20090327final_order_no_30760.pdf

Office of the Secretary
Service Date
March 27, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPROPRIATE
DISPOSITION OF IDAHO POWER
COMPANY'S S02 EMISSION PROCEEDS
TO FUND AN ENERGY EDUCATION
PROPOSAL ORDER NO. 30760
CASE NO. IPC-08-
On April 14, 2008, the Commission issued Order No. 30529 concerning the
appropriate disposition of the proceeds from the sale of Idaho Power Company s sulfur dioxide
(S02) emission allowances in calendar year 2007. In its Order, the Commission reserved
$500,000 (plus accumulated interest) of the S02 proceeds to possibly fund an energy education
program in Idaho Power s service territory. The Commission scheduled a Status Conference for
July 16 2008, so that interested parties could develop an educational proposal and offer it for the
Commission s review. At the conference, the Idaho Office of Energy Resources (OER)
submitted a proposal developed in cooperation with the Idaho Department of Education (DOE).
On January 8, 2009, the Commission convened a subsequent conference to evaluate
another proposal presented by Idaho Power. Order No. 30699. The Order also invited other
interested parties to offer other proposals. The Commission s Order requested interested persons
to file written comments on the OER-DOE proposal, the Idaho Power proposal, or any other
proposal no later than February 5 , 2009. The Commission received written comments from
DOE, Commission Staff, Citizens Protecting Resources, the Snake River Alliance, and one
customer.
Having reviewed the two energy education proposals, the transcripts of our two
conferences and the written comments, the Commission issues this Order regarding the
appropriate disposition of the reserved S02 proceeds.
BACKGROUND
A. Clean Air Act
Title IV of the Clean Air Act Amendments of 1990 established a national program for
the reduction of acid rain. 42 U.C. ~~ 7651 et seq. The centerpiece of the acid rain program is
the incentive- or market-based "cap and trade" S02 program. Under the cap and trade program
the U.S. Environmental Protection Agency (EP A) sets a cap or ceiling on the total amount of
ORDER NO. 30760
S02 emissions allowed nationwide. Based upon this cap, EP A allocates a certain number of
S02 emission allowances to thermal power plant owners. Each allowance provides the authority
to emit one ton of S02. See Order No. 29852 at 1. Idaho Power has an ownership interest in
three thermal power plants in the west: Jim Bridger, North Valmy, and Boardman.
A thermal power plant owner must hold sufficient allowances each year to cover its
actual S02 emissions. A power plant owner that does not possess sufficient allowances to cover
its annual emissions must purchase additional allowances or it is automatically fined and must
surrender future-year allowances to cover the shortfall. A power plant owner holding surplus
S02 allowances in a given year may retain the allowances or sell them. S02 allowances are
fully marketable commodities and can be traded on the open market or in special EP A-sponsored
auctions. Id.
B. The Procedural History
The history of this case is generally set forth in Order Nos. 30529 and 30588.
Briefly, the Idaho Energy Education Project (IEEP) recommended in January 2008 that the
Commission consider using $500 000 of S02 proceeds for energy education and associated
energy projects. In Order No. 30529 issued April 14, 2008, IEEP was directed to provide the
Commission with a course/classroom syllabus and additional information regarding any
arrangements with school districts and/or state agencies. Order No. 30529 at 9. In its response
IEEP proposed to develop an energy education curriculum using existing materials. IEEP
indicated that it could "partner" with other entities to acquire, review, develop, and implement
the proposed educational project. IEEP invited the Idaho Department of Education (DOE), the
Idaho Office of Energy Resources (OER), and Idaho Power to assist in the development and
implementation of the proposal. IEEP envisioned that DOE would become the primary manager
of the educational component; OER would provide expertise on renewables, energy
conservation, and efficiency opportunities; and Idaho Power would provide information about its
integrated electrical system and the importance of energy conservation and efficiency.
On June 2, 2008, the Commission issued Order No. 30557 and found that IEEP'
response was not sufficiently developed. Although IEEP had initiated contact with several
entities, it did not produce any agreement among the potential parties to implement the proposal.
Consequently, the Commission decided to convene a subsequent Status Conference so that
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IEEP and other interested parties ( can) advise the Commission of progress in
relevant communications and stipulate whether there is, or can be, a consensus
organizational structure that will support moving forward (with the
educational proposal). There is no designated lead party for the status
conference. The Commission continues to reserve judgment on the
appropriate disposition of the $500 000.
Order No. 30557 at 3.
The Commission held its first Status Conference on July 16, 2008. At the conference
OER and DOE offered their joint education proposal for the $500 000. Given the press for time
Idaho Power was not able to provide information regarding its existing Community Education
Program for schools. Tr. at 44. The Company indicated that its existing programs "fit very well
with the goals" of the OER-DOE proposal. Id.
In reaction to the OER-DOE proposal, participants generally voiced support for
energy education and offered constructive criticism of the proposal. Others suggested that the
school energy projects should be designed to engage the students at the project schools. Finally,
some participants expressed concern about the agencies ' estimated administrative costs. Tr. at
64.
On January 8, 2009, the Commission convened a second conference so that Idaho
Power could present an overview of its existing energy efficiency education efforts and its
energy programs currently available to schools. Order No. 30699 at 3. The Company presented
its own education proposal which represented a modification of its existing school programs.
The Commission also solicited other proposals.The Commission ordered that all final
comments regarding the appropriate disposition of the S02 proceeds be filed no later than
February 5 , 2009. Order No. 30699 at 4.
THE TWO PROPOSALS
A. The OER-DOE Proposal
Under the OER-DOE proposal, the $500 000 in S02 proceeds would be divided into
two equal amounts. Half of the funds would be used to develop and implement an energy
efficiency curriculum for schools. DOE would ensure that the energy curriculum would meet
Idaho educational "standards before implementing a program in K -12 schools statewide.
Proposal at 1. During this curriculum phase, DOE will also determine the best school grade(s) in
which to implement such a program.
ORDER NO. 30760
DOE envisions integrating the energy curriculum into classrooms by using a "train-
the-trainer" model. Under the OER-DOE proposal, two teachers will be initially selected to
develop the curriculum and these teachers would then train up to 30 more teachers per workshop.
The agencies estimate having 30 workshops during a two-year period. Id. at 2. The agencies
anticipate that administering the education portion of the energy proposal would require 0.8 of a
full-time employee (FTE) for the two-year period.
The second part of the OER-DOE proposal would be to make $250 000 available for
schools in Idaho Power s service territory to implement/construct specific energy efficiency
projects. Such measures might include conservation (lighting, heating, building construction)
projects or energy generation (solar or wind) projects. OER estimates that there are
approximately 62 public school districts in Idaho Power s service territory with more than 350
buildings. By augmenting Idaho Power s existing energy efficiency project for schools with the
additional $250 000, OER asserts that the additional funds will produce greater energy savings
for participating schools than relying on Idaho Power s existing programs alone. Proposal at 3.
OER anticipates that administration of the project component would require 0.5 FTE for one
year. The estimated costs for both components are set out below.
Education Component
Develop Curriculum $ 80 000
Select 2 Training Teachers 10 000
Train-the- Trainer Workshops 50 000
Admin/Overhead 110 000TOTAL $250 000
Project ComponentMarketing $ 13 989Project Funds 185 000
Admin/Overhead 51 011
TOTAL $250 000
B. The Idaho Power Proposal
Idaho Power s proposal is an expansion of its existing programs including the energy
efficiency education effort for students, programs to improve the energy efficiency of school
facilities, and the "Solar 4R Schools" program. As the case with the OER-DOE proposal, Idaho
Power would fully utilize the $500 000 of S02 proceeds over two years. The Company s two-
year proposal has three parts.
First, the Company proposes to expand the scope and number of mini-home audits for
students and have more in-depth follow-up in the classroom. The Company would assemble and
distribute classroom energy kits that include an actual kilowatt/kilowatt hour/volt/amp meter for
each student in the class to take home. Classroom exercises would teach meter reading,
ORDER NO. 30760
including AMI, and how to calculate electricity usage of various appliances in the home. Kits
would be distributed to about 100 classrooms each year by Idaho Power s five existing
community education representatives. Assuming an average of 30 students per classroom, this
component of the proposal would cost $90,000 per year or $180 000 over two years and would
not require any additional Idaho Power personnel.
Second, Idaho Power would have students assist in the energy audits of school
facilities and have students make recommendations for implementing energy efficiency
measures. Students would build and present business cases for their schools' decision makers.
Idaho Power s existing financial incentives for commercial energy efficiency would be available
to assist in funding of student recommendations adopted through this "learning lab" process.
The cost of this new component for marketing, technical assistance, workshops and Yz FTE for a
new program specialist would be $85 000 per year or $170 000 over two years.
Third, the Company would add two additional solar construction projects to Idaho
Power s existing "Solar 4R Schools" program and provide funding for additional classroom kits
and training. This would bring the number of solar installation projects in schools to four per
year. The cost of this expansion would be $75 000 per year, or $150 000 over two years, for
materials and training.
COMMENTS ON THE PROPOSAL
A. Public Comments
The Commission received two public comments supporting the use of S02 revenues
to fund energy education. Citizens Protecting Resources (a non-profit organization) generally
supported the energy education concept. CPR asserted that education is "one of the most
important elements" to encourage people to use energy more efficiently.
Without distinguishing between the two proposals, another Idaho Power customer
supports energy education in general. This customer asserted that elementary schools are the
best place to teach young people the importance of developing sustainable energy sources and to
use all forms of energy more efficiently. The customer also recommended the Commission
establish "a rate-payer/citizen oversight committee to help establish good, sound practices in
providing energy education. . . .
ORDER NO. 30760
B. Department of Education Comments
The Superintendent of Public Instruction recommended that the Commission adopt
the OER-DOE proposal. Superintendent Luna suggested his proposal is the "most efficient and
effective use of ratepayer dollars. It draws on the experience of experts in education to raise
student achievement and student interest in energy education while at the same time encouraging
Idaho schools to take the necessary steps to increase energy efficiency in the long run." The
Superintendent asserted DOE would work closely with the National Energy Education and
Development (NEED) organization to design energy education curriculum aligned to Idaho
content standards. He noted that DOE had partnered with NEED to host a workshop on energy
education for Idaho teachers in October 2008. He stated that S02 revenues would be used to
replicate this workshop across the State and to reach more Idaho teachers.
C. Snake River Alliance Comments
The SRA commended the Commission for its willingness to consider using S02
emission proceeds to develop energy education initiatives. Because of the limited amount of
revenue available, the Alliance recommended that overhead or administrative costs should be as
small as possible and that student involvement be incorporated into educational programs to the
maximum extent possible. SRA Comments at 2. Given its concerns regarding administrative
costs, the Alliance generally endorsed Concepts 1 and 2 of Idaho Power s proposal. While it
recognized that the Solar 4R Schools is "a very good idea, we believe those funds might be better
used to support the first two concepts" ofIdaho Power s proposal. Id.
The Alliance also agreed with IEEP that an advisory committee should be established
to monitor the selected proposal. "While we recognize that these programs are a logical
extension of much of the demand-side management efforts already in place at Idaho Power, we
believe such an advisory committee is best suited to accept and screen proposals by schools or
school districts, working in concert with the Company.Id. An advisory panel would also be
ideally suited to evaluate the performance of the two components to ensure they are
accomplishing what they were designed to do. Reporting and evaluating would assist the
Commission in determining whether the components of each proposal are effective. Id.
D. Staff Comments
Staff commended IEEP for initially suggesting that the Commission consider an
energy education project.Staff commented that educating students and their parents about
ORDER NO. 30760
energy use, conservation, measurement, and costs is the best long-term opportunity to increase
energy efficiency. After reviewing the two proposals, Staff asserted that Idaho Power s three-
part proposal "has the best opportunity to result in cost-effective energy savings for Idaho
Power s customers." Staff Comments at 4.
Staff observed that successfully implementing Idaho Power first component
(learning about mini-home audits) would involve about 6 000 students. By distributing kilowatt
meters and educational materials, students and their families will be encouraged to track and use
energy more effectively. "The long-term educational effect of the meters and the classroom
instruction will be beneficial, if not precisely measurable, in the decades that follow.Id. at 5.
Staff next asserted that the second component (to initiate energy efficiency audits of
school facilities by the Company and students) promises both short-term and long-term
educational benefits. Although this type of education program can take years to fully develop,
Staff believes it has the potential to produce positive results.
Staff determined the third component of Idaho Power s proposal was the least
compelling because solar generation is not yet generally a cost-effective resource. However
Staff maintained that solar generation will become more cost-effective in the future and that solar
(or renewable energy) education may be cost-effective in the long-term.Id. Staff also
asserted that it is more appropriate to expand this existing program, than to allow Idaho Power
Energy Efficiency Rider to fund not yet cost-effective solar projects, as was proposed by the
Company in Case No. IPC-08-10.
Finally, Staff noted that none of the three components in the Company s proposal
include an evaluation process or report. Staff asserted that post-implementation evaluations are a
necessary part of good program management. Consequently, Staff recommended that the
Company be required to evaluate the short-term cost-effectiveness and long-term potential of
these programs in a manner consistent with good program management. These results should be
reported to the Commission. Id. at 6.
DISCUSSION AND FINDINGS
At the outset, we commend the parties for their efforts in developing both energy
education proposals. We appreciate these thoughtful proposals in this new field of energy
education. Both proposals are intended to provide students with "hands-on" education and
experience regarding energy efficiency and conservation measures.
ORDER NO. 30760
After reviewing the details of both programs, the Commission finds that it
appropriate to implement a modified version of Idaho Power s proposal. While both proposals
have merit, we find that Idaho Power s proposal is focused on schools within its service territory
and has smaller overhead and administrative costs. We further find that Idaho Power s proposal
will integrate efficiently with OER's planned expenditures for energy programs encompassed in
the federal American Recovery and Reinvestment Act of 2009. In particular, OER plans to: (1)
train personnel to perform energy audits on all major school facilities; (2) retrofit 25 schools with
energy conservation/efficiency measures; and (3) fund the installation of two solar projects for
schools. www.accountabilitv .idaho. ~ov /pdf/ oer. pdf.
In selecting the Idaho Power proposal, we decline to adopt the third component -
adding two additional solar projects to the existing Solar 4R Schools program. We believe it is
more appropriate to utilize the $75 000 per year from this third component to further enhance the
other two components. Because Idaho Power s proposal will not be implemented until the
beginning of the next school year in the fall of 2009, that should be sufficient time for Idaho
Power to consider how best to reallocate the revenue to the other components.
We note that several parties urged us to establish an advisory board to facilitate the
implementation of Idaho Power s proposal. We concur and direct Idaho Power to establish an
advisory board to assist the Company in implementing its energy education proposal. In its
advisory capacity, the board may provide recommendations and assistance based upon its areas
of interest and expertise related to energy education.l Idaho Power should also involve the board
in preparing a final report after the two-year project. The report will review whether the
proposal met expectations regarding the short-term cost-effectiveness and future potential of
continuing the Company s energy education proposal.
We do not envision the advisory board as an "oversight" board. Idaho Power shall
have the final authority on all expenditures authorized by this Order. We hold the Company
accountable for its expenditures and the final report. We believe that the membership of the
advisory board should be comprised of persons or entities interested in energy efficiency
education. More specifically, we believe that the board should be comprised of representatives
and governmental agencies that participated in this case: DOE, OER, IEEP, the Idaho
I For example, Idaho Power should solicit the board's advice on how to reallocate the $75 000 per year now
available from the third component.
ORDER NO. 30760
Conservation League, the Industrial Customers of Idaho Power, Staff and the U.S. Department of
Energy (if it desires to participate). Finally, the cost for the advisory board shall not exceed
$12 500 annually. We anticipate that these costs might be covered by the interest that has
accrued on the $500 000 since our initial Order No. 30529.
ORDER
IT IS HEREBY ORDERED that the $500 000 in reserved S02 proceeds (plus the
accrued interest) be used to implement Idaho Power s energy education proposal as modified in
the body of this Order.
IT IS FURTHER ORDERED that Idaho Power establish an advisory board to assist
in implementing the energy education proposal. The cost of the advisory board shall not exceed
$12 500 per year.
IT IS FURTHER ORDERED that Idaho Power submit a final report after completion
of the two-year program. The report shall address the cost-effectiveness of the program and the
potential of continuing or expanding the program. The report shall also address any suggested
improvements to the program.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or in interlocutory Orders previously issued in this Case No. IPC-08-
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 or in interlocutory Orders previously issued in
this case. Within seven (7) days after any person has petitioned for reconsideration, any other
person may cross-petition for reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30760
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this OZ7
TIt.
day of March 2009.
MARSHA H. SMITH, COMMISSIONER
i2I . KEMPT , C MISSIONER
ATTEST:
bls/O:IPC-08-11 dh3
ORDER NO. 30760