20060502Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:DONOV AN E. WALKER
DATE:MAY 2, 2006
SUBJECT:IDAHO POWER'S APPLICATION TO CONTINUE ITS TIME OF USE
ENERGY PRICING PILOT PROGRAMS - CASE NO. IPC-06-
On March 3 , 2006, Idaho Power 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 initially approved in March 2005. Order No. 29737, Case No. IPC-05-2. The
programs were scheduled to expire on April 1 , 2006. 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 soliciting new participants. The Company also proposed some changes to the
availability of the programs, and the rates in the time-of-day pricing categories.
On March 15 , 2006, the Commission issued a Notice of Application and authorized
the Pilot Programs to continue past the April 2006 expiration date. Order No. 30001. On
April 18, 2006, the Commission authorized the use of Modified Procedure with a comment
deadline of May 2006. Order No. 30023. Commission Staff was the only party to file
comments, and recommended approval of the Company s Application.
THE APPLICATION
The current Pilot Programs, Schedule 4, Energy Watch Pilot Program, and Schedule
, Time-of-Use Pilot Program, were approved in March 2005 to run through April 2006.
Order No. 29737, Case No. IPC-05-2. The Company s Application seeks to extend and
continue the programs for an additional year. The programs are voluntary options available to all
residential customers in the Emmett Valley who have AMR metering installed.
Idaho Power employed Northwest Research Group to conduct a customer survey and
RL W Analytics to analyze the usage and billing data associated with these programs. The
DECISION MEMORANDUM
Company submitted its report, along with the information from the reports from the two outside
firms on March 29, 2006. This information was reviewed by Staff and is on file with the
Commission in Case No. IPC-05-
According to the Application, the Company is not proposing any changes to the
Energy Watch program, Schedule 4. Application at 5. The Company is proposing a change in
the availability of both pilot programs, in that program participation be limited to those
customers whose energy usage equals or exceeds 300 kWh for each of the most recent 12
consecutive billing periods or for all billing periods if the customer has less than 12 months of
billing history. Application at 4. The Company is proposing to change the rates for the time-of
day pricing periods by increasing the price differential between on-peak, off-peak, and mid-peak
rates. Application at 7. By increasing the differentials between time-of-day pricing periods, the
Company intends to increase the financial incentive for customers to shift their energy usage.
Along with its Application the Company filed proposed tariff sheets for both Schedule 4 and
Schedule 5 that provide for the continuation and changes to the pilot programs.
STAFF COMMENTS
Commission Staff reviewed the Company s Application as well as the Company
final report supplemented by the two reports from the outside firms. Staff provides an overview
of the existing pilot programs as well as an analysis of the reports and proposed changes to the
programs. Staff recommends approval of the Company s proposed changes and the continued
evaluation of the pilot programs.
Staff agrees with the Company that the programs need to be extended to further
evaluate the program benefits, customer retention, and to test ongoing demand reduction and
load shifting potential. Staff agreed that many questions still need to be addressed before
expanding these programs beyond the pilot phase and that further evaluation is appropriate.
Staff believes the proposed changes to the pilot programs will improve the program operation
and could provide valuable information regarding the 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 time-of-day pilot to
significantly increase the difference between the peak and off-peak prices should result in larger
DECISION MEMORANDUM
load shifts and provide additional information on the responsiveness of customers to pricing
differences.
Staff also recommends that the Company continue to improve is evaluation
methodology, and that the Company work with Staff during the continuation of the pilot
programs to develop an evaluation plan. Staff suggests: an expanded customer survey; an
analysis of the distribution of savings by program participants to determine who was successful
in shaving peak; making information on household energy use more available to program
participants; that the Company continue to develop methods to improve participation; and that
administrative costs be included in the analysis of cost effectiveness.
Staff recommends that the Company s Application be approved, including the
continuation, proposed changes, and further evaluation of the pilot programs. Staff also
recommends that the Company work with Staff to develop an evaluation plan for the pilot
programs that would address the issues noted in Staff s Comments.
COMMISSION DECISION
Does the Commission wish to approve the Company s Application to continue the
pilot programs for an additional year?
Does the Commission wish to approve the proposed changes to the pilot programs set
forth in the Company s Application?
Anything else?
c61
DONOV AN E. WALKER
DECISION MEMORANDUM