20101213Application.pdf

LISA D. NORDSTROM
Lead Counsel
Inordstrom(aidahopower.com
HIDA~POR(I
An IDACORP Company
December 10, 2010
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-10-46
IN THE MATTER OF THE APPLICA TlON OF IDAHO POWER COMPANY
REQUESTING APPROVAL OF REVISIONS TO THE IRRIGA TlON PEAK
REWARDS PROGRAM, SCHEDULE 23
Dear Ms. Jewell:
Enclosed for filng please find an original and seven (7) copies of Idaho Power
Company's Application in the above matter.
In addition, enclosed are nine (9) copies of Peter Pengily's testimony filed in support
of the Application. One copy of Mr. Pengily's testimony has been designated as the
"Reportets Copy." In addition, a disk containing a Word version of Mr. Pengily's testimony
is enclosed for the Reporter.
Very truly yours,
t: ~~. 'f ONh-
Lisa D. Nordstrom
LDN:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise. 10 83707
,
LISA D. NORDSTROM (ISB No. 5733)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
Inordstromayidahopower.com
dwalkerayidahopower.com
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Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY
REQUESTING APPROVAL OF
REVISIONS TO THE IRRIGATION PEAK
REWARDS PROGRAM, SCHEDULE 23
)
) CASE NO. IPC-E-10-46
)
) APPLICATION
)
)
COMES NOW, Idaho Power Company ("Idaho Powet' or "Company") and, in
accordance with Idaho Code §§ 61-502 and 61-503 and RP 052, hereby requests the
Idaho Public Utilties Commission ("IPUC" or "Commission") issue an order on or before
March 1, 2011, authorizing prospective changes to its Irrigation Peak Rewards Program
(Schedule 23). In support of this Application, the Company submits the following:
I. BACKGROUND
1. Schedule 23, Irrigation Peak Rewards Program ("Program"), is a voluntary
load control program currently available to agricultural irrigation customers receiving
service under Schedule 24, Agricultural Irrigation Service. The purpose of the Program
APPLICATION - 1
l
is to produce a decrease in the Company's system summer peak by turning off
specified irrigation pumps with the use of one or more load control devices during the
period of June 15 through August 15 (the "Program Season"). If not for the Program,
growing summer peak loads would likely require the construction of additional simple-
cycle gas peaker capacity to meet system load requirements a few hours each year.
The Program's benefit/cost ratio as reported in the Demand-Side Management 2009
Annual Report is expected to be 1.50 over a 20-year period.
2. Under the Program, the Company turns off specified irrigation pumps
behind a participating metered service point ("Metered Service Point") any Monday
through Saturday during the Program Season between the hours of 1 :00 p.m. and 8:00
p.m. Mountain Daylight Time ("MTD"). The Company utilizes either dispatchable or
timer-based load control devices to turn off specific irrigation pumps for a limited
number of hours during load control events. Customers with Metered Service Points
having more than one pump and at least 1,000 cumulative horsepower may elect to
manually turn off participating irrigation pumps during load control events. In exchange
for allowing the Company to interrupt electric service to specified irrigation pumps,
participating customers receive a monthly monetary incentive in the form of a bil credit
for usage that occurs during the calendar months of June, July, and August for each
Metered Service Point enrolled in the Program.
II. 2010 PROGRAM REVIEW
3. In 2010, the Company enhanced its traditional annual review by
conducting an additional study in conjunction with its 2011 Integrated Resource Plan
("IRP") analysis. This study was conducted in an effort to ensure that the Program's
APPLICATION - 2
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design is aligned with the resource needs identified by the IRP. The primary objectives
of this effort were to: (1) leverage the IRP analysis to determine the Company's future
capacity needs that can be cost-effectively met with demand response and (2) design
and operate demand response programs in a manner that satisfies the identified
resource need. The proposed Program modifications are a direct result of that analysis,
which is described in the accompanying testimony of Peter Pengily, Customer
Research and Analysis Leader.
4. After a thorough review of resource need and demand reduction potential,
the Company has concluded that its need for demand response extends beyond 8:00
p.m. to at least 9:00 p.m. Further, the Company has concluded that its annual capacity
need during the highest 60 hours of demand is expected to vary by more than 50
percent (167 megawatts) during the next five years.
5. Based upon the findings and conclusions reached by the Company in its
2010 Program review and analyses, a number of potential Program modifications were
indentified. First, in response to the need for load reduction until 9:00 p.m., the
Company explored methods by which it could extend the interruption period for a subset
of participants. Second, based upon the anticipated annual variations in capacity
needed, the Company explored a number of methods to better align annual Program
costs with the annual capacity need. That is, the Company explored modifications to
the Program's cost structure that would move from the current 100 percent fixed
incentive structure to a cost structure that would allow for some portion of the incentive
costs to vary in proportion to the projected capacity need.
APPLICATION - 3
,.
II. PROPOSED PROGRAM MODIFICATIONS
6. In response to the issues identified in its 2010 Program review, the
Company proposes several Program modifications. The following Program changes
are more fully explained in the testimony of Mr. Pengily that accompanies this
Application.
7. First, Idaho Power seeks to include the 8:00 p.m. to 9:00 p.m. MDT hour
as an "Extended Interruption" option on a voluntary basis. Customers who are wiling to
accept an extended interruption period wil receive a higher incentive payment for event
hours. In return, Idaho Power wil be able to reduce loads across the entire peak
period.
8. Second, the Company proposes to change the incentive structure for the
Program from a fixed incentive payment methodology to a methodology that combines a
fixed and variable incentive payment. The proposed incentive structure pays
participants a portion of their total incentive for being a participant in the Program (fixed)
and a portion based on how much the Company utilzes the Program (variable). Having
a portion of the incentive based on the actual utilzation of the resource wil more closely
align the cost of demand response with the variable capacity needed. The Company is
not proposing any changes to the incentive structure for the Timer Option. For
Dispatchable Options 1, 2, and 3, the participants wil be paid a fixed Demand Credit of
$5.00 per kilowatt ("kW") and an Energy Credit of $0.0038 per biled kilowatt-hour
("kWh"). The variable portion of the incentive wil be comprised of a $0.35 per kWh
calculated as the Biling Demand multiplied by the interruption hours of the Program.
Participants wiling to reduce demand in the 8:00 p.m. to 9:00 p.m. hour wil receive a
APPLICATION - 4
variable incentive payment of $0.40 per kWh, calculated as the Billng Demand
multiplied by the interruption hours of the Program. Exhibit No. 2 to Mr. Pengily's
testimony details the incentives and provides examples of these incentive payments at
different hours of interruption.
9. Third, to encourage equipment testing and participant familarity with the
Program, Idaho Power recommends that the Program be modified to allow one Program
test event per Program Season that is not subject to a variable payment.
10. Fourth, Idaho Power would modify the requirements under the Program's
Dispatchable Option 3 to align with the proposed incentive structure. Under the
Company's proposed changes to Dispatchable Option 3, a participant's fixed incentive
payment wil be calculated based on the participant's nominated load reduction and
energy use if no load control events are dispatched. This wil reduce the chance of the
Company overpaying participants if no load control events are dispatched. Instead of
basing load reduction for Dispatchable Option 3 participants on the maximum demand
in the 24 hours prior to an event, Idaho Power proposes to calculate the Program kW
based upon the average demand between 10:00 p.m. and 11 :00 a.m. MDT prior to an
event, as measured in kW over the load profile metering intervals, during each load
control event initiated during a Biling Period. The Company believes this calculation
wil more accurately represent the load reduction provided by the customer and
minimize the risk of paying for demand reduction not actually received by the Company.
11. Finally, for ease of customer calculation, the Company also proposes a
$1.00 per kW opt-out penalty for all Dispatchable Interruption Options rather than the
current opt-out penalty of $0.005 per monthly biled kWh per opt-out occurrence for
APPLICATION - 5
customers selecting the Dispatchable Interruption Options 1 and 2. Currently,
Dispatchable Option 3 participants do not pay an opt-out penalty and have no incentive
to provide the full load reduction nominated into the Program.
12. Overall, the proposed Program modifications are reflective of a
collaborative process in which Idaho Power received feedback from numerous
stakeholder groups, including the Idaho Irrigation Pumpers Association, the
Commission Staff, the Energy Effciency Advisory Group; and the Integrated Resource
Plan Advisory CounciL. The revised Program, as proposed, wil more closely align
Program incentives with the Company's need for demand response. The Company wil
continue to monitor the Program's performance and report on Program results each
year through the Demand-Side Management Annual Report.
13. The proposed modifications to tariff Schedule 23, Irrigation Peak Rewards
Program, are set forth in both legislative and final format in Attachment No. 1 to this
Application.
iv. MODIFIED PROCEDURE
14. Idaho Power requests this Application be processed under Modified
Procedure, Le., by written submissions rather than by hearing. RP 201, et seq. If,
however, the Commission determines that a technical hearing is required, the Company
stands ready to present testimony and support the Application in such hearing. In
support of this Application, Idaho Power has submitted the pre-filed direct testimony of
Peter Pengily, Idaho Powets Customer Research and Analysis Leader. Mr. Pengily's
testimony discusses the need and limitations for load control and demand response at
Idaho Power and summarizes the recent costs and operational results of the Program.
APPLICATION - 6
His testimony lays the foundation for continued demand response and details the
rationale underlying the Company's proposed changes.
15. Should the Commission approve the Company's request, an Order issued
by March 1, 2011, would allow adequate time for the marketing and communication of
the revised Program prior to the 2011 irrigation season. Under the current Program,
new applicants must submit their applications prior to March 15. A March 1 Order wil
allow approximately two weeks for potential applicants to consider the modified
Program design.
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
16. Communications and service of pleadings with reference to this
Application should be sent to the following:
Lisa D. Nordstrom
Donovan E. Walker
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
Inordstromayidahopower.com
dwalkerayidahopower.com
Greg Said
Scott Sparks
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
gsaidayidahopower.com
ssparksayidahopower.com
Vi. CONCLUSION
17. For the reasons set forth above and in the testimony that accompanies
this Application, Idaho Power respectfully requests that the Commission issue its Order
on or before March 1, 2011, approving the requested program modifications to its
Irrigation Peak Rewards Program (Schedule 23).
APPLICATION - 7