20090413ICIP Comments.pdf

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A T TOR N E Y SAT L AW iong APR 13 PM~: 00
Peter Richardson
Tel: [phone] Fax: [phone]
pete tié r ichardso n ando i eary. co m
P.O. Box 7218 Boise,lD 83707 - 515 N. 27th St. Boise, ID 83702
April 13, 2009
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilties Commission
PO Box 83720
Boise ID 83720-0074
RE: Case No.lPC-E-09.02
Dear Ms. Jewell:
We are enclosing an original and seven (7) copies of the COMMENTS OF THE
INDUSTRIAL CUSTOMERS OF IDAHO POWER in the above case.
An additional copy is enclosed for stamping and return to our offce.
Sincerely,
~,(tì.
Administrative Assistant for Peter Richardson
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Peter J. Richardson ISB 3195
RICHARDSON & O'LEARY PLLC
515 N. 27th Street
PO Box 7218
Boise, Idaho 83700
Telephone: [phone]
Fax: [phone]
peter~richardsonandolear .com
Attorneys for the Industrial Customers of Idaho Power
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BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )IDAHO POWER COMPANY'S ) CASE NO. IPC-E-09-02
APPLICATION FOR APPROV AL OF ITS )
AGREEMENT WITH ENERNOC TO )
IMPLEMENT AND OPERATE A ) COMMENTS OF THE INDUSTRIAL
VOLUNTARY COMMERCIAL DEMAND ) CUSTOMERS OF IDAHO POWERRESPONSE PROGRAM )
)
)
COMES NOW, the Industrial Customers ofIdaho Power ("ICIP") by and through its
attorney of record, Peter J. Richardson, and pursuant to that Notice of Application and Notice of
Modified Procedure issued by the Commission on March 20, 2009 and hereby provides its
Comments on Idaho Power Company's ("Company" or "Idaho Power") Application.
I
SUMMARY
The ICIP supports the concept of demand side response programs, but believes the
Company's proposal needs modification prior to approvaL. The ICIP makes specific
recommendations below relating to varous contract issues, pricing issues, timing issues and
missed opportunities. In conclusion the ICIP recommends Idaho Power be required to conform
Comments of the Industrial Customers ofIdaho Power IPC-E-09-02
1
its proposal to more closely align its terms and conditions to recently approved demand response
programs for its irrigation class of customers.
In its application Idaho Power is seeking Commission approval of an agreement between
it and EnerNOC under which EnerNOC, acting as a third pary aggregator, wil implement a
commercial demand response program ("Program") that would be made available to Idaho
Power's commerèial and industrial customers. Although the Program is outlined in the
application, the specific contracts and details of each individual commercial or industrial
paricipants' relationship with EnerNOC are not included in the application. EnerNOC wil be
paid by Idaho Power for a target number of MW reduction, which reduction wil be guaranteed
by EnerNOC. EnerNOC then wil individually contract with Idaho Power's commercial and
industrial customers and strike individual deals, presumably paying less than it is receiving from
Idaho Power, to meet its demand reduction target. The program's costs do not equal what the
commercial and industrial customers will receive in exchange for their paricipation. We do not
know what EnerNOC will be paying for acquiring its target demand reduction. Because the
individual arangements between EnerNOC and the commercial and industrial paricipants are
not public, the specific terms and conditions of those relationships are not known at this time.
Idaho Power recently had its Irrigation Peak Rewards taiff approved by the Commission
in Docket No. IPC-E-08-23. That program acquires demand response from irrigators by paying
them directly for curtailment rights. The Program for the commercial and industrial customers
purchases an identical product - dispatchable demand response - as does the Irrgation Peak
Rewards program. It is therefore reasonable to use the Irrigation Peak Rewards Program as a
benchmark against which to measure the EnerNOC aggregation Program. As a result of that
Comments of the Industrial Customers of Idaho Power IPC-E-09-02
2
comparsion it became apparent that the Irrigation Peak Rewards tariff has many attactive
featues not likewise available under the EnerNOC Program.
The Application observes, and the Commission repeats in its Notice of Application, that
Idaho Power "presented an overview of the Program to a meeting of the Industrial Customers of
Idaho Power." Application at p. 5. The ICIP was indeed presented an overview ofthe program
at its meeting in February. It should not be inferred from that statement that the ICIP
paricipated in any maner in the program's development or had any role in making decisions
relative to its formation. Unlike Idaho Power's inclusion of the irrigators in the settlement of the
Irrigation Peak Rewards docket, the Company formulated this proposal without input from the
industrial customers.
II
CONTRACT ISSUES
1 Lack of Transparency is a Concern
The Application is silent on any details ofthe contractual relationship between EnerNOC
and the program paricipants. EnerNOC will negotiate contract terms and rates individually with
each potential paricipant. Those agreements will be maintained confidentially between
EnerNOC and each paricipant. The lack of transparency as to how each participant wil be
treated is troubling. This is because there wil exist a large difference in the relative bargaining
strengths between EnerNOC and Idaho Power's customers. EnerNOC is a successful aggregator
of commercial and industrial demand response. It operates on a national scale. It is in the
business of buying demand reductions and aggregating them for bulk sale to utilities. Idaho
Power's commercial and industrial customers, on the other hand, have no experience in sellng
their demand back to the power company. In addition, EnerNOC's incentive, and profit, are tied
Comments of the Industrial Customers ofIdaho Power IPC-E-09-02
3
its striking a series of best deals with the individual paricipants. That said, more transparency-
not less - is called for.
2. Advance Notice Provisions
The Irrigation Peak Rewards program provides that the paricipant will receive notice of
an event of curailment by four p.m on the day BEFORE the event begins. Idaho Power's
EnerNOC proposal provides that notice of an event of curtailment be given four HOURS before
the event begins. The rational for this disparty is not addressed in the application. However it
seems that curiling an operating business or a factory would have much more complex and
difficult ramifications than simply turing a pump off in the middle of a potato field. If day
ahead notice is sufficient for the Irrgation Peak Rewards paricipants, it should also be made
available to the commercial and industrial paricipants in the' EnerNOC managed program.
3. Opt Out and Drop Out Rights
The Irrigation Peak Rewards program has several provisions built in that offer some
protections for the paricipants that should also be built into the industrial/commercial program.
Those protections include Opt Out Rights under which each irrgation paricipant is permitted to
opt out of an event of curailment up to five times each growing season. In addition, each
irrigation paricipant is given Drop Out Rights under which it is permitted to drop out ofthe
program completely upon a one time payment of $500. These protections should likewise be
available to all commercial and industrial participants under Idaho Power's proposaL.
4. Price
The ICIP has examined the cost to the ratepayer ofIdaho Power's proposed Program and
compared it to the payments the Company will make under the Irrigation Peak Rewards program
and finds the two numbers to be essentially identical at $4.65 per kw. However, it is not
Comments of the Industrial Customers ofIdaho Power IPC-E-09-02
4
reasonable to compare the cost of the commercial/industrial program to the price paid under the
Irrigation Peak Rewards program because EnerNOC wil be taking its operating costs and profits
out of that $4.65. This means that the commercial/industrial price will likely be less than the
price paid to the irrgation class. There is no offer of justification for this price disparity for the
purchase of an identical product - dispatchable demand reduction. One possible justification for
the price differential between the Irrgation payments and what EnerNOC ends up paying is,
undoubtedly, that EnerNOC wil be incuring costs in packaging together a large enough bundle
of different commercial/industrial customers to meet its MW reduction taget. We do not know
what that number is, however. The commercial/industrial curilment rights would seem to have
more value than the irrigation curailment right due to the different advance notice requirements -
four hours for the commercial/industral classes and a day ahead for the irrgation class.
In addition to the price disparity between customer classes, there will likely be price
disparity within the industrial/commercial classes because each individual participant wil strike
its own unique deal with EnerNOC. The application offers no justification for variations in
price for demand reduction WITHIN the commercial or industrial classes.
5. Dates of Potential Curailments
Irrgators may only be curtailed between June 15 and July 31 while the EnerNOC
commercial/industrial program proposes to curtail those two classes between the dates of June 1
through August 31. There was no discussion in Idaho Power's application as to why the dates
June 1 through August 31 were selected. As one might expect, there was also no discussion of
why the Irrgation Peak Rewards program only targets six weeks while the commerciai/industrial
program tagets three full months. This puts the commercial/industrial customers at much more
Comments of the Industrial Customers ofIdaho Power IPC-E-09-02
5
risk of incurng an event of curailment and should therefore require either higher compensation
or a justification for this disparity between classes.
The longer time period for the commercial/industrial program is made more perplexing
when one reviews Idaho Power's testimony supporting the six week irrigation program that was
prepared and filed just five months ago. In support of a stipulation regarding the terms and
conditions of the Peak Rewards program, Mr. Timothy Tatum provided the following testimony:
Q. Why is the Company proposing to reduce the number of weeks over
which the program is operated anually?
A. As part of the research and analysis process that led to the proposed
Program design, the internal Program design team at Idaho Power held several
discussions with subject matter experts that work within the generation dispatch
and power supply planing fuctions of the Company. According to perspectives
shared by representatives from the generation dispatch and power supply planing
groups, the value of the load reduction capability of the Program is in its ability to
reduce loads when the demand on the electrical system is at or near the anual
system peak. Furhermore, these discussions confirmed that currently there is a
near zero probability that Idaho Power's electrical system will experience a
anual system peak demand outside of the time period of June 15 through July 31.
With that in mind, the Program Season was revised to align with the June 15
through July 31 period.
IPC-E-08-23, Tatun, Di at pp 14 - 15.
The dates used by the Irrgation Peak Rewards program were specifically approved by
this Commission in its order adopting a settlement among the paries to resolve outstanding
issues on how that program was to be implemented. In its order the Commission made the
following finding:
The changes also reduce the number of weeks over which the program is
available, from the three sumer months of June through August to a six-week period,
June 15 through July 31. The time period was shortened because the value of the load
reduction capability of the program is its ability to reduce loads when the demand on the
electrical system is at or near the anual system peak. Idaho Power's witness testified
that "curently there is a near zero probability that Idaho Power's electrical system will
experience a anual system peak demand outside of the time period of June 15 through
July 31." Tatu Direct, p. 15. Thus, the program season was revised to align with the
June 15 through July 31 period.
Comments of the Industrial Customers ofIdaho Power IPC-E-09-02
6
Order No. 30716, issued January 14,2009.
Should the Commission approve the commercial/industrial demand response program
proposed by Idaho Power, then it is recommended that the time period in which curilment may
take place be revised to match the Irrigation Peak Rewards time period.
VI
CONCLUSION
Approval ofIdaho Power's application in this docket should be made contingent upon (1)
greater transparency in contract terms and conditions; (2) a requirement that the advance notice
provision be increased to day ahead notification (3) a requirement that customer protection
measures be offered to all commerciai/industrial paricipants such as Opt Out and Drop Out
clauses; (4) the implementation of a pricing mechanism that either matches the price being paid
to the irrigation class or a clear and defensible justification for any variations in price; and (5)
shortening the season during which curailments may take place to June 15 through July 31..
Respectfully submitted this 13th day of April, 2009.
RICHARDSON & O'LEARY PLLCByßt#4Peter J. ìëh~
Attorneys for the Industrial Customers of
Idaho Power
~
Comments of the Industrial Customers ofIdaho Power IPC-E-09-02
7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 13th day of April, 2009, a true and correct copy ofthe
within and foregoing COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER, was served
in the maner shown to:
Ms. Jean Jewell
Commssion Secreta
Idao Public Utilities Commission
POBox83720
Boise, ID 83720-0074
X Hand Delivery
_ U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Lisa Nordstrom
Baron L. Kline
Idaho Power Company
PO Box 70
Boise, Idaho 83707-0070
lnordstrom(fidahopower .com
bkline(fidahopower .com
x. Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
JohnR. Gale
Vice President, Regulatory Affairs
Idaho Power Company
POBox 70
Boise, Idaho 83707-0070
rgale(fidahopower .com
L Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
~~
Nina Curis
Administrative Assistant