20090701final_order_no_30852.pdf

Offce of the Secretar
Service Date
July 1,2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION SEEKING
AUTHORITY TO IMPLEMENT A
COMMERCIAL AIR CONDITIONER
CYCLING PILOT PROGRAM
)
) CASE NO. IPC-E-09-12
)
)
) ORDER NO. 30852
)
On April 16, 2009, Idaho Power Company ("Idaho Power" or "Company") fied an
Application with the Commission, pursuat to Idaho Code §§ 61-502, 61-507, 61-508 and
Commission Rules of Procedure 52, seeking authority to implement a Commercial Air
Conditioner (AC) Cycling Pilot Program ("Program").
PROCEDURAL BACKGROUND
On May 12, 2009, the Commission issued a Notice of Application and Modified
Procedure establishing a 28-day comment period for interested paries to submit comments
regarding Idaho Power's Application. See Order No. 30804. Thereafter, Commission Staff and
an Idaho Power customer submitted comments within the established comment period. On June
12,2009, Idaho Power submitted reply comments.
THE APPLICATION
The Application describes the commercial AC Cycling Program ("Progra") as a
volunta program directed toward "small commercial customers similar to its curent residential
air conditioner cycling program, Schedule 81." Application at 2. The Program was developed in
response to "numerous inquiries and requests from its small commercial customers." Id at 2.
Idaho Power envisions that the Program wil allow the Company to evaluate the "pros and cons
of each type of cycling device(;)" ascertain the average kW reduction for each type of cycling
device; and "determine the peak load reduction potential" of Program paricipants. Id at 4.
Eligible customers include Schedule 7 and Schedule 9 secondar customers in Ada
and Canyon Counties with a base load capacity under 200 kW. Id. at 3. Under the terms and
conditions of the Program, Idaho Power retains discretion as to whether to select or reject
Program paricipants. Id Paricipating commercial customers can elect to either: (1) install a
direct load control device ("Device") similar to the one used in the residential program; or (2)
ORDER NO. 30852 1
instal a Programable Controllable Thermostat ("PCT") which allows "the Company to initiate
AC Cycling." Id
The Program will "ru for two (2) Air Conditioning Seasons (June, July, and August),
to allow suffcient data and operational information to be obtained in order to evaluate and
consider offering a full scale commercial program." Id at 2. The Company foresees that the
Program will enable the Company to address its "summer peaking requirements" by reducing
commercial AC use durng the summer peaking period. Id at 3. Additionally, the PCT may
"help reduce overall energy use" which could result in "potential savings to all of the Company's
customers." Id
Upon installation of either the PCT or Device at the customer's place of business,
customers will receive documentation and training on its use. Id at 4. Thereafter, the Company
wil have the capabilty to "initiate a cycling event" by sending a radio/paging signal to the PCT
or Device. Id A power line carier ("PLC") signal wil be used for customers with installed
Advanced Metering Infastrctue ("AMI"). Id The radio/paging signal system wil be replaced
by a PLC system as AMI installation is completed or the paging type switches require service.
Id at 5. Cycling events may last up to four hours, continuous or in varous segments, per day
durng the June-August AC season. Id at 4. Cycling events are limited to a total of 40 hours
each month and 120 hours per AC season. Id Compensation for Program paricipation will
consist of a $7.00 monthy payment for Device paricipants and the receipt of a PCT for PCT
paricipants. Id at 5.
Idaho Power requests that the "costs of the Program be paid by use of the Energy
Effciency Rider fuds collected under Schedule 91." Id The Company estimates that the costs
for the Program wil be approximately $325,500 for 2009 and $340,800 for 2010. Id In the
Application, Idaho Power expresses its opinion that due to higher installation costs, as compared
to the Residential AC Cycling Program, the commercial Program is not cost-effective at ths
point in time. Id The Company's opinion regarding the peak load reduction capabilty for either
the Device or PCT was informed by its consultation with other utilities operating similar
programs as well as other organizations such as the Advanced Load Control Allance. Id at 6.
However, the Company believes that the Program could become cost-effective if the "average
load reduction of at least 2 kW is achieved at a 50 percent cycling rate. . . ." Id
ORDER NO. 30852 2
The Company wil acquire data regarding the Program's potential to reduce peak load
by "installng data loggers on a sample of pilot paricipants." Id at 6. Idaho Power wil also
solicit and evaluate data regarding customer preference, level of comfort and overall satisfaction
with the Program. Id
The Application includes, as Attachment No.1, a copy of a proposed new tarff
Schedule 82 which includes a detailed description of the Program, terms and conditions for
Program paricipation and the discontinuation of Program paricipation. Id at 5; Atch. NO.1.
The Company requests that the Application be processed through Modified Procedure "as
expeditiously as is reasonably possible." Id at 7.
COMMENTS
A. IPUC Staff
Staff recommends that the Commission not approve Idaho Power's Application for
authority to implement a Commercial Air Conditioner Cycling Pilot Program. Staff Comments
at 4. Staf notes that Idaho Power's "research indicated a wide range of load reduction capabilty
has been achieved by other utilities' similar programs." Id at 3. Idaho Power admitted in its
Application that "a commercial Program may not be cost-effective" because Device and PCT
installation costs are higher than the simple switch installation costs for the Residential AC
Cycling Program. Id "The Program would be cost-effective if an average load reduction of at
least 2 kW is achievable at a 50% cycling rate. . . ." Id
Specifically, Staff cites: (1) an October 2, 2008, meeting of its Energy Effciency
Advisory Group (EEAG) wherein "the Company estimated the potential demand reduction for a
small commercial AC cycling program to range between just .88 kW and 1.54 kW per
thermostat(;)" and (2) "the scant information provided in (Idaho Power's) Application" as
support for its non-approval recommendation. Id. at 3-4.
Moreover, Staff believes that Idaho Power's plan to utilze a pilot program to gather
the data to evaluate the Program's "potential cost-effectiveness" is unnecessary. Id at 3.
According to Staff, the data "may be obtainable less expensively through varous surey and
analyses techniques." Id Staff reports that an Idaho Power representative revealed that the
Company considered the surey and analysis approach, "but it ultimately decided to proceed
with a two-year pilot, instead." Id
ORDER NO. 30852 3
B. Idaho Power Customer
On May 26, 2009, a manager of a Schedule 9 secondar customer submitted an e-
mail regarding Idaho Power's Application. The customer stated, "I'm not sure that $7.00 a
month is enough incentive to get businesses on board." The customer believes that a larger
incentive is waranted because small commercial customers like the business he manages will be
able to shave more peak demand than a typical residential customer. The customer expressed
interest in paricipating in such a program if a larger incentive were offered.
C. Idaho Power Reply
In response to Staff comments, Idaho Power stated that it "proposed this pilot
program because of the urging and support it received from its Energy Effciency Advisory
Group ("EEAG"), of which Staff is a participant." Idaho Power Reply Comments at 1. The
Company also noted that curently there are no demand response programs available for its small
commercial customers (Schedule 7 and Schedule 9 Secondary, fewer than 200 kW in demand)
and customers within ths group have made requests for an AC cycling program. Id
Idaho Power restated that it made "inquiries with other utilties and organzations that
operate small commercial A/C cycling programs" and that the Company leared from these
discussions that the average demand reduction for this tye of program "ranged from about 1 kW
to a high of about 9 kW per customer." Id at 2. "Some utilties reported demand reduction
savings in terms of per ton of cooling and these results have a range of 0.25 kW to 0.51 kW per
ton." Id
Idaho Power concedes that the "actual, achievable load reduction" is uncertain. Id
The Company would like to utilze the pilot program for "two A/C seasons" in order to
determine if "any customer segments wil deliver cost-effective peak demand reduction, . . . test
customer option preferences, and . . . obtain real operational data about its own system." Id. at 2-
3. The Company continues by stating that if a customer segment has achieved demand
reductions exceeding 2 kW and customers are satisfied with the program, "the Company could
possibly continue to implement a program." Id at 3. If the Commission authorizes the
Company to institute the pilot program then it requests that the program be funded by the Energy
Effciency Rider fuds. Id.
ORDER NO. 30852 4
COMMISSION DECISION AND FINDINGS
Based upon our review of the filings and the record in this case, the Commission
denies Idaho Power's Application for authority to implement a Commercial AC Cycling Pilot
Program. In doing so, the Commission finds that Idaho Power has failed to demonstrate that the
proposed pilot program would serve as a useful and cost-effective tool to mitigate the increasing
sumer peak demand of its small commercial customers.
As the Company acknowledged in its fiing, the achievable peak demand reduction of
the proposed pilot program could var greatly among its small commercial customers. The
Company canot reasonably assert that any segment of its small commercial customer class will
ultimately provide the required demand reduction, 2 kW, justifying the Program's
implementation.
The Commission wishes to emphasize that it is encouraged by the recent efforts put
fort by Idaho Power in the development and implementation of demand reduction programs.
Durng the past year alone, the Company has submitted several applications, e.g., IPC-E-08-16
and IPC-E-09-02, seeking the Commission's approval to implement measures aimed toward the
reduction of its overall system demand.
Nevertheless, there exists a limited amount of Energy Efficiency Rider funds from
which to finance such programs. Constrained by this fact, the Commission must be circumspect
in its decisions authorizing the allocation and deployment of these fuds. The deployment of
Rider funds must be reserved for programs wherein the Company has made a more definitive
showing that the costs of implementing the program will not exceed the benefits of demand
reduction.
CONCLUSIONS OF LAW
The Idaho Public Utilties Commission has jursdiction over Idaho Power, an electric
utilty, and the issues presented in this matter pursuant to its authority under Title 61 of the Idaho
Code, and the Commission's Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that the Application of Idaho Power Company for
authority to implement a Commercial Air Conditioner (AC) Cycling Pilot Program is denied.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by ths Order) may petition for reconsideration within twenty-one (21) days of the
ORDER NO. 30852 5
service date of this Order with regard to any matter decided in 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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this :3 "tJ.
day of June 2009.
~gNS~JI 13 KÉMPT6N, P~ SIDENT
~L(~
MARSHA H. SMITH, COMMISSIONER
ATTEST:~D~Je, D. Jewell~~
Co mission Secretary
O:IPC-E-09-IZ_npZ
ORDER NO. 30852 6