IPC-02-2 and -, the Commission directed Idaho Power and the
Energy Efficiency Advisory Group (EEAG) to "evaluate and report to the Commission on the
viability of a Time-of-Use residential metering program by September 12, 2002.Order No.
29026 at 22. In compliance with this Order, Idaho Power submitted its "Report on Residential
Time-of-Use Pricing" (Report) on September 12, 2002.
IDAHO POWER'S REPORT ON TIME-OF-USE PRICING
To assist in evaluating the feasibility of residential time-of-use metering, Idaho Power
engaged the services of Christensen Associates. The Company described Christensen Associates
as "an economic consulting firm that has been providing consulting services to the energy
industry for more than 25 years and is well known in the industry for its work with time-of-use
and real-time pricing and market-based interruptible load programs." Report at
A. Analysis
Conventional TOU Pricin2::Traditional Time-of-Use (TOU) pncmg has
typically been characterized by two or three fixed price levels (e., peak, shoulder and off-peak)
for two seasons (e., summer and non-summer). fd. at 5. If applied on a mandatory basis to
residential customers, conventional TOU pricing would produce "very modest potential
benefits.fd. at 23. The Report attributed this to the relatively small differential between
average peak and off-peak wholesale costs (and resulting retail TOU prices), as well as the
general lack of correspondence between average peak costs and the day-to-day variations in
those costs. Although making TOU pricing voluntary would produce "somewhat higher
DECISION MEMORANDUM
consumer benefits " this would also result in "net revenue losses to Idaho Power due to
customers self-selecting the TOU rate whenever it offers immediate bill (and revenue)
reductions.!d.
2. Critical Peak TOU pricin2::This type of pricing allows the peak-period price to
be increased to a higher than normal "critical" level in response to high-cost conditions in the
wholesale market. ld. at 9. According to the Report
, "
Critical peak TOU pricing has the
potential to produce substantial benefits.ld. at 14. Not only would it produce much larger
demand reductions during the most important high-cost hours than does conventional TOU
critical peak TOU pricing would allow higher net customer benefits due to the greater
opportunity for benefits from load reductions during critical price periods. ld. at 23.
The Report indicated that if made mandatory, critical peak TOU pricing could result
in an annual customer benefit of more than $1 million. ld. More importantly, Idaho Power has
the potential to avoid $12 million per year in carrying charges for capital investments in peaking
facilities. !d. at 22. If offered on a voluntary basis, the Report stated that "careful rate design
would be required to limit the extent of revenue losses from customer self-selection.ld. Under
the assumptions used in Christensen Associates' analysis , a market share of 25% would produce
load reductions of approximately 40 MW during critical price conditions. ld. at 23-24.
A key factor limiting these potential benefits is the nature of the costs that would be
avoided by customers' load reductions. Under the Report's base cost scenario, cost reductions
fall short of revenue reductions - yielding a large net revenue reduction. ld. at 23. However
cost reductions under the high-cost scenario exceed the revenue reductions, producing net gains
to the utility. ld.
B. Metering Capabilities
According to the Report, Idaho Power s cost of installing advanced interval metering
equipment and modifying its billing systems to account for TOU pricing must also be
considered. ld. at 32. The analysis performed by Christensen Associates did not include any
cost component for the metering equipment necessary to record usage by time period. During its
standard monthly meter-reading process, the Company would retrieve consumption data for the
time-of-use periods from the standard time-of-use meter. The alternative, an automated meter
reading (AMR) system, is read remotely via the power lime or radio frequency and can be
collected at will, allowing customers to receive more timely information.
DECISION MEMORANDUM
According to the Report, the average cost to install a standard time-of-use meter for a
residential customer would be about $145 per customer, or approximately $47 million for all
residential customers system-wide. ld. As compared to the standard meter now installed for
residential customers, the incremental cost of the TOU meter would result in an increased charge
to customers of about $1 a month. ld. The Report indicated that the latest cost estimate to install
an AMR system across Idaho Power s service territory is approximately $72 million. ld.
C. PCA Implications
The Report advocated that any power supply-related benefits from time-of-use
pricing should flow through the PCA in a manner that is fair and equitable to customers and the
Company. Assuming that a time-of-use scenario that successfully addresses the potential
revenue attrition problems could be constructed, a time-of-use scenario "cannot be beneficial to
Idaho Power without a modification to the manner in which reductions in power supply costs
which result from customers ' load shifting are treated in the Power Cost Adjustment (PCA)
mechanism.!d. at 32-33. Under the current PCA methodology, 90% of the reductions in power
supply costs that would accrue as a result of customers shifting load from the on-peak to the off-
peak period are passed through to customers as a benefit. Thus, Idaho Power would retain only
10% of the benefit but absorb 100% of the reduction in revenue. The Report stated that PCA
treatment of benefits resulting from reduced power supply expenses "must be addressed to
remove the negative impact to Idaho Power s earnings in order for time-of-use pricing to have
the opportunity to be viable.ld. at 33.
D. Energy Efficiency Advisory Group
According to the Report, input from the Energy Efficiency Advisory Group indicated
support for implementing pricing that requires customers to pay what it costs to receive service.
ld. at 34. The Group was more supportive of increasing the charges for the standard tariff
service and making both the standard service and time-of-use service optional than it was
making time-of-use mandatory. ld.
The Report stated the EEAG believed it would be "more sensible to pursue a demand
response program than a time-of-use program at this time given the investment in metering
equipment that would be necessary to accommodate a wide-scale time-of-use program.ld. The
EEAG did not support mandatory time-of-use pricing for new subdivisions and housing
DECISION MEMORANDUM
developments, nor did the EEAG support cost shifting of additional meter-related costs to non-
participants. !d.
E. Conclusions of the TOU Report
Some new types of time-of-use pricing, particularly the critical peak TOU structure
, .
may have potential as viable pricing options for residential customers at some point in the future.
The cost of installing standard time-of-use meters, which would not allow for the "critical peak"
design, does not appear to be economic given the potential benefits that might accrue from load
shifting given the relatively small loads of residential customers. Until such time as an AMR
system is available on Idaho Power s system, and a PCA methodology is devised to remove the
native impact on Idaho Power s earnings due to the unequal treatment of the revenues and
expenses impacted by load shifting, residential time-of-use pricing is not economically viable.
ld. at 35.
PUBLIC COMMENTS
The Commission received four comments from private citizens in this case. A Kuna
resident concluded that the opportunity for concerned customers to help themselves via TOU
pricing should not be withheld just because the utility does not see any financial benefit. A
commentor from Boise was disappointed in the Company s position because "these meters
would give the consumer a proactive change to manage their consumption in collaboration with
Idaho Power to lower consumption during peak, high cost use times.
Another Boise resident supported voluntary time-of-use meter installations with a rate
structure that supports the advantageous use of the information given by the meters. However
TOU metering should be used in conjunction with "substantial" conservation programs, like
those promoting efficient appliances and construction, to minimize the peak power Idaho Power
must purchase. While this commentor indicated that net profits or return on investment is the
measure by with Idaho Power and the PUC should determine program validity, he noted that
Idaho Power s revenue loss would be offset by "lower power and capital costs and higher
company image.If this program is adopted, this individual stated there should be no
predetermined method for make-up of revenue losses until they are proven to exist.
A fourth commentor from Idaho City noted that the time-of-use pricing matter is in
the wrong place at the wrong time" for Idaho Power customers, who would lose no matter how
rates were structured. Furthermore, the program would be of substantial cost and minimal
DECISION MEMORANDUM
benefit to customers, many of whom cannot shift power usage to other times. This commentor
also argued that other companies who have tried TOU pricing now consider it a failure and it
would be of minimal benefit since Idaho Power s power costs only rise during a few hours on a
limited number of days in the summer.
ADVANCED ENERGY STRATEGIES COMMENTS
Jeffrey C. Brooks of Advanced Energy Strategies, Inc. (AES) also filed comments in
this case. These comments generally supported the comments of the NW Energy Coalition with
several amendments and caveats. AES argued that time-of-use rates are best suited to medium
and large commercial and industrial customers. AES Comments at 1. The residential customer
group is intrinsically the wrong target market for TOU applications and is unlikely to enjoy the
economies of scale necessary to outweigh the necessity of personal convenience for the average
customer. Unlike commercial and industrial customers, residential and small commercial are
unlikely to provide the magnitude of benefit necessary to impact utility-scale needs. Commercial
and industrial customers represent the most fertile application of time-of-use rates, which should
work in conjunction with efficiency improvements, load management, and load shedding
strategies to provide an integrated portfolio of DSM load shaping tools. ld. at 2.
AES first recommended that the 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 :;:. I MW demand customers. ld. at 3. However, small commercial (.::: 25kW
demand) and residential customers should be exempted from TOU rate participation. AES
believes the Commission need not wait until another study is completed before ordering Idaho
Power to do this. !d.
Second, AES recommended that Idaho Power formulate TOU demand and energy
rates in a revenue neutral fashion to the utility. ld. This would provide appropriate customer
price signals, which simultaneously promotes improved energy efficiency options and/or load
shifting, load management, or load shedding techniques. !d.
Third, AES recommended that the Commission order Idaho Power Company to
integrate TOU and other rate design options into an overall Demand Side Management strategy
for inclusion in an Integrated Resource Plan and in the next general rate case proceedings
rumored to commence in the fall of2003. ld. at 4.
DECISION MEMORANDUM
NWEC AND LAW COMMENTS
Following its involvement in the pilot time-of-use (TOU) rates program operated by
Puget Sound Energy (PSE), the NWEC has several concerns about TOU programs. First
NWEC believes that TOU programs are not a substitute for energy efficiency programs and may
divert utility, consumer, and regulator attention away from cost-effective efficiency programs
that produce durable economic and environmental benefits. NWEC and LAW Comments at 2.
NWEC's second concern is that the PSE program data collected to date suggests that
the cost of the TOU program is approximately 10 times the economic benefit. The first of the
required quarterly reports released in October showed that 94% of customers were not able to
save enough with TOU to offset the $1.00 incremental meter reading charge. !d. PSE submitted
a request to the Washington Utilities and Transportation Commission in mid-November to end
the pilot-program nine months prior to the original pilot completion date, which the WUTC
approved. NWEC noted that the cost threshold would be higher for Idaho Power since the cost
ofthe AMR system was not included in the assessment ofPSE incremental costs.
Third, NWEC is concerned that TOU pricing and associated load shifting may have
adverse environmental impacts. If TOU pricing is effective at shifting loads from on-peak
periods to off-peak periods, coal-fired generation may increase in the west since it has a lower
variable off-peak running cost than natural gas. !d. at 3. Since coal generation produces 2 - 3
times as much CO2 as gas generation, as well as emitting much larger amounts of oxides of
nitrogen (NOx), sulfur dioxide (SOx), particulates, mercury, and other pollutants, a shift from
gas to coal carries significant environmental consequences. !d.
NWEC also believes that alternative programs, such as critical period pricing and
energy efficiency, can provide deeper benefits. The economic value of load shifting on a hydro-
based grid is very modest. Data presented in the PSE rate proceeding suggested that the on-peak
off-peak power cost differential was about a half-cent per kwh over the next five years. !d.
During the few hours per year when the differential gets much larger, creative pricing may help
to contain market price spikes and should be examined. Furthermore, NWEC and LAW stated
that a strategy to reduce loads on Idaho Power s hydro-based grid during droughts would seem to
be more important than TOU pricing. ld.
Research done by the Northwest Power Planning Council's Regional Technical
Forum indicated that investments in residential weatherization can produce up to 5 kilowatts of
DECISION MEMORANDUM
peak load reduction for each average kilowatt of energy load saved. ld. at 4. These savings
benefit generation, transmission and distribution capacity requirements. Similarly, investments in
new construction energy efficiency, industrial motors, and other measures produce significant
peak load savings. Simply put, efficiency provides double benefits - both peak AND energy,
while TOU programs typically benefit only one aspect of the equation. ld.
. Although the NWEC and the LAW Fund recognize that they have largely favored
exploration of TOU strategies in recent proceedings, they now recommend the Commission
defer any further consideration ofTOU pricing for Idaho Power s residential customers until the
economic and environmental impacts are better understood. !d. They hesitate to support such
programs, even for industrial and large customers, until more information is available on the
environmental consequences of load shifting. However, they do encourage the Commission and
Idaho Power to explore a critical peak pricing strategy as one response tool for drought and high
energy cost periods. ld.
DRAM COMMENTS
The Demand Response and Advanced Metering Coalition (DRAM)l is a policy
organization comprised of utilities, public interest groups, metering and communications
companies and demand response providers. DRAM believes that the proceeding to date has
been a good start in identifying the cost and benefits of dynamic pricing. However, DRAM also
believes the costs of the enabling technology, in this case advanced metering, may have been
overestimated and that some of the benefits from deployment of advanced metering may not
have been accounted for. Dram Comments at 12.
Types of Meters
Dram argued that the key to addressing metering choices is understanding the
objectives being pursued and also the benefits that each choice provides. ld. at 4. Standard time-
of-use meters enable time-of-use rates due to their ability to record usage in a specific pre-set
period for billing purposes. Depending on the meter, however, this may simply be an
accumulation of data in several time-based registers and not include data collection in hourly
1 DRAM members participating in these comments include: eMeter, SchlumbergerSema, Landis + Gyr,
MeterSmart, DCSI/TW ACS, Echelon, Puget Sound Energy and the Alliance to Save Energy. More information on
DRAM can be found at www.dramcoalition.org
DECISION MEMORANDUM
intervals. While simple TOU rates can be implemented, other options like Critical Peak Day
Pricing cannot be.
An automated meter reading (AMR) system, per say, does not enable TOU
pricing/rates. The functional objective of AMR is to automate and streamline the meter reading
operation so as to reduce meter-reading costs. ld. at 5. An AMR system does not necessarily
provide the interval measurement necessary for dynamic pricing and, in most cases, a basic
AMR system does not increase the frequency of data access and presentation to the utility or the
customer. Important to note, however, is that with either a standard or advanced AMR system
the benefit to a utility whose existing meters are of the older, conventional, non-AMR type can
be great. ld. Several utilities in recent years have undertaken AMR deployments based on a
business case supported by savings in meter reading operations.
The type of meters most closely associated with demand response is referred to as
advanced meters. These meters provide automated meter reading functionality but do so by way
of a fixed communications network which provides flexible two-way communications capability.
These meters record and measure data on at least an hourly interval basis, transmit data to the
utility on at least a daily basis, allow customer access to usage data on at least a daily basis (via a
free website), and provide interval-based usage and pricing data to customers on at least a
monthly basis (via the monthly bill). !d. at 6.
Costs of Meters
Although Idaho Power quoted the average meter cost per customer for a standard
time-of-use meter to be $145 , DRAM submitted that an average cost of$100 is more appropriate
for an advanced meter capable of allowing TOU pricing. ld. at 7. Based on a cost estimate of
$100 per customer, which may be at the high end of the applicable cost range, the total cost for
providing advanced metering to all 300 000 of IPC'residential customers would be
approximately $30 million. ld. at 9. While this estimate could conceivably rise due to special
circumstances present in the IPC service territory, DRAM found that the estimate of $72 million
for an AMR system as presented in the report is substantially too high based on commercially
available technologies installed on millions of customers in the U.S. ld.
DECISION MEMORANDUM
Benefits
DRAM believes that other advanced metering benefits were not addressed in the
Report and warrant further examination. These include: outage management and response (i.
trip avoidance, crew optimization), more timely and efficient response to customers, reduced
meter reading costs (i., reduced labor costs, avoided vehicle and equipment costs), improved
meter reading accuracy, and a reduction in estimated bills. The Company would also acquire
two-way communications ability and interactive messaging ability, load control and management
capabilities, the acquisition of new and different data, and improved forecasting. Advanced
meters would also optimize the planning, expansion and operation of the distribution system.
Individual customers would benefit from enhanced usage information (resulting in enhanced
ability to practice energy management) and additional rate options (customer choice of different
product from same provider). The system would benefit from faster wholesale power cost
settlements, improved data, improved forecasting, system optimization, and system planning and
expansion. ld. at 10-12.
STAFF COMMENTS
Staff split its comments into three sections. The first portion advocated implementing
AMR with or without TOU pricing while the second discussed TOU pricing in generaL The
third section outlined Staffs recommendations to the Commission regarding this case.
Automated Meter Reading and Time of Use Pricing
Although Idaho Power s Report concluded that residential time-of-use pricing was
not economically viable "until such time as an AMR (automated meter reading) system is
available on Idaho Power s system and a PCA (power cost adjustment) methodology is devised
to remove the negative impact to Idaho Power s earnings " Staff did not agree. Staff Comments
at 2, quoting Report at 35. In support of its position, Staff noted Christensen Associates
analysis that mandatory, critical peak time-of-use retail pricing provided the potential for
benefits exceeding $1 million annually and the potential for another $12 million annual benefit
by avoiding the capital costs associated with 200 megawatts of new peaking facilities. !d. Even
without consideration of TOU pricing, the Report indicated that an AMR system has a positive
net present value of $32 million over the life of the equipment as compared to the current
metering system. !d. In addition, Staff noted that the AMR study listed many customer service
DECISION MEMORANDUM
benefits, cost savings, and revenue enhancement opportunities for the Company that would result
from implementing an AMR system. !d.
According to Staff, the most effective TOU rates (i., critical-peak TOU) can be
implemented only if an AMR system is in place. ld. at 4. With AMR, retail prices can vary as
necessary to track costs while treating all customers the same regardless of billing cycle because
the monthly meter-reading schedule is no longer a limiting factor. Idaho Power tested an AMR
system in the Idaho City area in 1999 and concluded that the AMR system was deployable and
met the Company s technology requirements. !d. at 3. Although Idaho Power estimated the
initial cost of an AMR system to be $72 million, or about 50% more than that required for
traditional TOU meters, the entire cost of the AMR system is more than offset by savings in
meter reading costs and improved customer service. ld. at 4. More specifically, Idaho Power
estimated the annualized cost of an AMR system to be about $4 million, but that AMR would
save nearly $6 million per year in monthly meter reading and customer movement costs. ld. at 5.
With this in mind, Staff believes that consideration of TOU pricing should first focus
on planning and installing an AMR system. !d..at 4. After Idaho Power has begun AMR
installations, the Commission could then consider whether TOU pricing, either mandatory or
optional, is an appropriate rate design. Staff believes that determination of TOU rates would be
best considered during Idaho Power s next general rate case. ld. Once some ofthenew meters
are installed, the Commission and Idaho Power will be able to test alternative TOU rate designs
to more precisely estimate Idaho customers' price elasticity of demand. Although Staff believes
AMR is justified without implementation of TOU pricing, AMR is just the first step in
establishing the TOU pricing.
Staff Analysis of Idaho Power s TOU Pricing Report
Staff was unclear why Idaho Power believes that the PCA mechanism and TOU
pricing will necessarily result in lost revenue. To the extent that TOU prices are established to
cover costs, Staff does not believe that reduced revenues would result from rate design. ld. at 5.
However, if necessary, Staff noted that the Company may file an application with the
Commission for a regulatory ruling to accommodate new technology or innovative rate design
that results in lower rates, better service to customers, or to allow the Company to earn its
authorized return. ld. at 6.
DECISION MEMORANDUM
Staff did not believe that the EEAG, as a whole, would agree with Idaho Power
assessment of the Group s conclusions. ld. Staff has participated in all of the EEAG meetings
and agreed that these issues were discussed. However, Staff stated that no vote was taken on
these issues and no conclusions were reached on the TOU issue. ld.
Although Puget Sound Energy (PSE) recently sought early termination of its
voluntary TOU pricing program, Staff believes this should have little impact on the Idaho
Commission s consideration of either an AMR system or a critical peak TOU pricing for Idaho
Power. ld. PSE serves customers in a more temperate climate and does not experience the
extreme summer peak demand that Idaho Power does. !d. PSE's TOU program offers an
optional tariff to customers, which as described in the Report, results in less than optimal
benefits when compared to a mandatory TOU tariff. In addition, Staff argued that PSE serves
primarily an urban area where costs to manually read meters are presumably much lower than
Idaho Power s per customer meter reading costs. !d.
Staff Conclusion
Based on Christensen Associates' conclusion that mandatory, critical peak TOU
pricing has the potential to trim 200 MW from Idaho Power s peak demand, Staff believes that
this is an option that should not be easily dismissed or unnecessarily delayed given the future
capacity deficit forecasted by Idaho Power. !d. TOU pricing, combined with other demand side
management programs, may cost-effectively supplant the need for acquiring capacity from
peaking plants and transmission upgrades for many years.
Staff recommends that Idaho Power submit a plan to the Commission in early 2003
for installation of new meters capable of AMR and critical-peak TOU pricing. ld. at 7. Staff
believes the Company should begin implementing AMR in those areas and for those customers
where the benefits to Idaho Power and its customers are the greatest. ld.
IDAHO POWER REPLY COMMENTS
The Company s reply comments agreed with the several conclusions of the NW
Energy Coalition and the Land and Water Fund. Specifically, the Company agreed that the
economic value of load shifting on a hydro-based grid is very modest. Reply Comments at 5.
The Company also agrees with their recommendation that further consideration of TOU pricing
for Idaho Power s residential customers be deferred until its impacts are better understood. !d.
DECISION MEMORANDUM
6. With regard to Staff s comments, Idaho Power addressed several issues regarding the Report
and implementation of an automated meter reading (AMR) system.
Potential Benefit of Time-of-Use Pricinq
Idaho Power argued that Staffs comments on the potential benefit of TOU pricing
provide an incomplete representation of the results included in the Report. Staffs commen!s
blur the important distinction between the value associated with load reductions (i., the value
associated with reductions in power supply costs) with the value associated with customer bill
reductions. fd. at 2. The $1 million in potential benefits from mandatory, critical peak time-of-
use retail pricing referred to by Staff represents the benefit customers could realize as a result of
reduced bills associated with the time-of-use pricing. ld. This potential benefit to individual
customers has no correlation to the value associated with reduced power supply costs attributable
to load shifting.
Idaho Power noted that although customers have the potential for over $1 million in
immediate bill benefits under critical peak TOU pricing, the reduction in power supply costs
associated with load shifting is only $370 000 (Report, p. 23; Report, Table 2, p. 29). ld. at 3.
The real value of time-of-use pricing comes from a reduction in power supply costs resulting
from load shifting, which in turn leads to the reduction in rates paid by all customers, not just the
amount of near-term reduced rates passed on to some customers through bill reductions. A
pricing mechanism that provided $630 000 more in bill reductions than are supported by cost
reductions is not economically viable and will ultimately lead to overall increased rates for all
customers, negating any customer benefit that might be available under TOU rates. !d.
Ability to Track Market Prices with an AMR System
The Company clarified that although the critical-peak TOU pncmg structure
overcomes several of the issues associated with standard TOU pricing, it does not eliminate the
mismatch between prices and costs. ld. at 4. Idaho Power also indicated that Staffs assertion
that with an AMR system the monthly meter-reading schedule is no longer a limiting factor is
incorrect. While an AMR system allows for more flexibility in obtaining usage information than
a manual read system, monthly meter reading and billing schedules will still be necessary in
order to generate bills manage work flows, and integrate usage information into the Company
customer billing system. ld.
DECISION MEMORANDUM
Energy Efficiency Advisory Group
Although Staff was critical of Idaho Power s assessment of the EEAG's conclusions
regarding time-of-use pricing for residential customers, the Company pointed out that its
representation of the EEAG's conclusions is consistent with the meeting minutes as reviewed
and approved by the individual EEAG members. ld. at 4-
Implementation of an AMR System
The Company was surprised that Staffs comments questioned "why the Company
has not yet implemented a plan to install an AMR system and apparently is not planning to do so
in the near future.ld. at 5 , quoting Staff Comments at 7. In response to informal questions
posed by Staff prior to the deadline for the filing of Staff comments, the Company indicated that
it is currently experiencing a very tight capital market. ld. The 2003 capital budget approved by
the Company s board of directors, although increased over the 2002 capital budget, is still
constrained and includes funding only for those items that are deemed critical to reliable
operations. While an AMR system would provide many benefits, its immediate implementation
is not critical for reliability or ongoing business operations during 2003. The Company
expressed to Staff its intent to request 2004 budget approval of the capital needed to begin
implementation of an AMR system during 2004. ld.
Conclusion
Although the Company s Report to the Commission concluded that it is not
economically viable to implement time-of-use pricing prior to the implementation of an AMR
system, Idaho Power acknowledged that automated meter reading capability provides multiple
benefits. As indicated in its reply comments, Idaho Power plans to request budget approval for
the cap~al necessary to begin AMR implementation in 2004. This approval of course would be
subject to the Company s financial situation, capital markets, and other resource needs. Idaho
Power has been evaluating the potential costs and benefits of implementing TOU pricing for its
various customer classes for several years and plans to continue evaluating it in the future. As
additional information regarding the impacts of TOU pricing becomes known, Idaho Power
believes it will be useful in its own evaluation. Idaho Power believes that no further action on
the Commission s part regarding time-of-use pricing as it relates to the Company is necessary at
this time and that this docket should be closed. !d. at 7.
DECISION MEMORANDUM
COMMISSION DECISION
What action, if any, does the Commission wish to take on the issues of Time- of-Use
metering and/or Advanced Meter Reading?
/7
~.lLJA- d". tIl~~
Lisa D. Nordstrom
M:IPCEO212 In3
DECISION MEMORANDUM