20120316Application.pdf

RECEIV
eslDA~POR(I
An IDACORP Company
JULIA A. HILTON
Corporate Counsel
jhiltontæidahopower.com
March 15, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-12-15
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR A DETERMINATION OF 2011 DEMAND-SIDE MANAGEMENT
("DSM'? EXPENDITURES AS PRUDENTL Y INCURRED
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Application in the above matter.
Also enclosed for filng are nine (9) copies of the testimony of Darlene Nemnich.
One copy of Ms. Nemnich's testimony has been designated as the "Reporter's Copy." In
addition, a disk containing a Word version of Ms. Nemnich's testimony is enclosed for the
Reporter.
Julia A. Hilton
JAH:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise. ID 83707
JULIA A. HILTON (ISB No. 7740)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
jhilton(gidahopower.com
Inordstrom(gidahopower.com
RECE!VED
20'1 MAR '5 PH t.: 55
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MAnER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION OF 2011 DEMAND-
SIDE MANAGEMENT ("DSM")
EXPENDITURES AS PRUDENTLY
INCURRED.
)
) CASE NO. IPC-E-12-15
)
) APPLICATION
)
)
)
.
In accordance with RP 052 and RP 201, et seq., Idaho Power Company ("Idaho
Powet' or "Company") hereby respectfully submits its Demand-Side Management 2011
Annual Report ("DSM 2011 Annual Report") in compliance with Order No. 29419 and
makes application to the Idaho Public Utilties Commission ("Commission") for an order
designating Idaho Powets 2011 expenditures of $35,623,321 in Idaho Energy
Efficiency Rider ("Ridet') funds and $7,018,385 in a regulatory asset account (Custom
Efficiency incentives) for a total of $42,641,706 as prudently incurred demand-side
management ("DSM") expenses.
In support of this Application, Idaho Power represents as follows:
I. INTRODUCTION
1. The Commission has "consistently stated that cost-effective DSM
programs are in the public interest and has admonished electric utilties operating in the
APPLICATION - 1
State of Idaho to develop and implement DSM programs in order to promote energy
efficiency." Case No. IPC-E-10-09, Order No. 32113 at 8, citing Order Nos. 29784 and
29952. To further the Commission's objective, Idaho Power has implemented and/or
manages a wide range of opportunities for all of its customer classes to participate in
DSM activities, to be informed about energy use, and to use electricity wisely. Through
DSM programs, Idaho Power seeks to provide customers with programs and
information to help them manage their energy usage and to achieve prudent cost-
effective energy effciency and demand response resources to meet its electrical
system's energy and demand needs. To assist with the development and
implementation of DSM activities, Idaho Power receives input and consultation from its .
Energy Efficiency Advisory Group ("EEAG"). The fourteen members of the EEAG
represent customers, state agencies, and other stakeholders who provide a broad
range of recommendations, including input on new program proposals, modifications to
existing programs, and overall expenditures of DSM funds. In addition to the EEAG,
Idaho Power has worked to build and maintain relationships with trade alles, trade
organizations, and regional groups involved in DSM activities.
2. Since the Rider was implemented in 2002, the Company has
progressively increased the breadth and funding level of its DSM activities. The
Commission found that the Company had prudently incurred cost-effective DSM-related
Rider expenses of $29 millon from 2002 to 2007. Order Nos. 30740 and 31039. In
addition, the Commission found that the Company's 2008 and 2009 cost-effective DSM-
related Rider expenses of $50.7 millon were prudently incurred. Order No. 32113.
Further, the Commission found that the Company prudently incurred cost-effective
DSM-related Rider expenses of $41.9 millon in 2010. Order No. 32331.
APPLICATION - 2
3. As a result of Idaho Power's increased DSM activity over the last nine
years, Idaho Powets quarterly customer relationship survey in 2011 indicated that the
percentage of customers who have a positive perception of Idaho Powets energy
efficiency efforts has steadily grovin from 39 percent in 2003 to 58 percent in 2011, a
positive increase of 49 percent. In 2012, Idaho Power and another utilty tied for the
highest customer satisfaction with business customers among western mid sized
utilties. Those customers that were aware of Idaho Powets DSM activities showed a
significantly higher rate of customer satisfaction. Andrew Heath, 2012 Electric Utility
Business Customer Satisfaction Study: Overall Results Idaho Power, J.D. Power and
Assoc., Feb 29, 2012, at 40. Idaho Powets DSM activities, along with four other.
programs, were assessed by Intellgent Utilties, which ranked IDACORP as the sixth
most intellgent utilty in the nation in 2011. Jil Feblowtz, 2011 UtilQ Rankings: Top 25
Intellgent Utilties, Intellgent Utilities, Jan.lFeb. 2012, http://ww.intellgentutility.com/
magazine/article/254121/20 11-utilq-rankings.
II. 2011 DSM RESULTS
4. In 2011, Idaho Power continued its DSM programs in order to increase
participation and faciltate energy savings. Idaho Power currently offers its Idaho
customers seventeen energy efficiency programs, three demand response programs,
several educational initiatives, and savings to customers through market transformation
programs. Overall, annual energy savings from Idaho Powets energy effciency
activities in 2011 totaled 179,424 megawatt-hours. DSM 2011 Annual Report at 1.
5. To achieve these results, total system-wide expenditures on 2011 DSM-
related activities increased to $46,266,252. Id. app. 2 at 136. The $46,266,252 of
system-wide, DSM-related expenses in 2011 include expenditures for customers in
Oregon and other operations and maintenance expenses that are not before the
APPLICATION - 3
Commission; Idaho Power is seeking a determination that $35,623,321 in Idaho Rider
expenses and $7,018,385 in Custom Efficiency incentives were prudently incurred for a
total of $42,641,706. Id. A summary of program expenditures funded by the Rider in
2011 is provided in Exhibit NO.1 to the Direct Testimony of Darlene Nemnich ("Nemnich
Testimony") that accompanies this Application.
6. Results show that of all the seventeen energy efficiency programs offered
by Idaho Power, only the Home Improvement Program is not cost-effective from the
total resource cost ("TRC") and the participant cost test ("PCT") perspectives. All three
of Idaho Powets demand response programs are cost-effective when evaluated from a
long-term perspective. From a one-year perspective, the A1C Cool Credit program was
not cost-effective for 2011. An explanation of the cost-effectiveness analyses and steps
Idaho Power has taken to increase future cost-effectiveness of these two programs is
provided in the Nemnich Testimony.
II. THE DSM 2011 ANNUAL REPORT
7. In support of its Application requesting the Commission accept the
Company's 2011 DSM expenditures funded by the Rider and Custom Efficiency
incentives accounted for as a regulatory asset as prudently incurred, Idaho Power
presents its DSM 2011 Annual Report as Attachment No. 1 to this Application.
8. The DSM 2011 Annual Report is submitted pursuant to the DSM reporting
obligation set forth in Order No. 29419 and in accordance with certain agreed-upon
guidelines set forth in the Memorandum of Understanding for Prudency Determination
of DSM Expenditures ("DSM MOU") submitted as part of the stipulation in Order No.
31039. In sum, Idaho Powets DSM 2011 Annual Report contains the following:
a. Template. Idaho Power used previous DSM annual report formats
as a guide for its DSM 2011 Annual Report. Two Supplements, Supplement 1: Cost-
APPLICATION - 4
Effectiveness ("Supplement 1 ") and Supplement 2: Evaluation ("Supplement 2"),
accompany the DSM 2011 Annual Report.
b. Table of Contents. The DSM 2011 Annual Report, Supplement 1,
and Supplement 2 each have a detailed table of contents showing where specific
program information can be found as well as the location of the cost-effectiveness
analyses and the evaluation table.
c. Introduction Section. This section can be found on pages 3
through 17 of the DSM 2011 Annual Report. It provides an initial overview of program
process evaluations, impact evaluations, and updated assumptions used to calculate
program cost-effectiveness.
d. Cost-Effective Section. Supplement 1 provides detailed cost-
effectiveness information by program and energy savings measure as well as detailed
financial information separated by expense category and jurisdiction. In addition to the
three benefit/cost analyses used in previous DSM annual reports (Le., the total resource
cost perspective, the utilty cost test ("UCT") perspective, and the participant cost
perspective), Supplement 1 contains the ratepayer impact measure ("RIM"), a cost-
effectiveness test added in 2010. The RIM test measures the impact to customer bils
or rates due to changes in utilty revenues and operating costs caused by an energy
efficiency program.
e. Evaluation Section. Supplement 2 contains Idaho Powets
evaluation plans, copies of completed program evaluation reports, research reports, and
reports done by Idaho Power or third parties. Supplement 2 also includes a compact
disc containing market progress evaluation reports provided by the Northwest Energy
Efficiency Allance.
APPLICATION - 5
f. Program Specific Section. The DSM 2011 Annual Report contains
the following information for each program or initiative: (1) a table listing the summary
of the program participation; (2) performance and costs; (3) a description of the
program; (4) 2011 activities; (5) a cost-effectiveness discussion, which includes whether
a new analysis was conducted and new assumptions used; (6) a section on customer
satisfaction and evaluations providing an overview of process, impact, and market effect
evaluations that were conducted; and (7) a section describing strategies for
implementation of each initiative for 2012. This section also refers to studies included in
Supplement 2.
g. Expenses Without Direct Energy Savings. In the section titled
"Other Programs and Activities," the DSM 2011 Annual Report describes education
initiatives and other non-energy-saving DSM efforts. These efforts support the
Company's overall DSM agenda. Other programs and activity expenses are shown in
Appendices 2-4 and Exhibit No. 1 to the Nemnich Testimony.
IV. EVOLUTION OF THE 2011 REPORT
9. The DSM 2011 Annual Report and accompanying Nemnich Testimony
provide a sufficient basis for the Commission to determine whether Idaho Powets DSM
and energy efficiency expenses were prudently incurred. In order to meet Commission
Staff's expectations for assessing cost-effectiveness tests, methods, and evaluations as
indicated in Attachment NO.1 to the DSM MOU, Idaho Power has included:
a. Cost-Effectiveness Measurements. In the DSM 2011 Annual
Report, Idaho Power calculates cost-effectiveness from the ratepayer impact measure,
participant cost, utility cost, and the total resource cost perspectives at the program
level, except for those programs with no customer costs in which case the participant
cost test is not applicable. This includes demand response programs which are
APPLICATION - 6
evaluated at the utilty and total resource cost perspectives. Idaho Power also
evaluates cost-effectiveness from the utilty and the total resource cost perspectives for
each measure within a program, where the measures are not interactive. Supplement
1 includes detailed results of the cost-effectiveness tests by program and by
measurement. Appendix 4 of the 2011 DSM Annual Report shows the UTC and TRC
for each of Idaho Powets energy efficiency and demand response programs from a
program-life perspective.
b. Net-to-Gross Adjustments. For the DSM 2011 Annual Report,
Idaho Power used these ratios as an input to cost-effectiveness calculations where
appropriate. For a detailed discussion of these adjustments, see pages 3-4 of
Supplement 1.
c. Program Evaluations. Independent, third-party consultants are
used to provide impact and process evaluations to verify that program specifications are
met, provide viable recommendations for program improvement, and validate energy
savings achieved through Idaho Powets programs. In 2011, impact evaluations were
completed on eight programs and process evaluations were conducted on two
programs. All but two of these evaluations were conducted by third-part contractors.
Copies of these reports can be found in Supplement 2.
V. MODIFIED PROCEDURE
10. Idaho Power believes that a technical hearing is not necessary to consider
the issues presented herein and respectfully requests that this Application be processed
under Modified Procedure; Le., by written submissions rather than by hearing. RP 201
et seq. Idaho Power has, however, contemporaneously filed the Nemnich Testimony in
support of this Application. The Company stands ready to present the testimony in
APPLICATION - 7
support of this Application in a technical hearing if the Commission determines such a
hearing is required.
Vi. COMMUNICATIONS AND SERVICE OF PLEADINGS
11. Communications and service of pleadings with reference to this
Application should be sent to the following:
Julia A. Hilton
Lisa D. Nordstrom
Idaho Power Company
P.O. Box 70
Boise, ID 83707
jh i1ton(gidahopower. com
Inordstrom(gidahopower.com
Darlene Nemnich
Greg Said
Idaho Power Company
P.O. Box 70
Boise, ID 83707
dnemnich(gidahopower.com
gsaid(gidahopower.com
VII. REQUEST FOR RELIEF
12. As described in greater detail above, Idaho Power respectfully requests
that the Commission issue an order designating Idaho Powets expenditure of
$42,641,706 funds in 2011 as prudently incurred DSM expenses.
DATED at Boise, Idaho, this 15th day of March 2012.
J&i~ ~
Attorney for Idaho Power Company
APPLICATION - 8