20081208Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 6864
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Z008 DEC -8 PM 2: r 4
IDAHO PUBt cII-ILITIr-Q r. ~~I'" l ,", '"10'."Lij . a. v ;:,"!Lti'~iÍ:il'ì ~~ .Jj'~
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR A ) CASE NO. IPC-E-08-16
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY TO INSTALL ADVANCED )
METERING INFRASTRUCTURE (AMI) ) COMMENTS OF THE
TECHNOLOGY THROUGHOUT ITS SERVICE) COMMISSION STAFFTERRTORY. )
)
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Neil Price, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure in Order No. 30637 issued on September 9, 2008,
submits the following comments.
BACKGROUND
On August 5, 2008, Idaho Power Company ("Idaho Power" or "Company" submitted an
Application for a Certificate of Public Convenience and Necessity ("CPCN") pursuant to Idaho
Code §§ 61-502A, 61-503, 61-525, 61-526, RP 52, and RP 112, to install Advanced Metering
Infrastructure ("AMI") technology throughout its service territory, to accelerate depreciation of
the existing metering infrastructure, and to include the corresponding operation and maintenance
benefits as they occur.
STAFF COMMENTS 1 DECEMBER 8, 2008
The Company will utilze a phased implementation approach for the installation of the
AMI technology, beginning with its Capital Region (including the Boise, Kuna, Meridian, and
Eagle communities) in 2009, Canyon and Payette Regions (including the Nampa" Caldwell,
Payette and Ontario communities) in 2010 and its Southern and Eastern Regions (including the
Twin Falls, Hailey, Jerome, Pocatello and Salmon communities) in 2011. Installation of the new
meters wil generally progress along established meter reading routes.
Idaho Power believes that AMI offers numerous long-term benefits to its customers,
including but not limited to the following: reducing operational costs associated with meter
reading, improving meter reading accuracy; eliminating the need for Idaho Power to gain access
to customer property for monthly meter reading; improving outage monitoring, theft detection,
and employee safety; providing a platform for remote connects and disconnects that would also
save customer time and employee labor; and providing biling advantages resulting in fewer
estimated bils, less rebiling, flexible biling schedules, account aggregating, and flexible rate
designs.
The Company has already selected vendors and executed contracts for the purchase of the
necessar hardware, software and labor for AMI installation. The project wil require multiple
vendors (4) due to the lack of a single-source vendor offering all of the requisite products and
services necessar for AMI installation.
Idaho Power does not request a rate increase in conjunction with its Application; it will
make a separate fiing. However, the Company has requested that, in the ordinar course of
events, it wil be allowed to rate base the prudent capital costs of deploying AMI as it is placed in
service, to accelerate the depreciation of the existing metering infrastructue replaced by AMI
over the three-year deployment, and to include the operation and maintenance benefits in the
accounting methodology.
In anticipation of project commencement in January 2009, Idaho Power has made certain
equipment and material purchases totaling $1.2 milion and states that it will be required to make
additional purchases of approximately $5 milion in September and October 2008.
STAFF ANALYSIS
Staffhas reviewed the Company's Application, the filed testimony and exhibits of
Company employees Gale, Heintzelman and Waites, along with other information subsequently
provided by the Company and third parties. After a thorough review of all information available,
STAFF COMMENTS 2 DECEMBER 8, 2008
Staff is generally supportive of the Company's Application requesting a Certificate of Public
Convenience and Necessity to install AMI technology throughout its service terrtory. Staff
offers the following in support.
Staff has long believed that AMI is cost effective and that the operational savings and
potential benefits are substantial enough to support the capital expenditue required to deploy
AMI. AMI deployment will lead to both lower costs and improved services relative to the
alternative of maintaining the existing meter infrastructure. The Company's analysis indicates
that the operational savings alone supports the immediate deployment of AMI and while future
potential benefits exist, they wil require additional expenditures to obtain.
In Order No. 28894 issued on November 21,2001, the Commission ordered Idaho Power
to establish the Energy Effciency Advisory Group for the purose of recommending new DSM
measures, enhancing existing DSM programs, prioritizing the implementation of appropriate
programs and evaluating each program's effectiveness. The Commission fuher ordered the
Advisory Group to consider implementation of a residential time-of-use (TOU) metering pilot
program and the feasibilty of installng TOU meters in new subdivisions along with allowing
existing customers to voluntarily install TOU meters.
As par of the 2002 PCA, with deferred power costs in excess of $220 milion and
concern about the consumption and costs in the residential class, the Commission directed Idaho
Power and the Advisory Group to perform a comprehensive DSM study of the Idaho Power
service terrtory and once again ordered Idaho Power to evaluate and report on the viabilty of a
TOU residential metering program. Idaho Power subsequently fied a report with the
Commission stating that TOU pricing would not be economically viable until an automated
meter reading system is acquired. However, with TOU pricing's potential to create significant
load reductions during high cost hours and to reduce the need for expensive peaking facilties,
the Commission ordered Idaho Power to submit a plan to replace the curent meters of Idaho
Power's customers with advanced meters capable ofTOU pricing.
In compliance with the Commission's Order, Idaho Power timely submitted its "Report
on Residential Time-of-Use Pricing" on September 22,2002. After reviewing the report, Staff
commented:
Given that Idaho Power's own analysis of implementing an AMR system
shows that the benefits far exceed the costs and that Idaho Power has tested
an AMR system that met the Company's requirements, Staf questions why
the Company has not yet implemented a plan to install an AMR system and
STAFF COMMENTS 3 DECEMBER 8, 2008
apparently is not planing to do so in the near future. Staff recommends that
Idaho Power submit a plan to the Commission in early 2003 for installation of
new meters capable of AMR and critical-peak TOU pricing. Ths
recommendation is based on the facts that AMR: 1) has been shown by Idaho
Power's aräly~is to be cost-effective due to the reduction in meter reading
costs alone; 2) Ìiàs been successfully tested by Idaho Power; 3) provides
additional service and cost savings benefits for customers and the utility; and
4) may enable customers to receive substantial potential benefits from TOU
retail pricing.
After receiving comments from several interested paries, including residential
customers, the Demand Response and Advanced Metering Coalition (DRAM), two different
AMR meter manufacturers, Staff and the Company, debating the economic feasibility of
automated meters, the Commission issued Order No. 29196 on Februar 23, 2003 stating:
We believe that AMR should be implemented as soon as possible, with
installation commencing this year and completed in 2004 As a public utility,
Idaho Power has the responsibility to keep the rates charged for the service it
provides "just and reasonable." Idaho Code § 61-301. This responsibilty
includes installng infrastrcture that reduces operation costs fuded by
ratepayers. Moreover, the Company has a statutory duty to provide service
that "shall be in all respects adequate, efficient, just and reasonable." Idaho
Code § 61-302.
In that Order the Commission directed Idaho Power to submit a plan by March 20, 2003 to
replace the existing meters of Idaho Power customers with advanced meters.
On May 9, 2003 Idaho Power filed an updated AMR analysis and advised against
implementing AMR because it did not believe it was a prudent investment at that time.
However, the Company stated that it was willng to continue monitoring developments and
conduct periodic assessments to determine the appropriate time for deployment.
In comments responding to Idaho Power's updated AMR analysis, Staf reiterated its
position that an AMR system could result in many customer services, cost saving, and revenue
enhancement opportunities while acknowledging that:
(T)here is clearly uncertainty in evaluating AMR given that the Company's
earlier finding that AMR's multiple benefits merited implementation in 2004
evolved into the Company's later position that AMR should not be
implemented at this time. Staff does not agree that, based on savings from
meter reading alone, system-wide AMR implementation to all customers is
not initially cost-effective.
STAFF COMMENTS 4 DECEMBER 8, 2008
Therefore Staff recommended that an initial limited roll out of Power Line Carer (PLC)
automated meter reading in the most cost-effective areas followed by an opportity for the
Company to evaluate, monitor, and reassess implementation of selected AMR technology to the
rest of the system.
On October 24, 2003 the Commission issued a final order (Order No. 29362) in Case No.
IPC-E-02-12 stating:
After a careful evaluation of all comments fied in this case, we continue to
find that AMR technology can empower customers to make informed
decisions regarding their energy consumption and should be implemented as
soon as possible. However, we also recognize that significant questions and
uncertainty remain regarding the proper technology, installation costs,
fuctionality and actual cost savings that may be realistically achieved.
In light of the foregoing discussion and findings, the Commission directs
Idaho Power to collaboratively develop and submit a Phase One AMR
Implementation Plan to replace current residential meters with advanced
meters in selected service areas within 60 days of the service date of this
Order. The Commission also directs Idaho Power to complete Phase One
AMR installation by December 31, 2004, and file an AMR Phase One
implementation status report no later than the end of2005. Upon review of
the status report detailng costs and benefits resulting from this limited AMR
installation, the Commission wil determine if the benefits of AMR justify its
implementation beyond the areas covered in Phase One.
Phase One Implementation
Idaho Power completed deployment of AMI to approximately 27,000 customers in the
McCall and Emmett areas in November 2004. The Company tested the AMI system in these
areas to resolve issues and problems with the technology which wil help the Company to
understand the system functionality, find problems and solve them before implementation
throughout the service territory. As indicated earlier, Staff supported the approach of analyzing
and deploying the system in a smaller location rather than deploying the system at once to the
entire service territory. As a result, the Company now believes it has a robust AMI system that is
ready to be deployed to the rest of its service territory. The Company noted that AMI
implementation throughout the Company's service territory is basically the same as the
implementation in the McCall and Emmett areas; however, there are a number of technical
improvements for the next phase of implementation. The AMI modules in the meters have now
been standardized and market competition now exists, which reduces the total cost per end point
of $292 as fied in the Company's 2005 AMR Report, to a total cost per end point of$136.
STAFF COMMENTS 5 DECEMBER 8, 2008
These modules also have larger memory, which helps ensure data retrievaL. Hardware and
software improvements expanded the data collection bandwidth and increase data retrieval
success rates. Staff sees these improvements as evidence that the system wil continually
improve over time.
Staff had expected a system-wide rollout of the technology before now, but recognized
the problem encountered in the Phase One Implementation associated with the Meter Data
Management System (MDMS) component. Idaho Power sought to implement an MDMS system
that had not yet been developed. The Company contracted with Itron to implement an existing
system that it believed could be modified to suit its needs. Modifications did not lead to the
system passing the Company's Validate, Estimate and Edit (VEE) acceptance criteria. These
problems eventually were fixed when the Company was able to implement Version 5, Revision
11 in March of2007. The software now has the specific fuctionality to support time-variant
pricing, including critical-peak pricing.
The MDMS curently has the fuctionality required to support the AMI system and time-
variant rates for the 25,000 end points curently being served by Idaho Power's AMI system but
it will require additional capabilty as the system expands. Witness Heintzelman indicated in his
testimony (Heintzelman, Di pg. 8) that "as each anual deployment is completed, additional
fuctionality wil be implemented in the succeeding year." The Company has indicated that it
plans on implementing more dynamic pricing programs for all customers, including time of use,
critical peak pricing, variable peak, and real time pricing programs as well as demand response
programs like interrptible rates. However, as stated in the Company's testimony, additional
investments wil be required before wide-scale applications of such pricing programs become a
reality.
Throughout its Phase One Implementation, the Company has leared that the Customer
Information System (CIS) also poses some problems with time-variant pricing. Due to
constraints within the CIS, Idaho Power has to manually intervene in the rate change process for
the time-variant pricing customers. The Company maintains it will require additional time and
investment before it can offer time-variant pricing on a large-scale basis.
Following the completion of the Phase One Implementation, the Company filed its Phase
One AMR Implementation Status Report (Case No. IPC-E-06-1) in which the Commission was
apprised of many of the issues discussed above. Given some of the technical difficulties
experienced during the Phase One Implementation, the Company requested, and was granted, a
STAFF COMMENTS 6 DECEMBER 8, 2008
one year period to allow some of the processes involved to mature sufficiently to resolve some of
the problems encountered during the Phase One implementation. However, the Commission also
stated in Order No. 30102 that "we continue to find that Idaho Power should be working toward
the implementation of AMR technology as soon as possible" and further stated that "the potential
benefits of advanced metering to ratepayers and the Company are too great to delay AMR
implementation indefinitely." Following the Commission's explicit directives, the Company is
now proposing a system-wide AMI deployment. Staff believes that the Company has resolved
the technological issues encountered during Phase One Implementation and justified its selection
of AMI equipment; therefore Staff supports a system-wide implementation as described below.
SYSTEM-WIDE IMPLEMENTATION
Idaho Power chose PLC technology for its AMI system. The Company noted in
Production Request No. 13 that PLC is the best fit for the Company's system based on
geographic size and distribution of the Company's system, full fuctionality, applicability and
compatibility with the Company's outage management system, and overall cost of ownership. In
addition to the PLC technology, substation and distribution systems wil be equipped with
communications equipment to send and receive data from the AMI meters. The AMI system
proposed for deployment throughout the Company's service territory is identical to the system
deployed in Phase One of AMI Implementation.
Idaho Power estimates that the total capital cost for the project will be approximately
$70.9 milion. This amount includes Information Technology (IT) expenditures, meter costs,
station equipment expenses and additional, unquantifiable costs that are known to incur, such as
sales tax, customer growth, fuel charges and personnel time. The estimated first year revenue
impact of the deployment is $3.8 milion, which equates to an increase ofless than one-percent
of the Company's current revenue requirement. The capital cost does not include the accelerated
depreciation of the existing metering infrastrctue or the operation and maintenance benefits
associated with the deployment of the new AMI technology.
Idaho Power has committed to including in its rate base only the amount actually incurred
up to the "commitment estimate" ($70.9 milion). However, the Company requests the abilty to
revise the commitment estimate for documented, legally-required equipment changes and
material changes in assumed escalation or growth rates. The Company will absorb any costs
beyond the revised commitment estimate.
STAFF COMMENTS 7 DECEMBER 8, 2008
Staff has reviewed the Company's cost estimates and finds them to be reasonable.
Although Staff is aware that the estimates will change throughout the deployment, the
Company's commitment to absorb the additional costs will help limit the impact on customers.
Staff supports the Company's request to rate base the prudent capital costs of deploying AMI as
it is placed in service, and to capture the operation and maintenance benefits simultaneously.
However, Staff notes that the final determination of prudency will have to be a part of a formal
rate proceeding when actual implementation costs are known.
The Company also requests that the depreciation for the existing meters be accelerated
over three years. Company witness Gale states in his testimony that accelerated depreciation is a
fundamental assumption in the Company's analysis and that "Idaho Power desires to have the
(existing) metering equipment fully depreciated at the time the deployment is complete, thus
avoiding a stranded asset situation and the possibility of used and useful concerns." Though
Staff does not support a three-year accelerated depreciation on existing metering equipment,
Staff does not propose to saddle the Company with stranded, unecoverable assets and fully
supports the amortization of the undepreciated balance of the existing equipment. Staffs
concern with the accelerated depreciation is the rate impact on customers. The undepreciated
balance of existing meter equipment is approximately $27 milion, and a three-year depreciation
period would increase the Company's revenue requirement by $11.8 milion the first year, $10.5
milion the second year and $9.2 milion in the final year. These amounts do not reflect the
recovery the Company wil be seeking for the AMI investment and have not been compared to
existing rate recovery levels for meters to determine the net incremental cost for AMI.
Staff requested from the Company different scenarios for depreciating the existing
metering equipment, and though the Company obliged, it also stated that it concluded that a
3-year recovery provides the adequate cash flow to improve cash flow coverage ratios to levels
necessary to maintain its credit strength and its abilty to access external markets for capital
projects, thus allowing the Company the greatest opportity to fud the new AMI equipment
with reduced reliance on borrowing. The Company states that without the three-year accelerated
depreciation period, it would have to reevaluate deployment at this time to avoid additional
negative cash flow. Staff believes the cost-effectiveness of AMI supports its full deployment
regardless of the depreciation period for existing meters and notes that other utilties have
successfully implemented AMI in Idaho without accelerating the depreciation of the old meters.
Depreciation rates approved in IPC-E-08-6, Order No. 30639 result in anual depreciation of
STAFF COMMENTS 8 DECEMBER 8, 2008
approximately $3.31milion for existing meters in Account 370.00. At this accrual level, the
existing meter account wil be fully depreciated in 8.25 years assuming all new meter
investments beginning in 2009 are added to the Meters-AMR Equipment Account 370.10.
However, Staff is also well aware that current economic conditions and the tightening of
capital markets may hinder utilities' plans to fud planed capital expenditures. Consequently,
Staff believes additional cash flow from some acceleration of depreciation is reasonable but that
it should be balanced with the impact on increasing customer rates. Therefore, Staff
recommends an accelerated depreciation period of five years.
The Implementation Plan
Idaho Power proposes to deploy AMI in thee years. The Company noted that the time
period was based on the factors discussed below:
(a) Impact on Revenue Requirement - the Company felt that a three year
implementation was a good balance for the realization of savings and benefits;
(b) Impact on Existing Employees - the planed deployment allows time to
retrain some employees and others to seek different employment due to
elimination of meter reading positions;
(c) Operational Savings - time frame will allow the Company and customers to
realize the greatest operation savings by maximizing the reduction in
operational cost once an area is completely automated;
(d) Impact on Anual Capital Requirements - proposed amortization of existing
meters over the same period as deployment would generate cash flows that
partially offset the external financing requirements for AMI;
(e) Other Major Capital Requirements Needed to Reliably Serve Existing
Customers - curent capital requirements outweigh the cash that Company
produces, thus forcing them to debt and equity markets;
(t) Areas with High Growth (New Meters) - deployment stas with higher
customer growt to minimize the number of non-AMI meters required to
support customer growth prior to AMI deployment and associated costs;
(g) Ease of Implementation Logistics - deployment follows electrical system
boundaries to provide the best case for practical installation, process
implementation, and operating cost.
STAFF COMMENTS 9 DECEMBER 8, 2008
Staff believes that the time frame is aggressive because the Company needs to install the AMI
system to about 160,000 customers per year during the deployment period. However, Staff
believes that the Company's selection of the time frame for the AMI system-wide
implementation is reasonable based on the factors mentioned by the Company, some of which
has already been previously discussed. The Company will star deployment of the AMI system
with the highest growth areas first in 2009.
Benefits
The AMI system is capable of providing numerous functions that wil result in savings
for the Company and its customers. According to the Company's financial analysis, the
projected savings from AMI will sta the year after full deployment and customer payback wil
occur in the 7th year. The Company's 2005 AMR report shows that anual savings of $303,000
were realized in the Emmett and McCall operating areas. The Company projects at least $4.7
milion in anual savings after AMI deployment is completed for all customers. Some of the
system capabilties include automated meter reading, verifying power outages, theft detection,
performing remote connect/disconnect, provide load profie, voltage monitoring, provide
customer usage information, and time-variant rates. Staff also acknowledges that there are
additional soft benefits, namely those associated with improved billng accuracy, that have not
been quantified. Staff looked at these capabilties and benefits of AMI and some of these
capabilties can be realized immediately after the deployment of the system and others will be in
the future.
Immediate Benefits
Meter Reading Operations
The most significant benefit from implementing an AMI system immediately after
deployment is the savings from the meter reading costs. The automated reading fuctionality of
the AMI meters reduces the labor and travel costs associated with meter reading. In addition to
reduction of the manual meter-reading workforce, the Company identified other immediate meter
operation benefits such as:
(a) Reduction of Manual Meter-Reading System (MVRS) software-maintenance
fees, hand-held data-collector maintenance fees, and repair costs;
(b) Elimination of erroneous meter readings which reduces re-read orders and
improves bil quality;
(c) Reduction of estimated readings due to access or weather issues;
STAFF COMMENTS 10 DECEMBER 8, 2008
(d) Reduction of vehicle purchases, maintenance, and fuel costs;
(e) Reduction of safety incidents and accidents;
(t) Elimination offield visits for move-in/move-out orders;
(g) Enhanced abilty to identify failed meters within 24 hours, as opposed to
being identified during the next montWy manual reading cycle.
Each of the benefits identified above has a positive impact on customers and the Company. Staff
concludes, as the Company's analysis demonstrates, that the benefits identified from meter
reading operations alone justify AMI for the Company and its customers.
Outage Detection
After the AMI technology has been deployed throughout its service territory, Idaho
Power wil integrate the AMI system with its Outage Management System. This fuctionality of
AMI will provide useful information for the Company in outage situtions by allowing the
Company to determine if power is available at a specific end point. A communication response
from the meter indicates there is an electrical connection to the customer and a lack of
communication indicates that power may not be available.
AMI has additional benefits related to outage events. AMI equipment will be used to
verify that all customers are back in service before the Company's line crew leaves the outage
location to eliminate return trips. This is paricularly advantageous in Idaho Power's service
territory, where mountainous terrain, remote locations, and extreme weather conditions make
accessibilty and crew travel time critical factors in being able to restore customers' service
promptly. AMI will also be used to verify if the cause of an outage is due to the Company's
facilities. The communication response mentioned before is established by pinging the meter. If
there is a response, it means that the cause of the electrical problem might be on the customer's
equipment instead of the Company's equipment. Therefore, there is no need to dispatch a Line
Crew because it is the customer's responsibilty to have an electrician make repairs on their
equipment. Staff believes that this will save labor and the Company can utilze the Line Crew
efficiently to respond to other important repairs. AMI can also be used to identify the amount of
actual load on a transformer compared to its size. With this data, the Company can replace the
transformer prior to the fuse melting. As a result, a single outage will only be needed for the
replacement of the transformer. If the fuse melted, two outages will occur for the customer, one
for replacement of fuse and the other for the replacement of the transformer. Staff believes that
STAFF COMMENTS 11 DECEMBER 8, 2008
AMI wil help reduce the number of outages for the customer in this case. It can also reduce
customers' frstration due to disruption of their service while making the repair.
Overall, AMI wil help the Company identify outages faster in its service territory from
the communication with the meters. Staff believes that the Company will operate more
efficiently when responding to outages once deployment of AMI is complete. Customer
satisfaction wil increase because of the improved abilty of the Company to respond to outage
events.
Potential Benefits
Most of the capabilties require the Company to make additional investments to star
realizing the benefits. Among these are remote service connect/disconnect, providing in-home
display of energy use or pricing data, collection of electrical system data such as voltage and
power quality metrics, automation of distribution system fuctions, and time-variant rates.
Time-of-Use
AMI has the abilty to collect hourly data with no additional investment, which is a key
component to establish time-variant rates. Staffhas noted numerous times in previous comments
that TOU pricing provides the potential for significant cost savings in meeting the electricity
demands of its customers. Staff noted in testimony fied with the Company's curent rate case
that "effective TOU rates encourage shifting energy consumption to off-peak periods, where
price per kWh is comparatively low, but can result in higher overall consumption with lower
bils if enough energy is shifted off-peak." B. Lanspery, Di pg. 5. Staff believes that the
shifting of demand to off-peak periods will lessen the need for peaking resources, which wil
reduce the incremental costs of the Company while meeting the demand of its customers.
However, the Company noted that it "is stil evaluating the benefits and costs of collecting and
storing this very large quantity of data for all customers." Answer to Staff Production Request
No.6. The Company's Customer Information System needs to be redesigned to eliminate the
time-intensive manual process of setting up and removing customers on time-variant rates.
Curently, there are pilot programs for time-variant rate options available for the Emmett area
customers who have AMI. Staff noted that the most effective TOU rates can only be
implemented if AMI is in place because montWy meter reading schedules are no longer a
limiting factor. Staff expects that after full deployment of AMI, the Company will be able to
offer time-variant rates in the futue. Staff believes that this AMI capabilty will be beneficial to
both the Company and its customers by using energy more effciently to reduce costs.
STAFF COMMENTS 12 DECEMBER 8, 2008
METER READING
Curently, Idaho Power's meter reads are collected by meter readers and input into a
handheld electronic device. The reads are then loaded into the Multi-Vender Reading System
(MVRS). The MVRS performs validation on the readings and a batch fie loads the readings
into the biling system.
Once AMI has been implemented, Idaho Power wil be using the AMI system to read
meters four times daily. Readings wil be taen at midnight, and wil then have follow-up reads
every 8 hours. The Company is also planning to collect 15 minute energy consumption data on a
smaller number of meters for electrical system and energy consumption modeling. The AMI
system is expected to increase the Company's abilty to obtain actual reads throughout the year.
Generally, estimated readings occur more frequently during the winter, when meter accessibilty
becomes an issue. With the AMI system, the Company anticipates reading 99.9% of its meters
year round.
Using AMI, the meter readings wil be collected by the Two-Way Automated
Communication System (TW ACS) net server system per a preset schedule four times a day. The
reads will then be transferred to the Meter Data Management System daily. Once the MDMS
performs data validation, the Time-of-Use biling component calculation wil upload to the
customer information system via a system interface.
The proposed daily meter reading schedule will benefit customers that are wishing to
disconnect service. In a situation where a customer wants to disconnect service and a new
customer is scheduled to sta service at the same address or there is a continuous service
agreement) in place, the Company wil use the scheduled midnight read the day of the request to
complete all closing and opening meter read requests. If a customer requests his or her service to
be disconnected, and there is not a new customer requesting service or a continuous service
agreement, then the Company wil schedule an actual physical disconnection of service. Idaho
Power does not leave meters connected between customers.
i Continuous Service Agreements are offered by Idaho Power to provide electric service without interrption to
rental properties. When a tenant moves out and closes the account, Idaho Power transfers responsibilty for bil
payment from the tenant to the propert manager. Propert managers are charged a $10 fee for each transfer of
responsibilty .
STAFF COMMENTS 13 DECEMBER 8, 2008
PILOT PROGRAMS
Idaho Power curently offers two programs, Energy Watch and Time of Day, to its
customers in the Emmett valley. Under the Energy Watch Program, Schedule 4, customers pay a
substatially increased flat rate for energy consumption during a designated Energy Watch
Period. Energy Watch Periods are determined by the Company. Program paricipants are
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 wil be for the hours of 5 :00 p.m. to 9:00 p.m. The Company will not
call for more than 10 Energy Watch Periods from June 15 to August 15, for a total of 40 hours.
The base energy rate for the Energy Watch Program is equal to the first block energy charge
under Schedule 1, curently 5.7783 ~ per kWh. Durng Energy Watch Periods, the base energy
rate is 20 ~ per kWh. The over-300 kWh pricing block is eliminated. Customers participating in
the Energy Watch Pilot Program continue to pay the monthly service charge of $4.00.
Under the Time-Of-Day Program, Schedule 5, customers are given the opportity to
reduce their electric bils by shifting their sumer 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 provide energy is the lowest. During the non-summer season, the
pricing would be the same as that under Schedule 1, curently 5.7783 ~ per kWh. The three
time-of-day periods for the sumer 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 though Friday 8.8683~ per kWh
Mid-Peak 7:00 a.m. to 1:00 p., Monday through Friday 6.5148~ per kWh
Off-Peak 9:00 p.m. to 7:00 a.m. on all days and all hours 4.8074~ per kWh
Saturday, Sunday, and the Four of July
The sumer and non-summer seasons are defined the same as under Schedule 1, with the
sumer season beginning June 1 and ending August 31. Customers paricipating in the Time-of-
Day Pilot Program continue to pay the monthly service charge of $4.00.
The Company plans to implement more dynamic pricing programs for all customers in
the future, including time of use and critical peak pricing programs like the Time-of-Day and
Energy Watch programs curently in place. The Company maintains it has done substantial
research into various dynamic pricing programs that may be offered to customers with the
completion of the AMI deployment. Due to system limitations, time-varant rates are limited to
STAFF COMMENTS 14 DECEMBER 8, 2008
the 25,000 end points currently being served by Idaho Power's AMI system. As stated in Mr.
Gale's testimony, additional investments wil be required before wide-scale applications of such
pricing programs can become a reality. Staff recommends that the Company offer its pilot
programs to as many customers as curent system capabilities will allow, as AMI is implemented
in each region of its service territory.
Although Staff recommends that the Energy Watch and Time of Day programs be offered
to customers on a voluntary basis as soon as possible after the AMI infrastrctue is in place in
each region, Staff is not recommending that these programs continue indefinitely. After gaining
additional information and experience with these two programs during the AMI rollout, both
Idaho Power and the Commission will be in a better position to evaluate varous rate designs and
demand response/critical peak programs.
An integral par of the analysis of any future proposal to implement a new program or
rate design is consideration of how customers, particularly low-income or vulnerable customers,
wil be impacted. Although AMI implementation is a necessar first step towards implementing
TOU pricing or certain demand response programs, the Commission does not need to determine
at this time what specific rates or programs, if any, should be implemented in the future. The
cost-effectiveness of Idaho Power's implementation of AMI is not contingent upon any futue,
unquantified benefits to be derived from adoption of TOU pricing or demand response programs.
TIME DELAY FOR DISPLAYING CUSTOMER USAGE
Idaho Power uses Nexus Energy Software to provide customers with energy usage data
via links on the Company's website. The software also provides analytical tools to help manage
energy consumption, view account information, and, importtly, estimate potential savings
associated with the time-varant pricing programs. Nexus communicates with the MDMS
system to provide customer level data in graphical formats. Curently, the Company has a
foureen day delay before it is able to display a customer's usage. The Company's goal is to get
usage to the customers within three days. From the beginnng, customers have not seen fit to
access or use the available data. It is possible that the curent staleness of data is not appealing to
customers, customers may not know how to use the website, or there may be a genuine lack of
interest in the information that is available. Regardless, Staff recommends that the Company
provide customers with real time usage information. In the meantime, Staff recommends that the
Company inform customers of the availabilty of power cost monitors such as the Blue Line,
STAFF COMMENTS 15 DECEMBER 8, 2008
Aztech, and Energy Detective devices. These devices provide customers information on energy
usage and the associated cost on a real time basis.
STAFF RECOMMENDATION
Since 2002, Staff has advocated that the Company install AMI technology to reduce
meter reading costs and provide a platform for many other services including TOU rates. Staff
also supported the phased deployment of AMI in the Emmett and McCall service areas before
full deployment to prove the technology and identify benefits. The Commission has also
supported the installation of AMI, recognizing the potential for both immediate cost savings and
the promise of futue benefits through improved service and more effcient electrical
consumption.
Staff believes the Company has now proven that the technology works and the
operational savings derived from the AMI justifies the capital expenditue associated with
system-wide deployment. The AMI technology also provides for a vast aray of potential
benefits that, although difficult to fully quantify, wil enhance customer service and provide
future resource cost savings. Staff recommends that the Commission grant the Certificate of
Public Convenience and Necessity requested by Idaho Power to continue with its AMI
deployment over three years. Staff also recommends that Idaho Power be allowed to rate base
the prudent capital costs of the deployment, not to exceed the commitment estimate, as it is
placed in service with the final prudency of such costs to be determined in a formal rate
proceeding. Staff also recommends that the Commission approve an accelerated depreciation of
five years for the existing meters in Account 370.00.
Staff recommends that the Company offer its Time of Day and Energy Watch programs
to customers as AMI is implemented in each region of its service territory.
Staff recommends that the Company provide customers with real time usage information
and information about commercially-available power cost monitors.
STAFF COMMENTS 16 DECEMBER 8, 2008
Respectly submittd this ~ day of December 2008.tV~
Neil Price
Deputy Attorney General
Technical Staff: Donn English
TJ Golo
Daniel Klein
i:/umisc/comments/ipce08. ) 6nptjdedk.doc
STAFF COMMENTS 17 DECEMBER 8, 2008
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 8TH DAY OF DECEMBER 2008,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-08-16, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
DONOV AN E WALKER
BARTON L KLINE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: dwalker(iidahopower.com
bkline(iidahopower .com
COURTNEY WAITES
JOHNRGALE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: cwaites(iidahopower.com
rgale(iidahopower .com
MICHAEL L KURTZ
KURT JBOEHM
BOEHM KURTZ & LOWRY
36 E SEVENTH ST STE 1510
CINCINATI OH 45202
E-MAIL: mkurz(iBKLlawfrm.com
kboehm(iBKLlawfrm.com
KEVIN HIGGINS
ENERGY STRATEGIES LLC
PARKS IDE TOWERS
215 S STATE ST STE 200
SALT LAKE CITY UT 84111
E-MAIL: khiggins(ienergystrat.com
~.'Co
SECRETARY
CERTIFICATE OF SERVICE