20101124notice_of_application_order_no_32121.pdf

Office of the Secretary
Service Date
November 24 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AN INVESTIGATION
OF APPROPRIATE COST RECOVERY
MECHANISMS FOR IDAHO POWER'
ENERGY EFFICIENCY PROGRAMS NOTICE OF APPLICATION
CASE NO. IPC-10-
NOTICE OF
INTERVENTION DEADLINE
ORDER NO. 32121
YOU ARE HEREBY NOTIFIED that on October 22, 2010, Idaho Power filed an
Application requesting that the Commission issue an Order "accepting the Company s demand-side
resources business model." Application, p. 1. The Application seeks authorization to adjust ways
for the Company to recover the costs of its energy efficiency programs. More specifically, the
Company proposes to (1) move certain demand response incentive payments into the Power Cost
Adjustment on a prospective basis beginning June 1 , 2011; (2) establish a regulatory asset for
Custom Efficiency program incentive costs beginning January 1 , 2011; and (3) change the carrying
charge on the Energy Efficiency Rider from the customer deposit rate to the Company s authorized
rate of return. Application, p. 1.
YOU ARE FURTHER NOTIFIED that Idaho Power identified several objectives with
its Application, including addressing a growing negative balance in the Energy Efficiency Rider
account, and implementing a realistic earnings opportunity for Idaho Power for its investments in
the demand-side resource (DSR) programs. Application, p. 5. Currently, all costs for DSR
programs are recovered through the Energy Efficiency Rider (Schedule 91), which is presently
75% of base rates. The Rider balance has been negative since April 2008 and is now negative by
more than $16 million. Application, p. 5. The Company estimates the 2010 year-end negative
balance of$17 009 140 in the Rider account will grow to a negative $29 677 151 in 2012.
YOU ARE FURTHER NOTIFIED that Idaho Power requests authority to remove
recovery of customer and contractor incentive payments for the Company s demand response
programs from the Rider balancing account to the PCA for 100% recovery on a prospective basis.
The Company has three demand response programs that include incentive payments: (1) the AlC
Cool Credit program which provides summer peak reduction benefits by cycling participating
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 32121
residential customers ' air conditioning units; (2) the Agricultural Irrigation Peak Rewards program
which switches off participating customer irrigation pumps during times when additional system
peak resources are needed; and (3) the Flex Peak Management program, which reduces commercial
and industrial loads when called upon during system peak times. Application, p. 6. The Company
states the demand response incentive payments are expected to be nearly $13.7 million in each 2011
and 2012. Application, p. 7. The Company proposes to include these costs in the PCA consistent
with the current PCA methodology. The Company would forecast demand response incentive
payments to be included in PCA rates effective June 1 , 2011. In a future filing, the Company will
request that a normal or base level of expenses for incentive payments be placed into base rates.
Each year as part of the PCA case, the forecasted level of payment expenses would be compared to
the normal level included in base rates to determine the level of demand response cost recovery to
be included in the PCA forecast. Deviations between actual demand response incentive costs and
forecasted costs would be included in the following year s PCA true-up.
YOU ARE FURTHER NOTIFIED that Idaho Power also proposes to change the method
for recovering a separate portion of energy efficiency program incentive costs currently recovered
through the Rider balancing account. Specifically, the Company proposes to capitalize the direct
incentive payments associated with the Custom Efficiency program to enable the Company to earn
a return on this portion of its demand-side resource activities. The Company proposes to start
booking these incentive payments to a regulatory asset account beginning January 1 , 2011.
Application, p. 8. The balancing account would be included in the Company s revenue requirement
in future rate cases with a four-year amortization period. The Custom Efficiency program began in
2003, and in 2008 and 2009, the program saved 41 059 and 51 836 MWh, respectively. The
Company estimates Custom Efficiency incentive payments to be approximately $5.2 million in
2011 and $5.6 million in 2012. The investments made under the program are tangible assets like
lighting upgrades and motor rewinds that are owned by customers rather than by Idaho Power.
Application, p. 9.
YOU ARE FURTHER NOTIFIED that the Company states that if the Commission
implements the two proposals, the 2010 Rider balance of negative $17 million is projected to shrink
to a negative $3 356 306 in 2011 , and start reducing the negative balance in the Rider account.
Application, p. 10. The Company expects the Rider balance account to approach zero in the middle
of2012. Id.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 32121
YOU ARE FURTHER NOTIFIED that the Company also requests that the Commission
authorize a carrying charge on the Energy Efficiency Rider. The Company expects it will take
almost two years to eliminate the negative balance in the Rider account if the Company s proposals
are implemented. The Company requests that the Commission authorize a carrying charge on the
remaining balance the same as the Company s authorized rate of return (currently 8.18 overall rate
of return with a 10.5 return on equity component) rather than the interest rate on customer deposits
which currently is 1 %. Application, p. 9.
YOU ARE FURTHER NOTIFIED that the Application together with supporting
testimonies and exhibits have been filed with the Commission and are available for public
inspection during regular business hours at the Commission offices.. The Application and
testimonies and exhibits are also available on the Commission s web site at www.puc.idaho.gov
clicking on "File Room" and then "Electric Cases.
DEADLINE FOR INTERVENTION
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter for
the purpose of presenting evidence or cross-examining witnesses at hearing must file a Petition to
Intervene with the Commission pursuant to the Commission s Rules of Procedure 72 and 73
IDAP A 31.01.01.072 and .073. Persons intending to participate at hearing must file a Petition to
Intervene no later than fourteen (14) days from the service date of this Order. Persons seeking
intervenor status shall also provide the Commission Secretary with their electronic mail address to
facilitate further communications in this matter.
YOU ARE FURTHER NOTIFIED that persons desiring to present their views without
parties' rights of participation and cross-examination are not required to intervene and may present
their comments without prior notification to the Commission or to other parties.
YOU ARE FURTHER NOTIFIED that once the deadline for intervention has passed
the Commission Secretary shall issue a Notice of Parties. The Notice of Parties shall assign exhibit
numbers to each party in this proceeding.
YOU ARE FURTHER NOTIFIED that after the Notice of Parties is issued, the
Commission anticipates that the parties will informally convene to devise a recommended schedule
to process this case. In addition to the schedule, the parties may discuss discovery logistics
electronic service, and other scheduling matters.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 32121
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over this
matter pursuant to Title 61 of the Idaho Code and specifically Idaho Code ~9 61-124, 61-125 , 61-
307, 61-502, 61-503 , and 61-507. The Commission may enter any final Order consistent with its
authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted
pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that persons desiring to intervene in this case for the
purpose of presenting evidence or cross-examination at hearing shall file a Petition to Intervene
with the Commission no later than fourteen (14) days from the service date of this Order.
IT IS FURTHER ORDERED that after the Notice of Parties is issued, the Staff shall
informally convene a prehearing conference with the parties to discuss the processing of this case.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;;..3
rJ:
day of November 2010.
~ff.
. KEMPTON, P SIDENT
MARSHA H. SMITH, COMMISSIONER
~LA~
MACK A. REDFORD , C MMISSIONER
ATTEST:
Commission Secretary
bls/O:IPC-I 0-27 _
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 32121