20141222Comments.pdf

DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 8370
Street Address for Express Mail:
472 W, WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO FUND ITS CONTINUED PARTICIPATION
IN THE NORTHWEST ENERGY EFFICIENCY
ALLIANCE THROUGH THE ENERGY
EFFICIENCY RIDER.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E.I4.38
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission comments as follows on Idaho Power
Company's Application requesting authorization to fund the Northwest Energy Efficiency
Alliance.
BACKGROUND
On October 29,2014,Idaho Power Company ("Idaho Power" or the "Company") filed an
Application requesting authorization to continue its participation in the Northwest Energy
Efficiency Alliance (NEEA) for the period 2015-2019. NEEA is a non-profit organization that
encourages energy efficiency in the Northwest by promoting products, services and practices
through market transformation.l It is funded through Northwest utilities (in Idaho, Montana,
Oregon, and Washington), Bonneville Power Administration, and the Energy Trust of Oregon.
Application at l-2. The Company requests that its participation be funded by the Energy
Efficiency Tariff Rider ("Rider").
I Market transformation is the strategic process of intervening in a market to create lasting change. Application at 2.
STAFF COMMENTS DECEMBER22,2OI4
The Commission approved Idaho Power's 2010 Application to fund NEEA for 2010-2014.
Order No. 31080. In that Order, the Commission noted that its ooapproval of the Company's
continued participation in NEEA, and the use of Rider funds to pay for that participation, is not a
determination of prudency." Id. at7. Rather, 'owhen Idaho Power in the future requests a
Commission determination that its use of Rider funds was prudent, it must demonstrate that a
sufficient benefit to customers resulted from the Company's participation in NEEA ." Id. at 7 ,
Idaho Power's current Application describes the NEEA Business Plan for 2015-2019,
including funding for its optional programs and activities. Idaho Power identifies the NEEA
activities that the Company believes will beneflrt its customers most, including: (l) activities of
the University of Idaho Integrated Design Lab1, (2) Top Tier Trade Ally Advanced Training; (3)
Commercial Lighting Initiatives, (4) Residential Retail Product Portfolio; and (5) Residential New
Construction. Id. at 6. According to the Company, its agreement with NEEA helps ensure that the
Company's energy efficiency expenditures are prudent - that is, that they are reasonable and
effective. Id. at 6-7. The Regional Energy Efficiency Initiative Agreement ("Agreement") is
attached to Idaho Power's Application. Application, Attachment 3.
Subject to the Commission's approval, Idaho Power has committed to fund NEEA based
on a quarterly estimate of expenses. According to the agreement, the five-year total direct funding
amount cannot exceed $13,450,83 5. Id. at 9. This amount is approximately 8.97o/o of NEEA's
"all in" budget of $169 million for the 2015-2019 funding cycle. The actual funding percentage
will vary depending on decisions by Idaho Power and other funders to participate in optional
programs and activities.
STAFF ANALYSIS
Staff reviewed the Company's Application, Direct Testimony, and Agreement with NEEA.
Staff also reviewed prior NEEA accomplishments, NEEA's current proposal, and the Company's
explanation of why it opted out of selected programs and activities. On multiple occasions, the
Commission has ordered Idaho Power to pursue all cost-effective demand-side management
("DSM"). Because NEEA provides cost-effective energy savings, Staff recommends the
Commission approve Idaho Power's Application to fund NEEA through the Rider for the 2015-
2019 funding cycle. However, Staff does have concems about Idaho Power's decisions to opt out
of some programs and activities that could potentially influence its ability to acquire additional
cost-effective energy savings.
STAFF COMMENTS DECEMBER22,2OI4
NORTHWEST ENERGY EFFICIENCY ALLIANCE
NEEA has been successful in identifuing and removing market barriers to energy
effrciency across the region and leveraging opportunities to advance the adoption of energy
efficiency as standard practice. NEEA accomplishes this by:
o Designing and executing strategic market interventions to expand the availability and demand
for energy efficient products, services and practices.
o Identifying, developing and advancing emerging opportunities for energy efficiency.
o Building and leveraging relationships by using NEEA's broad market influence to promote
energy efficiency initiatives whereas an individual utility such as Idaho Power lacks the
influence to do so.
NEEA's market transformation efforts compliment Idaho Power's local energy efficiency
programs, particularly in its residential sector. For example, one of NEEA's most notable
successes is the Energy Efficient TV initiative. When the initiative began in2009,NEEA worked
with and leveraged the market power of utilities in California to promote "super-efficient" TVs
into retailers' showrooms across the West Coast. These "midstream" incentives were provided to
national and regional retailers such as Best Buy, Costco, Kmart, Sam's Club, Sears, Target,
Walmart, and other independent retailers throughout the Northwest. "[M]ajor brands,
manufacturers and retailers would rather interface with a single entity with broad market power"
than any one utility. NEEA Presentation to the Idaho Public Utilities Commission, January 9,
2013, at 96. Because NEEA is not bound by a single utility's service territory, but represents a
broader market place, it was able to successfully and cost-effectively promote its Energy Efficient
TV initiative. See /d NEEA also worked to increase TV energy efficiency standards with
ENERGY STAR and state and federal standards. Today, TVs are 55o/o more efficient than when
the pilot program began in 2009.
STAFF COMMENTS DECEMBER22,2OI4
2015 - 2019 Business Plan
NEEA forecasts 145 aMW2 of total regional energy savings by 2019 at a total regional cost
of $145-169 million. However, this is dependent upon funder participation in optional programs.
NEEA believes it can deliver the energy savings at a levelized Total Resource Cost test (TRC)3
that is at or below 3.5 cents/kWh, which is significantly less than Idaho Power's 4.7 cents/kWh
levelized TRC portfolio cost.
Strategic Markets
For the first time, the NEEA 2015-2019 Business Plan is bifurcated into core strategic
markets, and optional programs and activities. The four core strategic markets include: (1)
Residential Consumer Products, (2) Residential New Construction, (3) Commercial Lighting, and
(4) Commercial New Construction.
1. For Residential Consumer Products, NEEA will work with retailers at the corporate
level to change purchasing and stocking practices for lighting, appliances, heating
and cooling equipment, and consumer electronics.
2. For Residential New Construction, NEEA will work to increase energy efficiency
performance in homes by influencing building codes and the entire supply chain that
plans, builds, sells, and inspects new residential buildings.
3. Commercial Lighting targets the supply chain that manufactures, distributes,
specifies, designs and installs lighting. This strategic market is rapidly changing due
to federal standards and technology advancements. It includes the optional Top Tier
Trade Ally Advance Training (TTTA) program, which Idaho Power has opted to
fund, that targets commercial lighting contractors, training resources and utility
programs to accelerate market adoption of advanced lighting practices.
4. Commercial New Construction includes funding for the Integrated Design Labs.
Even though Strategic Energy Management will continue to be offered for the
commercial/industrial sectors, Staff notes that the Business Plan provides a limited
'Of the 145 aMW of total regional energy savings, 75 aMW are considered co-created savings and 55 aMW of net
market effects savings. Co-created savings are savings derived from NEEA and its utility partners. Net market effects
savings net out utilities' local program activity and only include savings associated with market change.
' The TRC test reflects the program's total costs and benefits to all customers in the utility's service territory. A
benefit/cost ratio greater than 1.0 means that the program is beneficial to the utility and its ratepayers on a total
resource cost basis.
STAFF COMMENTS DECEMBER2Z,2OI4
industrial/agriculture investment. NEEA will continue to offer its emerging technologya initiative
and advocate for improved code and standards.
Oplional Programs
For the 2015-2019 funding cycle, NEEA is offering four optional programs: (1) TTTA, (2)
Commercial Real Estate and Existing Building Renewal ("CRE/EBR"), (3) Industrial Technical
Training, and (a) Marketing and Stakeholder Relations. The energy savings for these programs
will not be claimed by NEEA or Idaho Power. While deciding to provide funding for the TTTA
program, Idaho Power has opted out of the other three programs. If Idaho Power had opted to
fund these three programs, its funding commitment would have increased by $1,679,320 over the
five-year cycle. Staff will discuss the optional programs in greater detail below.
Optional Programs Idaho Power Will Not Fund
l. Commercial Real Estate/Existing Building Renewal ("CRE/EBR")
The focus of CREiEBR is to engage and leverage strategic partnerships between property
owners and managers. The program also offers tools and strategies to accelerate the adoption of
energy efficiency. According to the Company, it has opted out of CRE/EBR because it believes
the program focuses on large commercial office buildings that are not as prevalent in Idaho. Staff
acknowledges that convincing building owners to invest in energy efficiency projects can be
difficult considering that it is the building occupant leasing the space who often pays the energy
bi11.
Staff believes that the CRE/EBR program has been successful during the current cycle,
especially with its 2013 Kilowatt Crackdown program, a local implementation of a national
program with the same name. Kilowatt Crackdown was a successful year-long energy efficiency
competition between commercial office buildings to save the most energy. The program was put
on through a partnership between NEEA, Building Owners and Managers Association (BOMA)5
Boise, and Idaho Power. In Boise alone, there were 43 commercial office buildings that
a Emerging Technology has been a core function of NEEA. NEEA evaluates the market to identiff, test and advance
new, emerging energy efficiency technologies into the market.
' SOMA is a real estate interest group. BOMA Boise represents the interests of Boise professionals who own, manage
or support commercial real estate in Idaho.
STAFF COMMENTS DECEMBER22,2OI4
participated. The competition engaged BOMA Boise and its influential members in a successful
energy efficiency awareness campaign, focusing on behavioral change.
NEEA will not offer Kilowatt Crackdown in its 201 5-2019 Business Plan, but will
transition the program to be implemented by individual utilities. Idaho Power does not plan to
offer another competition similar to Kilowatt Crackdown. However, if another competition is
offered, the Company believes it should target smaller-sized commercial office buildings to better
reflect Boise's commercial real estate. Staff encourages the Company to implement a similar
program that extends beyond its typical direct-incentive offerings.
2. Industrial Technical Training
Idaho Power is opting out of Industrial Technical Training because it believes it can offer
trainings at a lower cost. Staff understands that NEEA contracts with a third party to offer
webinars and in-person industrial technical trainings in Idaho Power's service territory.
Consequently, Staff agrees it may be less expensive for the Company to implement these
trainings. From 2010-2014, 30 webinars and 44 in-class trainings were offered in Idaho Power's
service territory.
The cost to deliver the trainings and webinars from 2010-2014 was estimated to be
$986,658. This cost was shared between NEEA and Idaho Power. To determine the cost in ldaho
Power's service territory from 2010-2014, an allocation factor was used because NEEA did not
provide historic labor costs by program.
In response to Staff discovery, the Company confirmed plans to offer about the same
number of in-class trainings; Idaho Power does not plan to offer webinars. Staff believes it is
appropriate for the Company to offer lower cost training, provided that the training is equally cost
effective. However, Staff is concerned that webinars are not being offered. Webinars can be a
more cost-effective and a convenient way to reach additional customers. Staff will review the
success of the Company's Industrial Technical Education programs in its annual DSM prudency
review.
STAFF COMMENTS DECEMBER22,2OI4
3. Marketing and Stakeholder Support
Idaho Power has opted out of Marketing and Stakeholder Support because it believes that
NEEA's efforts do not align with Idaho Power's brand and temperament. In Staff Comments in
Case No. IPC-E-14-04, Staff was critical of Idaho Power's ineffective marketing practices,
insufficient marketing budgets, and failure to adapt its program delivery and expand its program
offerings. The 2013 HANSA GCRNon-Participant Survey analyzed non-participants (customers
who had not participated in DSM programs) at the sector level and concluded thatTlo/o of
commercial, 60yo of residential, and 45Yo of ir:rigation customers were not aware Idaho Power
offers energy efficiency incentives. Furthermore, ooSeveral third party evaluations demonstrated
that the lower customer awareness is likely related to uncoordinated and insufficient marketing
practices." Staff Comments, Case No. IPC-E-14-04, at 8.
Opting out of NEEA's Marketing and Stakeholder Support leaves Idaho Power responsible
for creating all marketing, such as website development, press releases, consumer awareness
campaigns, point of purchase design and development, and product display programs for NEEA's
downstream programs. These are the same type of marketing tasks that Staff believes the
Company needs to improve upon for its own DSM programs. Consequently, Staff is naturally
concerned about the Company's ability to effectively promote and market NEEA programs. One
solution may be for Idaho Power to use NEEA funding savings (approximately $800,000 over 5
years), to bolster marketing and customer awareness of all Idaho Power energy efficiency
offerings.
REGIONAL ENERGY EFFICIENCY INITIATIVE AGREEMENT
In the current funding cycle, Idaho Power's share of NEEA funding was about 8.6% of the
total, or approximately $3.3 million per year. For the 2015-2019 funding cycle, Idaho Power's
total investment has decreased from $16.5 million to $13.5 million and represents approximately
8.96% of NEEA's total budget, or an average of $2.7 million per year. Idaho Power's funding
share is based on its share ofthe total S-year regional energy savings.
The agreement calls for NEEA to report Idaho Power's share of the total regional savings
in proportion to its share of the five-year funding at8.96Yo, which will be adjusted for any optional
programs that participants do not fund. In addition to Idaho Power's share of the total regional
savings, NEEA will deliver an annual savings report including any true-up for the calendar year by
July 1 of the following year. Savings will be reported by zip code where feasible, both for
STAFF COMMENTS DECEMBER22,2OI4
achievements resulting from the2015-2019 investment, as well as for achievements during 2015-
2019 resulting from prior investments in NEEA.
The contract includes three provisions under which Idaho Power may reduce or
discontinue funding and terminate the agreement. First, Idaho Power may, at its option, terminate
its agreement with sixty days' written notice if its regulatory bodies do not allow recovery of
expenses incurred under the Agreement. Second, Idaho Power may elect to reduce or discontinue
funding upon the implementation of restructuring legislation or other legislation which eliminates
the responsibilities of Idaho Power to provide benefits under a public purpose charge. Third,
Idaho Power may discontinue funding with sixty days' notice to NEEA if there is a change to the
NEEA Bylaws to which Idaho Power does not agree. Additionally, if at any time the NEEA
Board of Directors determines that NEEA's progress versus its Business Plan objectives does not
warrant continued investment, or if NEEA does not have suffrcient funds to operate, Idaho Power
will not be obligated to continue funding.
STAFF RECOMMENDATION
Staff recommends the Commission authorize Idaho Power to fund NEEA through the
Idaho Energy Efhciency Rider for the 2015-2019 funding cycle. Should the Company conduct
further analysis and conclude NEEA is not a cost-effective resource, or if it decides to decrease or
discontinue funding NEEA, Staff recommends the Company submit an Application for
Commission review.
Respectfully submitted this -nyl'U / day of December 2014.
Technical Staff: Donn English
Nikki Karpavich
i:umisc/comments/ipce I 4.3 8djhdenk comments
STAFF COMMENTS
Deputy Attorney General
DECEMBER22,2OI4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22Nd DAY OF DECEMBER 2014,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC.E.14-38, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWNG:
LTSA D NORDSTROM
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-MAIL: [e-mail]
dockets@ idahopower. com
THERESA DRAKE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE