20131112final_order_no_32923.pdf

Office of the Secretary
Service Date
November 12,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE CONTINUATION )
OF IDAHO POWER COMPANY’S A/C COOL )CASE NO.IPC-E-13-14
CREDIT,IRRIGATION PEAK REWARDS,)
AND FLEXPEAK DEMAND RESPONSE )
PROGRAMS FOR 2014 AND BEYOND )ORDER NO.32923
________________________________________________________________________________________
)
On June 4,2013,the Commission initiated this proceeding to examine the
continuation or modification of three voluntary demand response (“DR”)programs offered by
Idaho Power Company:A/C Cool Credit;Irrigation Peak Rewards;and FlexPeak Management
programs.See Order No.32823.After a series of workshops occurred,the parties to the
proceeding entered Demand Response Programs Settlement Agreement (the “Settlement”)and
filed it with the Commission.The Commission took comments on the proposed Settlement
through October 30,2013.
Having reviewed the record,including the proposed Settlement and the comments,
the Commission finds that the proposed Settlement is just,fair,and reasonable and in the public
interest,and it enters this Order accepting the Settlement as filed.
BACKGROUND
A.Prior Orders
In prior proceedings,the Commission “temporarily suspended”the A/C Cool Credit
and Irrigation Peak Rewards programs for 2013 and approved changes to the FlexPeak program.
The Commission suspended the first two DR programs and modified the third based on the
Company’s assertion that it would not experience a peak-hour generation deficit from 2013
through July 2016.See Order Nos.32776 and 32805.In summary,these two prior Orders
provided as follows.
1.Order No.32776—A/C Cool Credit and Irrigation Peak Rewards.In Order No.
32776,the Commission approved a proposed settlement agreement entered into by the parties
including the Idaho Irrigation Pumpers Association,Inc.(the “Irrigators”);Idaho Conservation
League (“ICL”);Snake River Alliance (“SRA”);the Company,and Commission Staff.The
parties agreed to suspend the A/C Cool and Peak Rewards programs for 2013 based upon Idaho
Power’s 2013 Integrated Resource Plan (‘IRP”).More specifically,the 2013 IRP showed that
ORDER NO.32923 1
the peak-hour projected loads for the summer months of 2013,2014,and 2015 do not show a
“peak-hour deficit until July 2016 and therefore [there is]no need [to employ]peak-hour demand
response programs”like the A/C Cool and Peak Rewards programs.The Company relied on the
same rationale for amending the Peak Rewards contract.
2.The settlement approved in Order No.32776 also provided that residential
customers participating in the A/C Cool Credit program be provided a “continuity”payment of
$1.00 per month for the three summer months of 2013.The settlement also provided for
continuity payments for those irrigation customers voluntarily participating in the four Peak
Reward options.In addition to continuity payments,the parties requested that the Commission
schedule an informal prehearing conference to set public workshops and develop a procedural
schedule so that the parties and other interested persons may evaluate changes to the demand
response programs for calendar year 2014 and beyond.The Order approving the temporary
suspension directed Staff to convene an informal prehearing conference for the parties to develop
a schedule for the public workshops.It also directed that the intervenors (the Irrigators,ICL,and
SRA)would be deemed parties in the new case.Order No.32776 at 8.
3.Order No.32805—FlexPeak.In the FlexPeak Order,the Commission approved
changes to the program which will reduce the cost of the program by about $500,000 for 2013.
Order No.32805 at 3.As with the A/C Cool and Peak Rewards programs,the Commission
directed that the public workshops also address “how to continue the FlexPeak program in the
future.”Id.at 4.
B.Proceedings in this Case
The parties to this case include the Company,Commission Staff,the Irrigators,the
ICL,the SRA,EnerNOC,Inc.and the Industrial Customers of Idaho Power.See Notice of
Parties.As directed by the prior orders,on June 12,2013,the parties convened an informal
prehearing conference to schedule public workshops.A series of five public workshops occurred
between July 10 and August 27,2013.Workshop participants discussed how the Company
includes DR in its IRP,how it calculates cost-effectiveness,the purpose of DR,and DR
programs and their operational design.The last workshop also included settlement discussions
that culminated in the proposed Settlement.See Notice of Informal Prehearing Conference,and
Notices of Public Workshops.
ORDER NO.32923 2
On October 2,2013,Idaho Power filed the proposed Settlement and tariff Schedules
23 and 81 (the Irrigation Peak Rewards and A/C Cool Credits tariffs),along with a motion and
testimony that ask the Commission to approve them.See Idaho Power Company’s Motion to
Approve Settlement Agreement.On October 9,2013,the Commission notified interested
persons that the proposed Settlement had been filed,and requested that they submit written
comments about it by October 30,2013.See Order No.32906.Commission Staff,ICL,SRA,
and Idaho Power filed comments or testimony supporting the proposed Settlement.Two
members of the public—Honeywell International,Inc.and John Weber—also filed comments.
THE PROPOSED SETTLEMENT
All parties except ICIP signed the proposed Settlement.’A non-party—Idaho Power
customer and workshop participant Mike Seaman—also signed.The signors believe the
proposed Settlement is fair,just and reasonable and in the public interest and that the
Commission should approve it under Commission Rule of Procedure 274.See Idaho Power
Company’s Motion to Approve Settlement Agreement.
In summary,the Settlement proposes to fully resolve this case as follows:
A.DR Guiding Concepts
The Company will implement DR programs using the following concepts:
1.Use existing demand response resources when possible.This includes
using,to the extent possible,current demand response equipment owned
or available to Idaho Power and participating demand response customers,
which currently represents about 400 MW of potential demand response
capacity;
2.Offer demand response for all three customer classes (residential,
commercial/industrial,and irrigation);
3.Keep costs as low as possible;
4.Re-evaluate the value calculation as the IRP changes;
5.Take a long-term outlook.In order to have viable demand response
programs in the long term,the program must continue in the short term.
6.Calculate avoided cost for demand response by using the avoided capacity
cost of a 170 MW single cycle combustion turbine multiplied by the
l ICIP participated in these proceedings,but ultimately took no position of record on the Settlement.
ORDER NO.32923 3
effective load carrying capacity,measured over 20 years,plus
corresponding deferred energy savings for 60 program hours;
7.Strive for consistency in dispatch requirements across programs;and
8.In addition to reducing peak loads,DR may be used for load following,
non-spinning operating reserves,improved reliability during emergencies;
and flexibility to address delays in building new supply-side resources.
By the 3”quarter of 2014,the Company will determine whether it is
feasible to use DR as operating reserves and,if it is,the Company will
work with Staff and stakeholders to develop a pilot program.
See Settlement at 3-4.
B.DR Valuation
The Company will use a minimum deferred resource of 170 MW when calculating
DR value.The annual value of DR equals the levelized annual cost of the minimum size
deferred resource,measured over 20 years,plus the corresponding deferred energy savings for
60 program hours.The Company’s DR portfolio presently is valued at $16.7 million,Id.at 4-5.
C.Specjfic DR Programs
The Settlement Agreement discusses three DR Programs:(1)A/C Cool Credit;(2)
Irrigation Peak Rewards;and (3)FlexPeak Management.If a system emergency occurs,DR
capacity from each program will be available for immediate dispatch.Program specifics include:
1.A/C Cool Credit Program.The A/C Cool Credit Program is available from June
15 through August 15,Monday through Friday.Participants receive a $15 bill credit for the
season (consisting of three,$5 credits for each of the three months).See Motion,Attachment 3,2
Participants include presently enrolled residential customers with an installed load-control
device.The Company will try to replace currently installed paging devices with Advanced
Metering Infrastructure (“AMI”)compatible devices by June 2014.The Company will not
actively market the program;but it will try to recruit customers who move into a home with a
load-control device,or who were enrolled in the program but then move to a home without a
load-control device.The Company also will accept new participants upon request.
2 The Settlement proposes revised tariffs,including tariff Schedules 81 —Residential Air Conditioner Cycling
Program and tariff Schedule 23 —Irrigation Peak Rewards Program.The proposed Settlement incorporates the
proposed tariffs by reference.See Settlement ¶7-8 (incorporating tariff schedule).See Settlement ¶J 7 and 8.The
Company’s Motion attaches the proposed tariffs as Attachment 3.See Motion at ¶5 [sic],page 3.
ORDER NO.32923 4
The Company need not notify participants before a dispatch event.Dispatch events
may last up to 4 hours,but no more than 15 hours per week or 60 hours per season.Participants
may opt out of two events per season.See Settlement at 5-6.
2.Irrigation Peak Rewards Program.The Irrigation Peak Rewards Program is
available from June 15 through August 15,Monday through Saturday from 1:00 p.m.to 9:00
p.m.Participants receive a fixed incentive of about $16 per kW per season.If more than three
dispatch events occur,participants receive a variable incentive of $0.148 (or $0.198 for the 9:00
p.m.option)per kWh.With the realization rate included,this results in a cost to the Company of
about $0.22 per kWh.
Participants may select three interruption options.The Company need not notify a
participant before a dispatch event occurs if the participant selected Interruption Options I or 2.
But the Company must provide at least four hours notice to participants who select Interruption
Option 3.Dispatch events may last up to 4 hours,but no more than 15 hours per week or 60
hours per season.Participants may opt out of up to three events at $5.00 per kW per event,and
opt out of additional events for $1.00 per kW per event.Id.at 6-7.
3.FlexPeak Management Program.The FlexPeak Management Program is
available from June 15 through August 15,Monday through Friday from 2:00 p.m.to 8:00 p.m.
Participants may receive a fixed incentive that will include at least three dispatch events.If more
than three dispatch events occur,participants will receive a variable incentive.The Company
will notify participants at least three hours before a dispatch event occurs.Dispatch events may
last up to 4 hours,but no more than 60 hours per season.Id.at 7-8.
THE COMMENTS AND TESTIMONY
The Commission received comments or testimony from two members of the public
and from parties including Idaho Power,Commission Staff,ICL,and SRA.In summary,the
comments collectively support the proposed Settlement as follows.
The proposed Settlement is a fair and reasonable resolution of the issue and provides
a reasonable approach for continuing DR programs.It is important to continue the DR programs
to ensure that sufficient,reliable DR resources exist to meet anticipated deficits in 2016 and
2017.Further,since 2003,ratepayers have invested more than $83,000,000 to develop a robust
set of DR programs with broad support.Going forward,customers only will enjoy the benefits
of avoiding high priced peak power and delaying or deferring additional peaking resources if the
ORDER NO.32923 5
Company continues operating these programs.The Settlement would allow the Company’s DR
programs to operate in a manner that is cost-effective and operationally beneficial to the electric
system.
The proposed Settlement makes the best use of prior DR investments by allowing the
Company to use existing participants and equipment when possible.It thus enables the
Company to leverage its existing DR infrastructure investment to continue operating a cost-
effective resource,maintain program participation until the programs are needed,and minimize
ongoing costs to customers.
The proposed Settlement attempts to reduce costs and improve DR program
responsiveness by decreasing incentive payments to irrigation and residential customers while
increasing program dispatch requirements.These agreed-upon program modifications would
make the programs more flexible,reliable,and useful because of the ability to respond with
shorter notice to program participants,and will help the Company provide reliable service during
extreme weather and water conditions.
For these and other reasons,the parties recommend the Commission accept the
proposed Settlement as being in the public interest.
DISCUSSION AND FINDINGS
A.Standard ofReview
The Commission reviewed the proposed Settlement under Procedural Rules 271-277.
IDAPA 31.01.01.271-277.The Commission is not bound by a proposed settlement.Rather,the
Commission must independently “consider the reasonableness of the settlement and whether
acceptance of the settlement is just,fair,and reasonable,in the public interest,or otherwise in
accordance with law or regulatory policy.”IDAPA 3 1.01.01.274 and 276.The Commission can
consider the settlement using a range of procedures.Id.In this case,the Commission opted to
review the proposed Settlement under the Commission’s rules of modified procedure;that is,
through the written testimony and comments discussed above rather than through an evidentiary
hearing.The proposed settlement’s proponents must establish that it is reasonable,in the public
interest,or otherwise in accordance with law or regulatory policy.IDAPA 3 1.01.01.275.
ORDER NO.32923 6
B.Commission Findings
Based upon our review of the Settlement,the testimony,and the comments,we find
that the record is comprehensive and further proceedings are not necessary.We note that the
workshops were well-attended,and that participants represented diverse interests.Further,all
parties except the ICIP expressly support the Settlement,and the two public comments generally
support the Settlement.
We believe it is important for the Company to continue its DR programs to ensure it
has sufficient,reliable DR resources to meet expected deficits.The Settlement allows the
Company to leverage prior DR investments,and should enable it to maintain program
participation and improve program responsiveness while minimizing costs to customers.
Accordingly,based on our review of the record,we find the Settlement is fair,just and
reasonable,and we accept it in the public interest.IDAPA 3 1.01.01.274-276.We appreciate the
parties’and workshop participants’work on the Settlement,and their ability to resolve the issues
presented.
We also encourage the Company to continue evaluating opportunities associated with
DR programs on an ongoing basis.Circumstances such as increased demand related to business
relocation and expansion,coupled with increased residential construction can occur quickly and
impact the system well before a future IRP formally indentifies the increased demand.
Accordingly,ongoing review could lead to adjustments to DR programs that might reduce the
risk of buying wholesale power at costs that exceed the recovery of DR expenses.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company’s Motion to Approve
Settlement Agreement is granted.The Commission accepts the Settlement.
IT IS FURTHER ORDERED that the clean versions of tariff Schedules 23 and 81,
Attachment 3 to the Company’s Motion,are approved as filed effective January 1,2014.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
ORDER NO.32923 7
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this /2’
MACK A.REDFORD,COMMISSIONER
LL
ATTEST:
/1 4\/1
Jdn D.Jewell (I
Cô’mmission Secretary
O:IPC-E-13-1 4kk3
MARSHA H.SMITH,COMMISSIONER
day of November 2013.
I /
I
PAUL KJELbANDIER,PRESIDENT
ORDER NO.32923 8