20040318Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:JOHN HAMMOND
DATE:MARCH 18, 2004
SUBJECT:IN THE MATTER OF IDAHO POWER COMPANY'S APPLICATION
FOR AUTHORITY TO IMPLEMENT AN IRRIGATION PEAK
CLIPPING PILOT PROGRAM. CASE NO. IPC-04-
On February 5 , 2004, Idaho Power Company (Idaho Power; Company), filed an
Application, pursuant to Commission Rule of Procedure 52, for authority to institute a pilot
program to pennit the Company s customers to participate in its proposed Irrigation Peak
Clipping Pilot Program (Pilot Program) by implementing Tariff Schedule 23. Idaho Power
proposed that Tariff Schedule 23 become effective on March 6, 2004. In order to allow adequate
time for interested persons and parties to comment on this matter the Commission suspended the
effective date of Idaho Power s Tariff Schedule 23 until April 5, 2004 or until the Commission
issues an Order approving, modifying or rejecting the Company s Application, Program and
Tariff.
On February 27, 2004, the Idaho Irrigation Pumpers Association filed written
comments. On March 10 2004, the Commission Staff filed its written comments. Finally, on
March 17, 2004, Idaho Power filed reply comments.
BACKGROUND
In Idaho Power s 2002 Integrated Resource Plan (IRP), the Company identified peak
resource deficiencies facing its system in upcoming years. In the IRP , Idaho Power indicated it
would target demand-side measures that address peak-hour demand reduction as a means of
addressing those deficiencies. The irrigation summer load is a major portion of the Company
summer peak demand. Idaho Power believes the Irrigation Peak Clipping Pilot Program is a
DECISION MEMORANDUM
demand response program that could potentially reduce peak-hour demand by attempting to
manage capacity instead of energy.
The purpose of the proposed Pilot Program is to interrupt power to selected irrigation
pumps during peak weekday hours in the summer months in order to decrease the Company
system summer peak. The proposed Program would be an optional, supplemental service that
would pennit the Company to interrupt the power to all irrigation pumps behind a participating
customer s metered service point on a regular basis with the use of an electric timer. In
exchange for allowing the scheduled interruption, participating customers would receive a
monthly monetary incentive based on kilowatts of reduced load.
COMMENTS
Staff Comments
In its comments Staff stated its support for the Company s Program. Staff believed
that it was consistent with the objectives of the Company s IRP and believes that programs like
this should be aggressively pursued. However, Staff stated it is not clear to it why a pilot is
necessary to achieve the goals of this Program. Staff pointed out that PacifiCorp s Irrigation
Load Control Credit Rider Program - Schedule 72 (pAC-O3-3 and PAC-03-14) was
implemented during the summer of 2003 and was available to all irrigation customers the first
year it was offered. Staff stated that this program was well received and considered a success by
PacifiCorp, the Commission and most customers. Staff stated that PacifiCorp s program, albeit
more aggressive, is very similar to the one proposed by Idaho Power in this Application.
Staff also believed that the duration and frequency of interruptions is an issued that
should be evaluated in Idaho Power s Program. Staff stated it is premature to limit the irrigators
options to a single four-hour interruption. Staff alleged that there were simply too many
variables including type of crop, soil type, climate and irrigation system design to have a one size
fits all approach. Staff believed the purpose of the pilot program or programs should be to
evaluate how the Company and the irrigators might operate with different interruption options.
Staff believed an option with multiple interruptions could be offered with little or no added costs.
Sta:ft" believed that once a customer is selected to participate in the Program and is equipped with
a timer it would be simple matter to program that timer with appropriate interruption frequency
and period. Staff believes by adjusting the Program in these two regards the Company would be
able to maximize the load reduction capability of it.
DECISION MEMORANDUM
Staff believed that the incentive amount that Idaho Power proposes to pay customers
for interruptions is reasonable. In addition, the Staff noted that the Company expects that in
almost all situations the energy consumption curtailed during the four hour period of interruption
would be consumed either prior to or following the interruption, resulting in no energy reduction
for the customer.
Staff stated that Idaho Power proposes to include the results of the Irrigation Peak
Clipping Program in the annual report to the Commission detailing the EEAG activities. This
report is due no later than March 15 of each year. Staff stated this proposed schedule would
make it very difficult to make any program improvements for the 2005 season that might be
recommended as a result of the experience gained from its operation this year. Accordingly,
Staff recommended that the Company file a report regarding this Program with the Commission
no later than December 2004. Staff recommended that the report should include the number
of customers and the number of sites participating, amount of load under control, amount of load
reduction achieved, the number of times and the amount of load that failed to be interrupted
when scheduled and the reason for that failure. Staff also recommended that the report should
also provide a detailed cost breakdown, with a cost effective analysis, an assessment of customer
satisfaction and any recommended changes to the Program. Staff stated that the report should
provide sufficient detail to facilitate a meaningful evaluation of the various interruption options
on a monthly basis.
Idaho Irri2ation Pumpers Association
The Irrigators support the stated goal of Idaho Power s Program that will assess the
efficacy of using timers on irrigation pumps to reduce summer peak and assessing customer
participation, volunteerism, satisfaction, and retention, as well as to monitor any unintended
consequences from participation. The Irrigators stated that they look forward to opportunity to
review and evaluate the results of the Program reported by the Company to the Commission.
The Irrigators also stated that it is their expectation that the Program could be modified as may
be appropriate and instituted as a permanent program designed to be cost effective to the
Company and also priced appropriately to create an incentive for participation by irrigation
customers and fully and fairly compensate them for their resulting reduction in summer peak
demand. The Irrigators also urge the Commission to promptly approve and implement the
Program and Tariff Schedule 23 using Modified Procedure under the Commission s Rules.
DECISION MEMORANDUM
Idaho Power Reply Comments
First, Idaho Power stated that as Staff pointed out in its comments, the Company only
intends to accept 200 metered service points into the Program instead of 200 customers as stated
in the Company s Application and proposed tariff. The Company stated that should the
Commission approve the ~ompany' s Application and Program in the form Idaho Power intended
it will submit a corrected Tariff Schedule 23 to reflect that it will accept up to 200 metered
service points to participate in the Program.
Second, the Company stated that it is offering this Program as a pilot because it is
prudent to do so in order to gain experience in operating and managing a new program and
testing new equipment and technology that may be used in a fully developed program. The
Company stated that using this method of evaluating and testing a new program generally
translates into higher customer satisfaction, enhanced customer participation and an increase in
peak load reduction.
Third, although Staff recommended expanding the number of hours of interruption
the Company contends that through the pilot it will be able to assess the efficacy of this issue and
many others. The Company stated that it would survey participants to determine their
satisfaction with the Program and to judge whether increase hours of load reduction would be
possible. The Company also stated that it would survey some non-participating irrigation
customers to determine if the number of hours of load reduction in the Program was a factor in
their decision not to participate in the Program. The Company requests that it be permitted to
rely on the results of the Program and the proposed surveys to determine the suitable number of
hours of interruption for any subsequent Program years.
Fourth, despite Staff's recommendation that the Company allow irrigation customers
the option of providing multiple interruptions within a week, Idaho Power believes that giving
the option of only one interruption per week will allow most irrigators an opportunity to
participate in the Program without reducing crop production or encouraging the modification of
their irrigation systems. The Company stated that allowing to many interruptions could
encourage customers to attempt to reduce production to take advantage of the incentives.
However, should the Commission determine that the Company should increase the amount of
load interruptions per metered service point per week beyond the one recommended by the
Company, Idaho Power recommends offering Program participants the following three options:
DECISION MEMORANDUM
(a) Four hours one day per week at $1.75 per kW of Billing Demand;
(b) Four hours two days per week at $1.88 perkW of Billing Demand; or
(c) Four hours three days per week at $2.00 per kW of Billing Demand.
Fifth, the Company stated that the decision to develop any direct load control
program should be made through the IRP process. The Company contends that if the IRP
analysis shows that this Program is a cost effective resource and if the results of the Program
indicate that it is a viable demand response program, the Company suggests that the appropriate
process for determining its scope beyond 2004 should be through the EEAG.
Sixth, the Company disagrees with Staff's calculation that in the Program only a 19
kW per metered service point load reduction would be realized. Rather, the Company alleges
that it expects the Program will realize a 109 kW load reduction per metered service point.
Finally, the Company stated that it can file a report with the Commission regarding
this Program as recommended by Staff, by December 2004.
COMMISSION DECISION
Does the Commission wish to approve Idaho Power s Application, Tariff and
Program?
If so, does the Commission wish to make any modifications to the Program and tariff
as proposed by the Company?
If the Commission approves operation of this Program does the Commission wish to
require the Company to file a report about the results of the Program, as recommended by Staff
on or before December 2004?
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DECISION MEMORANDUM