20100422Comments.pdf

Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
RICHARDSON & O'LEARY, PLLC
515 N. 27th Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter(ßrichardsonandolean.com
greg(ßrichardsonandoleary.com
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Attorneys for the Industrial Customers of Idaho Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
CONW ANY FOR AUTHOIDTY TO
FUN ITS CONTINED
PARTICIPATION IN THE
NORTHWEST ENERGY EFFICIENCY
ALLIANCE FOR THE PEIDOD 2010-
2014
) CASE NO. IPC-E-IO-04
)
) COMMENTS OF THE INDUSTRIAL
) CUSTOMERS OF IDAHO POWER
)
)
)
)
Pursuant to Rule 203 of the Rules of Procedure of the Idaho Public Utilties Commission
(the "Commission") and the Commission's Notice of Modified Procedure served March 24,
2010, the Industrial Customers of Idaho Power ("ICIP") hereby fie these comments. As
discussed below, ICIP opposes the joint application ofthe Northwest Energy Efficiency Alliance
("NEEA") and Idaho Power Company ("Idaho Power" or the "Company") to increase fuding
for NEEA, and respectfully urges the Commission not to authorize increased expenditure on
NEEA programs from Idaho Power's energy efficiency rider fuds.
BACKGROUND
Idaho Power first began paricipating in NEEA in 1997, and the Commission has allowed
the Company to recover its costs in its rates. See, e.g., Order Nos. 27045, 27124, 27877, and
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28211. The Commission increased Idaho Power's energy efficiency rider to 1.5% of base rates
in May 2005, and to 2.5% of base rates in May 2008, in par, to continue fuding NEEA. See
Order Nos. 29784 and 30560; Application, at p. 3. In March 2009, the Commission approved
Company fees paid to NEEA through 2007. See Order No. 30740.
In May 2009, the Commission approved a fuher increase in the energy efficiency rider
to 4.75% of base rates, from which Idaho Power has projected it wil collect over $33 milion in
2010. See Direct Testimony of Tim Tatum, Exhibit No.3, Case No. IPC-E-09-05 (March 16,
2009). In the case approving that recent increase in the rider, one par requested that the
Commission increase rider fuding above 4.75%, in par, to "allow for additional fuding for
NEEA." See Order No. 30814, at p. 3. But the Commission did not approve a rider rate above
4.75%, and thereby implicitly rejected increased fuding of NEE A as an adequate basis to raise
the rate higher. Id
In ongoing Case No. IPC-E-10-09, the Company seeks Commission approval of
expenditure of approximately $1.8 milion in the years of 2008 and 2009 for NEEA programs.
Now, with this joint application, NEEA and Idaho Power request the Commission's approval of
continued funding for NEEA from the energy effciency rider. The joint application contans
NEEA's five-year business plan for 2010 to 2014, which calls for an increased NEEA budget of
$191.7 milion for that period. Application, at p. 4. Idaho Power's share would be $16,522,800
over five years, which is approximately $3,304,560 anually. That is a substantial increase in
anual fuding for NEEA from 2009, which was $919,850. See Idaho Power Company's
Demand-Side Management 2009 Annual Report, Appendix 2, p. 124. According to Staffs
comments fied in this case today, Idaho Power's share of NEE A fuding would increase from
6.4% in 2009 and prior years to 8.4% going forward, and NEEA's anual, overall budget for
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2010 to 2014 has nearly doubled. Staff's Comments, at p. 3. And the joint application states that
NEEA's programs' costs per unt of energy saved will increase from their historical price of 2
cents per kWh to a future price of3.5 cents per kWh. Application, at p. 13.
Thus, although the joint application does not expressly state so, it appears to be a request
for advanced approval or prudency determination of increased fuding to NEEA. The joint
application does not expressly include a request to increase the energy efficiency rider rate above
4.75% at this time, but nor does it explain to which demand side management ("DSM")
programs Idaho Power wil decrease fuding in order to pay over $2 milion per year more to
NEEA.
DISCUSSION
Cost-effectiveness needs to be the governng factor of Idaho Power's DSM programs to
ensure that ratepayer funds achieve the greatest demand-side reductions for ratepayer benefit.
The Company should be using ratepayer fuds from the energy efficiency rider to achieve the
greatest demand reduction and highest cost effectiveness. Because the pool of DSM fuds is
limited, an increase in funding of NEEA wil result in a decrease in fuding for some other DSM
program. Thus, the joint application to increase NEEA's share of rider funds must demonstrate
NEEA's five-year business plan wil result in more energy savings to Idaho ratepayers than
could be achieved with alternative use of those funds. ICIP respectfully submits that the joint
application fails that test.
ICIP believes that the most effective DSM programs are those that directly incentivize
the customer to achieve electricity demand reductions. For example, Idaho Power's industrial
DSM programs incent industrial customers to reduce demand, and the industrial customers have
achieved far greater demand reductions per dollar spent than achieved for any other customer
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class. See Idaho Power Company's Demand-Side Management 2008 Annual Report, at p. 8.
The Commission has allowed industrial customers the option to be "self-directed" to use energy
effciency rider funds themselves for qualifying projects and, alternatively, has approved a
streamlined process for industrial customers to obtain incentive payments for customized DSM
projects through the "Custom Efficiency Program." See Order No. 29784, at pp. 8-11. The
Commission has determined that "( a)llowing Schedule 19 customers and the three special
contract customers to design DSM projects for their specific facilities will promote energy
efficiency." Id at 10. The Commission was correct because in 2009 the Custom Effciency
Program achieved a very low total resource cost of 2.4 cents per kWh saved and a utility cost of
only 1.3 cents per kWh saved. See Idaho Power Company's Demand-Side Management 2009
Annual Report, at p. 71. Those are realized benefits of a direct incentive program with proven
effectiveness for Idaho ratepayers.
NEEA's projected future costs of 3.5 cents per kWh, in contrast, are directed at market
transformation, and are inherently more difficult to evaluate. See Application, at p. 13. The joint
application in this case insists that Idaho Power can "better leverage" its energy efficiency
investment by paricipating in NEEA's regional market transformation programs, and by pooling
resources with other energy effciency program operators. In theory, this makes sense. But the
Commission has always required Idaho Power "to establish that it has been prudent in
paricipating in NEEA through. .. ensuring that, on the whole, the Company's Idaho ratepayers
wil benefit through Idaho Power's paricipation in NEEA through more efficient use of energy
resources." Order No. 27877 (emphasis added). Moving the fuds out of state and pooling them
with fuds from other entities to be spent on regional programs makes it diffcult to track the
fuds and benefits. The Commission has noted to difficulty in tracking the success of NEE A's
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programs. See Order No. 30814, at p. 5. (noting the "imprecise allocation of NEE A savings" as
a complicating factor in evaluating effectiveness of DSM programs directed at different customer
groups). ICIP submits the money should stay in Idaho and go towards Idaho-specific programs.
ICIP does not dispute the potential for general, societal benefit of NEEA's efforts, and
some individual ICIP members have received some benefit from working with NEEA. But ICIP
questions whether most of NEE A's programs directly reduce demand on Idaho Power's system.
Indeed, some of NEE A's Idaho programs, even if successful, will not necessarly reduce demand
on Idaho Power's system, or even within the region.
For example, the joint application refers to NEEA's support and achievements with
ENERGY STAR homes. Aplication, at p. 5. That regional program seeks to incent building of
"homes that are at least 20 percent more energy effcient than those built to standard Idaho
Code." See Idaho Power Company's Demand-Side Management 2009 Annual Report, at p. 34.
The program certifies effective insulation, high-performance windows, tight construction and
sealed ductwork, energy-effcient lighting, ENERGY STAR qualified appliances, and efficient
heating and cooling equipment. Much of the benefits would therefore increase effciency in
home heating or water heating. But, as Idaho Power and NEEA acknowledge in footnote 5 of
the joint application, less than 10% ofIdaho Power's customer base uses electric resistance space
and electric water heat for their homes. The vast majority of homes in Idaho Power's territory
rely on natural gas - not electricity - for those needs. Also, many of the benefits of effcient
appliances are limited to decreased water use. So, while promoting ENERGY STAR homes is
commendable in general, it does not achieve the tageted electricity demand reductions that the
Commission should require for the benefit of Idaho Power ratepayers.
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Likewise, the joint application discusses NEEA's "Consumer Electronics Initiative,"
which incentives purchases of televisions, computers, and other home electronics. Application,
at pp. 6-7. But there is no way to require that a home electronic device bought due to this
incentive program actually replaced an existing electronic device in Idaho Power's territory.
Footnote 8 of the joint application admits that "zip code level tracking" of the benefits of this
program is not always feasible. The appliance and its energy savings could end up in a home not
even served by Idaho Power, or, worse yet, it could increase energy use on Idaho Power's system
by being a second or third electronic device of that type put in use in a home served by Idaho
Power.
In light of the difficulty in tracking the benefits of NEE A's programs to Idaho ratèpayers,
third pary review ofthose programs and their cost-effectiveness for Idaho ratepayers is essentiaL.
But NEEA and Idaho Power indicated in response to ICIP's production request number 7 that the
anual third pary evaluations and third party audits referred to on pages 13 and 14 of the joint
application do not specifically track the benefits ofNEEA's programs to Idaho Power ratepayers.
Rather, NEEA and Idaho Power stated in that discovery response that the "Operational Audit
included in the NEEA agreement does not evaluate cost-effectiveness of programs; it evaluates
how well the organzation's strcture is at making decisions and executing organzation
objectives." In other words, it is not clear that NEEA and Idaho Power plan to evaluate the
direct benefit of NEEA's programs to Idaho ratepayers who are fuding them, or to evaluate
whether Idaho ratepayers are receiving a fair energy-saving benefit for their NEEA contribution.
the application itself admits that zip code level traching of these regional efforts is often not
feasible. See Application, at p. 14 n.8.
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In short, increasing funding to NEEA is not prudent at this time. The Commission has
implicitly rejected a request to raise the energy effciency rider above 4.75% to increase funding
to NEEA in the recent past. See Order No. 30814, at pp. 3, 5. And nothing in the joint
application in this case justifies increased fuding to NEEA at this time. ICIP is opposed to
raising the energy efficiency rider above 4.75%, especially at a time when the economy is
strggling. An increase in funding of NEEA wil necessarily result in a decrease in fuding for
some other DSM program. The joint application does not explain what program will get
decreased fuding. ICIP sllbmits that Idaho Power should spend the DSM money on programs
that provide easily measurable reductions in demand on Idaho Power's system, not on increased
fuding of NEE A's broadly focused, regional, market transformation programs.
CONCLUSION
ICIP respectfully requests that the Commission deny the joint application and its implicit
request for authorization for increased fuding of NEE A.
Respectfully submitted this 22nd day of April 2010,
RICHARDSON & O'LEARY, PLLC
s
A rn for the Industrial Customers of
Idaho Power
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