20041207Tatum Direct.pdf

Idaho Public Utilities Commission
Office of the SecretaryRECEIVED
DEC - 6 2004
Boise, Idaho
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-O4-
IN THE MATTER 0 F THE
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORITY TO
REVISE THE ENERGY EFFICIENCY
RIDER, TARIFF SCHEDULE
IDAHO POWER COMPANY
DIRECT TESTIMONY
TIMOTHY E. TATUM
December 2004
Please state your name and business address.
My name is Timothy E. Tatum and my business
address is 1221 West Idaho Street, Boise, Idaho.
By whom are you employed and in what
capaci ty?
I am employed by Idaho Power Company (~the
Company ) as a pricing Analyst in the pricing and Regulatory
Services Department.
Please describe your educational background.
In May of 2001, I received a Bachelor of
Business Administration degree in Economics from Boise State
University. I am currently a graduate student at Boise State
University and plan to earn a Master of Business
Administration degree in May 2005.
Please describe your work experlence wi
Idaho Power Company.
I became employed by Idaho Power Company in
1996 as a Customer Service Representative in the Company
Customer Service Center. Over the first two years I handled
customer phone calls and other customer-related
transactions.In 1999, I began working in the Cus tomer
Account Management Center where I was responsible for
customer account maintenance in the area of billing and
metering.
In June of 2003, after seven years in
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customer service, I began working as an Economic Analyst on
the Energy Efficiency Team.As an Economic Analyst, I
maintained proper accounting for Demand-Side Management
( ~
DSM") expendi tures, prepared and reported DSM program
accounting and acti vi ty to management and various external
stakeholders, conducted cost-benefit analysis of DSM
programs, and provided DSM analysis support for the
Company s 2004 Integrated Resource Plan (~IRP"
In August of 2004, I accepted a position as a
pricing Analyst in pricing and Regulatory Services.As a
Pricing Analyst, I have continued to work in the area of DSM
by providing program analysis and regulatory guidance.
What is the scope of your testimony?
My testimony will describe the DSM programs
and costs for which the Company is requesting recovery
through the Energy Efficiency Rider (~Rider
Have you prepared any exhibi ts as part of
your testimony?
Yes. I have prepared the following exhibits:
Exhibi t Description
Exhibi t 5 Estimated DSM program
expenses 2005 - 2009.
Exhibi t 6 DSM program development and
analysis methods used in the
2004 IRP process.
Exhibi t 7 DSM program descriptions for
the programs analyzed during
the 2004 IRP process.
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Idaho Power Company
Exhibi t 8 Figure 13 and Figure 14.Figure 13 is a fixed cost
comparison of the supply-side
and demand-side resources
analyzed in the IRP. Figure
14 is a fixed and variable
cost comparison of the
supply-side and demand-side
resources analyzed in the
IRP.
Exhibi t 9 Resource portfolio comparison
report showing the net power
supply benefi t for portfolios
containing each IRP DSM
program compared agains t
baseline portfolio, referred
to as P-Zero. Also, Total
Resource Cost for each
program is presented along
wi th a ratio of benef i ts costs.
Exhibi t 10 Table showing the estimated
energy and demand savings for
each DSM program included inthe IRP. This table reflects
any changes made to the
es tima tes since the IRP
process was completed.
Exhibi t 11 Northwest Energy Efficiency
Alliance contract for 2005-
2009.
Please categorize the DSM related costs that
Idaho Power Company is seeking to recover through the Rider.
The costs for the DSM programs and efforts
the Company plans to implement beginning in 2005 can be
segmented into five main cost categories: 1) 2004 IRP-
identified DSM programs, 2) other customer focused DSM
programs and projects, 3) funding for the Company
participation in the Northwest Energy Efficiency Alliance
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Idaho Power Company
the Alliance
),
4) DSM research and studies, and 5) DSM
departmental administration.
Has the Company reviewed i ts planned DSM
programs and efforts wi th the Energy Efficiency Advisory
Group (~EEAG"
Yes.The Company has reviewed its planned
DSM programs and efforts, including the costs associated
wi th each effort, wi th the EEAG.
Are you familiar wi th the DSM programs
included in the Company s 2004 IRP?
Yes.I assisted in the design and analysis
of each DSM program included in the Company s 2004 IRP.
Please describe the DSM programs included in
the IRP.
Six DSM programs were selected through the
IRP working group process to be included in the final
resource portfolio. Four of the six programs are designed to
address both summer demand reduction and energy efficiency
improvements.The two remaining programs are demand
response programs that are designed to reduce the Company
summer peak.The six programs are identified as the
Residential Efficiency (New Construction) Program, the
Commercial Efficiency (New Construction) Program, the
Industrial Efficiency Program, the Irrigation Efficiency
Program , the Residential Air Condi tioner Cycling Program,
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Idaho Power Company
and the Irrigation Peak Clipping Program.
What costs categories are included in the DSM
program costs?
DSM program costs refer to the cost to the
utility to operate a DSM program. These costs include
administrative costs, marketing and advertising costs,
programmatic capi tal costs, programmatic operation and
maintenance costs, moni toring and evaluation costs, and
incentive and rebate costs.
What are the costs associated wi th the DSM
Programs included in the 2004 IRP?
The average annual cost associated with the
implementation and operation of the DSM programs included in
the 2004 IRP is expected to be approximately $8.8 million
over the five-year period 2005-2009.Exhibi t 5 detai 1 s the
annual cost proj ections associated wi th each individual DSM
program inc uded in the 2004 IRP.
Were all of the 2004 IRP DSM programs
determined to be cost-effective?
Yes.
Please describe the method used to determine
the cost-effectiveness of the DSM programs included in the
Company s 2004 IRP.
The DSM programs were analyzed to estimate
cost-effectiveness using a two-step process. The first step
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Idaho Power Company
consisted of a pre-screening of potential DSM programs using
the methods described in the Electric Power Research
Institute (~EPRI") End-Use Tag Manual and The California
Standard Practices Manual: Economic Analysis of Demand-side
Programs and proj ects. The pre-screening analysis compared
estimated program costs and hourly load impacts to an hourly
The alternative costs representedset of alternative costs.
both heavy and light load market purchase estimates as well
as gas-fired peaker generation costs.This set of
alternative costs was used as a pre-screen in order to
represent the value of summer peaking resources when
This pre-designing potential DSM resource options.
screenlng analysis, referred to as the static analysis,
eliminates any DSM options that have a benefit/cost ratio
less than 1.0 from further consideration. Exhibi 6, pages 1
through 8, describes in detail the static analysis used to
screen DSM programs as part of the IRP evaluation process.
Exhibi t 6 is from the Demand-Side Resource Data section in
2004 IRP Technical Appendix.
What is meant by ~benefit/cost" ratio?
A benefit/cost ratio is the value derived by
di viding the discounted stream of program benefi ts by the
A benefit/cost ratiodiscounted stream of program costs.
greater than 1.0 indicates that the program is cost-
During the static analysis, benefit/cost ratioseffecti ve.
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Idaho Power Company
were calculated from both the Total Resource Cost (~TRC"
and Utility Cost (~UC") test perspectives for each DSM
program.EPRI defines the Total Resource Cost test as a
measure of the total net resource expendi tures of a DSM
program from the point of view of the utili ty and its
customers as a whole. Costs include changes in supply costs,
utili ty costs, and participant costs. Transfer payments
between customers and the utili ty, such as monetary
incentives for program participation, are ignored.EPRI
defines the Utili ty Cost test as a measure of the total
costs to the utili ty to implement a DSM program.Exhibi t
pages 2 through 4 , describes these two tests in further
The Residential Efficiency (New Construction)detai 1
Program, the Commercial Efficiency (New Construction)
Program, the Industrial Efficiency Program, and the
Irrigation Efficiency Program were screened for cost-
effectiveness using the TRC test perspective.The
Residential Air Condi tioner Cycling Program and the
Irrigation Peak Clipping Program were screened for cost-
effectiveness using the UC test perspective.
Why were the programs that are designed to
address energy efficiency improvements screened for cost-
effectiveness based upon the TRC test results?
Each energy efficiency program requires a
participating customer to pay a portion of the installed
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Idaho Power Company
cost of the energy efficiency measure (s) encouraged by the
program.The TRC test perspective considers the participant
costs as a portion of the resource costs analyzed by the
This is important because the participant cost intest.
most cases lS a significant portion of the total program
cost and must be included in the analysis in order to fully
quantify the cost to customers and the utili ty as a whole.
Why were the demand response programs
screened for cost-effectiveness based upon the UC test
resul ts?
The demand response programs included in the
2004 IRP do not require the participating customer to pay a
portion of the measure cost; rather the utili ty provides the
program equipment and a monetary incentive for participation
in the program.The TRC test, by defini tion, ignores
transfer payments between the utility and program
participants. Since a large portion of the program costs
associated with the demand response programs are the
incentive payments provided to customers, eliminating them
from the test results in an ineffective screening mechanism
The UC test perspectivefor demand response programs.
includes all costs to the utili ty including incentive
paymen t s .The UC test provides a full analysis of all costs
incurred by the utili ty to implement a demand response
resource making it the most effective screening test for
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Idaho Power Company
demand response programs.
What was the second step in the analysis
process?
The second step of the analysis estimated the
hourly impacts to net power supply costs resulting from each
DSM program through the use of a dynamic simulation model.
The dynamic simulation model yielded a proj ected increase or
decrease in net power supply costs resulting from each
program over a 30 -year planning period.The present value
of the impact to net power supply costs was the program
benefi t.For each DSM program analyzed, a ratio of the
present value Total Resource Costs to program benefi t was
calculated.Each option was ranked based upon its
benefit/cost ratio.The options wi th the highest
benefi t/cost ratios over 1.0 were included in the final
resource portfolio.
Please describe the purpose of the
Residential Efficiency (New Construction) program.
The Residential Efficiency (New Construction)
program is designed to provide lost opportuni ty peak demand
and energy savings in new residential homes by incorporating
energy efficiency measures during the design and
construction phases.For many energy efficiency measures,
the only time to incorporate them into a building is at the
time of ini tial construction.Thi s program wi 11 be
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Idaho Power Company
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patterned after the Company s existing Energy Star Homes
Northwest program, which partners wi th regional and state
Direct incentives will be provided toorganizations.
Incentives will be basedbuilders and possibly homebuyers.
Exhibi t 7, page on kilowatt or kilowatt-hour savings.
Exhibi t 7 is from thedescribes this program In detail.
Demand-Side Resource Data section in 2004 IRP Technical
Appendix.
Who is eligible to participate in this
program?
Builders and homeowners planning to build a
single-family residential home within the Company s Idaho
service territory will be eligible to participate in the
program.
You stated that all of the DSM programs
included in the Company s 2004 IRP were determined to be
cost-effective through the dynamic simulation analysis.
Please share the results of the cost-effectiveness analysis
results for the Residential Efficiency (New Construction)
program.
The 30-year nominally levelized TRC of the
Residential Efficiency (New Construction) program is $0.058
In comparison to other demand-side andper kilowatt-hour.
supply-side resources selected by the IRP analysis, this
program is shown to be a low cost resource, as can be seen
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Idaho Power Company
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Exhibi t 8 can al so befrom Figure 14 included in Exhibit
The dynamic simulationfound on page 50 of the 2004 IRP.
analysis yielded a Total Resource Cost benefit/cost ratio of
Exhibi t 9 shows how this program, compared to the53.
other DSM programs analyzed in the IRP, ranked in terms of
the Total Resource Cas t, the net power supply benef it, and
Exhibi t 9 is from the Portfoliothe benefit/cost ratios.
Analysis - Results and Supporting Documentation section in
the 2004 IRP Technical Appendix.
You have referred to a 30-year nominally
levelized TRC. What is meant by nominally levelized TRC?
Nominally levelized TRC is defined as the
present value of total resource costs of the resource over
the life of the program divided by the discounted stream
energy or demand savings.
Has the design and/or program goals of the
Residential Efficiency (New Construction) program changed
significantly from the program analyzed through the IRP
process.
However, a slight change to theNo.
proj ected program costs has been made in the first program
year. In order to meet the expected level of program
participation, the Company plans to increase marketing
efforts in the Treasure Valley, Twin Falls and pocatello
This change will resul t in an increase to firstmarkets.
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Idaho Power Company
year program costs, compared to the costs included in the
IRP, of approximately $42,000.Exhibit 6, column 11 details
the proj ected costs for the program through 2009.
Please describe the purpose of the Commercial
Efficiency (New Construction) program.
The Commercial Efficiency (New Construction)
program is designed to provide lost opportuni ty peak demand
and energy savlngs n new commercial bui ldings by
incorporating energy efficiency measures during the design
and construction phases.Like the Residential Efficiency
(New Construction) program, this program identifies for
implementation measures, which can be achieved only during
the construction process.Financial incentives and
education will be the primary methods used to encourage
program participation.Incentives will be based on kW or
kWh savings.Exhibi t 7 , page 3 describes this program in
detai 1
Who is eligible to participate in this
program?
This program will be available to new
commercial building owners/developers and
archi tects / engineers.The program will be available to
customers planning to take service under Schedules 7, 9, and
qualified commercial customers taking service under
Schedule 19.
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Idaho Power Company
Please share the results of the cost-
effectiveness analysis results for the Commercial Efficiency
(New Construction) program.
The 30-year nominally levelized total
resource cost of the Commercial Efficiency (New
Construction) program is $0.068 per kilowatt-hour.
comparison to other demand-side and supply-side resources
selected by the IRP analysis, this program is shown to be a
low cost resource, as can be seen from Figure 14 included on
Exhibi t The dynamic simulation analysis yielded Total
Resource Cost benefit/cost ratio of 3.84.Exhibi t 9 shows
how this program ranked compared to the other DSM programs
analyzed in the IRP process in terms of its Total Resource
Cost, net power supply benefit, and benefit/cost ratios.
Has the design and/or program goals of the
Commercial Efficiency (New Construction) program changed
significantly from the program analyzed through the IRP
process.
No.
Please describe the purpose of the Industrial
Efficiency program.
The Industrial Efficiency program is designed
to reduce peak demand and energy of large indus trial and
commercial customers.Idaho Power will provide direct
incentives and assist wi th audi t costs.Incentives will be
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Idaho Power Company
based on kW or kWh savings.This program is simply an
expanded version of the Company s current Industrial
Efficiency program.Exhibi t 7, page 2 describes this
program in detai 1 .
Who is eligible to participate in this
program?
The program will be available to all new and
existing customers taking service under Schedules 09 and
with a basic load capacity of 500 kW or greater.Special
contract customers will also eligible.
Please share the results of the cost-
effectiveness analysis results for the Industrial Efficiency
program.
The 30-year nominally levelized total
resource cost of the Industrial Efficiency program is $0.032
per kilowatt-hour.In comparison to other demand-side and
supply-side resources selected by the IRP analysis, this
program lS shown in Exhibi 8, Figure 14 to be a low cost
resource.The dynamic simulation analysis yielded a Total
Resource Cost benefit/cost ratio of 3.25.Exhibi t 9 shows
how this program ranked compared to the other DSM programs
analyzed in the IRP in terms of its Total Resource Cost, net
power supply benefit, and benefit/cost ratios.
Has the design and/or program goals of the
Industrial Efficiency program changed significantly from the
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Idaho Power Company
program analyzed through the IRP process?
Yes. The program marketing and administrative
costs over the first year are expected to be lower than
those included in the IRP analysis due to the program
awareness generated under the Company s current Industrial
Efficiency program.Exhibi t 5 details the proj ected cost
streams associated wi th this program.In addi tion, as a
resul t of meetings held wi th customers and Commission Staff,
several changes, which are detailed by Ms. Brilz in her
testimony, are proposed for the program.
Do the program design changes negatively
impact the cost-effectiveness of the program?
No.The decrease to the marketing and
administrative costs in the first program year come with no
proj ected decrease to energy savings and an increase in the
benefi t/ cost ratio.
Please describe the purpose of the Irrigation
Efficiency program.
This program is designed to reduce peak
demand and energy of irrigation customers.Cus tamers wi
receive direct incentives for modifications to existing or
new irrigation systems.Incentives will be based on kW or
kWh savings.This program, like the Industrial Efficiency
program, is simply an expanded version of the Company
current Irrigation Efficiency program.Exhibi t 7, page
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describes this program in detail.
Who is eligible to participate in this
program?
The program will be available to all
agricultural customers taking service under Schedule 24.
Please share the resul ts of the cost-
effectiveness analysis results for the Irrigation Efficiency
program.
The 30-year nominally levelized total
resource cost of the Irrigation Efficiency program is $0.051
per kilowatt-hour.In comparison to other demand-side and
supply-side resources selected by the IRP analysis, this
program is shown to be a low cos t resource, as ill us tra ted
The dynamic simulation analysisin Figure 14 of Exhibi
yielded a Total Resource Cost benefit/cost ratio of 3.77.
Exhibi t 9 shows how thi s program ranked compared to the
other DSM programs analyzed in the IRP in terms of its Total
Resource Cost, net power supply benefit, and benefit/cost
ratios.
Has the design and/or program goals of the
Irrigation Efficiency program changed significantly from the
program analyzed through the IRP process.
Yes.While the overall program design has
not changed for this program, the demand and energy goals
have changed for each of the first five years of program
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Idaho Power Company
opera tion Exhibi t 10, pages 1 and 2 provide detai 1 on the
new energy and demand targets for this program.Due to the
timing of the implementation of this program in 2005, the
level of participation in the first program year
proj ected to be lower than the IRP estimates.The energy
savings is expected to be higher in the following years
reaching the IRP energy savings target for the program by
2009.
Please describe the purpose of the Air
Condi tioner Cycling program.
The AC Cycling Program is an optional,
supplemental service that will allow participating customers
an opportuni ty to voluntarily permi t the Company to cycle
their central air condi tioners wi th the use of a direct load
control device in exchange for a monthly monetary incentive.
This program is designed to be a continuation of the
Residential Air Conditioner Cycling pilot Program operated
by the Company during the summers of 2003 and 2004.
November 15, 2004, the Company filed an Application with the
Commission requesting authority to implement this program.
Who is eligible to participate in this
program?
The AC Cycling Program will be a voluntary
program offered to residential customers taking service
under Schedule The Program will be offered to customers
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Idaho Power Company
in Ada and Canyon counties and in Emmett where the Company
has installed Advanced Meter Reading (~AMR") capabili ty.
Please share the resul ts of the cost-
effectiveness analysis results for the Air Conditioner
Cycling program.
The 30-year nominally levelized total
resource cost of the Air Conditioner Cycling program
$5.50 per peak kilowatt per month.In compari son to other
demand-side and supply-side resources selected by the IRP
analysis, this program is shown to be a low cost capaci ty
resource, as can be seen from Figure 13 on Exhibi t The
analysis yielded a Utility Cost benefit/cost ratio of 1.
for this program over its 30-year life.
Has the design and/or program goals of the
Air Conditioner Cycling program changed significantly from
the program analyzed through the IRP process.
Yes.The incentive payment amount per
customer per year has been increased from $20, which was
included in the IRP analysis, to a proposed amount of $21.
The program target participation ramp rate has also been
revised from that included in the IRP analysis.For the IRP
analysis, a ramp rate of 8,000 customers per year for five
years was assumed.For the current program design, a ramp
rate of 2,000 customers per year for the first two years,
increasing to 12,000 customers in the remaining three years,
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Idaho Power Company
has been assumed.Under both the IRP assumption and the
current program design, the program is intended to be fully
installed within five years.
Do the program design changes you have
described affect the overall cost-effectiveness of the
program?
No.The evaluation of the pilot Program
revealed that by operating the program on days with
tempera tures above 95 degrees Fahrenhei t, the Company could
expect to receive a 1.11 kilowatt load reduction per
participant. Based on the evaluation findings, the analysis
was updated to include a reduction of 1.11 kilowatts per
participant, rather than the 1.0 kilowatt assumed in the IRP
analysis.Overall, the adjustments to the 3 O-year program
design and analysis assumptions resulted in a Utility Cost
benefi t/ cost ratio of 1.42 for this program compared to a
ratio of 1.29 resulting from the IRP analysis, which
indicates that the program remains cost-effective.
Please describe the purpose of the Irrigation
Peak Clipping program.
The Irrigation Peak Clipping program is
designed to provide a temporary reduction in demand by
turning off irrigation equipment wi th the use of a timer
during the summer months of June, July, and August.
Customers who participate in the program will receive a
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Idaho Power Company
monthly bill credit paid on the basis of their monthly
billing demand.
Who is eligible to participate in this
program?
Agricul tural irrigation customers taking
service under Schedule 24 with pumps over 100 horsepower
will be eligible to participate in this program.
Please share the resul ts of the cost-
effectiveness analysis results for the Irrigation Peak
Clipping program.
The 30-year nominally levelized Total
Resource Cost of the Irrigation Peak Clipping program is
In comparison to other$4.22 per peak kilowatt per month.
demand-side and supply-side resources selected by the IRP
analysis, this program is shown to be a low cost capaci
resource, as is illustrated by Figure 13 in Exhibi The
analysis yielded a 30-year program Utility Cost benefit/cost
ratio of 1.40 for this program.
Has the design and/or program goals of the
Irrigation Peak Clipping program changed significantly from
the program analyzed through the IRP process.
Yes.During the summer of 2004, the Company
operated the Irrigation Peak Clipping pilot Program.
November 1, 2004 , the Company filed an application with the
Commission requesting authorization to operate a full
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Idaho Power Company
Irriga tion Peak Clipping program.The IRP analysis of the
Irrigation Peak Clipping program assumed each participant'
pump would be interrupted once a week during the summer
months of June, July, and August. The incentive payment per
kilowatt of monthly billing demand was set at $1.75 per
month in the IRP analysis.Based on the Irrigation Peak
Clipping pilot Program, the current program design has been
modified to provide customers the option to choose to be
interrupted one, two, or three times per week.The proposed
incentives included in the Company s November 1 filing are
$2 . 01 per kilowatt of billing demand for customers selecting
to be interrupted once per week,$ $2.51 per kilowatt for
customers selecting to be interrupted twice per week, and
$2.76 per kilowatt for customers selecting to be interrupted
three times per week.
Is the cost-effectiveness of the modified
program substantially different from the program analyzed
through the IRP process?
No.The Irrigation Peak Clipping program, as
currently designed, is shown to be cost-effective using the
same analysis methods used in the IRP analysis.The inpu t
for the updated analysis were modified based upon the
resul ts of the Irrigation Peak Clipping pilot program
evaluation findings. The findings revealed that the actual
average load reduction per participant was approximately 50%
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Idaho Power Company
of the customer s monthly billing demand, instead of the 80%
The evaluation findings alongassumed in the IRP analysis.
with the program design changes were incorporated into the
updated analysis, which produced a Utility Cost benefit/cost
ratio of 1.36, only a small change from the ratio of 1.40,
which resul ted from the IRP analysis.The relatively small
change in the benefit/cost ratio can be attributed to the
offsetting effect between the increase in the number of days
during a week the participant can be interrupted and the
decrease in the actual load reduction per participant,
coupled wi th the increase in the incentive payment amount.
Please describe Idaho Power Company s other
customer focused DSM programs.
The Company currently operates two customer
focused DSM programs that were not analyzed through the IRP
process.The Company plans to continue operating both of
the programs, known as the Small proj ect and Education Fund
and the Distribution Efficiency Initiative.
Please describe the purpose of the Small
Project and Education Fund.
Idaho Power , wi th the support of the EEAG,
established two funds In an effort to respond to research
requests, educational opportuni ties, and qualified small
proj ects that are not eligible for participation .under other
The Small Project Fund and the Education Fundprograms.
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Idaho Power Company
were ini tially funded wi th 2% of the current Idaho DSM Rider
funding which results in approximately $54,000 annually for
each fund.The Company plans to continue making Rider funds
available for the Small Proj ect and Education Fund on an
annual basis as detailed in Exhibi 5, column
Please describe the purpose of the
Distribution Efficiency Initiative.
The Distribution Efficiency Initiative, DEI,
encourages the operation of the distribution system at a
lower average vol tage, when possible, to reduce consumption
of various end-use loads.This research proj ect, developed
by the Alliance, involves multiple utilities and
technologies to evaluate the cost effectiveness of different
approaches to lowering average vol tage. This proj ect will
also assess the potential effects of this effort by
quanti fying the achievable energy savlngs and demand
reduction.The Company has identified program costs of
$100,000 per year for 2005 and 2006 as detailed on Exhibit
5, column
Does the Company plan to implement any other
customer focused programs?
Yes.The Company plans to implement two new
customer focused programs for the existing commercial and
residential sectors.The new commercial and residential
programs were analyzed and shown to be cost-effective during
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Idaho Power Company
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the IRP process; however, they were not selected to be
included in the final IRP resource portfolio.Exhibit
shows how these programs, referred to as Commercial
Efficiency (Existing Construction) and Residential
Efficiency (Existing Construction), ranked compared to the
other DSM programs analyzed in the IRP in terms of their
Total Resource Costs, net power supply benefi ts, and
benefit/cost ratios.
Why were the Commercial Efficiency (Existing
Construction) and Residential Efficiency (Existing
Construction) programs not selected to be included in the
Company s final IRP resource portfolio?
The Commercial Efficiency (Existing
Construction) and Residential Efficiency (Existing
Construction) programs were found to be cost-effective
during the IRP analysis; however, the two programs were not
selected for the final resource portfolio.During the IRP
process, it was decided that it would not be feasible from
an operational perspective to ramp-up six, resource size,
energy efficiency programs along wi th the two demand
response programs wi thin a year s time.The decision was
made to include the Commercial and Residential Efficiency
(New Construction) programs in the selected IRP portfolio in
order to capture lost opportuni ty savings, while also
establishing smaller program offerings within the
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Idaho Power Company
residential and commercial customer classes.In addition,
the Commercial and Residential Efficiency (New Construction)
programs had the lowest 30-year benefit/cost ratios of the
six energy efficiency programs analyzed, indicating that
although they were cost-effective, they we not as cost-
effective as the four programs selected for the final
portfolio.The rankings for these two programs are shown on
Exhibi t By offering a limi ted rollout of the Residential
and Commercial (Existing Construction) programs in 2006, the
Company plans to gain a better understanding of the energy
efficiency potential of these programs that may serve as the
basis for the design of larger, resource-sized programs in
the future.
Please describe the purpose of the
Residential Efficiency (Existing Construction) program.
The Residential Efficiency (Existing
Construction) program is designed to reduce the peak demand
and energy consumption of residential customers taking
service under Schedule 01.Al though a firm program design
has not been determined, ini tial assumptions include payment
of direct incentives for modifications to existing single-
family homes, multifamily homes or manufactured homes.
Incentives will be based on kilowatt or kilowatt-hour
savlngs Marketing and education will be a large component
of this program.Exhibi t 7, page 6 describes this program
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Idaho Power Company
in detail.
Please describe the purpose of the Commercial
Efficiency (Existing Construction) program.
The Commercial Efficiency (Existing
Construction) program is designed to reduce the peak demand
and energy consumption of commercial customers taking
service under Schedules 7 and Although a firm program
design has not been determined, initial assumptions include
payment of direct incentives for modifications to commercial
customers categorized in 11 different building types
including retail, small offices and hospi tals.Incentives
will be based on kilowatt or kilowatt-hour savings.Exhibit
7, page 4 describes this program in detail.
Would you briefly describe the goal of the
Alliance?
Idaho Power addresses market transformation
in its service territory by being a member of the Alliance
and working to coordinate Alliance activities in Idaho.The
Alliance is a regional group whose mission is to catalyze
the Northwest marketplace to embrace energy-efficient
products and services.
Idaho Power s current contract wi th the
Alliance ends on December 31, 2004.Has the Company elected
to participate in the Alliance in the future?
Yes. The Company has signed an agreement wi
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Idaho Power Company
the Alliance for the period 2005-2009.A provision in the
agreement allows the Company to cancel its participation in
the Alliance if recovery of the Alliance funding is not
authorized by the Commission in a manner acceptable to the
Company. The Company s 2005-2009 agreement with the Alliance
is included as Exhibit 11.
How has the Company s participation in the
Alliance been funded in the past?
Funding for the company s participation in
the Alliance was authorized through 2004 by Order No. 28333
in Case No. IPC-99-13.Through this Order, the Commission
authorized the use of revenue sharing funds to offset the
annual payments to the Alliance through 2004.The annual
contribution level for Idaho Power has been set 6. 39%
the total Alliance budget,$1.million,and is based
upon the Company percentage Pacific Northwes t retai 1
energy sales.Idaho s share of the $1.3 million payment
amount is 95.5%.Currently, the Company has accumulated a
credit balance of approximately $1.9 million in its Alliance
funding account.The Company recommends that the excess
dollars be used to fund the first two quarters of the
Company s 2005 funding commitment to the Alliance and that
the remaining funds be spread equally across the remaining
contract years of 2006-2009.
What is the annual funding amount required to
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Idaho Power Company
support the Company s participation in the Alliance?
The annual Alliance funding amounts over the
next five years are detailed in column 7 on Exhibi t
These funding amounts reflect the net amount aft1er the
application of the $1.9 million credit.
Has the Company explored the cas
effectiveness of funding the Alliance activities?
In 2003, after six years of existence, the
Alliance initiated a retrospective evaluation to determine
whether it had transformed enough markets to justify the
costs of the Alliance.An ad hoc committee that included
members both internal and external to the organization led
the retrospective.Two primary findings of the study were
that the Alliance has been successful at transforming, or
contributing to the transformation of, markets and that the
benefi ts of the Alliance have exceeded costs.The study
concluded that the regional approach of the AI~iance is an
asset and even greater leverage in program implementation
can be gained in the future. It is estimated that the
overall energy savings attributable to the Alliance efforts
has come at a cost of approximately $0.01 per kilowatt-hour.
The Alliance estimates Idaho Power s share of the cumulative
energy savings attributable to its efforts was approximately
5 average megawatts by 2003.
The Company has identified costs for DSM
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Idaho Power Company
Wha t are theresearch and studies in its overall plan.
types of DSM studies and research the Company plans to
undertake?
The Company plans to conduct research and
studies in order to continue to effectively manage and grow
its DSM operations. These studies and research may include
DSM assessments, customer characteristic surveys, and
Information providedparticipation in regional studies.
through these studies and research will serve as a basis for
enhancements to existing DSM programs and the development of
In the past, the results ofother potential DSM resources.
similar research and studies have been presented to the EEAG
in order to provide a solid foundation of information to aid
the group in providing valued input.For example, the Idaho
Power Demand-Side Management Peak Reduction Assessment
prepared by Mike Rufo at Quantum Consulting, Inc. and Rich
Barnes of Kema-Xenergy, Inc. was completed in 2003.This
assessment was presented to the EEAG and served as the basis
for the design of four of the DSM programs included in the
The Company has identified $100,000 per year for2004 IRP.
Exhibit 5, column 2 details thestudies and research.
estimated annual cost associated with studies and research.
Are the costs associated wi th the evaluation
of the varlOUS DSM programs categorized as ~DSM studies and
research"
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Idaho Power Company
The costs associated with the evaluationNo.
of individual DSM programs are included in the total costs
for each individual program.
You have identified ~DSM departmental
administration " as a main DSM cost category.What
administrative costs are included in this category?
DSM departmental administration costs will
include various incremental overhead costs related to the
operation of the DSM efforts funded through the Rider that
are not directly attributable to a specific DSM program.
These departmental administration costs may include, but are
not limi ted to labor costs, office supplies and equipment,
DSM database support, and travel.Departmen tal
administration costs are expected to average approximately
$290,000 annually over the next five years.Exhibi t
column 1 details the annual DSM departmental administration
costs.
Does this conclude your testimony?
Yes, it does.
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Idaho Power Company