20050124STAFF COMMENTS.PDF

DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366
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Street Address for Express Mail:
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BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO IMPLEMENT A RESIDENTIAL AIR
CONDITIONER CYCLING PROGRAM.
CASE NO. IPC-O4-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of Record, Donald L. Howell II, Deputy Attorney General, and submits the following
comments in response to Order No. 29663 issued on December 20, 2004.
BACKGROUND
On November 15 2004, Idaho Power Company filed an Application for authority to implement
an expanded residential air conditioner cycling program ("AC Program" or "Program ). In essence
Idaho Power seeks authority to modify and expand its two-year "pilot" AC cycling program that
expired October 24, 2004. The Company states that it does not believe that a formal hearing is
necessary and requests that its Application be processed under Modified Procedure. In Order No.
29663 the Commission solicited public comments regarding the proposed AC Program.
STAFF COMMENTS JANUARY 21 2005
STAFF ANALYSIS AND COMMENTS
The purpose of the AC Program is to reduce Idaho Power s peak loads during June, July and
August at less cost than the alternative of building another gas-fueled peak generation plant. After two
years of operating a pilot version of the proposed AC Program, Idaho Power has determined that
changes are warranted to increase the potential benefit/cost ratio of an expanded program while
retaining sufficient value to participants.
During the pilot program, both programmable thermostats and direct air conditioner switches
were tested. Based upon its pilot experience the Company has determined that the AC Program should
use only the direct switches to maximize the benefit/cost ratio. During the pilot program, participants
electricity bills were credited $10 per month for three months. In the present Application the Company
has recommended that a $7 per month credit is both necessary for program cost effectiveness and
sufficient to attract participation by customers.
During the pilot program, cycling events were defined as lasting up to four hours per day and
up to ten events could occur in a single month, for a total of up to 40 hours per month. The new
Program contains the same 40-hour per month and 4-hour per day limits, but does not limit the number
of cycling events per month that may occur. For example, the new Program allows the Company to
cycle participants' air conditioners for two hours per day for 20 days in a month or four times for one
hour each time in a single day. The amount of time that an air conditioner is switched off in a cycling
event is not specified. The Company s evaluation of the pilot suggests that cycling events in which
AC units are off 67% of the time and on 33% of the time result in a greater benefit/cost ratio for the
utility. The evaluation also showed that AC cycling results in an average of less than 20 Fahrenheit
temperature increase inside participants' homes during the last hour of a cycling event and that most
participants ' total electricity usage per month stayed the same or declined very slightly.
Under the new Program, the Company reserves the right to limit participation based upon the
availability of equipment, funding or selection criteria the Company "considers necessary to ensure the
effective operation of the Program." Such selection criteria may include energy usage, location of
house, size of house or other factors. Participants will be permitted to "opt out" of the program one
day each month upon providing advance notice to Idaho Power.
Staff appreciates that the proposed program will allow Idaho Power considerable flexibilities in
selecting participants and in dispatching this resource. We trust that the Company will use these
flexibilities reasonably in the course of maximizing system benefits.
STAFF COMMENTS JANUARY 21 2005
Idaho Power proposes to limit the Program s costs to an average of about $2.2 million per year
for the first five years and to an average of about $1.5 million per year over the lifetime of the
Program. Of those costs, 54% are expected be incentive payments to participants, 30% for capital
equipment, and 16% for program administration. The Company estimates that participation in the
Program will increase from 2 000 customers in 2005 to 40 000 by 2009. Based on an average load
reduction of 1.11 kilowatts per participant when the outside temperature is at least 950 Fahrenheit
000 participants equates to 44.4 MW of peak load reduction.
It is Staff s understanding that the Company has a sufficient balance in its Energy Efficiency
tariff rider account to begin implementation of this Program. Additional Energy Efficiency funding
has been sought by the Company in Case No. IPC-04-29 and is currently under consideration.
The Company estimates that, based on the costs of a simple-cycle combustion turbine, the
utility benefit/cost ratio of the Program will be 1.07 by the tenth year of operation and 1.42 over 30
years.
CONCLUSIONS
The costs and benefits (and to an extent even the participation) in this program will largely be
under the direct control of Idaho Power. Assuming the Company s estimates of costs, benefits and
participation are reasonably accurate and that the Program is effectively implemented, this demand-
side Program offers a better alternative for meeting customer load than purchasing a similar amount of
supply-side generation and transmission resources.
RECOMMENDATIONS
Staff recommends that Idaho Power s Application to Implement a Residential Air Conditioner
Cycling Program be approved as filed.
Respectively submitted this 2J4 day of January 2005.
Donald L. H ell, II
Deputy Attorney General
Technical Staff: Lynn Anderson
i:umisclcomments/ipcO4.27dhla comments
ST AFF COMMENTS JANUARY 21 2005
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 21 sT DAY OF JANUARY 2005
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-04-, BY MAILING A COpy THEREOF POSTAGE PREPAID, TO
THE FOLLOWING:
MONICA MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
TIM OTHY TATUM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
CERTIFICATE OF SERVICE