20110920Comments.pdf

KARL T. KLEIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5156
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Street Address for Express Mail:
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Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR APPROV AL )
OF ITS ENERGY EFFICIENCY INCENTIVE )
AGREEMENT WITH THE IDAHO OFFICE OF )ENERGY RESOURCES. )
)
)
CASE NO. IPC-E-1l-16
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilties Commission comments as follows on Idaho Power
Company's Application for approval of its Energy Efficiency Incentive Agreement with the
Idaho Offce of Energy Resources ("OER").
BACKGROUND
On July 21,2011, Idaho Power and OER entered into an Agreement to set forth some
basic parameters that would provide for the accumulation and reinvestment of energy efficiency
incentive payments from Idaho Power for qualified energy efficiency programs implemented by
OER's K-12 Energy Efficiency Project for public schools. Application at 1. The Agreement
states that the intent is to maximize the available dollars from both the OER federal stimulus
funds and Idaho Power's energy efficiency incentives in order to help OER's energy effciency
initiatives continue to provide benefits past the availabilty of the stimulus fuds. Agreement
at 1.
STAFF COMMENTS 1 SEPTEMBER 20, 2011
According to the Agreement, OER has approximately $9.6 milion in federal fuding for
the K-12 program over the next 12 months. Idaho Power offers a number of energy effciency
programs which include incentive payments to customers who install qualifying energy
efficiency measures. The Application states that OER will invest federally provided funds into
energy effciency projects for Idaho Power customers. Application at 2. Any incentive
payments from Idaho Power for measures installed through OER's K-12 public school program
will be paid into a dedicated fund held by Idaho Power. Application at 3. These fuds wil be
eararked for use in additional cost-effective energy effciency measures for Idaho Power
customers identified by the K-12 Energy Effciency Project, and limited to OER's continued
implementation of cost-effective energy efficiency projects for Idaho Power customers. Id. at 3.
The Agreement states that OER may use up to ten percent of the monies from this
dedicated fud to reimburse reasonable and prudent administration costs associated with the
reinvestment of incentive payments into cost-effective energy efficiency programs. Agreement
at 2. The Company claims that this agreement wil accomplish a higher level of energy
efficiency than either pary could achieve with their respective programs alone. Application at 1.
STAFF REVIEW.
In reviewing the Agreement, Staff notes that it is does not tae a position on or determine
how any Idaho Power customer chooses to handle the incentive payments it receives through
paricipation in the Company's demand-side management (DSM) programs.
Staffs primary concern with the Agreement is that Idaho Power's qualification of
projects funded through OER be held to the same standards as all of the Company's other DSM
projects. The Agreement contains some ambiguity on this subject. Page one of the Agreement
reads "... incentive payments from IPC for OER's qualified energy efficiency projects would be
made in accordance with IPC's existing energy efficiency programs." On the following page,
the previous statement is augmented with "The intent is to keep the qualification and payment of
IPC incentives, as well as the directed re-investment of incentive money into additional energy
efficiency measures, as close to identical as possible to IPC's other customer related incentive
and energy effciency programs." Agreement at 2 (italics added). However, Staffis reassured
by Idaho Power's response to Staffs Production Request NO.1 in which the Company confirms
that, "...(OER-fuded projects) would either qualify or not qualify for such incentives according
STAFF COMMENTS 2 SEPTEMBER 20, 2011
to Idaho Power's existing rules for the operation of those incentives programs. OER would be
treated no differently than any other customer or entity that would apply for energy efficiency
incentives with Idaho Power." Staf maintains that projects be evaluated identically.
In Idaho Power's response to Staffs Production Request No.7, the Company lists
Custom Efficiency, Easy Upgrades, and Building Efficiency as the three programs for which
school efficiency projects may qualify for incentive payments. In Order No. 32245, the
Commission allowed Idaho Power to begin accounting for incentives paid through the Custom
Efficiency program as a regulatory asset. Exclusive of projects funded through OER, these
incentives were estimated to be $5.6 milion in 2012. As stated on page 74 of the Company's
2010 DSM Annual Report, the incentive levels for the Custom Effciency program can be up to
70 percent of the project cost.
The DSM report also states that the Company plans to develop a "single lighting
calculator" to be used by both the Custom Efficiency program and Easy Upgrades program in
order to "standardize terms and conditions, and follow a similar project verification protocol
between programs". Because many of the incentive payments made to schools since 2009 have
been for lighting retrofits, the consolidation of lighting calculators wil help all parties evaluate
future incentive payments made to schools.
Staff anticipates that the additional $9.6 milion potentially invested by OER through the
three eligible DSM programs wil exceed previous program demand forecasts and therefore
significantly increase the number of projects incented, the dollar amount of incentive payments
issued, as well as the amount of regulatory assets capitalized. Consequently, Staffwil increase
its scrutiny of these programs and recommends that the Company maintain clear and
comprehensive records.
As the Company is aware, this Agreement does not presume recovery of expenses
incurred through the Agreement. Staff reiterates that all program decisions, incentives, and
administrative payments issued through this Agreement, as with all of the Company's programs,
are subject to a prudency determination by the Commission in advance of recovering fuds. This
includes, but is not limited to, verification of Net- to-Gross (NT G) values, including sources, as
well as justification for program rules and incentive amounts.
STAFF COMMENTS 3 SEPTEMBER 20, 2011
Lastly, Staff assumes that the Agreement will apply to projects implemented after the
date of the Commission Order approving creation of the dedicated fud held by Idaho Power.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Agreement between Idaho Power
and OER with the understanding that projects within each DSM program receive identical
evaluation, and that the Agreement be applied to projects implemented after the date of the
Commission Order approving creation of the dedicated fund held by Idaho Power.
Respectfully submitted this 20K day of September 2011.
il1t-
Karl T. Klein
Deputy Attorney General
Technical Staff: Stacey Donohue
i:umisc/commentsipce 11.16kksd comments
STAFF COMMENTS 4 SEPTEMBER 20, 2011
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 20TH DAY OF SEPTEMBER 2011,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-11-16, BY E-MAILING AND MAILING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
DONOVANE. WALKER
JASON B. WILLIAMS
LEGAL DEPARTMENT
IDAHO POWER COMPANY
P.O. BOX 70
BOISE IDAHO 83707
E-MAIL: dwalken8)idahopower.com
jwiliamsêidahopower.com
MICHAEL 1. YOUNGBLOOD
GREGORY W. SAID
IDAHO POWER COMPANY
P.O. BOX 70
BOISE IDAHO 83707
E-MAIL: myoungblood("idahopower.com
gsaidêidahopower.com
JOHN CHATBURN
SUE SEIFERT
OFFICE OF ENERGY RESOURCES
304 NORTH 8TH STREET SUITE 250
BOISE IDAHO 83720-0199
john.chatburn("oer.idaho.gov
sue.seifert("oer .idaho. gov
~~,K~
SECRETARY
CERTIFICATE OF SERVICE