20090313Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: NEIL PRICE
DEPUTY ATTORNEY GENERAL

DATE: MARCH 12, 2009

SUBJECT: IDAHO POWER COMPANY’S APPLICATION FOR APPROVAL OF AN
AGREEMENT TO IMPLEMENT A COMMERCIAL DEMAND RESPONSE
PROGRAM; CASE NO. IPC-E-09-02

On March 2, 2009, Idaho Power Company (“Idaho Power” or “Company”) filed an
Application with the Commission seeking approval of an agreement with EnerNOC (“EnerNOC”) to
implement a voluntary demand response program for its commercial and industrial customers.
THE AGREEMENT
The Application describes the commercial demand response program (“Program”) as a
voluntary program “targeting Idaho Power‟s commercial and industrial customers that are willing and
able to reduce their electrical energy loads for short periods (two to four hours) during summer peak
days.” Application at 1-2. Program participants will receive compensation for voluntarily reducing
their loads. Id. at 2. The Program will be extended to Schedule 9, Schedule 19 and Special Contract
customers with an average summer billing demand of at least 200 kW. Id.
The Company selected EnerNOC through a “competitive RFP process to implement the
Program on a turn-key basis.” Id. EnerNOC will be responsible for the Program‟s implementation
and operation, including:
1. Entering into contracts with individual Idaho Power customers to reduce their
loads when requested by EnerNOC;

2. Marketing plans;

3. Securing participants;

DECISION MEMORANDUM 2
4. Installing and maintaining all equipment, aside from the meter, used to reduce
demand;

5. Tracking participation; and

6. Reporting results to Idaho Power.

Id. Idaho Power will “initiate demand response „events‟ by notifying EnerNOC, who will, in turn,
supply the requested load reduction to the Idaho Power system.” Id.
EnerNOC will make incentive payments based on the reduction in demand each customer
agrees to provide to the Idaho Power system. Id. at 3. These payments will occur monthly based
upon predetermined reductions and “event-based payments based on actual kWh energy reductions.”
Id. EnerNOC will conduct energy audits to identify potential areas for demand reduction. Id. There
is no monthly fee for program participation. Id. Some participants may need to install “pulse
initiated metering” and EnerNOC has agreed to reimburse Idaho Power for the cost of installing this
type of metering system and for the cost of the individual meter. Id. All participants will be able to
track their historical and real-time energy use and demand reductions via a web portal. Id.
The Application states that the term of Idaho Power‟s agreement with EnerNOC begins on
February 23, 2009 and extends five years from that date. Id. However, it also states that the
Agreement is contingent upon Commission approval without material change or condition. Id. at 5.
The amount Idaho Power has agreed to pay in consideration for EnerNOC‟s services are based upon
the “value to Idaho Power of delivered capacity and energy reductions.” Id. at 3. The Agreement
includes a liquidated damages provision should EnerNOC fail to achieve a predetermined level of
performance. Id.
EnerNOC has committed to deliver a certain amount of demand reduction for the Idaho
Power system which varies “from a lower bound of 2 MW and upper bound of 35 MW in 2009, to a
lower bound of 35 MW and upper bound of 65 MW in 2013.” Id. at 4. The targets for demand
reduction for each year of the contract term (2009-2013) “are 2 MW, 30 MW, 40 MW, 50 MW, and
50 MW, respectively.” Id. The parties assume that the Program will be implemented by April 2009.
Id.
The Agreement stipulates that Idaho Power shall be empowered to initiate a “program
event” “between 2 p.m. and 8 p.m. on any non-holiday weekday day between June 1 and August 31
of each program year,” which will then obligate “EnerNOC to reduce customer demand by the agreed
DECISION MEMORANDUM 3
upon amount.” Id. Idaho Power is limited to one “event” per day, a total of 20 events per season,
totaling no more than 60 hours and with a duration between 2 and 4 hours per event. Id. Idaho
Power is required to give at least two hours notice to EnerNOC prior to the initiation of an event. Id.
Notice to EnerNOC from Idaho Power will be via an electronic dispatch signal and EnerNOC will
then notify individual customers by telephone or e-mail. Id. EnerNOC will notify customers once an
event is terminated. Id.
The Application states that the total cost of the Program is approximately $12.2 million
over the life of the contract, varying from approximately $315,000 in the first year of the Program to
approximately $3.5 million in its final year. Id. at 5. Idaho Power estimates that 85 percent of
Program costs will be associated with Capacity Payments to EnerNOC, 6 percent for Energy
Payments to EnerNOC and 9 percent for Idaho Power administrative costs. Id.
The Program was reviewed by Idaho Power‟s Energy Efficiency Advisory Group
(“EEAG”) and presented at a meeting with the Industrial Customers of Idaho Power. Id. The
Application contains a cost-effectiveness analysis as an attachment. Id. The Company proposes that
Program costs be recovered from Energy Efficiency Rider funds, or, “if the Commission decides in
the remaining portion of the Irrigation Peak Rewards proceeding . . . that the costs of the Irrigation
Peak Rewards Program should be recovered through the Power Cost Adjustment [(“PCA”)],” that
Program costs should likewise be recovered through the PCA. Id. at 6.
Finally, the Company requests that the Application be processed through Modified
Procedure “as expeditiously as is reasonably possible.” Id.
COMMISSION DECISION
Does the Commission wish to process Idaho Power‟s Application for approval of its
Agreement with EnerNOC to implement a voluntary commercial demand response program through
Modified Procedure with a 30-day comment period following a Notice of Application and Modified
Procedure?

M:IPC-E-09-02_np