20090504NW Energy Coalition Comments.pdf

~/ ~~ £/'1/"1
vt: Æv.,/~~... rli
NW ENERGY COALITION rH""!", t: ì
May 1,2009 lGfl9HAY -4 AM If: f 2
Jean D. Jewell, Secretar
Idaho Public Utilties Commission
472 West Washington S1.
P.O. Box 83720
Boise, Idaho 83720
Re: Case No. IPC-E-09-05 In the Matter of the Application of Idaho Power Company For
Authority to Revise the Energy Efficiency Rider, Tariff Schedule 91.
Dear Ms. Jewel,
The NW Energy Coalition submits the followig comments in the above referenced case. The
Coalition supports Idaho Power's request to increase support for its demand-side management efforts.
However, we believe that the proposed increase of the energy effciency rider to 4.75 percent of retail
revenues is insufficient to captue all the cost-effective energy savings potential in Idaho Power's
service terrtory and to operate robust demand-response programs to reduce peak generation resource
needs. We recommend that the Commission approve the Company's request to increase the energy
effciency rider, but at a high enough level to capture all available energy savings.
Philosophy Change - Energy Effciency as a Resource
Idaho Power has been on a steep upward, deployment cure since the Commission first directed the
Company to revitalize its energy effciency and demand-side management programs in 2001. The NW
Energy Coalition was involved in the case leading up to Order No. 28722 and has been an active
member of the Energy Efficiency Advisory Group since its inception in 2002. We have great respect
for DSM program leadership and staff who have risen to the challenge of program development,
implementation and marketing. Whle we have been a constant voice for more aggressive
implementation and more expansive marketing, we have applauded the consistent growt in Company
investments and the resulting energy savings.
As the Commission is well aware, using electrcity more effciently is the quickest and least-cost
approach to meeting customers' power needs. Not only does energy effciency reduce customer bils,
it often reduces loads most durng peak periods when Idaho Power's system is most stressed. We
support Company testimony by Tim Tatu, who states on page 6, line 9:
"Energy effciency is recognized by Idaho Power and its customers as providing economic, operational,
and environmental benefits. Therefore, the pursuit of all cost-effective demand-side resources is a
primar objective for Idaho Power."
Ths statement reflects the Company's philosophical evolution and its commitment to acquing
demand-side resources. Energy efficiency is a resource for meeting customers' energy needs at the
lowest long-term cost. It is no longer just a "customer service" to help with home or business
improvement projects.
..
In the first years following the rider's inception, the Company fuded most of its effciency program
labor and adminstrative expenses from general revenues instead of separate rider revenues. Lacking a
specific fuding chanel for stafng, the Company's DSM program remaied under-staffed, slowig
program development and implementation. The Company needed to rapidly expand its offerigs and
savings, so the Coalition urged it to fud DSM program staff, admnistration and program marketing
costs out of rider revenues. We believe this action has helped to increase energy savings levels and
program penetration.
Increased DSM Investments are Consistent with Regional and National Trends
The Coalition is involved in utility resource planng and energy effciency program development in
all four of the Nortwest states and at the regional leveL. We have watched a clearly rising trajectory in
acquisition of energy savings. Idaho Power's steady ramp-up in program investments and energy
savings is consistent with the level of energy savings acquisition at individual utilities across the
region.
The latest draft of the energy conservation analysis by the staff at the Nortwest Power and
Conservation Council, as par of the preparations for the 6th Regional Power Plan, shows that the
conservation resources in the Nortwest are more abundat than ever. Ths expanded effciency
resource exists even when the high savings levels from compact fluorescent lights are excluded. The
draft Council analysis shows just over 6,000 aMW of economically achievable energy savings over the
next 20 years due to many new conservation measures and technologies, higher avoided costs, and a
strong push from the federa and state codes and stadads.
The 5th Regional Power Plan identified 3,900 aMW of achievable conservation. In rough numbers,
Idaho Power is about 10 percent of the regional load and would therefore be expected to achieve about
10 percent of the regional energy savings. We acknowledge that regional savings projections canot
account for conditions unque to each service terrtory. Stil, that 10-percent slice of the system reflects
the ballpark savings levels that could be achieved. That said, the Council's draf conservation resource
assessment, for the region as a whole, projects cost-effective acquisition of 175 aMW/year in 2010,
ramping up to 280 aMW/year in 2014 and to 360 aMW/year in 2019. That puts Idaho Power's
potential at about 17 aMW in 2010,28 aMW in 2014 and 36 aMW in 2019. These numbers reflect
only energy savings and not capacity savings. The Council does not include demand response or load
control measures as a par of this conservation resource assessment, so those efforts by the Company
should be in addition to the ballpark energy effciency figures.
In 2007, the Oregon legislatue allowed the investor-owned utilities to increase their contrbutions to
the public purose charge from 2.4 percent (for efficiency) to whatever would be needed to captue all
the energy effciency potential identified in their integrated resource plans. In 2008, Portland General
Electric and PacifiCorp increased contrbutions to the Energy Trust of Oregon by 1 percent of retail
revenue. Those contrbutions are expected to rise as both PGE and PacifiCorp increasingly select
effciency as the lowest cost resource. It is importt to note that both PGE and PacifiCorp operate
demand-response and load-control programs in addition to contrbuting 3.4 percent of revenues to
Energy Trust effciency programs.
Seattle City Light's 2008 Integrated Resource Plan calls for a doubling of its anua energy savings
efforts by 2012, to 15.3 aMW from 7.1 aMW. This ramp-up in savings acquisition has been supported
by an increase in DSM stafng and budget, even as other utility deparents are facing budget cuts
2
and hiring freezes. SCL's resource plan calls for all load growth to be met with energy savings by 2012
or soon thereafter.
Finally, proposed legislation before the U.S. House and Senate would establish an Energy Effciency
Resource Standard requiring all electrc utilities to meet 15 percent of their load with kWh savings and
natual gas distribution companes to meet 10 percent of their gas load with therm savings by 2020.
The electric resource stadard stas at 1 percent ofload served by kWh savings in 2012. If Congress
adopts this stadard, Idaho Power will need to ramp up its energy efficiency program activities,
independent of demand response and temporar load-shedding programs.
Increased Rider Funding for Demand Response and Program Deficit Priarily
We are very concerned that the signficant majority of the additional revenue from the rider increase
will be absorbed by the expanded irgation peak rewards program, the new commercial demand
response program and the overall program deficit. The demand-response programs are vita to
reducing the Company's peak resource needs. We support the progr expansion requests fied with
the Commission and discussed with the EEAG.
That said, the EEAG and the Company have identified a number of effciency programs ready for
wider distrbution and other programs stil in the growth phase that may be constrained by lack of rider
fuding. While the Company has testified that lack of rider fuding has not limited program
development in the past, the Coalition is concerned that ths signficant increase in the rider will cause
the Company to delay any futue requests for additional investments. If ths happens, the Company
wil miss opportunities to captue cost-effective energy savings and help lower customers bils.
The following char attempts to present the incrementa rider increases from 2009-2011, along with the
incremental increases in demand response and the declining deficit.
2008 2009 2010 2011
Rider Program $18.8 M $29.6M $29.5M $31.8M
Rider Funding $17.4 M (2.5%)$27.3M (4.75%)$33.2M (4.75%)$33.2M (4.75%)
Rider Increase $ 9.9M (over '08)$ 5.9M (over '09)No increase
Irrgation Peak $1.4M $+5.8M (over '08)$ O.3M (over '09)$1.6M(over'10)
Commercial DR No program $0.6M "$1.8M "$0.8M "
Deficit $ 305M $3.9M "$2.4M "$0.2M "
Incr. of 3 areas $10.3M "$4.5M "$2.6M "
The above table ilustrates that the increases in the demand response programs and paying down the
deficit consume the increased rider revenues, except in 2010 when the rider increase is $900,000 more
than the incremental increases in the three noted areas. Certaiy, it is importt for the rider increase
to cover past expenditues and reduce the program deficit going forward. But ths fuding
arangement does not allow the Company to expand its core efficiency programs or to provide
additional fuding for the Nortwest Energy Efficiency Alliance (NEA) programs.
Whle the Coalition has a number of signficant concerns with the Company's draft DSM Potential
Study being prepared by Nexant, we note that it does show considerable opportties to increase
energy savings and it identifies and recommends new programs for Company adoption in the
3
fortcoming integrated resource plan. The proposed rider fuding and the proposed demand response
programs expenditues may not accommodate these effciency program expansions. In addition, to
ramp up savings acquisition and maximize paricipation rates the Company should consider paying up
to the ful cost of effciency measures. The balance between utilty incentives and customer
investment is a delicate one and can certnly impact penetration rates. To push paricipation past free
riders and into pars of the customer base that are not "regular" paricipants in utility programs, it is
importt for program managers to have the discretion to find incentive levels and program marketing
levels that produce maximum benefits. Often ths region has been hesitant to fully invest in energy
effciency and conservation as a resource, even though ratepayers will pay 100 percent of supply-side
alternatives.
New Northwest Energ Effciency Aliance Strategic Plan
Earlier this month, the Board of NEE A voted to adopt a new strategic organzational plan and a
complementa business plan that enables NEEA to achieve its goals. The Coalition is disappointed
that Idaho Power's testimony does not include reference to the increased investment expectation as
adopted by the NEEA Board. With its diverse portfolio of programs, NEEA has achieved the lowest-
cost energy savings of any utility program in the region. We understad that the very low-cost CFL
programs responsible for 60 percent of the residential energy savings will no longer be offered, but
NEEA continues to innovate and leverage work across the region, providing direct and indirect
benefits to customers of individua utilties.
The strategic business plan calls for a doubling ofNEEA's overal program budget and an expansion
into natural gas market transformation activities. Ths signficant program expansion directly reflects
the increased energy savings potential and the recogntion that the region must ramp up its energy
effciency programs to help reduce energy bils, stimulate more economic development and reduce
environmental impacts.
NEEA's programs will continue to be implemented at the regional and individual utility levels. The
increase in Idaho Power's NEEA commitments from $ 1. 3 M/year to potentially $3.3M/year -- while
dramatic -- is expected to yield very low-cost energy savings for Idaho Power customers. Individua
utilities benefit from the region-wide economies of scale and leveraged program development that
NEEA provides. The Coalition supports the direction taen by NEEA and urges the Commission to
approve Idaho Power's taff rider increase request only if it includes adequate fuding to meet its
share of the increase in NEEA's budget.
In sumar, the Coalition supports Idaho Power's request to increase rider fuding. We recommend
the Commission increase the rider level beyond 4.75 percent to allow for increases in core efficiency
program budgets and additional investments in NEEA.
Than you for the opportity to offer these comments. I am available to provide the Commission
with any additional inormation or to answer any questions that arse from these comments.
Sincerely,
Nancy Hirsh
Policy Director
NW Energy Coalition
4
,.
8111st Ave.
Suite 305
Seattle, W A 98104
206-621-0094
nancy(Ðnwenergy.org
5