20050322Final Order No 29737.pdf

Office of the Secretary
Service Date
March 22, 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO INSTITUTE TIME-VARIANT PRICING
PILOT PROGRAMS FOR CUSTOMERS
PARTICIPATING IN THE AMRPHASE I
IMPLEMENTATION PROJECT
CASE NO. IPC-O5-
ORDER NO. 29737
On February 2, 2005, Idaho Power Company filed an Application seeking authority
to institute time-variant pricing programs for customers participating in the Advanced Meter
Reading (AMR) Phase I Implementation Project. In its Application the Company requests that
the proposed Schedule 4 and Schedule 5 be approved effective March 4 2005 and remain
effective until April 1 , 2006. However, the Company subsequently agreed and consented to an
extension of the March 4, 2005 effective date. In Order No. 29717 the Commission authorized
the use of Modified Procedure with comments due on March 11 , 2005. Comments were filed by
Commission Staff and by the Idaho Irrigation Pumpers Association, Inc. In this Order we
approve the Company s Application.
THE APPLICATION
Idaho Power proposes two pilot programs for customers currently participating in the
AMR Phase I Implementation project in the vicinity of the cities of Emmett and Letha, Idaho
(Emmett Valley). The two proposed programs are: (1) Energy Watch Pilot Program, proposed
Schedule 4; and (2) Time-of-Day Pilot Program, proposed Schedule 5. The Company proposes
that both programs be offered to customers on an optional, voluntary basis.
The Application states that, consistent with its prior commitment to investigate and
file with the Commission time-of-use pricing programs that utilize the capability of the AMR
technology, the Company has designed two new residential pricing programs that utilize the
hourly energy consumption data made possible by the AMR implementation. The goal of the
pilot programs is to provide information to evaluate the impacts and benefits of time-variant
pricing to residential customers.Customers participating in the voluntary programs may
experience reduced electric bills, while the Company may experience reduced power cost
expenses by providing energy to customers during less expensive time periods. The Application
also states that the programs will enable the Company to measure customer interest in and
ORDER NO. 29737
satisfaction with the programs, as well as implement and test electronic data transfer, billing, and
metering systems that are necessary to successfully offer programs which rely on hourly meter
readings.
The Company proposes that cumulative enrollment in the two programs be limited to
300 metered service points, consisting of approximately 150 customers for each pilot program.
Service under the two pilot programs would be available starting June 1 , 2005 , and continue
through April 1 , 2006. The Application also proposes that interested customers be required to
notify the Company of their desire to participate by May 15 , 2005, and that selection for the
programs be on a first-come, first-served basis. Under both programs the energy rates for non-
summer months would be the same as those customers on Schedule 1 service, while the summer
rates would differ for those in the pilot programs.
Energy Watch Pilot Program - Proposed Schedule 4
Under this program customers would pay a substantially increased flat rate for energy
consumption during a designated Energy Watch Period. Energy Watch Periods will be
determined by the Company. Program participants will be notified of the declared Energy
Watch Period by 4:00 p.m. the day ahead by telephone and, where available, by email. Energy
Watch Periods can occur on any weekday from June 15 through August 15, and will be for the
hours of 5:00 p.m. to 9:00 p.m. The Company proposes that the Energy Watch Periods will
occur on no more than 10 days from June 15 to August 15 , for a total of 40 hours.
Current rates under Schedule 1 for residential customers are 5.0863 cents/kWh for
the first 300 kWh and 5.7253 cents/kWh for all kWh over 300 kWh during the summer. The
non-summer rate for Schedule 1 is 5.0863 cents/kWh for all kWh. Under the Energy Watch
Pilot Program the proposed base energy rate for all hours other than the Energy Watch Periods is
0863 cents/kWh. During Energy Watch Periods the proposed base energy rate is
cents/kWh. The over-300 kWh pricing block will be eliminated. Customers participating in the
Energy Watch Pilot Program would continue to pay the monthly service charge of$3.30.
Time-of-Day Pilot Program - Proposed Schedule 5
Under this program customers would be given the opportunity to reduce their electric
bills by shifting their summer usage, based upon three different price categories, from "on-peak"
periods, when the cost to provide energy is highest, to the "off-peak" periods, when the cost to
ORDER NO. 29737
provide energy is the lowest. During the non-summer season, the pricing would be the same as
that under Schedule
The three time-of-day periods for the summer season are defined and priced as
follows:
Time-of-Day Period Definition Energy Rate
On-Peak 1 :00 p.m. to 9:00 p., Monday through Friday 6.4781 ~ per kWh
Mid-Peak 7:00 a.m. to 1 :00 p., Monday through Friday 8090 ~ per kWh
Off-Peak 9:00 p.m. to 7:00 a.m. on all day, and all hours 9725 ~ per kWh
on Saturday, Sunday, and the Fourth of July
The summer and non-summer seasons are defined the same as under Schedule 1 , with the
summer season beginning June 1 and ending August 31. Customers participating in the Time-of-
Day Pilot Program will continue to pay the monthly Service Charge of$3.30.
COMMENTS OF THE IRRIGATION PUMPERS
The Irrigators, while supportive of the program, raise what they believe to be
questions, inconsistencies, and possible shortcomings. The Irrigators do not seek a hearing or
delay in implementing the program. The Irrigators state they have consistently been proponents
of time-sensitive rates and other programs that will lower overall utility costs while providing
incentives to customers. They state the proposed residential time-of-day program is consistent
with these objectives and should be piloted to secure meaningful data then implemented system
wide as soon as possible.
The Irrigators ' main concerns included: ,the magnitude of the price differential
between peak and off-peak; customer feedback; and the designation of on-peak periods.
Price Differential - The Irrigators compare Idaho Power s proposed rates for the
Time-Of-Day Pilot, Proposed Schedule 5, to PacifiCorp s Schedule 36 rates in Idaho as follows:
IDAHO POWER ACIFICORP
On-Peak 6.4781 10.4948
Mid-Peak 8090 n/a
Off-Peak 9725 6168
ORDER NO. 29737
The Irrigators state that PacifiCorp s very distinctive price differential between on-peak and off-
peak, approximately three times, is working very well. The price incentive, about 30%
differential, for Idaho Power s Pilot is minimal and appears inadequate.
Customer Feedback - The Irrigators state that it is not clear from Idaho Power
filing if customers will be given a comparison of what their bill would have been had they not
opted for the time-of-use pilot program. There should be a simple comparison of each monthly
bill under the time-of-day rate and what it would have been under the standard service.
Designation of On-Peak Periods - The Irrigators question why the proposal includes
only the summer months. Additionally, they point out that the time in the proposed residential
program for the mid-peak period is 7:00 a.m. until 1 :00 p., while the mid-peak period for the
irrigation time-of-day program (Schedule 25) goes from 9:00 a.m. to 1 :00 p.m. Lastly, the
Irrigators question why the proposed residential program covers only three months, while the
Schedule 25 program covers four months.
FINDINGS OF FACT
Although there are many ways to structure a rate design with respect to Time-of-Use
(TOU) pricing with each having its own advantages and disadvantages, the Company s proposal
is a reasonable one. There is a sufficiently strong price signal to encourage load shifting, yet the
rate differences between peak and off-peak are not so aggressive as to be punitive to customers
who fail to shift and/or reduce their energy use. As Idaho Power s peak load continues to
increase relative to its average load, it is becoming increasingly important to reduce energy use
during peak periods by providing proper price signals or by directly controlling load. It appears
that both load-shaping programs are designed to help mitigate the increasingly high costs that
Idaho Power incurs to provide peak load capacity.
Although greater participation in the pilot program than the 300 customers proposed
by the Company may statistically be more useful, this level of participation (300 customers) will
provide sufficient information to evaluate Time-of- U se pricing.
Commission Staff did an analysis based on actual use data collected over the last year
from customers with AMR in the Emmett service area. This analysis applied the TOU pricing as
proposed by the Company in these pilot programs to the actual usage of customers with AMR
. and assumed that participating customers will have no change in use. This was done to see the
effect that both proposed rate schedules would have on customer bills, and to see the effect on
ORDER NO. 29737
total proj ected revenue. Assuming no change in customer use, the resulting change in bills
would range from a $14 decrease to a $12 increase. Over 99% of the customer bills would
change, either up or down, by less than $10. Because of the difference in price for peak rate use
the actual effect on customer bills will obviously be greatly dependent on when the energy is
used. Again assuming no change in customer use, the resulting change in proj ected total
revenue generated by the proposed Schedule 4 rates would increase by approximately 0.3%, and
revenue generated by the proposed Schedule 5 rates would increase by approximately 2.8% over
current rates. Given the small number of program participants, 300, Staff believes that the total
revenue effect will be insignificant.
Any change in actual revenue generated from the pilot is likely to be less for two
reasons. First, the primary purpose of the pilot is to encourage customers to shift energy usage
away from high priced peak periods, so to the extent that the program is successful, it will
generate less revenue. Secondly, this is a voluntary program and customers will tend to
participate if they believe their bills will be lowered. A few participants may generate higher
bills than they would have under the existing Schedule 1 rates, but it is likely that the majority of
the participating customers will lower their bDls under the pilot. This will tend to generate less
revenue than a mandatory pro gram.
In its Application the Company stated that it is not requesting recovery of reduced or
lost revenues that may result from implementation of the pilot programs.However, the
Company stated that the issue of lost revenues, and any mechanism that may be adopted to
address lost revenues, should be fully investigated if either pilot program becomes permanent or
is expanded beyond its current scope. We make no findings in this Order regarding the issue, if
any, of lost revenues with regard to the proposed pilot programs.
UL TIMATE FINDING OF FACT
AND CONCLUSIONS OF LAW
Idaho Power Company is an electrical corporation providing electric service to the
public within the State of Idaho Idaho Code 99 61-118, 61-119, and is operating as a public
utility. Idaho Code 9 61-129.
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
its Application to institute time-variant pricing pilot programs, and the issues involved in this
ORDER NO. 29737
case by virtue of Title 61 , Idaho Code, and more specifically Idaho Code 99 61-129, 61-501 , 61-
502, 61-503, 61-515 , 61-520, 61-523, 61-524 et seq.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company s Application to institute
time-variant pricing pilot programs, Schedule 4 and Schedule 5, is approved.
IT IS FURTHER ORDERED that the Company shall include a status report and
preliminary findings of the pilot with the Company s AMR Phase One Implementation Status
Report at the end of 2005 , and submit a final report to the Commission upon completion of the
pilot program.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code 9 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;;l..J-
A-il.
day of March 2005.
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSEN, COMMISSIONER
ATTEST:
J a D. Jewell
C mmission Secretary
O:IPCEO502 dw2
ORDER NO. 29737