20111117Donohue Rebuttal.pdf

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IDAHO PUBLIC UTILITIES COMMISSIOiN:: ....
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IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR ) CASE NO.IPC-E-11-08
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC SERVICE )IN IDAHO. )
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REBUTTAL TESTIMONY OF STACEY DONOHUE
IDAHO PUBLIC UTILITIES COMMISSION
NOVEMBER 16, 2011
1 Q.Please state your name and business address for
2 the record.
3 A.My name is Stacey Donohue. My business address is
4 472 West Washington Street, Boise, Idaho.
5 Q.By whom are you employed and in what capacity?
I am employed by the Idaho Public Utilities6A.
7 Commission as a Utilities Analyst in the Utilities Division,
S focusing on demand-side management (DSM) issues and cases.
9 Q.What is your education, experience and background?
10 A.I received a B.A. in History from James Madison
11 University in 1999 and a Master's of Public Administration
12 (M.P.A.) from Boise State University in 2010. Prior to
13 joining the Commission Staff in 2010, I was employed as an
14 Energy Specialist at the Idaho Office of Energy Resources
15 where my main responsibility was managing the administration
16 of stimulus-funded grant projects. While completing my MPA,
17 I was hired by the Boise State University Department of
1S Public Policy and Administration to conduct survey research
19 and author a report on customer service and state-wide
20 interagency relationships for the Idaho Transportation
21 Department, which was presented to the lTD Board. I have
22 attended the New Mexico State University Center for Public
23 Utili ties' course in Practical Regulatory Training, the
24 National Regulatory Research Institute's course on
25 "Electricity's Current Challenges", the International Energy
CASE NO. IPC-E-11-0S
11-16-11 DONOHUE, S. (Reb) 1
STAFF
1 Program Evaluation Conference, as well as multiple web
2 trainings related to DSM issues. I serve on Idaho Power's
3 Energy Efficiency Advisory Group (EEAG), Avista's Energy
4 Efficiency Advisory and Technical Committees, and the
5 Regional Technical Forum's Policy Advisory Committee. In
6 addition, I have filed written comments representing Staff's
7 position in DSM related cases for all three Idaho investor-
S owned utili ties.
9 Q.What is the purpose of your testimony?
My testimony rebuts CAPAI witness Teri Ottens'10 A.
11 opinion that the Commission should increase Idaho Power's
12 Weatherization Assistance for Qualified Customers (WAQC)
13 program funding. I maintain that Ms. Ottens' definition of
14 low income funding level "parity" among Idaho electric
15 utilities does not justify the $1.5 million (125%) funding
16 increase she recommends for Idaho Power. I further believe
17 that uncertainty regarding both program cost effectiveness
1S and overall need makes significant low income weatherization
19 funding increases premature in this case. I recommend that
20 interested parties immediately convene workshops to develop
21 consistent cost effectiveness criteria, identify appropriate
22 methods for measuring need, and establish proportional
23 funding levels.
24 Q.On pages 15 through 17 of her testimony, Ms.
25 Ottens defines Idaho electric utility "parity" as a
CASE NO. IPC-E-11-0S
11-16-11 DONOHUE, S. (Reb) 2
STAFF
1 relatively equal low income weatherization funding level
2 based on a dollar per residential customer amount. Using
3 this definition, do you agree with Ms. Ottens' conclusion
4 that Idaho Power's funding level should increase by 125%
5 (from $1.2 million to $2.7 million annually) to achieve
6 "parity" with Avista's current funding level?
7 A.No. Al though I agree wi th Ms. Ottens that Rocky
8 Mountain Power and Idaho Power are funding their low income
9 programs at approximately $5. 32/customer and $3. 21/customer
10 respectively, I disagree with her conclusion that Avista's
11 per-customer funding level is at $6. 69/customer. Ms.
12 Ottens' testimony ignores that when the Commission ordered
13 Avista to spend $700,000 annually on low income
14 weatherization in Idaho, that amount was for both its gas
15 and electric low income weatherization programs. The
16 funding levels for Idaho Power and Rocky Mountain Power, on
17 the other hand, are only for those utili ties' electric low
18 income weatherization programs. Ms. Ottens is, therefore,
19 over- stating Avista' s per customer funding level.
20 If Avista continues to spend 60% of its low income
21 program budget on electric measures, then (using Ms. Ottens'
22 methodology) the $420,000 budget divided by Avista's 105,286
23 electric residential customers (FERC form No.1, 2010, pg.
24 304) equates to a $3. 98/customer expenditure. Accordingly,
25 Idaho Power's low income investment of $3. 21/customer is
CASE NO. IPC-E-11-0811-16-11 DONOHUE, S. (Reb) 3
STAFF
1 similar to Avista' s and achieves relative "parity", even as
3
2 defined by Ms. Ottens.
Q.Do you agree that the Commission should seek to
5
4 attain parity among utilities as defined by Ms. Ottens?
A.No. It makes more sense to provide similar
6 funding based on need, not on the basis of total residential
7 utility customers as proposed by Ms. Ottens. Requiring each
S utility to fund low income programs based on the total
9 number of residential utility customers is arbitrary and
10 does not account for differing levels of need for low income
12
11 weatherization in each utility's service territory.
Q.Can you suggest a better method of comparing
14
13 funding levels among Idaho electric utilities?
A.Yes. It would be better to compare proportional
15 funding levels among the utilities based on factors
16 measuring relative need for low income weatherization within
17 each utility's service territory. Possible methods could
1S include the number of low income customers, number of homes
19 needing weatherization, and poverty rates. Although these
20 suggestions are a reasonable starting place for discussions,
21 determining equitable funding levels is complicated issue
22 that would be best resolved through the previously mentioned
23 workshops.
24 Q.Did Ms. Ottens accurately characterize Staff's low
25 income cost effectiveness concerns on pages 21 and 22 of her
CASE NO. IPC-E-11-0S
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STAFF
1 testimony?
2 A.In broad terms, yes. Ms. Ottens says she
3 perceives that Staff seeks "a sort of parity or uniformity
4 in the cost effectiveness evaluation methodologies used for
5 the three utilities' programs". She states that Staff
6 "wishes to know whether, in fact the programs are cost
7 effective" . Finally, Ms. Ottens states that Staff is
S looking for "guidance from the Commission" regarding the
9 incorporation of non-energy benefits in low income costs
10 effectiveness analysis.
11 While Ms. Ottens' statements on this subject are
12 generally accurate, Staff believes that cost effectiveness
13 methodologies, including the treatment of non-energy
14 benefits, should be reasonably similar between utilities
15 rather than necessarily "uniform". This is the standard for
16 other DSM program cost effectiveness calculations and Staff
17 sees no reason to modify that approach for low income
1 S programs.
19 In a slight departure from Ms. Ottens' perception,
20 Staff believes that stakeholder workshops are the most
21 effective venue for establishing the treatment of non-energy
22 benefits and cost effectiveness methodology. Staff believes
23 these issues should be resolved before existing low income
24 funding levels are significantly increased.
25 Q.Would you please explain Staff's concern regarding
CASE NO. IPC-E-11-0S
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STAFF
1 Idaho low income weatherization programs?
2 A.Staff has identified problematic inconsistencies
3 among Idaho's utili ty- funded low income programs. A recent
4 evaluation of Rocky Mountain Power's low income program by
5 an independent evaluator revealed problems with program
6 delivery, oversight, and possibly cost effectiveness. Idaho
7 Power has yet to complete a post implementation evaluation
S of its low income weatherization program, but is it clear
9 that all three utilities have very different standards for
10 measuring energy savings, recording measure level data,
11 providing oversight of Community Action Partnership ("CAP")
12 agencies, and calculating cost effectiveness.
13 For example, all low income programs should
14 capture and analyze measure level data from the CAP agencies
15 so that the list of measures eligible for utility
16 reimbursement can be effectively analyzed for cost
17 effectiveness, and if necessary, modified. Currently,
1S utilities capture wide-ranging amounts and types of data
19 from the CAP agencies, which negatively impacts program
20 implementation decisions. This and other discrepancies
21 should be resolved so that Staff, CAPAI, and the utili ties
22 have a clear understanding of expectations surrounding
23 program management and cost-effectiveness calculations
24 before more funds are invested.
25
CASE NO. IPC-E-11-0S11-16-11 DONOHUE, S. (Reb) 6
STAFF
1 Q.What are Staff's concerns regarding cost-
2 effectiveness calculations?
3 A.Staff is concerned that the three companies
4 calculate the cost effectiveness of their low income
5 programs very differently. While there should be some
6 flexibility within the methodological details to account for
7 different circumstances, there should also be common,
S general parameters for cost effectiveness calculations
9 between such similar programs.
10 In particular, all three utilities measure energy
11 savings differently. Rocky Mountain Power uses a billing
12 analysis, Avista uses deemed savings per measure, and Idaho
13 Power uses an energy audit analysis to measure energy
14 savings. None of these methods are necessarily wrong.
15 However, they all have substantial shortcomings, which can
16 include significant over or under-estimation of savings. It
17 is impossible to accurately assess a program's cost
1S effectiveness, and how to improve it if necessary, until the
19 disparate views on how to measure energy savings are
20 resolved.
21 In addition, there is wide discrepancy on whether
22 and to what extent non-energy benefits should be included in
23 the cost effectiveness analysis. Idaho Power does not
24 include any, but Avista and Rocky Mountain include some
25 limited and quantifiable non-energy benefits. Avista and
CASE NO. IPC-E-11-0S
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STAFF
1 Rocky Mountain also include a 10% conservation preference
2 adder to their low income programs, which Idaho Power does
3 not include. Disparate methodologies make it difficult, if
4 not impossible, to draw conclusions about cost effectiveness
5 among similar programs when the benefits of each are
6 quantified so differently.
7 Q.Are the three utili ties' low income weatherization
S programs similar enough that a negative evaluation of one
9 program calls into question the other programs' cost
10 effectiveness?
11 A.It certainly could. Idaho Power is not, of
12 course, responsible for the shortcomings of Rocky Mountain's
13 program. Nevertheless, according to Ms. Ottens, the CAP
14 agencies implement the three utili ty- funded low income
15 programs in Idaho using "identical implementation standards
16 dictated by the U. S. Department of Energy" (Direct Testimony
17 of Teri Ottens, IPC-E-11-0S, pg. 22). Therefore, a
1S significant problem with program oversight or discrepancies
19 in cost effectiveness calculations is likely to affect all
20 three programs.
21 Q.Ms. Ottens justifies increasing Idaho Power's low
22 income funding by $1.5 million per year citing statistics in
23 her testimony including rising poverty rates, the
24 termination of American Recovery and Reinvestment Act (ARRA)
25 funding, and the backlog of WAQC eligible customers in Ada
CASE NO. IPC-E-11-0S
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STAFF
1 County. Do you disagree that the economy has impacted the
2 number of low income customers and their ability to pay
4
3 electric bills?
A.No. Staff disagrees that this information alone
5 can identify program need or proper funding levels. Without
6 proper program implementation and evaluation to determine
7 cost effectiveness, it is impossible to determine if the
S existing program is a reasonable expenditure of rate payer
9 funds.
10 Q.On page 21 of her testimony, Ms. Ottens indicates
11 that Staff's concern about increasing Idaho Power WAQC
12 funding is due to a Rocky Mountain Power Case No.
13 PAC-E-11-13 in which Rocky Mountain Power asked to
14 discontinue evaluation of its low income program because of
16
15 cost effectiveness. Is she correct?
A.Yes, in part. In that case, Staff had serious
17 concerns about the implementation and evaluation of the
1S Company's low income program, including program cost
20
19 effectiveness. In addressing these issues, Staff had the
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24
25
following comments:
Staff further believes there needs to be a common
understanding and approach with respect to how
utilities implement, evaluate, measure and verify
programs targeted to low income customers. The
Commission Staff, utili ties, stakeholders, and
other interested parties would greatly benefit
from such an understanding. Similarly, interested
parties could come to agreement with respect to
how utili ties should manage programs and what degree
of oversight is necessary.
CASE NO. IPC-E-11-0S11-16-11 DONOHUE, S. (Reb) 9
STAFF
1 In pursuit of this, Staff recommends that the
Commission host an informal workshop as soon as2 possible so that all interested parties can par-
ticipate in a collaborative discussion about the
3 issues surrounding low income weatherization programs.
Workshop obj ecti ves include developing a deeper
4 understanding of the issues, explore ways to resolve
those issues, and finally, developing an action plan
5 that creates greater certainty regarding the
implementation and evaluation of low income
6 weatherization programs. This workshop will allow
Rocky Mountain and the other utilities to consider
7 ways to enhance the cost-effectiveness of existing
low income programs and/or create new programs thatS target low income customers. At the conclusion of
the workshop, Staff will provide the Commission with
9 a report which will, at a minimum, identify the
agreements reached and recommendations for future10 Commission action.
11 Additionally, in Case No. AVU-E/G-11-01, Staff
12 supported a Stipulation and Settlement that called for the
13 following:
14 The Company and interested parties will meet and
confer prior to the Company's next general rate
15 filing in order to assess the Low Income weather-
ization and Low Income Weatherization Education16 Programs and discuss appropriate levels of low-
income weatherization funding in the future.
17
1S In testimony supporting the stipulation in that case,
19 Staff witness Lobb stated:
20 Staff believes it is time to discuss all issues
associated with the Company's low income weather-21 ization program to assure the program is cost
effective, that it remains cost effective and that22 sufficient funds based on need are made available.
23 Q.What is you recommendation in this case?
24 A.I recommend that the Commission not increase
25 funding for the Idaho Power WAQC program by 125% as proposed
CASE NO. IPC-E-11-0S11-16-11 DONOHUE, S. (Reb) 10
STAFF
1 by CAPAI. Rather, I recommend that the Commission
2 consolidate the low income workshops approved in Avista Case
3 No. AVU-E/G-11-01 and proposed in Rocky Mountain Power Case
4 No. PAC-E-11-13 to resolve issues relating to utility low
5 income programs and include Idaho Power in these
6 discussions. These issues include consistent implementation
7 methodology and cost effectiveness evaluation,
S identification of non-energy benefits, proper determination
9 of need, and appropriate levels of annual low income
10 funding. CAPAI' s request for a funding increase for Idaho
11 Power's WAQC program should be considered after the
12 consolidated workshop has resolved administration and cost
13 effectiveness issues.
14 Q.Does this conclude your testimony in this
16
15 proceeding?
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1S
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A.Yes, it does.
CASE NO. IPC-E-11-0S11-16-11 DONOHUE, S. (Reb) 11
STAFF
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16TH DAY OF NOVEMBER 2011,
SERVED THE FOREGOING REBUTTAL TESTIMONY OF STACEY DONOHUE, IN
CASE NO. IPC-E-ll-08, BY E-MAILING AND MAILING A COPY THEREOF,
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