20090702Pengilly Rebuttal.pdf

RECEIVED
2009 JUL -2 PM a: II
IDAHO PU¡;;¡ If"
UTILITIES CO~X~AiŠSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATON FOR A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY FOR THE LANGLEY
GULCH POWER PLANT.
CASE NO. IPC-E-09-03
I DAHO POWER COMPANY
DIRECT REBUTTAL TESTIMONY
OF
PETER PENGILLY
1 Q.Please state your name, address, and present
2 occupation.
3 A.My name is Peter Pengilly. My business
4 address is 1221 West Idaho Street, Boise, Idaho.
5 Q.By whom are you employed and in what
6 capacity?
7 A.I am employed by Idaho Power Company as a
8 Customer Research and Analysis Leader in its Customer
9 Relations and Energy Efficiency group.
10 Q.Please describe your educational background.
11 A.In May of 1976, I received a Bachelor of
12 Science Degree in Anthropology from Uni versi ty of Idaho,
13 Moscow, Idaho. In 1986, I began attending Boise State
14 University and, in 1992, I received Bachelor of Science
15 Degree in Mathematics. I continued at Boise State
16 University after graduation as an adjunct professor in
17 mathematics while completing courses specializing in
18 statistics.
19 I have since attended numerous seminars and
20 conferences on statistical analysis and on pricing issues
21 related to the utility industry and have attended seminars
22 and courses involving public utility regulation. These
23 courses include Edison Electric Institute's ("EEl") Advance
24 Rate Course and New Mexico States Uni versi ty' s Center for
PENGILLY, DI REB 1
Idaho Power Company
1 Public Utilities Rates Course and The Restructuring
2 Electric Industry Course. Additionally, I have attended
3 numerous conferences and forums on energy efficiency and
4 demand response, including the Demand Response Coordinating
5 Committee ("DRCC") meetings, the E Source Forum, and
6 Bonneville Power Administration post-2011 energy efficiency
7 meeting.
8 Q.Please describe your work experience.
9 A.From 1976 until 1986, I worked as an
10 archaeological technician on contract with various
11 universities, government agencies, and private contractors.
12 At the same time, I was involved in managing a small
13 family-owned business. From 1986 until 1992, I was
14 employed by the Idaho State Historical Society managing
15 their Archaeology laboratory. In 1992, I went to work as a
16 Research Analyst for the Idaho Department of Correction.
17 In 1993, I transferred to the Idaho Department of Labor as
18 a Research Analyst Supervisor under the auspices of the
19 Bureau of Labor Statistics. This position included
20 supervising a staff as well as performing a variety of
21 economic and statistical analyses and reporting.I was
22 employed by Idaho Power Company in December of 1999 as a
23 Senior Pricing Analyst in the Pricing and Regulatory
24 Services Department. My duties as a Senior Pricing Analyst
PENGILLY, DI REB 2
Idaho Power Company
1 included the development of al ternati ve pricing structures,
2 management of pricing programs, the analysis of the impact
3 on 'customers of rate design changes, and the administration
4 of the Company's tariffs.In that position I helped
5 develop several demand response programs, a time-of-use
6 pilot program, and a critical peak pricing program.
7 In 2006, I was promoted to my current position as
8 Customer Research and Analysis Leader in the Customer
9 Relations and Energy Efficiency Department. In this
10 position I am responsible for the research, analysis,
11 forecasting, and reporting associated with Idaho Power's
12 energy efficiency and demand response programs. As such, I
13 am a member of the Northwest Energy Efficiency Alliance
14 ("NEEA") cost-effectiveness expert committee, a
15 representati ve at the Pacific Northwest Demand Response
16 Project ("PNDRP"), Idaho Power's representative at the
17 Regional Technical Forum ("RTF"), and a member of the E
18 Source DSM Executive Council.
19 Q.What is the scope of your rebuttal testimony
20 in this proceeding?
21 A.My testimony will address how Idaho Power
22 accounts for energy efficiency and demand response in the
23 Integrated Resource Plan ("IRP") process, and how Idaho
24 Power's energy efficiency programs affect its winter peak.
PENGILLY, DI REB 3
Idaho Power Company
1 ENERGY AN PEA DEM SAVINGS IN THE IRP PROCESS
2 Q.Could you explain how energy efficiency and
3 demand response are integrated in the IRP process?
4 A.The energy and peak demand reductions that
5 resul t from the energy efficiency and demand response
6 programs are integrated into the IRP process in two
7 distinct ways. Annually, all forecast results from the
8 existing and committed energy efficiency and demand
9 response programs are incorporated into the load forecast.
10 This forecast is reassessed each year taking into account
11 the results of the previous year. This annual forecast is
12 used in the IRP process for those years when an IRP is
13 produced. Additionally, for each IRP, new energy
14 efficiency and demand response potential is identified as a
15 new resource and is analyzed similar to a new supply-side
16 resource.
17 Q.Could you describe the difference in how
18 energy and peak demand savings are accounted for in the IRP
19 or forecasting process?
20 A.To get a true picture of Idaho Power's
21 projected reduction for energy efficiency programs, it is
22 necessary to add the incremental annual forecast of
23 existing and committed programs to the incremental annual
24 new potential and then accumulate them over the years. The
PENGILLY, DI REB 4
Idaho Power Company
1 cumulative impact that was originally produced for the 2009
2 IRP can be seen in Figure 1.
3 Figure 1: Historic and Forecast Cumulative Impact of IPC
4 Energy Efficiency Programs 2002-2027
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5
6 In contrast, to understand the forecast peak demand
7 reduction from demand response programs, it is necessary to
8 add the annual existing and committed demand response
9 reduction with the annual new potential reduction. The
10 demand response reduction is not addi ti ve across years.
11 Q.Do you agree with Ms. Mitchell's assertion
12 on page 29 of her direct testimony that there should be new
13 incremenLal savings included in the plan forecast for the
14 next 15 years?
15 A.No. As stated above, peak demand reduction
16 from demand response programs is not cumulative and is
PENGILLY, DI REB 5
Idaho Power Company
1 independent from year to year. Idaho Power believes that
2 when these programs mature the peak demand reduction will
3 become rela ti vely constant as seen in Figure 2 below.
4 Figure 2: Historic and Forecast Impact of IPC Demand
5 Response Programs July Peak Hour 2002-2027
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6
7 Figure 2 includes existing and committed peak demand
S reduction from the A/C Cool Credit program and the
9 Irrigation Peak Rewards timer program as well as the
10 forecast increased peak demand reduction from the FlexPeak
11 Management and the Irrigation Peak Rewards dispatchable
12 programs. The maximum peak reduction from these programs
13 at maturity is expected to result in approximately 312 MW
14 achieved by 2013. This represents a huge peak reduction -
15 approximately 10 percent of Idaho Power's 200S peak demand
16 and about S percent of the forecast peak for 2013. In
PENGILLY, DI REB 6
Idaho Power Company
1 fact, this amount exceeds the FERC's aggressive expansion
2 of Idaho's potential peak demand reduction identified in
3 its recent publication A National Assessment of Demand
4 Response Potential published in June 2009 (Appendix A -
5 State Profiles, p. S1). FERC reports that Idaho's
6 potential peak demand reduction from "aggressively
7 expanding today's programs" to be 6 percent of load by 2014
S and reports the same percentage for 2019.
9 Q.Wi tness Mitchell compares expected peak
10 demand savings from energy efficiency programs in the 2006
11 IRP and the 200S and 2009 updates, then concludes that peak
12 savings are surprisingly reduced in the 2009 IRP Addendum.
13 Are Idaho Power's forecast peak savings from energy
14 efficiency programs decreasing as shown in Ms. Mitchell's
15 Figure 16?
16 A.No. In fact, these two forecasts are very
17 similar and both only include the peak demand reduction
1S from existing and committed energy efficiency programs.
19 Witness Mitchell's erroneous conclusion results from
20 using the estimated peak reduction published in the 200S
21 Update and 2009 Addendum, which are from two different
22 forecasts beginning with two different base years. The
23 expected case peak savings from Table S, p. 21, in the 200S
24 Integrated Resource Plan Update include cumulative savings
PENGILLY, DI REB 7
Idaho Power Company
1 from 2007 through 2027. The expected case peak savings
2 published in the Integrated Resource Plan Addendum -
3 February 2009, p. A-24, begin in year 2009 and accumulate
4 through 2028. These two forecasts should not be compared
5 as they are in Mitchell's Figure 16 because the forecast
6 from the 2008 Integrated Resource Plan Update includes more
7 years of accumulated peak demand reduction data.
8 Q.How does Idaho Power account for its demand
9 response programs in the Company's load and resource
10 balance analysis?
11 A.Idaho Power accounts for its demand response
12 programs in two ways, as existing and committed resources
13 and as new resources. In the Company's Response to Staff
14 Production Request No. 84, Idaho Power included in its
15 committed peak reduction resources the A/C Cool Credit
16 program, peak reduction from its energy efficiency
17 programs, and the peak reduction from its existing
18 Irrigation Peak Rewards timer program. Idaho Power
19 included the new Flex Peak Management program, and the
20 incremental difference of the new dispatchable Irrigation
21 Peak Rewards as new resources. For the Irrigation Peak
PENGILLY, DI REB 8
Idaho Power Company
1 Rewards program, the estimated load reduction was:
2
Irrigation Peak Rewards
Existing New Total
2009 34 88 122
2010 34 132 166
2011 34 176 210
2012 34 176 210
Q.Is this the current level of peak reduction
3 Idaho Power forecasts from the Irrigation Peak Rewards
4 program?
5 A.No. Idaho Power made these estimates last
6 year during the course of preparing Case No. IPC-E-08-23,
7 prior to the implementation of the Peak Rewards program
8 changes. Since the dispatchable option for the Irrigation
9 Peak Rewards program is new this year (2009), it has been
10 and will continue to be difficult for Idaho Power to
11 forecast peak reduction until the Company has operated the
12 program and can determine more precisely what the results
13 of the program will be. The Company's current estimates
14 are included in Mr. Bokenkamp's Exhibit No. 10.
15 IMPACT ON WINTER PEA
16 Q.Could you explain how Idaho Power's energy
17 efficiency programs affect winter peak?
18 A.The savings from Idaho Power's energy
19 efficiency programs are achieved throughout the year,
20 including winter peak. Depending on the energy efficiency
PENGILLY, DI REB 9
Idaho Power Company
1 program and measure, different programs affect winter peak
2 at different levels.
3 Idaho Power's programs incent customers with
4 inefficient electric heat to convert to efficient electric
5 heat and efficient air conditioning. For example, in the
6 Heating and Cooling Efficiency program, customers are
7 incented to either replace existing heat pumps, install
8 heat pumps where natural gas in not available, or install a
9 heat pump in new construction where natural gas is not
10 available. In the Rebate Advantage program, customers are
11 incented to buy new electrically-heated Energy Star~
12 manufactured homes. In the Energy Star~ Homes Northwest
13 program, Idaho Power pays incentives to builders who build
14 homes heated with any source, but the Company only counts
15 the electric savings in i ts cost-effective analysis. To
16 ensure that Idaho Power's programs are cost-effective, all
17 of its programs must result in electricity or electrical
18 peak demand savings.
19 Q.Does this conclude your testimony?
20 A.Yes, it does.
PENGILLY, DI REB 10
Idaho Power Company