20100414final_order_no_31039.pdf

Office of the Secretary
Service Date
April 14 2010
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
ORDER NO. 31039
CASE NO. IPC-09-
In its 2008 rate case, Case No. IPC-08-, Idaho Power requested that the Commission
find that its 2002-2007 expenditures on demand-side management (DSM) programs, funded by an
Energy Efficiency Rider, were prudently incurred. Total Rider expenditures during the period were
approximately $29 million. The Commission deferred a determination regarding the prudency of the
expenditures until the Company provided additional information to evaluate the programs
effectiveness. In February 2009, Idaho Power and Staff filed a Stipulation in that case establishing
the prudency of a portion of the Rider funds the Company spent during the five-year period. The
Stipulation addressed $14.3 million the Company spent on specific DSM programs as well as
payments Idaho Power paid for membership in the Northwest Energy Efficiency Alliance. Order No.
30740 p.l. The Commission subsequently issued an Order finding that "the Stipulation identifying
approximately $18.3 million in energy efficiency expenditures for 2002-2007 as prudent to be just
reasonable, and in the public interest." Order No. 30740 p. 2. The Stipulation approved by the
Commission also required the Company to file a pleading with the Commission seeking a prudency
determination for the balance of Rider funds spent during 2002-2007. On April 1 , 2009, Idaho Power
filed an Application requesting the Commission find the remaining $14 657 971 in 2002-2007
Energy Efficiency Rider expenditures to be prudently incurred expenses.
Following the filing of the Company s Application, Staff and Idaho Power continued to
discuss ways to evaluate the effectiveness of the Company s demand-side management (DSM)
programs. On October 5 , 2009, Staff hosted a DSM evaluation meeting, including a consultant
retained by the Commission, to discuss appropriate levels of objective and transparent evaluation of
DSM programs. As a result of the informal workshop and follow-up discussions, Idaho Power and
Staff agreed to terms for an annual, comprehensive utility DSM report, as set forth in a Memorandum
ofDnderstanding (MOD). The MOD provides terms for Idaho Power to manage, plan, evaluate, and
report its DSM activities to the Commission. In addition, Staff and the Company signed a Stipulation
agreeing that the remaining balance of Rider funds spent during 2002-2007 ($14 657 971) were
prudent expenditures and should be approved for ratemaking purposes.The Memorandum of
ORDER NO. 31039
Understanding providing terms for reporting and evaluating DSM expenditures and programs is
attached to the Stipulation.
On January 25 , 20 10, Idaho Power filed a Motion to Approve Stipulation requesting that
the Commission confirm that the $14 657 971 in Energy Efficiency Rider expenditures the Company
made between 2002-2007 were prudent. In addition, the Company asked the Commission to provide
feedback regarding the DSM reporting and evaluation terms discussed in the Memorandum of
Understanding. On February 8 , 20 10, the Commission issued a Notice of Application and Notice of
Idaho Power s Motion to Approve Stipulation, and Notice of Modified Procedure to process the
Application. Order No. 31000. The Commission s Notice did not establish a period for the filing of
reply comments and, after Staff and the Industrial Customers of Idaho Power filed comments, Idaho
Power filed a Motion to request an opportunity to file reply comments. The Commission granted the
Motion, and extended the comment period to March 19 2010.
The comments filed by the Industrial Customers address the two distinct aspects of Idaho
Power s Motion, that is, the Company s request for approval of the Stipulation establishing the
prudency of the Rider fund expenditures, and the Company s request for feedback on the terms of the
MOU. The substantive portion of the Stipulation addresses only the prudency of the $14 657 971
remaining from the balance of Rider funds spent during 2002-2007. Specifically, the Stipulation
states that Staff agrees that the remaining Rider fund balance "were prudent expenditures and should
be approved for ratemaking purposes." Stipulation, p. 3. The Stipulation does state that Staff and
Idaho Power agreed to terms for a more comprehensive annual DSM report and the Memorandum of
Understanding is attached to the Stipulation. The Stipulation does not indicate , however, that the
parties will seek approval of the MOU.
In its comments, the Industrial Customers stated it "will not challenge Staffs finding of
prudency as to Idaho Power s expenditure of the remaining $14.6 million spent from 2002 to 2007.
Industrial Customers Comments, pp. 4-5. However, believing the case "now includes a request for
Commission approval of the Memorandum of Understanding that will address future prudency
reviews " the Industrial Customers stated its opposition to Commission approval of the MOD.
The Industrial Customers ' concern about the Memorandum of Understanding prompted
reply comments from Idaho Power and Staff. Staff explicitly stated that it does not request that the
Commission approve the MOD. Staff Reply Comments, p. 2. The Company in its reply comments
noted that the MOU "explicitly and purposefully does not bind the Commission or other parties to its
principles in any regard.Idaho Power Reply Comments, p. 3. The Company stated it would be
ORDER NO. 31039
pleased if the Commission stated its approval of the MOU's guidelines, but acknowledged "that this
may be more than the Commission can offer at the present." Id.
Based on the pleadings filed in this case, including the Stipulation, it is clear that the only
determination for the Commission is regarding the prudency of $14 657 971 in Energy Efficiency
Rider expenditures that Idaho Power made between 2002 and 2007. None of the parties dispute the
prudency of those expenditures, and the Stipulation filed by the Company and Staff explicitly states
that the $14 657 971 remaining balance of Rider funds spent during 2002-2007 were prudent
expenditures and should be approved for ratemaking purposes. On this record, the Commission finds
that the $14.6 million of expenditures the Company made between 2002 and 2007 using Energy
Efficiency Rider funds for DSM programs were prudent and are hereby approved for ratemaking
purposes. Because the 2002-2007 DSM expenditures were made using tariff rider funds, however, a
determination that the expenditures were prudent will not affect customer rates.
The Industrial Customers recognize that "even if a utility implements Staffs prudency
guidelines and evaluation framework in the Memorandum of Understanding, the utility will still need
Commission approval of the expenditures in a formal filing, such as a general rate case.Industrial
Customers Comments, p. 7. The Industrial Customers and other interested parties will have an
opportunity in those proceedings to analyze and challenge the DSM evaluation at issue, regardless
whether the utility has evaluated and reported its programs consistent with the terms of the MOU.
Accordingly, we decline to discuss the terms of the MOU, other than to recognize that the MOU has
potential in evaluating and reporting Idaho Power s DSM programs. The Commission s future
review of particular DSM programs should be assisted, but will not be replaced by, Idaho Power
compliance with the terms ofthe MOU.
ORDER
IT IS HEREBY ORDERED that the Commission finds that $14 657 971 in Energy
Efficiency Rider expenditures that Idaho Power made between 2002 and 2007 were prudent and are
approved for ratemaking purposes.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 31039
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 'I
po.
day of April 20 I
ff.
KEMPTON SIDENT
MARSHA H. SMIT , COMMISSIONER
MACK A. REDFORD, COMMISSIONER
ATTEST:
Commission Secretary
bls/O:IPC-O9-09 ws3
ORDER NO. 31039