20130402final_order_no_32776.pdf

Office of the Secretary
Service Date
April 2,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-12-29
AUTHORITY TO TEMPORARILY SUSPEND )
ITS AIC COOL CREDIT AND IRRIGATION )
PEAK REWARDS DEMAND RESPONSE ) ORDER NO. 32776
PROGRAMS 1
On December 21, 2012, Idaho Power Company filed an Application seeking
Commission authorization to "temporarily suspend" its A/C Cool Credit and Irrigation Peak
Rewards demand response programs for 2013. The AIC Cool program allows the utility to
periodically "cycle" the central air conditioning units of participating residential customers
during the summer months of June, July, and August. See tariff Sch. 8 1. The Peak Rewards
program allows the utility to turnoff the irrigation pumps of participating irrigation customers for
a limited number of hours during the three summer months. See tariff Sch. 23. These two
voluntary programs are designed to reduce loads during summertime peak-hour demand.
Customers participating in these two programs are compensated with billing credits for the three
summer months.
BACKGROUND
A. Procedural History
On January 10, 201 3, the Commission issued a Notice of Intervention and Notice of
Prehearing Conference. Timely Petitions to Intervene were filed by the Idaho Irrigation Pumpers
Association, Inc. (the "Irrigators"); Idaho Conservation League (ICL); and Snake River Alliance
(SRA). The Commission granted these Petitions to Intervene. See Order Nos. 32725, 32718,
32713. On January 29,2013, the Commission convened a prehearing conference in this matter.
On February 14, 2013, the Company, intervenors and Commission Staff (the
"Parties") filed a proposed settlement. The Parties agreed to suspend the two programs for 201 3
and urged the Commission to schedule further workshops to discuss future changes to the
programs for years 2014 and beyond. On February 20,2013, the Commission issued a Notice of
Proposed Settlement and requested public comments on the proposed settlement. Order No.
32747.
ORDER NO. 32776
B. The Need for the Two Programs
In its Application, the Company reported that its 201 3 Integrated Resource Plan (IRP)
shows that the peak-hour projected loads for the summer months do not exceed the Company's
generation resources. More specifically, the Company maintained that its new IRP does not
show "a peak-hour deficit until July 201 6 and therefore [there is] no need [to employ] peak-hour
[load reduction] resources like" the A/C Cool and Peak Rewards programs in 201 3. Application
at 2-3. Consequently, the Company requested that it be allowed to temporarily suspend these
two demand response programs for the 2013 season (including the billing credits)' while the
Company works with stakeholders to re-assess the programs prior to the 2014 summer season.
Id. at 5.
The Company envisions using a collaborative approach with interested stakeholders
to develop and review changes to the two programs during calendar year 2013. "However,
should the Commission deny the Company's request to suspend the two programs . . ., the
Company stands ready to operate the programs in the summer of 201 3." Application at 6. If the
Commission approves the temporary suspensions, the Company would adjust its tariff Schedule
23 (Peak Rewards) and Schedule 81 (A/C Cool) to show that the customer incentive payments
would be reduced to zero, no new program participants would be accepted in 2013, and that
Idaho Power would not initiate any load control events for either program in 20 13. Id. at 6-7.
C. Projected Costs and Savings
The Company included prefiled direct testimony in support of its Application. Idaho
Power witness Theresa Drake stated that in 20 12 the Company spent approximately $5.5 million
on the AIC Cool program and approximately $12.3 million on the Irrigation program. Drake at
13, 19. She asserted that temporary suspension of the AIC Cool program would allow the
Company to save approximately $749,000 in payments to participating customers. Drake at 16.
Temporary suspension of the Peak Rewards program would save about $10.9 million in 2013.
The Company does not anticipate removing any of the customer load control devices but
recognized that customers may elect to no longer participate in the program. The Company
' Residential customers participating in the A/C Cool program receive a monthly billing credit of $7.00 for each of
the three summer months.
ORDER NO. 32776
calculated that 15% of custoniers may elect to have their devices removed which would result in
removal costs to the Company.
The Company also reported that it anticipates spending approximately $650,000 on
the A/C Cool program in 2013 for customer service inquiries, maintenance on the devices,
customer service for program participants, and maintaining access to the data bases. Id. at 14.
Additionally, the Company will be responsible for "software and license fees for the AM1
switches." Id Likewise, the Company estimated it will spend between $600,000 and $900,000
on the Irrigation program to keep the load control devices operational. Drake at 19.
D. Tlze Settlement Workslzop
A settlement workshop was held on February 6, 2013, and attended by all the Parties
and several members of the public. The purpose of the settlement workshop was to allow the
participants to discuss Idaho Power's Application to suspend the two demand response programs
for 2013. Based upon the settlement discussions, the Parties agreed to suspend the two programs
and the monthly "incentive" payments for this year (Phase I), and schedule additional workshops
to discuss further changes to the Company's demand response programs for 2014 and beyond
(Phase 11).
On February 14, 2013, Idaho Power filed the proposed "Settlement Stipulation" on
behalf of all the Parties and a Motion to Approve the Settlement Stipulation. The Parties agreed
that the proposed settlement represents a compromise of their respective positions. They assert
that the settlement is reasonable and in the public interest and urged the Commission to adopt the
Settlement Stipulation without condition or modification. The general terms of the proposed
settlement are set out below.
THE PROPOSED SETTLEMENT
A. A/C Cool Program
The Parties agree that it is reasonable to award residential customers who participated
in the AIC Cool Credit program a "continuity" payment of $1 .OO per month for the three months
of the suspended program. 'The purpose of the continuity payment is to encourage customers to
remain in the AIC Cool program this year while the Parties conduct additional workshops to
discuss thc program for 2014 and beyond. As initially proposed by Idaho Power, the parties
agree no new customers will be entered into the program. In addition, the Company will not
cycle the central air conditioning units of participating customers during 2013. In other words,
ORDER NO. 32776 3
there will be no dispatching events. Finally, the Parties agree that customers who wish to
discontinue their participation in the program may do so but the Company will assess a
reconnection charge of $85 for customers who discontinue and subsequently want to re-enter the
program before January 1,20 1 5.2 stiP. at 77 6-8.
B. Irrigation Peak Rewards Program
The Parties propose that irrigation customers who voluntarily remain in the Peak
Rewards program will also receive a "continuity" payment based upon which of the four Peak
Reward options is applicable. Option 1 and 2 participants will receive a continuity payment
equal to $4.54/kWlseason or $2.27/kW/month of 2013 participant billing demand. Option 3
participants will receive a continuity payment equal to $4.45/kW/season based upon the lesser of
the nominated demand for 2012 program season and the 2013 participant billing demand, or
$2.27/kW/month of the lesser nominated demand for the 2012 program season and the 2013
participant billing demand. Finally, participants in the Timer Interruption Option under the one-
day, two-day, or three-day component will receive continuity payments of $1.07/kW/season,
$1.88/kW/season, or $2.65/kW/season of 201 3 billing demand, respectively.3 Stip. at 7 1 1.
To be eligible for a continuity payment, Peak Rewards customers must have a
metered service point enrolled in the program during the 2012 season and the same customer
must have the same meter service point active between June 15 and August 15, 20 13. Id. Peak
Rewards customers that remove their load control devices or switches may be restricted from re-
entering the program in the future. Id. at 7 12. Like the AIC Cool program, irrigators
participating in the Peak Rewards program will not have their service interrupted during 2013.
During the suspension period, no new irrigation customers will be accepted into the Peak
Rewards program.
C. Post-2013 Programs (Phase 11)
The Parties also agree that changes to A/C Cool, Peak Rewards and possibly the Flex
peak4 programs for 20 14 and beyond should be evaluated in Phase I1 of this case. Consequently,
2 The exception to the re-entry charge would be where a customer moves from one residence to another. Stipulation
at 7 8.
3 On a monthly basis, the Timer Options for one-day, two-day, and three-day would receive a continuity payment of
$0.54/kWlmonth, $0.94lkWlmonth, or $1.33lkWlmonth of 2013 billing demand, respectively.
4 The Flex Peak program allows Idaho Power's contractor (EnerNoc) to reduce the load of participating industrial
and large commercial customers for short periods of the summer peak days. See Order No. 30805.
ORDER NO. 32776 4
the Parties request that the Commission schedule a prehearing conference to set workshops and
develop a procedural schedule so that the Parties and other interested persons may evaluate
changes to the demand response programs in advance of the 2014 summer season. Stip. at tj 14.
The Parties agree that continuity payments made in 201 3 should not be viewed as a precedent for
future continuity payments. Id. at 79 9, 1 1.
If the Stipulation is challenged by any person not a party to the Stipulation, the Parties
reserve the right to file testimony, cross-examine witnesses, and put on such case as they deem
appropriate. Id, at 7 16. Finally, the Parties request that the Commission issue its Order
accepting and approving the Settlement Stipulation no later than April 1, 20 13. Id. at tj 4.
COMMENTS
In response to the Notice of Proposed Settlement, the Commission received
comments from about 15 customers, ICL and Commission Staff.
1. Customers. Many customers expressed "disappointment" with the Company's
~ ~ ~ l i c a t i o n . ' They addressed several issues about the proposal to discontinue the existing
incentive payments including: (1) the Company's initial proposal sends the wrong signal about
energy conservation and efficiency to customers; (2) the Application sets back efforts to promote
energy efficiency; and (3) the suspension of the existing monthly payment decreases the
Company's ability to attract voluntary participation in DSMIconservation programs. Several
commenters took the Company to task for developing DSM programs and encouraging
customers to participate in such programs, and then discouraging participation by discontinuing
the incentive payments or possibly the programs themselves.
2. m. ICL recommended the Commission approve the Settlement Stipulation. It
noted that about 30,000 customers participate in the AIC Cool Credit program. In conjunction
with the Peak Rewards programs, these two programs provide over "350 MW of capacity to
mitigate peak demands. After a decade of development and millions of dollars invested,
ensuring the long-term viability of this resource serves the public interest. While stakeholders
examine the program over the next year, allowing Idaho Power to incur reasonable maintenance
expenses will help ensure the program remains viable." Comments at 1.
5 The Commission received three customer comments after the settlement was filed. Two commenters urged the
Commission to continue the incentive payments at their current levels as a means for participating customers to
lower their summer bills.
ORDER NO. 32776
ICL further asserted that a critical part of ensuring the viability of the AIC Cool
Credit program is maintaining customer participation. Encouraging many residential customers
to participate in this program is important because "each home provides a small amount of
demand reduction. ICL supports providing the $3.00 summer continuity [total] payment to
encourage customers to remain in the program." Id at 2 (footnote omitted). ICL also looks
forward to participating in the next phase of this case. As the two DSM programs mature, "the
operations and incentive levels must adapt to maximize the value for Idaho Power and
customers." Id.
3. Commission Staff. Staff also supported the proposed Settlement Stipulation and
urged the Commission to adopt it. Staff recognized that the demand response programs depend
upon adequate and voluntary program participation. "Participants must find value in the
program, either financially or intrinsically." Comments at 2. Staff noted the Company's initial
proposal to discontinue incentive payments was based upon projected capacity surplus in the
near future. Staff acknowledged A/C Cool Credit participants "have not necessarily incurred
program participation costs that justify continued credit payment, [however] Staff also
recognizes that participants can withdraw from the program and adversely impact future program
efficacy.'' Id, at 3. 'l'o encourage continued participation for 20 13, Staff believes the $1 .OO
monthly continuity payments are appropriate while stakeholder workshops are conducted. Staff
also supported the reinstallation fee to discourage customers from leaving the program and re-
enrolling in the future. Staff calculates that temporary suspension of the A/C Cool program
would allow the Company to save about $644,000 in incentive payments. Id. at 4.
Staff also supported maintaining some level of payments for Peak Rewards customers
because "irrigators may make up-front investment choices in order to participate" in the
program. Id. at 4. Consequently, Staff believed it is appropriate to encourage Peak Rewards
participants to remain in the program and be assured partial cost recovery. Although Staff
initially thought the AIC Cool and Peak Rewards programs could be dispatched, Staff agreed
with others that reducing customer payments while still dispatching the programs could
"detrimentally affect participant satisfaction and retention." Id.
DISCUSSION AND FINDINGS
The process for considering settlement stipulations is set out in our Rules 271-277,
IDAPA 3 1.0 1.0 1.27 1-277. When a settlement is filed, the Commission will prescribe the
ORDER NO. 32776
appropriate procedure for consideration of the settlement. In this case, the Commission issued a
Notice of Proposed Settlement and solicited public comments on the settlement. Rule 274.
Rule 276 provides that the Commission is not bound by the parties' Settlement
Stipulation. The commission will "independently review any settlement proposed to it to
determine whether the settlement is just, fair and reasonable, in the public interest or otherwise in
accordance with law or in accordance with law or regulatory policy." Id. The Commission may
accept, reject, or modify settlement provisions. Moreover, proponents of settlements carry the
burden of showing that the settlement is reasonable and in the public interest. Rule 275.
Based upon our review of the Application, the proposed settlement and the
comments, we find that the record is comprehensive and further proceedings are not necessary.
After reviewing the record, we find that the settlement is fair, just and reasonable. We find that
the proposed settlement is designed to encourage program participants to remain in their
respective programs. In particular, we find that providing continuity payments as proposed for
both residential and irrigation participants for 201 3 adequately balances the need to maintain the
two demand response programs while the Commission and the parties evaluate the programs for
2014 and beyond. We note that the settlement was supported by all of the parties to this case.
We also appreciate the thoughtful comments offered by customers about encouraging
and maintaining participants in the A/C Cool and Peak Reward programs. When we initially
authorized the pilot AIC Cool program in 2003, we recognized that DSM programs are powerful
tools in managing peak loads and mitigating the impact of potential rate increases. Order Nos.
29207 at 8; 29702. In particular, reducing the peak summer loads lessens the utility's reliance
upon purchasing power or constructing supply-side generation. We are disappointed that the
Company proposed to discontinue their use completely.
We are concerned about implementing measures in the short-term that may reduce the
effectiveness of both programs. Valuable time and resources were used to develop effective
DSM programs, and we do not want to impair the effectiveness of these programs in the future
when the Company's peak loads surpass its supply resources. This is especially true after the
Company recently replaced most of the older AIC control devices. For example, as one
customer indicated, it may be cheaper for the Company to cycle the air conditioning units than to
purchase or generate power from its own supply resources.
ORDER NO. 32776
We adopt the Parties' recommendation to convene workshops this year to evaluate
the two DSM programs for 20 14 and beyond. Staff counsel will convene an informal prehearing
conference for the Parties to develop a schedule for the workshops. It is important for the
Company and other interested parties to consider actions that will continue the viability of the
programs as DSM resources. The Parties may also want to review whether there are better
metrics to evaluate the cost-effectiveness of these programs.
Finally, we find merit in the customer comment about utilizing the A/C Cool andlor
the Peak Rewards programs this summer in response to unforeseen emergencies. Although the
Company does not believe it will need to use these programs in 201 3, we doubt that it has perfect
foresight. Conditions and circumstances may occur that could be helped by use of these
programs. We direct the Company to consider whether these programs might be utilized to
respond to system emergencies in 2013 and in the future. Without addressing the actual merits
of dispatching these programs during an emergency, "continuity" payments might be adjusted to
reflect the use of the DSM programs in responding to emergencies in 20 13.
O R D E R
IT IS HEREBY ORDERED that the Commission approves the parties' Settlement
Stipulation. Idaho Power shall file conforming tariffs within 14 days from the service date of
this Order.
IT IS FURTHER ORDERED that the Commission shall open a new docket for the
purpose of evaluating the A/C Cool Credit and Irrigation Peak Rewards programs for 2014 and
beyond. The parties to this case shall be deemed parties in the new case. Staff counsel will
convene an informal conference so the parties can propose a schedule for the processing of this
case.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or in interlocutory Orders previously issued in this Case No. IPC-E-12-29
may petition for reconsideration within twenty-one (21) days of the service date of this Order
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this case. Within seven (7) days after any person has petitioned for reconsideration, any other
person may cross-petition for reconsideration. See Idaho Code 5 6 1-626.
ORDER NO. 32776
n d DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 9
day of April 20 13.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
(i"ommission Secretary
ORDER NO. 32776