20140317Application.pdf

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An IDACORP Company
JULIAA. HILTON
Gorporate Gounsel
i hi [e-mail]
March 14,2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-14-04
2013 Demand-Side Management Expenses - ldaho Power Company's
Application and Testimony
Dear Ms. Jewe!!:
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Application.
Also enclosed for filing are nine (9) copies of the testimony of Darlene Nemnich.
One copy of Ms. Nemnich's testimony has been designated as the "Reporter's Copy." ln
addition, a disk containing a Word version of Ms. Nemnich's testimony is enclosed for the
Reporter.
lf you have any questions aboutthe enclosed documents, please do not hesitate to
contact me.
Very truly yours,
jt,)/t-l-,--
J[lia A. Hilton
JAH:csb
Enclosures
1221 W. ldaho St. (83702)
PO. Box 70
Boise, lD 83707
JULIA A. HILTON (lSB No. 7740)
ldaho Power Company
1221West ldaho Street ($702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
i h i lton @idahopower. com
Attorney for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION OF 2013 DEMAND-
SIDE MANAGEMENT ("DSM") EXPENSES
AS PRUDENTLY INCURRED.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-14-04
APPLICATION
ln accordance with RP 052 and RP 201, et seg., ldaho Power Company ("ldaho
Powe/' or "Company") hereby respectfully submits its Demand-Sde Management 2013
Annual Report ("DSM 2013 Annua! Report") and makes application to the ldaho Public
Utilities Commission ("Commission") for an order designating ldaho Powe/s
expenditures of $21,748,331 in ldaho Energy Efficiency Rider ("Rider") funds and
$4,203,155 of demand response ("DR") program incentives included in the 2014 Power
Cost Adjustment ("PCA"), for a total of $25,951,486, as prudently incurred demand-side
management ("DSM") expenses.
In support of this Application, ldaho Power represents as follows:
APPLICATION.l
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 ldaho to develop and implement DSM programs in order to promote energy
efficiency." Case No. IPC-E-10-09, Order No. 321 13 at 8, citing Order Nos. 29784 and
29952. To further the Commission's objective, ldaho Power implements and manages
a wide range of opportunities for its customers to participate in DSM activities, to be
informed about energy use, and to use electricity wisely. Through DSM programs,
ldaho Power seeks to provide customers with programs and information to help them
manage their energy usage and to achieve prudent cost-effective DSM resources to
meet the Company's electrical system's energy and demand needs.
2. To assist with the development of DSM activities, ldaho Power consults
with its Energy Efficiency Advisory Group ("EEAG"). The 14 members of the EEAG
represent a cross section of customers from the residential, industrial, commercial, and
irrigation sectors, as well as staff members of the public utility commissions of Idaho
and Oregon, ldaho Power, and other stakeholders. The EEAG meets on a regular
basis and provides a broad range of recommendations, including input on new program
proposals, modifications to existing programs, and overall expenditures of DSM funds.
!n addition to the EEAG, ldaho Power works to build and maintain relationships with
trade allies, trade organizations, and regional groups involved in DSM activities.
3. ln 2013, J.D. Power and Associates' 2013 Electric Utility Busrness
Customer Satisfaction Study reported that 55 percent of the business customer
respondents in the study are aware of ldaho Powe/s energy efficiency programs, and
APPLICATION - 2
those customers are more satisfied with ldaho Power than customers who are unaware
of the programs. DSM 2013 Annual Report at 18. ldaho Power's quarterly customer
relationship surveys in 2013 indicate that the percentage of customers who have a
positive perception of ldaho Powe/s energy efficiency efforts decreased slightly in the
past year, from 60 percent at the end of 2012 to 57 percent in late 2013. DSM 2013
Annual Report at 19.
II. THE DSM 2013 ANNUAL REPORT
4. ln support of this Application requesting the Commission deem the
Company's tota! 2013 DSM expenses as prudently incurred, ldaho Power presents its
DSM 2013 Annual Report as Attachment 1 to this Application.
5. The DSM 2013 Annual Report is submitted pursuant to the DSM reporting
obligation set forth in Order No. 29419 and in accordance with agreed-upon guidelines
set forth in the Memorandum of Understanding for Prudency Determination of DSM
Expenditures ("DSM MOU') submitted as part of the stipulation approved by Order No.
31039. ldaho Power used previous DSM annual report formats as a guide for its DSM
2013 Annual Report. Two Supplements accompany the DSM 2013 Annua! Report:
Supplement 1: Cost-Effecfiveness ("Supplement 1") and Supplement 2: Evaluation
("Supplement 2").
6. As in previous years, the DSM 2013 Annual Report contains a table of
contents, introduction, cost-effectiveness, and evaluation sections. lt also includes a
section describing each program or initiative in detail, as well as a section describing
other programs and activities that are not tied to direct energy savings. The DSM 2013
Annual Report uses the benefiUcost analyses used in previous DSM annual reports,
APPLICATION - 3
including the total resource cost test ("TRC') perspective, the utility cost test ("UCT")
perspective, the participant cost test ("PCT") perspective, and the ratepayer impact
measure ("RlM").
III. 2013 DSM ENERGY SAVINGS AND EXPENDITURES
7. ln 2013, ldaho Power offered its customers 18 energy efficiency
programs, one active demand response program, several educational initiatives, and
savings to customers through market transformation programs. Overall, annual energy
savings from ldaho Power's energy efficiency activities in 2013 totaled 107,284
megawatt-hours ("MWh'), which includes 18,346 MWh (preliminary estimate) stemming
from the Company's participation with Northwest Energy Efficiency Alliance. DSM 2013
Annual Report al4 and 144.
8. As explained in more detai! in the Direct Testimony of Darlene Nemnich
("Nemnich Testimony") filed contemporaneously with this Application, the Company's
overall energy savings is down this year. Nemnich Testimony at 10. The DSM 2013
Annual Report explains that this reduction in energy savings in 2013 is due, in part, to
ldaho Power and the region's increased evaluation, measurement, and verification
activities. DSM 2013 Annua! Report at 1. Timing of Custom Efficiency program
payments and fluctuations in the commercial/industrial programs also impacted results
for 2013. Nemnich Testimony at 10; DSM 2013 Annual Report at 10, 20, and 86.
9. Correspondingly, ldaho Power's expenditures on DSM-related activities
decreased in 2013, in large part due the temporary suspension of two demand
response programs. DSM 2013 Annual Report at 6. ln 2013, the Company's total
system-wide expenditures on DSM-related activities totaled $26,841,379. DSM 2013
APPLICATION - 4
Annual Report, Appendix 2. The $26,841,379 of system-wide, DSM-related expenses
in 2013 includes expenditures for customers in Oregon and other operations and
maintenance expenses that are not before the Commission as part of this prudence
request. ln this filing, Idaho Power seeks a determination that a total of $25,951,486
expenditures were prudently incurred in 2013 ($Zt ,748,331 in Rider expenses and
$4,203,155 in DR program expenses included in the 2014 PCA). A summary of
program expenditures by funding source in 2013 is provided in the Nemnich Testimony,
Exhibit No. 1.
10. The Nemnich Testimony describes severa! adjustments to the total dollar
amounts contained in the DSM 2013 Annual Report to arrive at the expenses the
Company presents to the Commission for a determination of prudence. Nemnich
Testimony at 14-23. The Company requests that the Commission reflect the following
adjustments in its records:
a. Custom Efficiencv Transfer. ln Order No. 32826, the Commission
approved the transfer of $14,200,174 in customer efficiency incentive payments to the
Rider account. Of this amount, $13,037,493 was previously deemed prudent in Order
Nos. 32667 and 32953 and therefore is not included in this prudence request. The
$1,162,681 remainder includes Custom Efficiency program incentive payments made
from January 1,2013, through May31 ,2013, with accrued interest. The $1,162,681 is
included in this request for a determination that 2013 DSM expenses were prudently
incurred. Nemnich Testimony at 17.
b. Rider-Funded Labor-Related Expenses. The Commission declined
to decide the reasonableness of increases in the Company's Rider-funded labor-related
APPLICATION - 5
expenses tor 2011 and 2012. Order Nos. 32667, 32690, and 32953. Due to these
Commission decisions, ldaho Power has excluded from this filing its 2013 increase in
Rider-funded labor-related expenses amounting to $269,432. Nemnich Testimony at
17-21.
c. A/C Cool Credit Switch Expenses. ln 2012, ldaho Power incurred
$32,090 in costs to install A/C Cool Credit switches after ldaho Power issued a letter to
its vendor directing it to halt installation. ldaho Power set aside such amounts in its
request for the Commission's prudence review of 2012 DSM expenses. Because the
A/C Cool Credit program will be operationa! ior the 2014 program season and the
switches will now add value to the program, ldaho Power is including these expenses in
this request for a determination that expenses were prudently incurred. Nemnich
Testimony at21.
d. Prior Year-End Adiustments. ln 2012, ldaho Power removed
$21,952 from its prudence request. This amount was removed from the Rider in 2013.
It is necessary to add this amount to this prudence request in order to avoid a double
removal of the $21,952. Nemnich Testimony at21.
e. Current Year-End Adiustments. The current year-end adjustments
reflect an accounting entry to correct $248 of ldaho expenses associated with the Home
Energy Audit program which were initially charged to the Oregon Rider account in error.
Nemnich Testimony aL23. ldaho Power transferred this amount to the ldaho Rider and
has included it for the Commission's review of whether such funds were prudently
incurred.
APPLICATION - 6
11. The DSM 2013 Annual Report and accompanying Nemnich Testimony
provide a sufficient basis for the Commission to determine whether ldaho Powe/s DSM
expenses were prudently incurred. ln order to meet Commission Staffs expectations
for assessing cost-effectiveness tests, methods, and evaluations as indicated in
Attachment No. 1 to the DSM MOU, ldaho Power included:
a. Cost-Effectiveness Measurements. ln the DSM 2013 Annua!
Report, ldaho Power calculates cost-effectiveness from the RlM, 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 and limited-income
weatherization programs which are evaluated at the UCT and TRC perspectives. ldaho
Power also evaluates cost-effectiveness using the UCT and TRC tests for each
measure within a program where the measures are not interactive. The DSM 2013
Annual Report, Supplement 1 includes detailed results of the cost-effectiveness tests by
program and by measure. The DSM 2013 Annual Report, Appendix 4 shows the
historical UCT and TRC results for each of ldaho Power's active DR and energy
efficiency programs from a program-life perspective.
Results show that of the 15 energy efficiency programs for which the
Company claims savings in 2013, 1 1 programs had benefiUcost ratios greater than 1 .0
for both the TRC and UCT. Nemnich Testimony at25. Two programs had benefiUcost
ratios less than 1.0 for the TRC but greater than 1.0 for the UCT, two programs had
benefiUcost ratios less than 1.0 for both the TRC and UCT, and one program had a
benefiUcost ratio of less than 1.0 for the PCT. ld. An explanation of the cost-
effectiveness analyses and steps ldaho Power has taken to increase future cost-
APPLICATION - 7
effectiveness of these programs is provided in the Nemnich Testimony on pages 24-35.
The cost-effectiveness calculation for the FlexPeak Management program shows
benefiUcost ratios greater than 1.0 from the TRC and the UCT perspective when
evaluated from a five-year life-cycle perspective; cosUbenefit analyses were not
performed on the A/C Cool Credit and lrrigation Peak Rewards programs because they
were suspended in 2013. ld.
b. Net-to-Gross Adiustments. For the DSM 2013 Annual Report,
ldaho Power used these ratios as an input to cost-effectiveness calculations where
appropriate. DSM 2013 Annual Report, Supplement 1 at 3-4.
c. Prooram Evaluations. lndependent, 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 ldaho Power's programs. ln 2013, these independent, third-
party consultants conducted process evaluations on six programs and an impact
evaluation on one program. Nemnich Testimony at 36. ln addition, ldaho Power
conducted its annual internal analysis and reports for the Flex Peak Management and
the lrrigation Peak Rewards programs. Copies of these reports can be found in the
DSM 2013 Annual Report, Supplement 2.
IV. MODIFIED PROCEDURE
12. ldaho 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,
ef seg. ldaho Power has, however, contemporaneously filed the Nemnich Testimony in
APPLICATION - 8
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.
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
13. 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, lD 83707
i h i lton @ idahopower. com
dockets@ id ahooower. com
Darlene Nemnich
TamiWhite
ldaho Power Company
P.O. Box 70
Boise, lD 83707
d [e-mail]
twh ite@id aho powe r. com
VI. REQUEST FOR RELIEF
14. As described in greater detail above, ldaho Power respectfully requests
that the Commission issue an order designating Idaho Power's 2013 DSM expenses of
$25,951,486 as prudently incurred.
DATED at Boise, ldaho, this 14th day of March 2014.
Attorney for ldaho Power Company
APPLICATION - 9
BEFORE THE
IDAHO PUBLIC UTILITIES GOMMISSION
GASE NO. IPC-E-14-04
IDAHO POWER COMPANY
ATTACHMENT 1
D EMAND.S'D E MAN AG EM ENT
2013 ANNUAL REPORT