20071012Quarterly progress report.pdf

EGErt 'il DAltO~POWER~
An IDACORP company
13ul OCT \ 2
p\ej \: 19
10/12/2007 \DF\HO Pt~E\t i~ 'In
n\ t-f:S CO1\1 til \;:'S I'
,", ,
lh..11 -
Ms. Jean D. Jewell, Secretary
Idaho Public Utilities Commission
O. Box 83720
Boise, ID 83720-0074
rft;-0 ,-
RE:Performance-Based Demand-Side Management Incentive Pilot Quarterly Progress
Report
Dear Ms. Jewell:
Pursuant to Order No. 30268, please find the attached Performance-Based Demand-Side Management
Incentive Pilot progress report for the third quarter of 2007. According to preliminary program results, the
company expects to achieve a market share within the market share dead-band under the pilot. Therefore, the
ENERGY ST AR(8) Homes Northwest program is not currently expected to have a financial impact to the
company for 2007.
The Company and the Commission Staff have made progress in addressing some of the "technical
difficulties" identified by Staff in its comments in Case No. IPC-06-32 and later detailed in Order No.
30268. This report details a modification to the Performance-Based Demand-Side Management Incentive
Pilot that will improve the pilot program s metrics.
Tim Tatum
Pricing Analyst
cc: Ric Gale
Greg Said
Doug Jones
Pete Pengilly
P&RS/Legal Files
Pricing & Regulatory Services
Voice: 208-388-5515
Fax: [phone]
ttatum~idahopower.com
O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
Idaho Power Company
Performance-Based DSM Incentive Pilot
Quarterly Progress Update
Year-To-Date September 30 2007
CE!\'l;'
2ilO10CT j 2 Pr1 I: 19
, "
IDPd1O PUBLIC
UTIlXflE8 COivHvilSSIGt.
Market Share Estimate
ENERGY STAR/JJ) Homes Completed 209
Estimated Total New Single-Family
Homes 746
Third Quarter Market Share Estimate 4.4%
Notes:
(1) The number of ENERGY STAR Homes completed is based on the number of incentive payments
Idaho Power has issued during the period.
(2) The Wells Fargo Idaho Construction Report covering the first three quarters of 2007 was not
available at the time of this update. As a result, the estimate of total new homes is based on a
combination of data from the most recent Wells Fargo Idaho Construction Report dated June 30
2007 and Idaho Power s records of new residential service points added during the period.
Expense Category
Incentives
ENERGY STAR Homes Northwest
Preliminary Proaram Costs
As of 3rd Quarter
2007
$156 100
289
695
147
7,407
733
387
$ 336 758
Evaluation
labor
Marketing
Other Expense
Training
Travel
Total
TET _PBI - QTR3 _2007- Update
Modifications to the Pilot Proaram s Metrics
According to Order No. 30268 , Idaho Power is eligible to receive an incentive
payment provided the "market share of homes constructed under the ENERY STAR
Homes Northwest program exceeds: (1) 7% of the total number of homes for which
construction permits are issued in Idaho Power s service area in 2007..." Furthermore
under the pilot program , the Company is subject to a penalty if the "ENERGY STAR
Homes Northwest program fails to reach a market share of 4.9%..." If the market share
of homes constructed under the ENERGY STAR Homes Northwest program in 2007 is
at least 4.9% and is not greater than 7%, Idaho Power is not eligible for an incentive or
penalty ("market share dead-band"
In Order No. 30268, the Commission detailed several "technical difficulties" with
the pilot program identified by Commission Staff in its comments. Over the past several
months the Company and Staff have made progress in addressing some of these
difficulties. One technical difficulty identified by Staff was the "uncertainty in measuring
the actual Energy Star homes percentage achieved.Specifically, the Company
understood Staff's concern to be related to the quantification of total new single-family
homes used in the market share calculation. In its application, the Company proposed to
use the Wells Fargo Idaho Construction Report listing of new single-family home permits
issued in Idaho Power s service area as the source for the new home data. Under this
approach , the Company s market share achievement is determined by dividing the
number of Energy Star homes that received an incentive from Idaho Power by the
number of single-family homes reported by Wells Fargo during the same period.
Following a discussion with Dr. Kelly Matthews, the preparer of the Wells Fargo
report, it was confirmed that the Wells Fargo data covers only approximately 75% of the
permits issued in Idaho Power s service area. Therefore , using the Wells Fargo data as
the sole basis for the market share calculation could result in undercounting total new
home construction and thus overstating the market share achievement. To address this
issue , the Company and Staff have agreed on a revised approach to quantifying the
number of new single-family homes in Idaho Power s service area. Under this new
approach, the number of new single-family homes to be used in the market share
calculation will be derived based on a combination of Idaho Power s records of new
residential customers and the Wells Fargo Idaho Construction Report. The Wells Fargo
data will be used to calculate a ratio of single-family homes to total residential homes in
TET - PBI - QTR3 _2007- Update
Idaho Power s service area. The ratio will then be applied to Idaho Power s records of
total new residential services added during the same period. The result is a derived
number of new single-family homes that is a more complete representation of new home
construction in Idaho Power s service area.
Attachment 1 details how this new approach compares to the original derivation
of market share. As can be seen in Attachment 1 , the market share achieved in 2006
under the original derivation method was 5.0% (estimated to be 4.9% in Case No. IPC-
06-32). Under the current pilot program design , 5.0% is the market share threshold
whereby the Company would be subject to a penalty if it achieves a market share below
that threshold. Under the revised market share calculation, the actual market share
achieved in 2006 would be calculated at 4.1 %, which would become the new penalty
threshold. While this new market share derivation method has the effect of lowering the
penalty threshold from 5.0% to 4.1 %, it does not improve the Company s ability to avoid
a penalty. That is, since the Company s future market share achievement is computed
using the same calculation method, the relationship between the market share
achievement and the penalty threshold remains unchanged.
Using the revised market share calculation , the Company preliminarily estimates
that it achieved a 4.4% market share of new Energy Star homes to total new homes
constructed year-to-date through September 2007. The calculation of this market share
value is also detailed on Attachment 1. Based on the market share estimate as of the
third quarter of 2007 , the company expects to achieve a market share within the market
share dead-band under the pilot for 2007.
The Company views this modification to the DSM Performance-Based DSM Pilot
program as an improvement to the pilot program s metrics. The Company will continue
to monitor and report the progress made under the pilot program and remain open to
other possible enhancements that will serve to maximize its informational benefits. If you
have any questions regarding this report or if the Commission feels this revision should
be filed in a more formal manner, please feel free to contact Tim Tatum at 388-5515.
TET PBI- QTR3 _2007 _Update
ATTACHMENT
Id
a
h
o

P
o
w
e
r

C
o
m
p
a
n
y
Pe
r
f
o
r
m
a
n
c
e
-
Ba
s
e
d

D
S
M

I
n
c
e
n
t
i
v
e

P
i
l
o
t

-

E
N
E
R
G
Y

S
T
A
R
iI
!
)

Ho
m
e
s

N
o
r
t
h
w
e
s
t
Re
v
i
s
e
d

M
a
r
k
e
t

S
h
a
r
e

C
a
l
c
u
l
a
t
i
o
n
.
O
r
i
g
i
n
a
l

D
e
r
i
v
a
t
i
o
n
'
o
f

Ma
r
k
e
t
S
h
a
r
e

.
R
e
v
i
S
Q
d
D
e
r
i
v
a
t
i
o
n
o
f
M
a
r
k
e
t
S
t
l
a
r
e
We
l
l
s

F
a
r
g
o
Or
i
g
i
n
a
l
We
l
l
s

F
a
r
g
o
Pr
o
p
o
s
e
d
Si
n
g
l
e
-
Fa
m
.
Ho
m
e
s
Ca
l
c
u
l
a
t
e
d
IP
C
o

T
o
t
a
l

N
e
w
Si
n
g
l
e
-
Fa
m
.
IP
C
o

S
i
n
g
l
e
-
Ho
m
e
s
Ca
l
c
u
l
a
t
e
d
Ye
a
r
IP
C
o

A
r
e
a
Co
m
p
l
e
t
e
d

(
1
)
Ma
r
k
e
t

S
h
a
r
e
Re
s
i
d
.

(
2
)
Ra
t
i
o

(
3
)
Fa
m
.
Co
m
p
l
e
t
e
d

(
1
)
Ma
r
k
e
t

S
h
a
r
e
(B
f
A
)
(D

x

E
)
(G
f
F
)
YT
D

S
e
p
t
.
20
0
7
N/
A
20
9
N/
A
86
6
80
.
74
6
20
9
4.
4
%
20
0
6
86
0
43
9
12
,
4
6
2
86
.
71
7
43
9
No
t
e
s
:
(1
)

"
Ho
m
e
s

C
o
m
p
l
e
t
e
d
"

f
o
r

2
0
0
6

i
s

t
h
e

n
u
m
b
e
r

r
e
p
o
r
t
e
d

i
n

t
h
e

2
0
0
6

D
S
M

A
n
n
u
a
l

R
e
p
o
r
t
.
(2
)

N
e
w

a
c
t
i
v
e

r
e
s
i
d
e
n
t
i
a
l

m
e
t
e
r
e
d

s
e
r
v
i
c
e

p
o
i
n
t
s

w
i
t
h

a
n
n
u
a
l

u
s
a
g
e

g
r
e
a
t
e
r

t
h
a
n

z
e
r
o
.
(3
)

R
a
t
i
o
s

o
f

s
i
n
g
l
e
-
fa
m
i
l
y

d
w
e
l
l
i
n
g

u
n
i
t
s

t
o

t
o
t
a
l

r
e
s
i
d
e
n
t
i
a
l

d
w
e
l
l
i
n
g

u
n
i
t
s

f
o
r

2
0
0
6

a
n
d

y
e
a
r
-
to
-
da
t
e

2
0
0
7

a
r
e

b
a
s
e
d

o
n

n
e
w

h
o
m
e

p
e
r
m
i
t

d
a
t
a
re
p
o
r
t
e
d

b
y

W
e
l
l
s

F
a
r
g
o

B
a
n
k
,
t
w
e
l
v
e

m
o
n
t
h
s

e
n
d
i
n
g

D
e
c
e
m
b
e
r

3
1
20
0
6

a
n
d

J
u
n
e

3
0
,
2
0
0
7

r
e
s
p
e
c
t
i
v
e
l
y
.

R
a
t
i
o
s

i
n
c
l
u
d
e

o
n
l
y

d
a
t
a

c
o
l
l
e
c
t
e
d
fr
o
m

s
a
m
p
l
e

a
r
e
a
s

w
i
t
h
i
n

I
d
a
h
o

P
o
w
e
r
s
s
e
r
v
i
c
e

a
r
e
a
.