20130104Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: JANUARY 4, 2013

SUBJECT: IDAHO POWER’S APPLICATION TO TEMPORARILY SUSPEND ITS
A/C COOL CREDIT AND IRRIGATION PEAK REWARDS PROGRAMS,
CASE NO. IPC-E-12-29

On December 21, 2012, Idaho Power filed an Application seeking Commission
authorization to “temporarily suspend” its A/C Cool Credit and Irrigation Peak Rewards demand
response programs. These two programs are designed to reduce loads during summertime peak-
hour demand. Idaho Power instituted these programs when it determined it was “more cost-
effective to utilize demand response programs rather than build a simply-cycle peaking resource”
to meet summertime peak-hour demand. Application at 3.
THE APPLICATION
A. Need for the Programs
In its Application, the Company reports that its 2013 Integrated Resource Plan (IRP)
shows that the peak-hour projected loads for the summer does not exceed the Company’s
generation resources. More specifically, the Company maintains that its current IRP does not
show “a peak-hour deficit until July 2016 and therefore [there is] no need for near-term peak-
hour resources like” the A/C Cool and Irrigation Peak Reward programs. Id. at 2-3.
Consequently, the Company requests that it be allowed to temporarily suspend these two demand
response programs for the 2013 season while the Company works with stakeholders to re-assess
the programs so they can become effective prior to the 2014 summer season. Id. at 5.
The Company envisions using a collaborative approach with interested stakeholders
to review changes to the two programs during calendar year 2013. The Company would file an
DECISION MEMORANDUM 2
application with the Commission to reactive the programs prior to the summer of 2014.
Application at 6. “However, should the Commission deny the Company’s request to suspend the
two programs through an Order issued by March 1, 2013, the Company stands ready to operate
the programs in the summer of 2013.” Id. 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 accepted in 2013, and that Idaho Power would not institute any load
control events for either program in 2013. Id. at 6-7.
The Company requests that its Application be proceed under Modified Procedure and
that the Commission suspend the two programs no later than March 1, 2013. The Company
proposes to individually notify customers participating in the two programs. The customer
notice letter also advises customers that the Company has filed an Application with the
Commission and that the Application and accompanying documents can be reviewed at the
offices of the PUC or Idaho Power or on their respective web sites. See Application, Atch. 2.
B. Costs and Savings
The Company has included prefiled direct testimony in support of its Application. In
2012, Idaho Power spent approximately $5.5 million on the A/C Cool program and
approximately $12.3 million on the Irrigation Peak Rewards program. Drake at 13, 19.
Company witness Theresa Drake asserts that temporary suspension of the A/C Cool program
would allow the Company to save approximately $749,000 in payments to participating
customers. Drake at 16. The Company does not anticipate removing any of the A/C load control
devices but recognizes that customers may elect to no longer participate in the program. In such
cases, the Company calculates that approximately 15% of customers may elect to have their
devices removed at a cost of approximately $85 per device. Consequently, removal costs in
2013 maybe approximately $425,000. Drake at 14-15.
Despite the savings, the Company also 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 AMI
switches.” Id.
DECISION MEMORANDUM 3
If the Irrigation Peak Reward program is suspended, the Company estimates it would
spend between $600,000 and $900,000 in program-related expenses to keep the load control
devices operational. Drake at 19. By suspending the two programs for 2013, the Company
estimates a savings of about $11.75 million which will “result in a direct customer benefit
recognized in the 2013-2014 PCA.” Drake at 22.
STAFF RECOMMENDATION
Staff recommends that the Commission issue a Notice of Application and set a
deadline for intervention. Staff also recommends that the Commission convene a prehearing
conference at its earliest convenience to determine whether this Application may reasonably be
processed under Modified Procedure.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and set a deadline for
intervention?
Does the Commission wish to convene a prehearing conference to allow parties an
opportunity to address processing this Application under Modified Procedure or some other
process?

bls/M:IPC-E-12-29_dh