20150416Redacted Reply Comments.pdf

SEffi*.
An loAcoRP company
LISA D. NORDSTROM
Lead Counsel
I [e-mail]
April 15,2015
VlA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-15-03 - New Schedule 82 - Flex Peak Program
ldaho Power Company's Redacted Reply Comments
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven (7)
copies of ldaho Power Company's Redacted Reply Comments.
ln addition, enclosed in a separate envelope are the confidential pages of ldaho
Power Company's Reply Comments. Please handle the confidential information in
accordance with the Protective Agreement executed in this matter.
Very truly yours,
8-- 0(-,,u,",,-,
Lisa D. Nordstrom
LDN:csb
Enclosures
'1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nord strom @ida ho powe r. co m
Attorney for ldaho Power Company
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF NEW TARIFF SCHEDULE
82, A COMMERCIAL AND INDUSTRIAL
DEMAN D.RESPONSE PROGRAM (FLEX
PEAK PROGRAM).
, .i ,
l5 Fil I+: lr9
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC.E-15-03
IDAHO POWER COMPANY'S
REDACTED REPLY COMMENTS
ldaho Power Company ("ldaho Powe/' or "Company"), respectfully submits the
following Reply Comments in response to the Notice of Application and Notice of
Modified Procedure issued in Order No. 33242 and in response to the Comments filed
on April 8,2015, by the Idaho Public Utilities Commission ("Commission") Staff ("Staff'),
the lndustrial Customers of ldaho Power ('lClP'), and the ldaho Conservation League
("lcL").
I. INTRODUCTION
ldaho Power appreciates the thoughtful and constructive comments filed by Staff
and lClP in this case. ldaho Power is especially encouraged to have the support of
lClP-the advocacy group representing the Company's customer segment most directly
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 1
impacted by this filing. Further, ldaho Power agrees with the statement made by Staff
that "The lack of near-term capacity deficits makes this a reasonable time to experiment
with program administration in order to achieve cost-savings for customers. lf the
Company can deliver the same reliable resource for less money, customers will be
better off." Staff Comments at 7-8.
The Company reaffirms its request that the Commission authorize Idaho Power
to manage the Flex Peak Program ("Program") within the parameters it identified when
it filed its Application. The Company is confident that it has the ability to operate a cost-
effective commercial and industrial ("C&1") demand response program and it would like
the opportunity to demonstrate that by operating the Program as envisioned in its initia!
filing. While Staff, lClP, and ICL suggest several Program modifications, the Company
does not believe it is necessary at this time to modify the Program prior to determining
whether the suggested changes are necessary for successful Program administration.
While the Company is proposing changes to the Program design, it also believes,
after reviewing the parties' comments, that there may be some areas of confusion about
how the Program was previously administered and how the Company proposes to
administer the Program. The Company's Reply Comments will first identify areas of
agreement, then clarify its proposed Program design, and respond to parties' suggested
changes.
II. END.OF-SEASON REPORT AND IMPAGT EVALUATION
The Company agrees with Staffs recommendation that ldaho Power prepare an
end-of-season report. The Company plans to carefully analyze the performance of the
Program throughout the program season. ldaho Power also agrees with Staff that
waiting until the filing of the Demand-Side Management Annual Report in March 2016 to
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 2
provide information on program performance may not allow interested stakeholders an
opportunity to provide suggestions for improvement in time to be implemented for the
2016 demand response program season. Staff Comments at 8. As Staff recommends,
the Company will commit to prepare a one-time end-of-season report that will be filed in
Case No. IPC-E-15-03 on or before November 2,2015. Additionally, the Company has
engaged a third party to perform an impact evaluation on the Company-managed
Program at the end of the 2015 season, the results of which will be shared with the
Company's Energy Efficiency Advisory Group ('EEAG") and included as part of the end-
of-season report to the Commission. The Company will use the results of this
evaluation, along with input from the EEAG, to determine if modifications should be
made to optimize the Program.
III. EVENT NOTIFICATION
The Company appreciates Staff pointing out an opportunity to clarify the tariff
language regarding the timing of event notification. Staff Comments at 7. The tariff
language related to event notification was not intended to be inconsistent with the
Application and supporting testimony filed in the case; rather, it was intended to make
clear that the Company does not have the technology to ensure all participants will be
notified precisely two hours prior to the event start time. The Company believes filing
revised tariff language specifying that the event notification shall occur "on or about two
hours prio/' to an event, rather than "at least" two hours before an event, would alleviate
Staff's concem about the timing of the notification.
IV. VISIBILITY TO REAL.TIME LOAD AND BASELINE DATA
Both lClP and Staff believe that ldaho Power should provide real-time load
monitoring to participants in order to make the load reduction more reliable. lClP
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 3
Comments at 5, Staff Comments at 4-5. Real-time load monitoring allows participants
to see their actual load reduction during an event displayed next to the calculated
baseline data, so that a participant can determine whether they are meeting their
nominated amount. EnerNOC, Inc. ("EnerNOC") previously provided two types of data,
rea!-time energy usage data and calculated baseline data, the combination of which
allowed for real-time load monitoring. As stated in the testimony of Quentin Nesbitt filed
with the Application, ldaho Power informally surveyed some of its participating
customers to determine if access to the real-time load monitoring was necessary for
participation in the Program. Many of those past participants stated they could
successfully participate in the Program without it. Direct Testimony of Quentin Nesbitt
at 5-6. All of ldaho Powe/s C&l customers have the ability to get real-time pulse data
from the Company's meters.l However, some participants have not yet purchased or
created software to read or display this data. Furthermore, some C&l customers have
their own energy management systems that integrate this real-time data; these
solutions may or may not include baseline calculations or monitoring.
To provide real-time load monitoring to al! participants, ldaho Power would have
to invest considerable financial and personnel resources to develop necessary software
for the benefit of perhaps only a few participants. !f ordered to provide real-time load
monitoring equipment, the Company believes it is unlikely this could be accomplished in
time for the 2015 program season. The Company maintains that a successful Program
is not reliant upon the same real-time load monitoring that was provided by EnerNOC.
Before being ordered to provide real-time load monitoring as part of the Program, ldaho
1 Pursuant to Rule D, Metering, "The Company will install, at the Customer's request, the
metering equipment necessary to provide load profile information."
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 4
Power would like the opportunity to gauge how participants perform under the proposed
Program structure.
For participants who either do not meet their nominated demand reduction by a
significant amount or who request it, ldaho Power field staff and energy efficiency
engineers can help participants who underperform to either adjust their weekly
nomination or identify more effective ways to reduce their loads during an event. ln
situations where a site visit is necessary, ldaho Power representatives can assist in
reflning a participant's reduction plan by identifying equipment operation that could be
modified during an event.
V. CLARIFICATION OF THE BASELINE CALCULATION
lClP indicates the Company's proposed Program uses the preceding week for
the baseline calculation
ICIP Comments at 4.
The Company's original baseline kW will be calculat"d E
using the three days out of the
immediate past ten non-event business days ("three-in-ten").
VI. "DAY-OF" LOAD ADJUSTMENT
The "day-of' load adjustment is the difference between the average original
baseline kW and the average actual metered l(ff during the two hours prior to the
participant receiving notification of an event. This adjustment is used to account for
customers using more or less load than their original baseline kW predicts on the day of
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 5
the Program event. While the inclusion of a "day-of' load adjustment component is not
disputed by the parties in this case, the Company believes there is some confusion
surrounding the time period on which the calculation is based, as well as disagreement
about the use of a downward "day-of' load adjustment.
Regarding the timing of the "day-of' load adjustment on pages 5 and 6 of its
Comments, Staff cites to EnerNOC's response to the 2014 Request for Proposal in
Staff assumes that the 2014 EnerNOC proposal is consistent with how EnerNOC has
managed the Program the last six years.
IC!P
Comments at p. 5.
The downward "day-of' Ioad adjustment, which Staff and lClP correctly note !
more accurately
measures the true kW reduction achieved during an event when participants' loads are
significantty less than their respective baseline kW. On page 6 of its Commentt, I
-.
This is why the Company believes that a symmetric "day-of' load
adjustment more accurately measures and compensates participants for their load
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 6
reduction, and protects all customers from paying for load reduction that was not
achieved. ldaho Power underctands that this is a common method recommended for
C&l demand response programs and, although
EnerNoc
has acknowledged that doing so is a common practice.2
ldaho Power's proposal is based on a combination of white papef studies and
other utility demand response programs.a The Company believes that its proposed
"day-of' load adjustment is consistent with industry practices and ensures a more
accu rate ca rcu latio n,:H:
::: :,"JII,, rooD ADJ usr, E Nrs
While the Company maint",n ' Ioad adjustment
is critical to program design (either upward or downward), it does not believe it is critical
to place a cap on the adjustment. However, caps do mitigate the magnitude of
adjustments. Placing caps on the "day-of' load adjustment dampens the effect of any
irregular load anomalies that may occur in an individua! participant's load during the
two-hour "day-of' load adjustment period. The Company's proposal is to use symmetric
upward and downward caps because the symmetry protects both the participants and
the Company from the volatility associated with large adjustments to the original
baseline kW.
2 EnerNOC White Paper, "The Demand Response Baseline," pp. 8-9, located via the following
I ink https ://www. naesb. orq//pdf4/dsmee qrou o3 1 00809w3. pdf.
3 Lawrence Berkeley National Laboratory Commercial Demand Response Baseline Study (pp.
1 0-20), located via the following I ink http://escholarshi p.orq/uc/itemi8ix6t5o9.
a An example of a tariffed program is Southern California Edison Demand Response tariff
baseline (Sheet 3), located via the following link https://www.sce.com/NRl/sc3/tm2iodflce184.pdf.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 7
The Company believes the proposed adjustment caps are a standard practice
used within the utility industry and are appropriate for the proposed Program. However,
this is one instance where the Company could implement changes to the percentage of
the adjustment caps, or eliminate the caps all together, in time for the 2015 Program
season if the Commission were to direct ldaho Power to implement a different upward
or downward cap.
VIII. INCENTIVE STRUCTURE
lClP recommends that if Idaho Power cancels an event within two hours of the
scheduled start time, the incentive payment is still made for the first hour of the event.
lClP Comments at p. 6. ldaho Power understands the effort it takes for participants to
get ready for an event and understands the impact of cancelling an event; however,
under the Company's proposal, participants receive weekly capacity payments
regardless of whether events are called or cancelled. Event cancellation is an important
element of the Program in situations when the system load forecast changes due to an
unplanned factor, like an immediate change in weather conditions. Event cancellation is
not intended to be used often and has only been used once in the last six years of
program operation. ln the rare case that an event is cancelled, the Company believes
the weekly capacity payment to participants based on their weekly nomination is fair
compensation without additional incentive payment.
On page 4 of its Comments, lClP re@mmends the Company calculate a
participant's reduction based on the average reduction over the event period rather than
the proposed hour-by-hour method. ldaho Powe/s proposal to use the average load
reduction achieved during an event for meeting the overall nomination and to have an
adjustment per hour for any underperformance ensures that load reduction is achieved
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 8
for the duration of the event, not just a portion of the event. When demand response
capacity is needed and ldaho Power schedules a four-hour event, the need for load
reduction includes every hour during the event. lf a participant has nominated 500 kW
but reduces 1,000 kW for the first two hours and zero for the last two hours, the
participant's average reduction would be 500 kW for the entire event. However, the
participant failed to provide an actual reduction of 500 kW for 50 percent of the time
load reduction was needed. For this reason, the Company believes having an
adjustment for every hour the nomination is not achieved most accurately measures
and incentivizes true load reduction that can be depended upon by system operators.
IX. PILOT PROGRAM STATUS
The Company does not believe operating the Program as a pilot is necessary to
"ensure an off-ramp from self-administration." Staff Comments at 8. A Company-
managed Program inherently provides an off-ramp because the Company is not
entering into a long-term contract with a third-party vendor and no long-term contracts
are signed with Program participants; as the proposed tariff language states, an
applicant would be required to annually apply for enrollment in the Program.
Additionally, the Company is concemed that a pilot program designation may potentially
deter Program participants or negatively impact enrollment in the Program. The
Demand Response Settlement Agreement, approved by Order No. 32923 in Case No.
IPC-E-13-14, directs the Company to take a long-term view when implementing its
demand response programs; ldaho Power does not believe a pilot is consistent with that
concept. As the Company committed to earlier in its Reply Comments, it will submit to
the Commission and the EEAG an end-of-season report and impact evaluation, which
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 9
will provide a thorough review of the Program's performance and allow interested
stakeholders an opportunity to provide feedback to the Company.
ldaho Power has been successfu! in designing and operating demand response
programs since 2003 and it is confident that it can successfully operate the Flex Peak
Program to achieve the targeted load reductions. lf the Company determines that
changes to the language in the tariff are needed, it will work with the EEAG and seek
Commission approval of the Program tariff changes.
X. CUSTOMER BENEFITS
ldaho Power is pleased to offer customers the benefits of a tariffed C&l demand
response program at a lower cost than alternatives offered by third-party vendors. The
benefits of ldaho Powe/s proposed Program are no more "speculative and hard to
quantify" than those offered by third-party vendors. ICL Comments at 5. While the past
and proposed Flex Peak Programs are roughly equivalent in structure, the benefits of a
Company-administered Program (e.9., lower cost, more timely participant payments,
and greater transparency) are admittedly different than those benefits (e.9., real-time
Ioad monitoring and coaching during events) provided to participants by a third-party
vendor. ldaho Power believes its proposal provides a good overall value to customers
and participants.
Unlike other potential C&l demand response program providers, ldaho Power
proposes to offer the Program at its cost of operating the Program-without a mark-up
for profit. This results in lower costs for all customers. Therefore, it would not be
reasonable to have ldaho Power shareholders "cover any cost impact that results from
ldaho Power actually realizing fewer demand reductions than they intend to acquire."
ICL Comments at 5.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 1O
x!. coNcLUStoN
ldaho Power respectfully requests that the Commission issue an order
authorizing ldaho Power to implement optional Schedule 82, Flex Peak Program, and to
manage the Program as identified in the Application. The Company also requests
authorization to continue recovering Program expenses in the same manner it cunent
recovers C&l demand response program expenses. The Company has experience
operating demand response programs for its residential and inigation customerc and is
confident that it has the ability to operate a cost-effective C&l demand response
program. While Staff, lClP, and ICL have raised several suggestions for Program
modifications, ldaho Power does not believe it is necessary at this time to modify the
Program prior to determining whether or not the suggested changes would be
necessa ry fo r successfu I Prog ram ad m i n istration.
DATED at Boise, ldaho, this 15h day of April 2015.
IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 11
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 15s day of April 2015 I served a true and conect
copy of IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS upon the
following named parties by the method indicated below, and addressed to the following:
Gommission Staff
Karl T. Klein
Deputy Attomey Genera!
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-007 4
Industria! Gustomers of ldaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
ldaho Gonservation League
Benjamin J. Otto
ldaho Conservation League
710 North 6h Street (83702)
P.O. Box 844
Boise, ldaho 83701
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IDAHO POWER COMPANY'S REDACTED REPLY COMMENTS - 12