20100126Stipulaton.pdf

LISA D. NORDSTROM (ISB No. 5733)
BARTON L. KLINE (ISB No. 1526)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
Inordstrom(âidahopower.com
bkline(âidahopower.com
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
WELDON STUTZMAN (ISB No. 3283)
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington (83702)
PO Box 83720
Boise, Idaho 83720-0074
weldon.stutzman(âpuc. idaho.gov i-=c:e.:i:;Nuì
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
A PRUDENCY DETERMINATION OF
ENERGY EFFICIENCY RIDER FUNDS
SPENT IN 2002-2007.
)
) CASE NO. IPC-E-09-09
)
) STIPULATION
)
)
This stipulation ("Stipulation") is entered into by and among Idaho Power
Company ("Idaho Powet' or the "Company") and the Staff of the Idaho Public Utilties
Commission ("Staff'). These entities are collectively referred to as the "Parties," and
individually as "Party."
I. INTRODUCTION
1 . The Parties agree that this Stipulation represents a fair, just, and
reasonable compromise of contested issues and that acceptance of the Stipulation by
the Idaho Public Utilties Commission ("I PUC" or the "Commission") would be in the
STIPULATION -1
public interest. Therefore, the Parties recommend that the Commission approve the
Stipulation and all of its terms and conditions without material change or condition.
II. BACKGROUND
2. On February 18, 2009, Idaho Power and the Commission Staff filed a
Stipulation in Case No. IPC-E-08-10 regarding the prudency of a portion of the
$28,961,716 in Energy Efficiency Rider ("Ridet') funds Idaho Power spent during 2002
through 2007. Per the terms of that Stipulation, Idaho Power subsequently filed an
Application on April 1, 2009, requesting that the Commission find the $14,657,971
unresolved balance of Rider funds spent during 2002-2007 to be prudent expenditures.
3. The Commission Staff maintains that to receive the requested expense
recovery, Idaho Power must demonstrate appropriate levels of objective and
transparent evaluation of their Demand-Side Management ("DSM") efforts through
annual documentation. To that end, the Commission Staff hosted a DSM Evaluation
Workshop on October 5, 2009, where process and impact evaluation and cost-
effectiveness reporting were discussed. As a result of the workshop and several follow-
up discussions, the Parties have reached the following settlement agreement:
II. TERMS OF THE STIPULATION
4. The Parties have agreed upon the contents of a more comprehensive
utilty annual DSM report that would demonstrate a commitment to, and
accomplishment of, objective and transparent evaluation of DSM efforts. Those agreed-
upon principles ("guidelines") as set forth in the Memorandum of Understanding for
Prudency Determination of DSM Expenditures ("DSM MOU") are attached as
Attachment No. 1 to this Stipulation.
STIPULATION - 2
5. Based on its review of the Company's DSM-related expenditures, the
Commission Staff agrees that the $14,657,971 remaining balance of Rider funds spent
during 2002-2007 were prudent expenditures and should be approved for ratemaking
purposes.
IV. ADDITIONAL PROVISIONS
6. The Parties agree that this Stipulation represents a compromise of the
positions of the Parties. Therefore, other than any testimony filed in support of the
approval of this Stipulation, and except to the extent necessary for a Party to explain
before the Commission its own statements and positions with respect to the Stipulation,
all statements made and positions taken in negotiations relating to this Stipulation shall
be confidential and wil not be admissible in evidence in this or any other proceeding.
7. The Parties submit this Stipulation to the Commission and recommend
approval in its entirety. Parties shall support this Stipulation before the Commission,
and no Party shall appeal a Commission Order approving the Stipulation or an issue
resolved by the Stipulation. If this Stipulation is challenged by any person not a party to
the Stipulation, the Parties to this Stipulation reserve the right to file testimony, cross-
examine witnesses, and put on such case as they deem appropriate to respond fully to
the issues presented, including the right to raise issues that are incorporated in the
settlements embodied in this Stipulation. Notwithstanding this reservation of rights, the
Parties to this Stipulation agree that they wil continue to support the Commission's
adoption of the terms of this Stipulation.
8. If the Commission rejects any part or all of this Stipulation, or imposes any
additional material conditions on approval of this Stipulation, each Party reserves the
STIPULATION - 3
right, upon written notice to the Commission and the other Parties to this proceeding,
within fourteen (14) days of the date of such action by the Commission, to withdraw
from this Stipulation. In such case, no Party shall be bound or prejudiced by the terms
of this Stipulation, and each Party shall be entitled to seek reconsideration of the
Commission's Order, file testimony as it chooses, cross-examine witnesses, and do all
other things necessary to put on such case as it deems appropriate.
9. No Part shall be bound, benefited, or prejudiced by any position asserted
in the negotiation of this Stipulation, except to the extent expressly stated herein, nor
shall this Stipulation be construed as a waiver of the rights of any Party unless such
rights are expressly waived herein. Execution of this Stipulation shall not be deemed to
constitute an acknowledgment by any Party of the validity nor invalidity of any particular
method, theory, or principle of regulation or cost recovery. No Party shall be deemed to
have agreed that any method, theory, or principle of regulation or cost recovery
employed in arriving at this Stipulation is appropriate for resolving any issues in any
other proceeding in the future. No findings of fact or conclusions of law other than those
stated herein shall be deemed to be implicit in this Stipulation.
10. The obligations of the Parties under this Stipulation are subject to the
Commission's approval of this Stipulation in accordance with its terms and conditions
and upon such approval being upheld on appeal by a court of competent jurisdiction.
11. This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
STIPULATION - 4
DATED this iin. day of January 2010.
Idaho Power Company Idaho Public Utilities Commission Staff
Byt42~
Lisa D. No trom
Attorney for Idaho Power Company
By n::~
Weldon Stutzman
Attorney for Idaho Public Utilty
Commission Staff
STIPULATION - 5
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-09-09
IDAHO POWER COMPANY
ATTACHMENT NO. 1
MEMORANDUM OF UNDERSTANDING
FOR PRUDENCY DETERMINATION OF DSM EXPENDITURES
This Memorandum of Understanding ("MOU") is entered into on this 21st day of
December 2009 between Idaho Power Company ("Idaho Powet'), Avista Utilities,
PacifiCorp (d/b/a Rocky Mountain Power) (collectively "the Utilities" and individually as
"the utility"), and the Staff of the Idaho Public Utilities Commission ("Staff'). All of the
above-named entities are hereinafter sometimes referred to collectively as "Parties" or
individually as "Part."
WITNESSETH:
A. The Parties agree that there exists a need for the Utilities and Staff to
develop a common understanding of the basis upon which prudency of demand-side
management ("DSM") expenditures can be determined for purposes of cost recovery.
B. The Parties attended a workshop on October 5, 2009, to discuss the
contents of a more comprehensive utility annual DSM report that would demonstrate a
commitment to, and accomplishment of, objective and transparent evaluation of DSM
efforts. The agreed-upon principles ("guidelines") stemming from that workshop are set
out below.
C. A copy of Staffs expectations for DSM prudency review is included as
Attachment No.1. Although Utilities wil make a good faith effort to address Staffs
expectations in following these guidelines, Staff expectations are informational and the
Utilities wil not be bound by them in the context of this Memorandum of Understanding.
D. The Parties recognize that implementation of the DSM prudency
guidelines and evaluation framework described below wil not automatically result in
MEMORANDUM OF UNDERSTANDING - 1
DSM prudency findings. Instead, even with their implementation, future DSM prudency
findings wil require the preparation of a formal filing with the Commission.
NOW, THEREFORE, in consideration of the foregoing, the parties agree as
follows:
Utilty DSM Annual Report Requirements
1. Template. Idaho Powets 2008 Demand-Side Management Annual
Report wil be used as a starting point template for enhanced reports beginning with
reports for 2009 DSM operations and results. Elements like those found in Idaho
Power's 2008 report wil be included in each Utility's annual report for Idaho programs
that reporting year, clearly identifing Idaho-specific data and narratives. The DSM
annual reports may be filed as stand-alone documents or as a combination of
documents (e.g., combined with a DSM business plan) that together fulfill the
agreements in this MOU.
2. Table of Contents. Each annual DSM report wil contain a table of
contents that references all items specified below, including the appendix where the
Cost-Effectiveness and Evaluation Table can be found.
3. Highlights or Introduction Section. Each annual DSM Report wil include
an initial overview of:
a. Process evaluations begun or completed during the previous year,
modifications to DSM processes that resulted from those evaluations, and planned
process evaluations and modifications for the coming year.
b. Impact evaluations begun or completed during the previous year,
modifications to DSM programs that resulted from those evaluations, and planned
MEMORANDUM OF UNDERSTANDING - 2
impact evaluations for the coming year. This section wil also highlight updates of
assumptions or reference reports used in assessing cost-effectiveness during the past
year and those expected to be reviewed in the coming year.
4. Cost-Effectiveness Section. Each DSM annual report wil include a Cost-
Effectiveness section and table listing individual programs/measures and the basis for
estimates of their cost-effectiveness, Le., formulas, data inputs and assumptions, and
source/rationale for each datum and assumption, including the date of the source.
5. Evaluation Section. Each DSM annual report wil include an Evaluation
section and table showing the schedule for evaluations, including impact assessment,
assumptions, source review, the schedule for field impact measurement, and
completion date. If this schedule is not included, a reasonable explanation for why such
a schedule, in whole or in part, is not necessary wil be included.
a. It is anticipated that over a reasonable frequency cycle (e.g., 2 to 3
years), all substantial programs wil have undergone process and impact evaluations.
However, Staff agrees that the initial evaluation cycles may be longer for 2008 and 2009
programs until these guidelines are fully implemented.
b. A copy of each DSM evaluation completed since filing the previous
DSM annual report wil be included as an appendix to the annual DSM report, as well as
any confidential cost information that are not included. The utility wil supplement its
DSM report with any confidential cost information onæ the Staff has signed a protective
agreement with the utilty.
6. Program Specific Section. Program-specific sections of the annual DSM
Report wil be reported by sector or by customer class, with a description of each
MEMORANDUM OF UNDERSTANDING - 3
individual program offered in the sector or customer class, and wil include a list of
measures within each program.
a. Process Evaluation. Each program-specific section wil have a
process evaluation description that includes:
L Program implementation modifications undertaken during
the course of the year and the rationale behind the change(s).
iL Other proæss issues identified during the course of the year.
iiL Any formal process evaluation undertaken during the year.
iv. Total proæss evaluation cost, inclusive of both utility-
provided and contract-provided services, and names of primary outside evaluators
conducting process evaluations and titles of internal evaluators. The DSM Report wil
indicate which cost information is considered confidential; each utility wil supplement its
DSM report with any program evaluations containing confidential proprietary information
once the Staff has signed a protective agreement with the utility.
v. Process changes completed or planned during the upcoming
year, if any.
b. Impact and Cost-effectiveness Evaluation. Each program-specific
section wil include an impact and cost-effectiveness evaluation description including:
L Primary assumptions and source (with year souræ was
produæd) used in the initial determination of cost-effectiveness.
iL Primary assumptions and source (with year source was
produced) used to determine post implementation impact and cost-effectiveness.
MEMORANDUM OF UNDERSTANDING - 4
iiL Any changes from initial determination (or last evaluation)
used for current cost-effectiveness evaluation and the reason for the change (such as
updated assumptions, sources or field measurement).
iv. Planned cycle for reassessment of cost-effectiveness
assumptions or measurement.
v. Total impact evaluation cost, inclusive of both utility-provided
and contract-provided services, and names of primary outside evaluators and titles of
inside evaluators. The DSM Report wil indicate which cost information is considered
confidential; each utility wil supplement its DSM report with any program evaluations
containing confidential proprietary information once the Staff has signed a protective
agreement with the utility.
vL Changes in program due to evaluation results.
c. Market Effects Evaluations. Each program-specific section wil
describe any market effects evaluations that have been planned or completed by or for
the utility, including those planned or completed by the Northwest Energy Effciency
Allance that are pertinent to any programs for which the utility is claiming electricity
savings or other impacts.
7. Expenses Without Direct Energy Savings. As discussed in the October 5
workshop, the Utilities have expenses associated with DSM-related activities for which
they do not claim energy savings. Expenses associated with non-quantifiable energy
saving programs and initiatives, including but not limited to, infrastructure, education,
outreach, and research, wil be identifed in the DSM annual reports and may be
considered reasonable and neæssary expenses for a broad based DSM portolio.
MEMORANDUM OF UNDERSTANDING - 5
Reasonable evaluations of such programs and efforts, commensurate with their costs,
wil be accomplished and reported. The Utilities wil include these expenses in the
calculations which determine a cost-effective DSM portolio.
Prudency Determination
8. A utility may request a DSM prudency review at any time.
9. The Parties recognize that planning, implementing, and evaluating DSM
programs are not a precise scienæ; they require the application of judgment and
experience. Utilities are encouraged to continually review these programs and make
appropriate program improvements.
10. Within that context, review of utility demand-side management expenses
for prudency shall take into consideration utility compliance with the planning,
evaluation, and reporting guidelines listed above. A showing by the utility that it made a
good faith effort to reasonably perform within these guidelines wil constitute prima facie
evidenæ that the utility's DSM expenses were prudently incurred for cost recovery
purposes. By its performing within these guidelines, assuming there is no evidence of
imprudent actions or expenses, the utility can reasonably expect that in the ordinary
course of business Staff wil support full cost recovery of its DSM program expenses.
Treatment of 2008 and 2009 Expenditures
11. Recognizing that their 2008 DSM reports have already been filed, the
Utilities need not amend those reports, but instead wil combine evaluation reporting for
2008 with 2009 in their 2009 reports to be filed in 2010. Because it is not possible to
comply exactly with the requirements listed above for the historical expenses of 2008
and 2009, Parties agree to include as many components as possible in the 2010 Annual
MEMORANDUM OF UNDERSTANDING - 6
OSM Report. Staff agrees to provide reasonable and necessry leeway for the
implementation of the guidelines described in this MOU for the 2010 DSM reports.
12. Staff agrees that Avista Utilities may re.file its 2008 DSM prudency
reuests that were deferred in AVU.E-Q9-Q1 and AVU-G-9-1 as full-year prudency
requests that will not be opposed by Staff.
~2tnmission Not Bound by TJis Memorandum of Understanding
13. . The parties to this Memorandum of Understanding acknowledge that the
Commission Staff binds only itself and has no explicit or implicit authonty to bind the
Idaho Public Utilties Commission.
IN WITNESS WHEREOF, the Parties hereto have caused this Memorandum to
be executed in their respeive names on the dates set fort below.
Dated tlis,.S;. day of BeeeffšeraQQg.
cr~:2010
IDAHO PUBLIC UTILITIES
COMMISSION STAFF
"d
Dated this ii..yof December 2009.
8ý:~ARaì1di
Repreentng the . Idaho Public
Utilites.. Commisslöì1...Stáff
IDAHO POWER COMPANY
¡.~
Dated this .; day of December 2009.AVISTA UTILITIES
MEMORANDUM OF UNDERSTANDING - 7
Dated this ¿; day of December 2009.
MEMORANDUM OF UNDERSTANDING - 8
ROCKY MOUNTAIN POWER
ATTACHMENT NO.1
Staff Expectations for Cost-Effectiveness Tests, Methods and Evaluations
1. Cost Effectiveness Measurements. As stated at the October 5, 2009,
DSM evaluation workshop, Staff believes that prudent DSM management requires that
cost-effectiveness be analyzed from a wide variety of perspectives, including the
ratepayer impact perspective, and that all programs and individual measures should
have the goal of cost-effectiveness from the total resource, utility, and participant
perspectives. (See IPUC Order No. 22299 issued January 27, 1989, and Order No.
28894 issued November 21, 2001.) If a particular measure or program is pursued in
spite of the expectation that it will not, itself, be cost-effective from each of those three
perspectives, then the annual DSM report should explain why the measure or program
was implemented or continued.
2. Net-to-Gross Adjustments. The net-to-gross issue was also discussed at
the evaluation workshop. Some of the references that the utilities assert that they use,
such as the California Standard Practice Manual, actually require that all tests be done
on a net savings basis. Staff continues to assert that most programs and measures
have a significant number of participants who would have installed the measure or
changed their behavior in the absence of the utility program. Absent new evaluation
research to provide a basis for the net-to-gross adjustments used by each utility, the
utility has the burden of explaining the source of its net savings adjustments or lack
thereof. Staff wil continue to assess whether utility cost-effectiveness estimates
suffciently and prudently include net-to-gross adjustments.
3. Third-Part Evaluators. Independence of evaluators from program and
portolio management is another important issue that was discussed at the evaluation
workshop. While it was generally agreed that not all evaluations need to be performed
by third-party evaluators, Staff believes such evaluations tend to be perceived as being
more objective and transparent, and thus more credible, than evaluations performed by
utility staff, all other factors being equal. While Staff wil review all evaluations and may
MEMORANDUM OF UNDERSTANDING - 9
review any evaluation in depth, utilities should expect that their self-evaluations may be
scrutinized more closely than third-part evaluations, as may the programs themselves.
4. Estimating Non-Energy Benefits. Non-energy benefits are important and
prudent factors to assess in analyzing cost-effectiveness and determining incentive
levels, but Staff cautions against creating confusion by subtracting the estimated value
of non-energy benefits from program and measure costs when reporting DSM costs on
a cents per kWh basis.
5. Contractor Costs. After DSM reports are filed in 2010, Staff may
reconsider whether to require inclusion of specific contract amounts paid to contractors
in subsequent DSM reports.
6. Suggested Resources. In addition to the several evaluation,
measurement, and cost-effectiveness manuals that were discussed at the workshop,
Staff suggests it may be useful for utilties to generally follow the guidelines in the
National Action Plan for Energy Effciency's Model Energy Effciency Program Impact
Evaluation Guide, released November 2007. Another of NAPEE's reports titled
Understanding Cost-Effectiveness of Energy Effciency Programs: Best Practices,
Technical Methods, and Emerging Issues for Policy-Makers may also be usefuL.
MEMORANDUM OF UNDERSTANDING -10