20130403Application.pdf

P I An IDACORP Company
JULIA A. HILTON
Corporate Counsel
jhilton(äidahopower.com
April 3, 2013
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VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-13-08
2012 Demand-Side Management Expenditures - Idaho Power Company's
Application and Testimony
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven (7) copies
of Idaho Power Company's Application.
Also enclosed for filing are nine (9) copies each of the testimony of Timothy E.
Tatum and Darlene Nemnich. One copy of each of Mr. Tatum's and Ms. Nemnich's
testimonies has been designated as the "Reporter's Copy." In addition, a disk containing a
Word version of Mr. Tatum's and Ms. Nemnich's testimonies is enclosed for the Reporter.
The confidential exhibits to Mr. Tatum's testimony have been placed in a separate,
sealed envelope. Because the exhibits are confidential, a Protective Agreement is
enclosed. If the Protective Agreement is satisfactory, please have the Idaho Public Utilities
Commission attorney sign and forward a copy of the fully executed Agreement to Idaho
Power Company.
If you have any questions about the enclosed documents, please do not hesitate to
contact the undersigned.
Very truly yours,
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]
ihiltonidahopower.com
lnordstromidahopower.com
013APp- PM !:!4Q
PUSL
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR A ) CASE NO. IPC-E-1 3-08
DETERMINATION OF 2012 DEMAND-SIDE )
MANAGEMENT ("DSM") EXPENSES AS ) APPLICATION
PRUDENTLY INCURRED. )
In accordance with RP 052 and RP 201, et seq., Idaho Power Company ("Idaho
Power" or "Company") hereby respectfully submits its Demand-Side Management 2012
Annual Report ("DSM 2012 Annual Report") and makes application to the Idaho Public
Utilities Commission ("Commission") for an order designating Idaho Power's
expenditures of $25,857,603 in Idaho Energy Efficiency Rider ("Rider") funds,
$6,019,109 in a regulatory asset account (Custom Efficiency program incentives), and
$14,479,447 of demand response ("DR") program incentives included in the 2013
Power Cost Adjustment ("PCA"), for a total of $46,356,160 as prudently incurred
demand-side management ("DSM") expenses.
APPLICATION -1
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 utilities operating in the
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 efficiency and DR 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 13 members of the EEAG represent customers, state agencies,
environmental groups, 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 allies, 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 million from 2002 to 2007. Order Nos. 30740 and 31039. In
addition, the Commission found that the Company's 2008 and 2009 cost-effective DSM-
APPLICATION -2
related Rider expenses of $50.7 million were prudently incurred. Order No. 32113.
Further, the Commission found that the Company prudently incurred cost-effective
DSM-related Rider expenses of $41.9 million in 2010. Order No. 32331. Most recently,
in 2012 the Commission found that the Company prudently incurred $42.5 million of
cost-effective DSM-related expenses in 2011. Order No. 32667 and Reconsideration
Order No. 32690.
3.In Order Nos. 32667 and 32690, the Commission declined to decide the
reasonableness of the Company's increase in Rider-funded labor-related expenses
included in the 2011 DSM expenses until the Company provides evidence by which to
better assess the reasonableness of those expenses. As described in more detail
below, the Company has included such evidence in the Direct Testimony of Timothy E.
Tatum ("Tatum Testimony") filed contemporaneously with this Application.
4.As a result of Idaho Power's increased DSM activity over the last 10
years, Idaho Power's quarterly customer relationship surveys in 2012 indicate that the
percentage of customers who have a positive perception of Idaho Power's energy
efficiency efforts has steadily grown from 39 percent in 2003 to 60 percent in 2012, a
positive increase of 54 percent. DSM 2012 Annual Report at 18.
II. 2012 DSM RESULTS
5.Idaho Power continued its DSM programs in 2012 in order to increase
participation and facilitate energy savings. In 2012, Idaho Power offered its Idaho
customers 17 energy efficiency programs, three demand response programs, several
educational initiatives, and savings to customers through market transformation
programs. Overall, annual energy savings from Idaho Power's energy efficiency
activities in 2012 totaled 170,228 megawatt-hours. DSM 2012 Annual Report at 1.
APPLICATION -3
6.To achieve these results, total system-wide expenditures on 2012 DSM-
related activities increased to $49,326,859. Id., Appendix 2 at 142. The $49,326,859 of
system-wide, DSM-related expenses in 2012 include expenditures for customers in
Oregon and other operations and maintenance expenses that are not before the
Commission as part of this prudence request. Idaho Power is seeking a determination
that $25,857,603 in Rider expenses, $6,019,109 in Custom Efficiency program
incentives, and $14,479,447 in DR program incentives included in the 2013 PCA were
prudently incurred for a total of $46,356,160. A summary of program expenditures by
funding source in 2012 is provided in Exhibit No. 3 to the Direct Testimony of Darlene
Nemnich ("Nemnich Testimony") filed contemporaneously with this Application.
7.Results show that all three of Idaho Power's DR programs are cost-
effective when evaluated from a long-term perspective. From a one-year perspective,
the A/C Cool Credit program was not cost-effective for 2012. Of the 15 energy
efficiency programs offered in Idaho by Idaho Power, only the Weatherization
Assistance for Qualified Customers and the Weatherization Solutions for Eligible
Customers were not cost-effective in 2012. An explanation of the cost-effectiveness
analyses and steps Idaho Power has taken to increase future cost-effectiveness of
these programs is provided in the Nemnich Testimony.
III. THE DSM 2012 ANNUAL REPORT
8.In support of its Application requesting the Commission deem the
Company's total 2012 DSM expenses as prudently incurred, Idaho Power presents its
DSM 2012 Annual Report as Attachment I to this Application.
9.The DSM 2012 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
APPLICATION -4
of DSM Expenditures ("DSM MOU") submitted as part of the stipulation approved by
Order No. 31039. In sum, Idaho Power's DSM 2012 Annual Report contains the
following:
a.Template. Idaho Power used previous DSM annual report formats
as a guide for its DSM 2012 Annual Report. Two Supplements accompany the DSM
2012 Annual Report: Supplement 1: Cost-Effectiveness ("Supplement 1") and
Supplement 2: Evaluation ("Supplement 2").
b.Table of Contents. The DSM 2012 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 1
through 21 of the DSM 2012 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 I 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 (i.e., the total resource
cost ("TRC") perspective, the utility cost test ("UCT") perspective, and the participant
cost test ("PCT") perspective), Supplement I contains the ratepayer impact measure
("RIM"), a cost-effectiveness test added in 2010. The RIM test measures the impact to
customer bills or rates due to changes in utility revenues and operating costs caused by
an energy efficiency program.
APPLICATION -5
e.Evaluation Section. Supplement 2 contains Idaho Power's
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 Alliance.
f.Program Specific Section. The DSM 2012 Annual Report contains
the following information for each program or initiative: (I) a table listing the summary
of the program participation; (2) performance and costs; (3) a description of the
program; (4) 2012 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 2013. 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 2012 Annual Report describes education
initiatives and other DSM efforts that are not tied to direct energy savings. DSM 2012
Annual Report at 117-127. These efforts support the Company's overall DSM agenda.
Other programs and activity expenses are shown in Appendices 2-4 and Exhibit No. 3
to the Nemnich Testimony.
10. The Nemnich Testimony also describes several adjustments to the total
dollar amounts contained in the DSM 2012 Annual Report to arrive at the expenses the
Company presents to the Commission for a determination of prudence. Nemnich
Testimony at 11-21. These adjustments include: $82,856 to adjust for the disallowance
of 2011 expenses in the A/C Cool Credit program in Order No. 32667; accounting
APPLICATION -6
corrections, most of which were incentives paid to customers from the Idaho Rider,
which should have been charged to the Oregon Rider; an adjustment deferring a
determination of prudence for some expenses incurred in 2012; and an exclusion of
incentive payments paid to program participants that did not meet program
requirements. Id. In addition, $3,512 of the incentives paid to customers from the Idaho
Rider which should have been charged to the Oregon Rider occurred in 2011. Id. at 13-
14. The Company requests that the Commission reflect this adjustment in its records
as necessary.
IV. EVOLUTION OF THE 2012 REPORT
11. The DSM 2012 Annual Report and accompanying Tatum Testimony and
Nemnich Testimony provide a sufficient basis for the Commission to determine whether
Idaho Power's DSM expenses were prudently incurred. In order to meet Commission
Staffs expectations for assessing cost-effectiveness tests, methods, and evaluations as
indicated in Attachment No. I to the DSM MOU, Idaho Power has included:
a. Cost-Effectiveness Measurements. In the DSM 2012 Annual
Report, Idaho Power calculates cost-effectiveness from the RIM, PCT, UCT, and TRC
perspectives at the program level, except for those programs with no customer costs in
which case the PCT is not applicable. This includes DR programs which are evaluated
at the UCT and TRC perspectives. Idaho Power also evaluates cost-effectiveness from
the UCT and TRC perspectives for each measure within a program, where the
measures are not interactive. Supplement I includes detailed results of the cost-
effectiveness tests by program and by measure. Appendix 4 of the 2012 DSM Annual
Report shows the historical UTC and TRC results for each of Idaho Power's energy
efficiency and DR programs from a program-life perspective.
APPLICATION -7
b. Net-to-Gross Adiustments. For the DSM 2012 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 Power's programs. In 2012, impact evaluations were
completed on six programs and a process evaluation was conducted on one program.
Idaho Power contracted with third-party consultants to research cycling strategies for
the A/C Cool Credit program and to evaluate measure assumptions for the Irrigation
Efficiency Rewards program. In addition, Idaho Power conducted its annual internal
analysis and reports for the Flex Peak Management and the Irrigation Peak Rewards
programs. Copies of these reports can be found in Supplement 2.
V. RIDER-FUNDED LABOR-RELATED INCREASES
12.In case No. IPC-E-12-15, the Company requested that the Commission
find its 2011 DSM expenses were prudently incurred. The Commission declined to
decide the reasonableness of the Company's increase in Rider-funded labor-related
expenses until the Company could provide evidence by which to better assess the
reasonableness of such expenses. Order No. 32667 and Reconsideration Order No.
32690.
13.As described in the Nemnich Testimony, the $25,857,603 in Idaho Rider
expenses described above includes the 2011 increase in Rider-funded labor-related
expenses excluded from the Commission's prudence determination related to 2011
DSM expenses. Id. The Nemnich Testimony also quantifies the corresponding amount
APPLICATION -8
of increase in 2012 Rider-funded labor-related expenses, as measured from the 2010
labor expense level. In order to demonstrate prudence of these amounts, the Company
has prepared a DSM Total Compensation Analysis, which is included as Exhibit No. I to
the Tatum Testimony. The Tatum Testimony describes the regulatory background for
Rider-funded labor-related expenses, the Company's approach to wages and
compensation, and data demonstrating that Idaho Power DSM employee compensation
levels are comparable to compensation levels for similar positions in peer utilities.
VI. MODIFIED PROCEDURE
14.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; i.e., by written submissions rather than by hearing. RP 201,
et seq. Idaho Power has, however, contemporaneously filed the Nemnich Testimony
and Tatum Testimony in support of this Application. The Company stands ready to
present the testimony in support of this Application in a technical hearing if the
Commission determines such a hearing is required.
VII. COMMUNICATIONS AND SERVICE OF PLEADINGS
15.Communications and service of pleadings with reference to this
Application should be sent to the following:
Julia A. Hilton
Regulatory Dockets
Idaho Power Company
P.O. Box 70
Boise, ID 83707
ihiltonidahopower.com
dockets [e-mail]
Darlene Nemnich
Tim Tatum
Idaho Power Company
P.O. Box 70
Boise, ID 83707
d nemnich(äidahopower.com
ttatumidahopower. corn
APPLICATION -9
VIII. REQUEST FOR RELIEF
16. As described in greater detail above, Idaho Power respectfully requests
that the Commission issue an order designating Idaho Powers 2012 DSM expenses of
$46,356,160 funds in 2012, which includes the increase in its 2011 DSM Rider-funded
labor-related expenses, as prudently incurred DSM expenses.
DATED at Boise, Idaho, this 3rd day of April 2013.
J U Lc '
Attorney for Idaho Power Company
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-13-08
IDAHO POWER COMPANY
ATTACHMENT I
DEMAND-SIDE MANAGEMENT
2012 ANNUAL REPORT