20120301Comments.pdf

Benjamin J. Otto (ISB No. 8292)
710 N 6th Street
Boise,ID 83701
Ph: [phone] x 12
Fax: (208)' 344-0344
bottoCPidaoconservtion.org
R~, r-CEI\IFO.... J l',._
2312 MAR -I PH 4: 25
Attorney for the Idao Conservtion Le .
"
BEFORE TH IDAHb PUBUC UTITIS COMMISSION
IN TH MATrROF TH )
APPUCA TION OF IDAHO POWER )
COMPANY FOR AUTORIl TO )
CONVRT SCHEDUL 54-FID )
COST ADJU~TMENT.FROM A PILT )
SCHEDULE TO ANONGOING, )
PERMANENT SCHEDULE )
CASE NO. IPC-E-ll-19
COMMENTS OF TH IDAHO
CONSERVATION LEGUE
The Idao Conservtion League (ICt) urges the Commission to make the Fixed Cos
Adjustment (FCA) permanent. The basic premise of the FCA-to remov a dicentive to
promote energ conservtion leadig to forgone recovery of approved fixed cosremais
unchanged 1 Durg the pilot stakeholders debated which causs of changig ener consumption
the mechanism should capture. 2 Maitaiing the curnt FCA, which captur al non-wether
related changes in consumption, best aligns the utiltys financial intere with ratepyets intere
in controlling energ bils. Algning thes interests wi help dose the gap between cunt
achievements in energ efficiency and the vat untappd economic potential avaable in Idao.
Introducton
Durg the FCA'pilot, vaous paries have rad a host of isue regadig both the
mechanics and the policy underpinnings of the FCA.3 The Compay and Staff have relved
r See Order 30267 at 13, IPC-E-04-15, (Initiating the FCA pilot)(Mar 12, 2007); Order 32251,
IPC-E-ll-03, (FCA Rates for 20ll - 2012).2 See Order 31063, IPC-E-09-28, (convert the FCA from pilot to permanent)(Mar 23,2010).
3 See Order 31063,'IPC-E-09-28, (Idao Power request to conver the FCA frm pilot to
peranent statu)(April 29, 2010).
ICL Comments
IPC-E-ll":J9
1 Marh 1,2012
some isue su as usg the mos cunt numerica inputs to caculate the rate and whether to
alocte the FCA rae to the afeced cl setely or individuay! The prar unresolved
issue is whether the FCA should continue to capture forgne fixed costs due to al non-weather
related factors that effect consuption, or be liited to facors dily attributable to, Idao
Power's activities.
Durg the püot period the PUC staff, ICL, and othrs have strued with now to address
the fact the cunt FC captur chage in fixed coss reovery beyond Compay spnsored
effciency efforts. 5 After reg mecisms that attempt to islate the impas to .fixed costs
recovery of Compay spnsored efficiency efforts, ICL believ that ratepyers are better served by
approvig the cunt FCA mechis. Th Washigton UTe's effort to islate the impacts of
Compay spnsored effciency from other facors is grt example of how complex and
contentious thi typ of mecis is Furher, a 2011 rert by the ACEEE debes how
liiting the FCA to Compay spnsored pros reais the dicentive towads broader
effciency efforts like buidig co and applice standads and do not addes tneutiltys
incentive to incre saes'
Instead of incrg complexity and crting a dicentive towads broad basd energ
efficiency, ICL reommends the Commison maitai the cuent FCA. Capturg al non-
weather related chge in energ consumption algns the utiltys fmanci interes with
ratepayets interes in controlling energ bil and provides a vauable risk mitigtion tool that
benefits shholders Below ICL explas how ratepayers ca sh in thes benefits.
4 See Staff Comments at 5. IPC-E-I0-07. (pCA Rates for 2010-201 I)(ay 6, 2010)(Staff
support using the enery fore in the concuent PCA as opposed to either test year ,or
lreing yea ener us data.); Or 31081 at 5, IPC-E-1O-07. (May 28.2010). .See Staff Comments at 5 - 6, IPC-E-0-28; ICL Comments at 8, IPC-E-09-28; ICL Comments
at 5, IPC-E-IO-07 at 5, (pCA Rate for 2010 - 2011)(ay 5, 2010).
6 See ACEEE Balancing Interests: A Review of Lost Revenue Adjustment.MeclianÍ$1fs for Utilty
Energ Effcienc Prams at 8 - I I. (Septembe 201 1 XAvailable at: htt://acee,.orWresearch-
reportuII4).ICL Comments 2 Marh 1',2012
IPC-E-II-19
I. The Fied Co Adjustent in Context!
Instead of recounting the ful hiory and mechaics of the FCA, fiv points se the stage
for ICL's comments below. The FCA: (I) is one pa of a larr regatory struur; (2) algns
i
reguation ~th the Commission policy to broadly support energ conservtion; (3) foc the
utilty on ~öntroUig,costs; (4) limits utilty cost recovery to approved fixed coss; and (5) rewds
ratepayers wha.increas their energ efficiency. Becaus ratepayers benefit from each of thes
features, the Commision should continue the curent FCA.
TheF(JAis one par of a larr regatory structure necess to levl the playig field for
demand side and supply side resurces. As long as Idao Power collects a portion of fixed costs
through volumetric rates, they face a structur diincentiv to pur actua reducions in
consumption reges of the caus Allowig the utilty to collect forgone fixed costs due to
changes in, constiption merely remove thi disincentiv. But the FCA doe not, and canot,
address other issues that provide a positive incentive to grow the utilty rate ba, pricipay the
abilty to ear a retur on capital invetment.7 The Commission ca better control utilty capital
investment tmough Iiitegrted resurce planning, rate caes and certificate of public convenience
proceedings.,.Proviclgapositive incentive for demand side resource on pa with supply side
., 'f.'.:; . I. ,.'
resources ra different issues that are best hadled throug other proceedigs for example the
Idao Powerpemand Side Resource proposa approved in IPC.E-IO-27. Th FCA is a nece,
but not sufficient, means to level the playing field.
The FCA is an important tool to enact the stated policy of thi Commision-to
"digen tly and vigorously pur al avaable, cost effective DSM, conservtion, and pricig
options that cauldpotentialy diplace or defer the need for additional futur peakg
7 Reguatory Assisance Project, Revenue Regulation and Decopling: A Guie to Theor and
Applicationat~6,(June 201 I) (explaiing the Averch Johnson effect is real and is best managedthroug "sound integted resurce planning that identifies the lea-cost long-term acquition
strategy(. ) ")(Avable at: http://bit.ly/RAPdecouple).
iICL Comments 3 Marh I, 2012
IPC-E-II-19 :
generation.'" Traditional reation miss incentiV with thi poli go. Th FC aligns
reguation with thi go by reovig a struur dicentiv whe maitaiingtheabitty to
establish consumption basd price sial Th Retory Asance Projec (RAP) revewed
severa alternatives to trational retion and conclud "Some of thes provide nealy the
sae benefits to utilty shholders as deuplig, but al of them fal short of the ful rage of
benefits that renue decoupg prvide paicuytho for consuers and th~
envionment. '"
There ar two ba options to remove the struur dicentive created bytraditional
regation - regning rates or instituting a trag mechais. Rates could be redesigned to
separte fixed and vale ch so caed straght fixed/vaable rates Idåo.Powér.calculates
that fixed cos reprent 71.7% of the total reenue reuiement for the resntia clas and
79.0% of the smal commerc cl10 As a ret, under a straght fixedvale rate scheme the
fixed cha would dwa the volumetric ch leavig ratepayers with a very wea consumption
basd price signal. Wea consuption bas price signal hider the Commisson's diective to
pur pricing options that dilace or defer new genetltion sourcesll Accrdigly, ICL and the
PUC Staf have consiently oppod movig in thi diion by steeply rag the fixed
cutomer cha for the redentia cla.
The other option is to institute a trag mechais that wi tru up any difference
between the fixed cos authorid by the Commison and those actuaytonected1:rythe utilty.
,
8 Order 30201 at 12, IPC-E-06-o9, Evand Andre CPCN (Decembe 15,2006); Order 32426
at 21, IPC-E-I1-D8, Idaho Power Geneal Rate Case (Decmber 30, 2011)("Wecontinue our
commitment that the Compay should pur al cost-effecive energefficiencies.")9 RAP at 41; See also NARUC Decouplingfor Electric and Gas Utilties:FrequentlyAsked
Questions at 4, (2007) ("Furhermore, as did abve, there are other method that remove the
througput dicentive, althoug reenue decoupling may be balce the removal of utilty
dincentives to energ effciency whie prervg cuomer incentives to deploy energ
efficien .".
10
II See Order 30201 at 12.
ICL Comments
IPC-E-11-19
4 Marh 1,2012
Whe more complex than a straght fixed/variable rate, this option alows for a strong
consumption' basd price signal whe providig the utilty with a better opprtunity to reover its
approved fixed costS.12 These benefits outweigh the complexity of the FCA.
TheFCA ~. focus the Company squaely on controlling costs. Under traditional
reguation, the utilty ca increas revenue in three ways cut costs, add customers or increas
saes. The FCA removes Idao Power's abilty to increa reenue by increasing saes beus the
true up mech.wisnlretums to customers any fixed cost revenue that exceeds the authonzed
amount. In~ea~~,tht utilty can only increas revnue by increasing customers or cutting costs.13
Since new customers nrig their own new cøs, the single best way to increas renue is to cut
cost. Cutting cost to improve effciency of aperations is in the interes of ratepyers and
shaeholders but cutting cost by reducing qúaty of servce is a potential pitfal of the cost
minimiztion objective. Fortunately, recent quaity of servce results for the Compay indicate
that the FCA mechanism has not diinished quaty of servce, but the Commision is wi to
continue monitorig quaity of servce as a çomplement to implementing the FCA mechaism.
Theriechanics of the FCA are workig as intended, providig surhar when
consumption declines and credits when consumption increass. As a result, the FCA ensur
,
Idaho Powercòllects the revenue approved by the Commision, no more and no les Without the
FCA IdaøPo-wercan' over collect fixed costs merely by increasing saes By liiting reovery to
'"
approved riXe4cQsts,'the FCA diectly beneUts ratepayers.
The FCA rewards ratepayers who become more efficient. If overa energ consumption
increass thedFCAprovides a credit to customers but their bils increas as they buy more energ.
If consumption declies the FCA leads to a surchar, but only up to the approve fied costs.
Customer bils should remai stable or declie becaus payig for les energ offsets the surchare.
12 See NARUC at 4~
13 See NARÚG~t 9; RAP.at 45 - 46.
ICL Comments
IPC-E-l1-19
5 Marh 1,2012
And, to the extent cusomers increas their effciency, their bils declie evn more. Under this
scheme, the FCA rewa the effcient ratepayer more tha the inefficient. Th is goo public
policy as long as al ratepyers have the opprtunity to beome more efficient and thereby reduce
total bils.
Tody ratepayers have more opportunities to p~icipate in efficiency progrs than
before. Since the adoption of the FC pilot Idao Power ha expade the suteoferierg
efficiency progrs for redential cuomers from sen prs to twelve.14 .Over this same
time, the portion of total energ savigs from Compay progrs attributable to the resdential
sector grew from 13.65% to 22.84%.15 Ratepayets abilty to control their energ use only
increaes when Idao Power supports other conservtion mea like buidig ,codes appliance
standa eduction prs, financig mechaisms, and supportive tax policy. The
Commision ca algn the utiltys financi interest with the ratepyets intere in controlling
energ bil by continuig the curnt FCA that captut al poble ways in which a utilty ca
foser or hide reucions in energ consumption.
II. The FCA Beefts Ratepers By Alning Utity Incenties and MitigatgRi
The FCA ca dicty benefit ratepayers in two priar ways. Fir~ Iëtepyets 'benefit
when the utiltys fmancia interets algns with ratepayer's intere in controlling energ bils.
Th benefit comes from both incred utilty spnsored progrs as well as ihcomplementar
public policies and pros. Second, in the eyes of invesors the FCA is a risk mitigation tool
that ca reduce the revenue volatilty ri to the Compay ledig to a lower over revenue
14 Idaho Power 2007 DSM Repor at 10 (March 2008); Idaho Power 2010 DSM Report at .18
(March 2011).IS ld.. at 55-56 (Showig tota savigs of 91,145,000 kwh and residential savigsòf12.440,682
kwh); ld.. at 129-130 (Showig total savigs of 187,626,344 kwh and resdentia savigs of
42,850,839 kw).
..
~arh:l,2012ICL Comments
IP-E-II-I9
6
requiementførratePayers16 As the FCA çatures more factors that influence ener" , :.'..,
consumption, it fosters both benefits by removig the diincentive towads broad bas efficiency
efforts ann by increasing the mechanis's vaue as a nsk mitigation tooL For thes reasons, a
robust FCA best serv the public interest.
Upon initiating the pilot the Commision stated: "Te annua FCA true-up mechanism
asures a more stable utilty recovery of fixed costs that are now recovered in the energ rate
componentf.i~'17 A: recent treatise by the Reguatory Assisance Project (RAP) considered thi
revenue stabilizing feature and explais the potential benefits to ratepayers as
"Econ~mic theory supports the notion that risk mitigation is vauable to inveors
andth~t tliatVaue wi (eventuay) be revealed in some way in the market-
.'¡
throug a lo;wef cost of equity, a lower cost of debt, or a lower requi equity" '
capitalizatiön ratio. Any of these wi eventuay produce lower rates for
consamers, in retur for the nsk mitigation measure.n18
Whe the treatise cites each element of rik-cos of equity, cost of debt, and capital
structure-RAP concludes that the diference is in the timing. Investors may take year to
recognize the benefits of risk mitigation thrug lower costs of equity or debt. Meawhie the
Commission ca limediately reduce the equity ratio without disturing the utiltys authoried" '
rate of retur¡andtherebydeliver immediate brnefts to ratepaye RAP explais the underlyig
theory as: "Byreduclng volatilty, the utilty needs les equity to provide the sae asurce that
bond covera~ratios and other fmancial requiements wi be met."19 ICL ages with RAP that,
16 RA at
3'i;: NARUC,at 9 ("As noted before, decouplig ca reduc risk for the utilty byensurg that its revnues and retur on investment remai stable. A lower ri-profie should
make the cost of capital lower for the utilty. ' For investors, this ca be realizd thrug an
increase in the utilty's debt/equity ratio, a decrease in the reur on equity, improve debt ratings
and creditrequ.ements. ").
17 Order 30267' at 13, IPC-E-04-I5.IS RA at 39; NARUC at 9.
19 RA at 39.
.;
ICL Comments
IPC-E-II-19
7 Marh 1,2012
in contra to reucg the retur on equity, reducing the equity ratio: "is more diectly reflective
of the nsk mitigation that decouplig actuay provide - that is stabiltion of earings with
respct to factors bend the utiltys control."io
Indudig all non-weather related chges in consuption in the FCAremöves the
disincentive towa broad bad energ effciency and maximiz its vaue as a ns,mitigation
tool. Mr. Cavaag and Mr. Youngblood both refer to the reduced revnue volatilty as a benefit
to the Compay of the FCA.21 The Commision ca sh thi vaue with ratepayers by reducing
Idao Power's ratio of equity to debt to reflect thi reduced ri. The Commision can. accomplish
thi by orderig Ida Power to ise debt rather tha equity for new capital or payig a dividend
and replacig the equity with debt.
III. Ratepers Beef if th FC Caures Al Non-Wea Reled Chges in Consumption
Electing to addres the diincentive towads brod ba energ effciency thr~~ a
trackig mechais is the fir step in creating a sound regtory scheme. Uke:ma$t,thigs in
life, the dev is in the detai and the spifc design of a fixed cost trackigmechaispl is a prie
example. Trackg mechaiss ca rage from "ful decouplig," which captures consumption
chages reges of caus, to "limited deouplig." al know as lost revenue adjusments, which
captures only spc caus of chgig consuption.22 Where a spcific mechaism falls withi
thi rage depends on how retors dea with four priar factors that influence electncity
consumption: (1) weather, (2) the number of cusomers, (3) the consumption patterns of
individua cusomers and (4) economic conditions in the servce terrtory. Once a factor is
included or exclud, the Commison mus examine whether additional retory actions are
necess to addres chages is nsk alloction or to promote specific policy goa. Curently the
20
RA at 39.21 Cavanag Dirt at 4; Youngbloo Dirt at 12.
22 RA at 11 - 13; NARUC at 5.
ICL Comments
IPC-E-11-I9
8 Marh 1,2012
FCA exdudes weather related changes in consumption and includes the othe thr factors.
Exdudig factors (rom the FCA works agast the public interes by faig to remov the utilty
disincentive'iowad$ broad bad energ efficiency and reducing the vaue of the FCA as a risk
mitigation tóol. Accordigly ICL recommends the Commission continue the curnt PeA as thei 'I.. ".. ¡',"¡,: : i
best means to~gilthe utilty's fmancial interests with ratepayets interests in controllg energ
bils.
Weather:
Deviations from the asumed weather patterns usd to set rates ca increas saes, due to
extreme weather, or decrease sales, due to les extreme weather and consequently les heating and
coolig lo~ds.When Idao Power initialy proposed the FCA they stated: "Te Compay
historicaly has asumed riks asiated with weather-related change in saes we sek no chage
in that risk alocation, which obviously does not afect the Company's incentiv to promote and
invest in energy efficiency."23 Exdudig weather drven chages in consumption expo utilty
and ratepayei:s"tothirisk.Weather normaltion methods mitigate this ri to some extent by
smoothig out revenue volatilty between years. ICL supports exdudig weather from the FCA,
which maitais historica rik alloctions mitigated throug weather normalizing metho
Number of Customrs:
Establishig rates requies asumptions about the number of cusomer on the syem in
the future. If cusomer counts decline compared to the asumed levl the util recovers les
revenue.l1Qwevr~ the utilty should alo incur les expense since the cuomer either remove or
does not brig some of their fixed costs with them. On the other had, if cusomer counts
increas the utRity could recover more renue, but they also incur more coss. Regadles Idao
Power has little abiJtyto influence the number of customers on the syem. More importantly,
I., ,
23 Gale Direct,åt
10, IPC-E-04-15 (implementing the FCA pilot) (Janua 30, 200).ICL Comments 9 Marh 1,2012
IPC-E-11-19
the sheer number of cuomers ha no impact on overa energ efficiency. Instead,maximizing
the efficiency of al cuomers reges of vitage, is the be way to achievthe Commission's
goal of deferrg or dilacig more expesive supply side reures
Durg the pilot period the Staff expred concern that new cusomerS have different
consuption patterns tha exising cuomers 24 ICL sumits that it is not at al clear that new
cusomers have a meaningfl dierence from exiing cuomers Whe ga spce heating is
certainly on the ri so is centra ai conditioning. New homes ar buit to higher standads but
tyicaly ar larr tha avera, meaing more spce to cool and light. Whe new cuSomers may
trigger the need for lie extensions or other infraructur, the Commission. ca more directly
addr this iss thrug the lie extension policy tha the FCA. Addtionållý, ifth~ Justification
for treating new cusomers diferently is their lower cansuption tha average, tIi$o holds true
for exising cusomers who beome more effcient. iiístead of addig complexity to the FCA by
requig a sepate rate for new cuomers ICL submits a better approh is to requie reguar
updates, such as every thid yea, to the cost of servce study inputs and resuts iid to calculate the
FCA. Treating new cuomers the sae as exising cusomers avoids complexity and maximizes
the benefits of the FCA by liiting dicentives and increasg the rik mitigation vaue.
Conumti Patter of Indivual Custom:
Idao Power ca influence on thi factor more tha any other. The Compay can
influence consumption patterns diectly thrug DSM progrs and more broadly ~hrough
mareting, eduction, and rate deigns. Idao Power ca also influence còinplementar state or
federa policies suh as buidig codes, appliace standa fmancig mechånisi:s,~nd tax
policy.2s Idao Power's "enhace commitment," made when the FCA pilot pro be,
24 Lobb Dirt at 8, IPC-E-0IS; Staff Comments at 8-9, IPC-E-9-28.
25 Whe chge in the ecnomy and wether ca also'. reduc individua energ consumption, the
FC ca include or exclud the factors on a macro s,e instea of the individua sce.
ICL Comments
IPC-E-II-I9
10 March 1,2012
captures thes broader efforts.26 Regadles of the caus, reducing per capita consuption benefits
ratepayers in the short term by reducing overa bil and in the long ru by avoidig expensive
generation resources. Desite these benefits, the priar unresolved issue thi Commison faces
is whethertheFCAshould continue to captur al non-weather related chage in consuption.
Indudig only changes in consumption directly attributable to Compay progs often
leads to contentious and complicated proceedigs. The Washigton UTC's cuent effort to
develop andiipleinent mandated conservtion targets is a prie example. Typicay," "'!" ,.1' i
stakeholders'c9mf'qrtwlththis factor decl,es along with the abilty to accurtely meaur the
energ savigs. Capturg changes in consumption 4i.e to a utilty incented new furace is
relatively eas tqnieasure and relatively uncontroversia. By contrat, chge attributable to
conservtion minded rate designs ar had to measure and thus quite controveial To the extent
the FCA excludes changes not dictly attributable to Company progrs, ratepaye mis the
benefits of removig the disincentive towads broad energ conservtion efforts and the vaue of
the FCA as a rik. mitigation tool.
The Commission ca bet serve the public interest by capturg al non-weather related
changes in consumption in the FCA. Doing so avoids expensive and contentious proceegs and
removes Ida0Pnwer's disincentive towadsbroader efforts to conserv energ. With the
Company, the~ebroade~ efforts include conservtion minded rate designs suc as the ye round
three-tier rate applicable to residential customers. Excludig rate desgn drve chage in
consumption from the FCA creates a disincentive to establish thes rates. Idao Power ca also
influence complementar state policies that promote energ efficiency like buidig cod and tax
policy. Whe Idao Power ca and should take a more active role in broadly promoting energ
effciency, excludig thes revenue impacts from the FCA, or eliminating the mechais
altogether, wiaider rather than bolster thi effort.
26
Order 30267 alB - 14, IPC-E-04-1S, (Approvig the FCA pilot pro)(March 12, 2007).ICL Comments 11 Marh 1,2012
IPC-E-II-19
The Commison ca incent Ida Power to pur their enhaced commitment more so
tha tody. One option is to make a portion of the FCA revery at ri. For example, when
Idao Power as to tru up acua revenue to authori renue, some amount of the forgone
revenue, say 75%, could be asd with addtional amounts alowed dependig on,dtmonstrable
step taken to enac the enhace commitment. Demonstrable steps could indude:a record of
lobbyig efforts on applicale state and federa policies, conveing buidig code traing and
enforcement seons for counties and cities incred eduction efforts,ard c1sigf.ingrates not
jus to "sh usge to lower cost time period" but to reuce overa us.27 Høwever,this
proposa adds additional complexity to the mechaism, and becaus the tru impact of these
efforts is dicult to quatif, dedig on an approprite "at ri" amount is likely to be
contentious Instead, the cunt FCA delivers more benefits ratepyers by reucing complexity,
removig the disincentive for brod bad energ effciency, and maximizs the FCA's risk
mitigation vaue. 'T Commision ca be serve ratepyers by approvig the curent FCA.
Ecoom Conitio in the Servce Terrtor
Th factor is the most controvers of the four. Lie weather conditions, the utilty ha
little abilty to influence thi facor. Hisoricay, Idao Power ased the riSK ,of èconomy-.'.' i ':, ....,.,' i
related chage in consuption. The FCA, in its curnt form, chages tlû, aloctiò4.However,
thi chage is not inhently unfai or unjus and ca actuay benefit cusomers.
Attempting to exclud economy-related chage in consumption is highy complex and
doe not necesy benefit ratepyers Weather normalization method ca mitigatet~e impact
of weather related chage in consumption and are a common featur of utiltyreation. But
normaliztion method to exclude economy-related chages in consumption ar rae and highy
27 See Idao Power 2012 Time Varint Pring Implementati Plan at 2, IPC-E-12-o5, Tariff
Advi 12-02 Tim Variant Pring Scheduls (Febru 22, 20 12)(ICL acknowledges that inverted
bloc rates ca drve lower consuption not jus shiing of consumption. But the specifics of
the time of us rates may or may not dr down consumption.)
ICL Comments
IP-E-II-I9
12 .Marh 1,2012
complex. Without the abilty to reduce revenue volatilty causd by economic conditions thug
normalization, the utilty and ratepyers remai fuly expose to thi risk. Ths higher rik profie
traslates into a higher overa renue requiment for ratepayers.
Indnpïg economy-related chages in consumption in the FCA ca beefit both the
utilty and ratepayers. A 2011 report by the ACEEE desribes how liiting the FCA to Compay
sponsored progrs reais the disincentive to support broader effciency efforts like buidig
codes and appliance standads and does not addres the utilty incentive to increa saes28
Because c~anges in economic conditions ca have a lar impact on consumption, includg this
factor in the fCA,increases its vaue as a rik mitigation tool. Capturg al economic-related
changes in energ consumption algns the utilty's fmancial interest with ratepayets intere in
controlling en.ergbils and maximizes its vaue as a ri mitigation tool.
Conclusion
ICL ures the Commission to maitai the curent FCA. Induding al non-wether
related changes in consumption benefits ratepayers becaus it is simple, limits the diincentive
towards broad bas energ conservtion, and maximizes the mechanism's rik mitigation vaue.
Ratepayers ca share the risk mitigation vaue of a robus FCA if the Commison reuces the ratio
of equity to debt, which ((is more directly reflective of the risk mitigation that decouplig actuay
provides - that is, stabiliztion of earings with respect to factors bend the utilty's control. "29
A robust FCA is the best means to align utilty incentive with the ratepyers interet in energ
conservtion whie accomplishig the Coml1ÏSon's goal to ((digently and vigorously purue all
avaable, cost'~ffective DSM, conservtion,:~d pricing options that could potentialy dilace or
28 See ACEEEBaiancing Interests: A Review of Lost Revenue Adjustment Mechanisms for
Utilty Energy Effcienc Programs at 8 - 11, (September 2011)(Available at:
htt://aceee.org/reseach-reportuI14).
29
RA at 39. '
ICL Comments
IPC-E-ll- I 9
13 Marh 1,2012
defer the need fot' newt and expensiv, generation resources. 30 For these rens, the
Commission ca be serve ratepayers by makg the cunt FC a permaneiit mechaism.
Refuly sumitted thi I-day of March, 20 II,&~
Benjamin Otto
Idao Conservtion League
30 Ordr 30201 at 12, IPC~E-06-o9, Emnder Andrew CPCN (December 15, 2006); Order 32426
at 21, IPC-E-ll-oS, ldiho Power Geral Rate Case (Decmber 30, 201l)("We continue our
commitment that the Compay shuld purue al cos-effecive energ effciencies.n)
ICL Comments
IPC-E-II-I9
14 Marh It 2012
CERTIFCATE OF SERVICE
I hereby ceify that on this 1st day of Marh 2012, I deliver tre and co copies of
the foregoing COMMNTS OF THE IDAHO CONSERVA nON LEAGUE to th followig via
the methodof.$ervice noted:
Jean Jewell
Commission Secretar (Origial provided)
Idao Public Utilties Commision
427 W. Washigton St.
Boise, ID 83702.:5983
Electronic Mai
Idaho Power
Jasn B. Wilams
Lisa D. Nordstrom
Idao Power Company
1221 West Idao Street
Boise, ida083 7()7-0070
jwiliams CPidaopower.com
InordstromCPidaopower.com
Michael J. Youngblood
Zacha L. iìars. .
Idao Po~erCoripany
P.O. ox 70' ' "
Boise, Idaoá3707
myoungblood€Pidaopo'wer.com
zharsCPidaopower.c()m
NWEC
Nancy Hirsh
NW Energ COalition
8ll 1st Ave., Suite 305
Seattle, WA 98104
Ph: [phone]
nancynwenergy.com
Micron ,..
Richard E. · Malgren
Sr. Asst. Genera Counsel
Micron Technology~ Inc.
800 South Federa Way
Boise. ID 837 t6
remalmgrenCPIpicron.com
CERTIFICATE OF SERVICE
Thorvald A. Nelson
Freerick J. Schmidt
Holland & Har LLP
6800 South Fiddler Gree Cirle, Ste. 500
Greenwood Vilage, CO 801 I 1
Tnelson~hollandharcom
fschmidt~ollandhar.com
&~..~......
Benjamin J. Otto
March 1,2012
Benjamin J. Otto (ISB No. 8292)
710 N 6di Stree
Bois,ID 83701
Ph: [phone] x 12
Fax: [phone]
bottoCPidaonservtion.org
Attorney for the Ida Consetion le
BEFORE TH IDAHO PUBIlC UT COMMISSION
IN TH MATIR OF TH )
APPIlCATION OF IDAHO POWER )
COMPANY FOR AU1HORIl TO )
CONVRT SCHEuæ 54-AX )
COST ADJUSTENT-FROM A PILT )
SCHEDULE TO AN ONGOING, )PERMAENT SCHEDULE )
CASE NO. IPC-E-1l-19
COMMEN OF TH IDAHO
CONSERVATION LEGUE,.
,:",.,. i
Exit 1
Ida Power Compay Resnse to Sta Producton Reques ,14
ICL Exhibit I Mah 1, 2012
IDAHO POW COMPANY
Development of Fixed Cost Adjultmnt Rate
. 2011 Test Year, Table I
,Class Cost of Service Functionalized Costs
Based UponGRC Settlement Stipulation .IPC.E.11..& . Filed September 23,2011
ICL Exhibit I March 1,2012
i