20060501Comments.pdf

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DONOVAN E. WALKER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5921
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, ID 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 CONTINUE ITS TIME-OF-USE ENERGYPRICING PILOT PROGRAMS
CASE NO. IPC-O6-
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of
record, Donovan E. Walker, Deputy Attorney General, in response to Order No. 30023, the
Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on April 18
2006, respectfully submits the following comments.
BACKGROUND
On March 3, 2006, Idaho Power Company filed an Application for authority to continue
its two time-of-use energy pricing pilot programs for customers in the Emmett Valley. The pilot
programs were approved in March 2005 and initially set to expire on April 1 , 2006. Order No.
29737, Case No. IPC-05-2. The Company proposed to extend the programs for an additional
year, allowing those that participated in 2005 to continue if they so desire and also to solicit new
participants. The Company also proposed some changes to program availability and rate
STAFF COMMENTS MAY 1 2006
differentials for the time-of-day pricing periods.
On March 15 2006, the Commission issued a Notice of Application and authorized the
pilot programs to continue past the April 1 , 2006 expiration date. Order No. 30001. The
Commission directed Staff to advise on the need for further proceedings once the Company filed
its report regarding the pilot programs. The Company filed its report on March 29, 2006.
OVERVIEW OF EXISTING PILOT PROGRAMS
Under the Energy Watch Pilot Program (also called the Critical Peak Period Pilot
Program, CPP), Idaho Power allows volunteer participants to pay the less expensive non-summer
rate (5.08 cents per kWh) instead of the summer rate (5.72 cents per kWh) except during the
company s selected Energy Watch periods, when the rate would be 20 cents per kWh. The
Company notifies participating customers either by telephone or bye-mail by 4 pm a day before
the Energy Watch period is set to begin. Energy Watch periods can occur on any weekday from
June 15 through August 15 for four hours between 5 and 9 p.m. Energy Watch periods will
occur on no more than 10 days for a total of 40 hours.
The Time of Day (TOD) pilot program encourages volunteers to shift their use to off-
peak periods when the rate is lower. In order to increase the financial incentive for customers to
participate, Idaho Power is proposing to increase the differential between off-peak and on-peak
rates. Off-peak times, during which the customer would pay 4.5 cents per kWh, would be from
9 p.m. to 7 a.m. on all days and during all hours on Saturday, Sunday and July 4. Mid Peak
times, during which customers would pay 6.23 cents per kWh, would be from 7 a.m. to 1 p.
Monday through Friday. On-Peak periods, during which customers would pay 8.24 cents per
kWh, would be from 1 to 9 p., Monday through Friday. This program would be in effect for
the summer season of June 1 through August 31.
According to Company reports, 76 of79 participants in the Energy Watch program
stayed with the program throughout last summer and 92 of95 customers in the Time of Day
program stayed on that program. Sixty percent of customers indicated they would participate
again and 50 percent said they would recommend the program to others. The Company hopes to
get up to 300 participants.
Idaho Power reports that customers in the TOD program saved about 5 percent on their
bills and customers on Energy Watch saved about lO percent. The Energy Watch participants
were able to cause a statistically significant reduction in Idaho Power s overall load requirements
STAFF COMMENTS MAY 1 2006
during peak hours when power is most expensive.
The Company submitted a short final report that summarized its internal evaluation of the
two programs, supplemented by two reports prepared by outside firms. One ofthe outside
reports is a mathematical analysis of the metering data, the other, the results of a survey of
Emmett area residents on their knowledge of the Advanced (Automated) Meter Reading (AMR)
installations and the related pilot programs implemented in the area.
The internal evaluation summarizes the design and operation of the program and
identifies a few of the operational problems the Company incurred in implementing the pilot
program. The Company indicated the program significantly exceeded manpower estimates in
three areas. Software that was supposed to convert the hourly usage data into billable units
failed to pass acceptance testing and this needed to be done manually for every participant.
Similarly, if a participant had part of a month's billing on a regular meter, and the other part on
an AMR meter, due to program timing, moves or other reasons, the Company had to manually
compute the customer s bills. The other area with higher than expected manpower requirements
was the effort required to notify participants in the Energy Watch program, via telephone, that
the following day would be an "event" day, with higher prices in effect. The Company used live
callers for the initial calling, followed by automated messages for those not reached in the initial
live calling effort. The Company also used e-mail notification for some participants.
The Company indicates these processes would need to be automated if the program were
to be expanded and would work on this during the pilot program continuation. The report
recommends eliminating the live calling effort and expanding the e-mail efforts. It also
recommends increasing the price differentials in the TOD program, implementing new marketing
strategies, and limiting participation to customers with a monthly usage in excess of 300 kWh.
The report concludes that the Time of Day Pilot program participants had a small
reduction in consumption during the peak period, and a savings in their bills. In contrast, the
participants in the Critical Peak Period Pilot Program (CPP) significantly reduced consumption
over the control group on the designated days, reducing peak load by an average of 1.33 kW per
participant.
The survey report indicates the majority of Emmett area customers believed the Company
provided sufficient information about the AMR installations and the two pilot programs.
Slightly more than half ofthe participants in both pilot programs indicated their participation had
not changed their lifestyle, and they indicated they would participate again.
STAFF COMMENTS MAY 1 , 2006
Program participants in the TOD pilot program surveyed further cited changes in laundry
practices as the area most impacted, while participants in the CPP pilot program identified
household temperature or comfort as the area most impacted.
STAFF ANALYSIS
Idaho Power wants to extend the TOU Pilot to further evaluate program benefits
customer retention and to test ongoing demand reduction and load shifting potential. Staff
agrees that many questions still need to be addressed before expanding these programs beyond
the pilot phase and that further evaluation is appropriate.
Staff finds the proposed changes to these pilot programs will improve the program
operation and also could provide valuable information regarding effect of pricing differentials on
customer participation and program benefits. Limiting the program to households with at least
300 kWh of consumption will allow the company to focus its efforts on customers with a
capability to shift significant loads. The proposed changes to the rate structure for the TOD pilot
to significantly increase the difference between the peak and off peak prices should result in
larger load shifts and provide additional information on the responsiveness of customers to
pricing differences.
Staff appreciates the need to reduce the cost of customer notification for the Energy
Watch Events and believes the recorded messages should be sufficient. However, we have some
concerns about the elimination of the live operators in the initial notification and recommend that
the automated message identify a number to call to speak with a live person if the customer has
questions. The goal here is to properly inform customers of an event and maximize customer
participation.
The other proposed changes primarily deal with administrative issues and should help
keep the Company s cost of administration reasonable without impacting customer participation.
Staff recommends that the Company continue to improve its evaluation methodology to
gain as much information during the pilot period as possible.
To that end, the Company should expand its customer survey to identify which actions
were most useful and shifted the most usage and which actions were the most disruptive to
customers. Additionally, the survey should query customers on whether minor changes, such as
the start and end hours for the peak period would improve participation and whether they used
automated devices, such as timers on water heaters or automatic set-back thermostats.
STAFF COMMENTS MAY 2006
The Company should also provide an analysis of the distribution of savings by program
participants to determine who was successful in shaving peak, why they were successful and
how participant peak shaving for this program compare to programs offered by other utilities.
Staff also believes that the Company should focus on making information on household energy
use more available to program participants during program operation to identify what additional
information would be useful in helping them make usage decisions.
Staff agrees with the Company that the participation rate for both programs needs to
improve given that less than 2% of the eligible households participating in either program and
the total number of participants was significantly lower than the Company had targeted. Staff
recommends that the Company continue to develop methods to improve participation and
evaluate the effects. Further evaluations should determine if greater participation can be
expected on a system-wide basis and whether lifestyle changes are an obstacle to participation
and if so how it can be minimized.
Finally Staff recommends that the Company include administrative costs in its analysis of
cost effectiveness and provide a more detailed analysis of its rate design alternatives.
STAFF RECOMMENDATIONS
Staff supports the continuation of these pilot programs with the proposed changes and the
further evaluation of the capability of programs such as these to reduce peak usage. Staff
recommends the Company work with Staff to develop an evaluation plan for these pilot
programs that would address the issues noted.
Respectfully submitted this Sf- day of May 2006.
DonovanE. alker
Deputy Attorney General
Technical Staff:Dave Schunke
Wayne Hart
i: u mise/ eommen ts/ipeeO6, 5d wdeswh
STAFF COMMENTS MAY 1 2006
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 1 ST DAY OF MAY 2006
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-06-, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
BARTON L KLINE
SENIOR ATTORNEY
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
MAGGIE BRILZ
PRICING DIRECTOR
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
SECRE
CERTIFICATE OF SERVICE