20150408ICL Comments.pdf

Benjamin I. Otto (ISB No. 8292)
710 N 6s Street
Boise,ID 83701
Ph: [phone]x12
Fax [phone]
[e-mail]
Attorney for the Idaho Conservation League
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF NEW TARIFF
SCHEDULES2, A COMMERCIAT AND
INDUSTRIAL DEMAND RESPONSE
PROGRAM (FLEX PEAK PROGRAM).
?tlll &i''n -l] Fil tr: l9
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO.IPC-E-15-03
COMMENTS
OF THE IDAHO CONSERVATION
LEAGUE
Idaho Power's annual Demand Side Management (DSM) Reports document that the Flex
Peak Management Program has provided verifiable and cost-effective demand reductions each
year since the program inception in 2009. Moreover, the third-party administrator, EnerNOC,
has consistently delivered demand reductions that exceed their obligation, has verified these
savings using "near real-time energy usage data"r, and provided equipment, software, expertise,
and coaching to assist program participants. In short, the EnerNOC administered Flex Peak
Program is a robust, cost-effective program that delivers unique benefits inherent to the third-
party administrator model.
Unless Idaho Power can establish the Company can provide an equivalent demand
reduction program for the same or less money, the Idaho Conservation League urges the
Commission to reject Idaho Power's Application. Unfortunately, Idaho Powers'Application and
Testimony do not make this showing. The third-party administered Flex Peak Program has
consistently delivered more demand reductions than expected resulting in increasing cost-
effectiveness each year. The third-party model provides unique benefits in regards to both the
services provide to program participants and the risk allocation to non-participants. Meanwhile,
Idaho Power's claims of customer benefits from bringing the program in-house are speculative
and hard to quantiff. Because the benefits do not outweigh the costs, ICL recommends the
Commission reject Idaho Power's Application and instruct the Company return to the
negotiation table with the third-party provides who responded to the Request for Proposal.
' Idaho Power 2014 Demand Side Management Report at 123.
IPC-E-ls-03
ICL Comments 1 April8,2015
I. The EnerNOC administered Flex Peak Program consistently delivers verified cost-effective
demand reductions.
Idaho Power's 2009 DSM Report provides the results from the first year of the Flex Peak
Program. Idaho Power called eight events and each time EnerNOC delivered more demand
reductions than they committed to provide.zInfact, EnerNOC and Idaho Power's goal for the
program was 2 megawatts of demand reduction, while EnerNOC actually delivered up to 17
megawatts in one event. Providing more demand reductions for the same cost directly benefits
customers.
In 2010, EnerNOC continued to grow the program reaching a maximum weekly demand
reduction nomination of 34.2 MW and actually delivered a maximum of 47.5 MW.3 Idaho Power
called four events and in each case EnerNOC successfully exceeded the committed megawatt
reduction."4 And while program costs almost quadrupled, the cost effectiveness results improved
from 2009, again directly benefitting customers.
In 2011, EnerNOC grew the program again reaching a maximum commitment of 4I.9
MW and actually delivering up to 58.8 MW in one hour.' Idaho Power called 14 events and
EnerNOC exceed their commitment in nine of these. Of the five remaining EnerNOC achieved
between 93o/o and99o/oof the commitment. In essence, EnerNOC's over-delivery in nine events
far exceeds the under-deliver in the five events. Also, critically, when EnerNOC's weekly
commitment fell below their contractual obligation, EnerNOC paid a penalty. This penalty-
backed commitment to deliver demand reductions places the risk of under-delivery on EnerNOC
rather than customers and is a valuable feature of a third-party administered program.
In20l2, EnerNOC's weekly commitments fell slightly to a maximum of 38.8 MW, but
they still delivered more demand reductions with a weekly peak of 54.2 MW.6 Idaho Power called
four events and EnerNOC over-preformed in two and under-preformed in two. Importantly, just
like the penalty EnerNOC pays for failing to meet their weekly demand reduction nominations,
they also pay penalties for not delivering on these nominations. Again this penalty-backed
commitment to deliver actual demand reductions insulates Idaho Power customers from risk and
is a valuable feature of third-party administered programs.
' Idaho Power 2009 Demand Side Management Report at 82.
' Idaho Power 2010 Demand Side Management Report at 84 - 85.
4 Id.
5 ldaho Power 2011 Demand Side Management Report at88.
6 ldaho Power 2012 Demand Side Management Report at95.
IPC-E-15-03
ICL Comments 2 April8,2015
In 2013, Idaho Power and EnerNOC agreed to some program changes including a cap to
EnerNOC's weekly demand response nominations and reduced payments to EnerNOC.? Like
years before, EnerNOC actually delivered more demand reductions than nominations for the
same price, reaching maximum nomination of 35 MW and actually delivering a maximum of 48
MW.8 And since the cost per MW of savings declined, the FlexPeak program continued to
become more cost effective with a Total Resource Cost result of 1.43.e Also like years past, the
post-program participant survey showed very strong support for the program in terms of feeling
prepared to participate and satisfaction with EnerNOC's administration.ro
2014 continued the same trend with EnerNOC making a maximum weekly commitment
of 30 MW and actually delivering a maximum of 39.6 MW.tt Idaho Power called three events and
EnerNOC delivered more reduction in two events and reachedg60/o of their commitment in the
third. Again, EnerNOC bears the risk of under-delivery. And while the20l4 DSM Report does
not provide a specific cost benefit test result, Idaho Power states the Flex Peak Program was cost
effective.r2 Program participants continued to report high satisfaction with the program, with
2014 survey results negligibly below 2013 in some categories, but exceeding 2012 levels in every
category.r3
Since the Flex Peak Program inception, EnerNOC has consistently delivered more
demand reductions than promised and the program has become increasingly cost-effective.
Nothing in the record indicates the EnerNOC administered program is faltering. Rather the
record indicates the program is delivering more savings for less cost per savings each year.
Therefore the only reason for Commission to approve Idaho Power's request to bring the Flex
Peak Program in-house is if Idaho Power can demonstrate they will deliver equivalently verifiable
demand reductions, maintain program participation levels, and ensure customers are insulated
from underperformance all for less money than a third-party administrator. Idaho Power's
Application and Testimony do not make this showing.
II. The third-party administrator model provides unique benefits to ratepayers.
7 See Direct Testimony of Tami White at 8.
' Idaho Power 2013 Demand Side Management ReportatgS.
' Idat97.
t0 Id.; 2009 DSM report at 83; 2010 DSM Reporf at 86; 2011 DSM Report at 89; 2012 DSM Report at
96;2013 DSM REortat99.
" Idaho Power 2014 Demand Side Management Report at 123.
t2 Id.
t3 Compare 2014 DSM Report at 124 to 2013 DSM Report at 99 and 2012 DSM Report at96.
IPC-E-1s-03
ICL Comments April8,2015
Idaho Power witness Quentin Nesbitt points out the "major difference'between the
EnerNOC program and Idaho Power's program.'n EnerNOC provides participants with the
equipment, software, and coaching both before and during demand response events.rs EnerNOC
also provides the equipment and software to enable near real-time energF-usage data to enable
monitoring and reporting for both participants and Idaho Power. Mr. Nesbitt states ldaho Power
will not provide any of this equipment or coaching.'u Mr. Nesbitt explains the Company
"informally surveyed" 25 recent participants and asked how "they might respond" to program
changes in2014, including apparently dropping the coaching and energy usage data.tT But in
2014, EnerNOC enrolled 93 different "sites".ls Idaho Power does not indicate whether this
informal survey is a representative portion of all program participants. And while Mr. Nesbitt
says Idaho Power "plans to discuss options" and will "explore installing equipment" to support
individual participants", there is no indication these potential additional program costs are
included in Idaho Power's estimates of cost savings. So, while Idaho Power claims to have found
some cost savings, they also will offer a program that provides less services and less certainty of
the actual program results. ICL believes that only significant cost savings can justifr this increased
risk and uncertainty.
A third-party administered program provides a critical benefit to ratepayers that Idaho
Power does not intend to replicate. Each week, EnerNOC is contractually obligated to nominate
some amount of demand reduction potential. If EnerNOC cannot find this potential, they pay a
penalty to cover Idaho Power's cost of procuring an alternate supply option. Then, if Idaho
Power calls an event and EnerNOC under preforms, EnerNOC pays a penalty. These penalty-
backed commitments ensure ratepayers get what they pay for and are not on the hook for the
cost of under-performance. However, Idaho Power does not propose equivalent protections for
ratepayers if the Company's actual demand response performance lags behind their predictions.
In this case, ratepayers would be on the hook for covering the cost of procuring additional supply
to replace the unrealized demand reductions. Because of this dynamic, ICL recommends that if
the Commission does approve Idaho Power's Application, then Idaho Power shareholders should
ta Direct Testimony of Quentin Nesbitt at 5-6.
t5 ldaho Power 2014 DSM Report at 122-123.
tu Nesbitt at 6.
t7 Id.
" 2014 DSM reportat 122.
te Nesbitt at 6.
IPC-E-1s-03
ICL Comments 4 April8,2015
cover any cost impact that results from Idaho Power actually realizingfewer demand reductions
than they intend to acquire.
III. Idaho Power's claimed customer benefits are speculative and hard to quantifr.
Idaho Power claims three primary customer benefits from bringing the Flex Peak
Program in house.'o First, Idaho Power claims to have found some "cost savings per kr,rr of load
reduction."" But Ms. White explains these reductions by comparing to the historical costs of the
program and the nominated demand reductions." But in fact, EnerNOC has consistently
exceeded the nominated amounts. A more accurate comparison is the actual program costs and
the actual delivered energy savings. But because we have no way to know actual program costs or
actual demand reductions until the end of the program season, Idaho Power claims of cost
savings are just a prediction. Moreover, Mr Nesbitt explains Idaho Power is "exploring"
providing additional equipment and services to program participants. It is not clear this
additional cost in included in Idaho Power's estimate of savings.
Second, Idaho Power explains that some program participants would like more
transparenry about the agreement between EnerNOC and individual program particpants. While
ICL understand these customers' curiosity, ICL does not see how this issue results in benefits or
detriments to non-participating customers. Non-program participants are only affected by
EnerNOC and Idaho Power's agreement because EnerNOC aggregates the demand reduction and
Idaho Power pays EnerNOC. How EnerNOC distributes these payments to the participants does
not impact non-participating Idaho Power customers. So, the increased transparency arising
from using a publicly available tariffmay somehow benefit individual participants and potential
participants, but Idaho Power makes no showing that this change translates into a broad
customer benefit.
Third, Idaho Power explains they "welcome any opportunitF it has to cross-market
energy efficiency programs and strengthen the communication and relationship with its
customers directly."23 While ICL certainly supports cross-marketing efficiency programs, there is
no reason Idaho Power cannot do so while maintaining a third-party administered Flex Peak
Program. Since 2009, Idaho Power's industrial and large commercial programs have been among
20 Application at 5; Nesbin at 6-7; 2014 DSM Report at 124.
2t Nesbixat6.
22 whiteat 14-15.
" Nesbix at7; 2014 DSM Report at 124.
IPC-E-1s-03
ICL Comments April8,2015
the best preforming in the Company's entire DSM portfolio. Nothing prevents Idaho Power from
marketing efficiency programs to participants in a third-party administered program. Idaho
Power reports they surveyed participants in 2014, so clearly the agreement with EnerNOC does
not prohibit any contact or cross-marketing. While ICL has not seen the specific document
stating this, it appears Idaho Power knows which customers participate in the Flex Peak Program,
otherwise they would have been unable to do the participant surveys. Lastly, Idaho Power states
they "welcome the opportunity'but does not describe even the broad outlines of how an in-
house Flex Peak Program will result in greater cross-marketing or more participating in efficiency
programs.
Like the cost savings and transparency issues, Idaho Power's claim that all customers will
benefit from an opportunity for cross-marketing is speculative and difficult to quantifr.
Meanwhile Idaho Power makes no effort to explain why these speculative benefits outweigh the
risk to customers of less reliable performance and less robust metering and data collection.
Without a clear cost-benefit advantage, there is no reason for the Commission to approve Idaho
Power's Application.
WHEREFORE, ICL respectfully requests the Commission deny Idaho Power's
Application and direct the Company to reengage with respondents to the Request for Proposals.
DATED this 8th day of April 2015.
Benjamin I. Otto
Idaho Conservation League
IPC-E-1s-03
ICL Comments
Respectfully submitted,
April8,2015
CERTIFICATE OF SERVICE
I hereby certii/ that on this 8th day of April, 2015, I delivered true and correct copies of
the foregoing COMMENTS OF THE IDAHO CONSERVATION LEAGUE to the following
persons via the method of service noted:
Hand delivery:
Jean Jewell
Commission Secretary (Original and seven copies provided)
Idaho Public Utilities Commission
427 W. Washington St.
Boise, ID 83702-5983
Electronic Mail:
Lisa D. Nordstrom
Tami White
Quentin Nesbitt
Idaho Power Compnay
1221 West Idaho Street
Boise, lD 83707
[e-mail]
dockets@idahopower. com
[e-mail]
[e-mail]
Peter J. Richardson
Gregory M. Adams
Richardson Adams, PLLC
515 N. 27ft Street
Boise,ID 83702
[e-mail]
[e-mail]
Dr. Don Reading
6070 Hill Road
Boise,ID 83703
[e-mail]
IPC-E-1s-03
ICL Comments
Benjamin I. Otto
April8,2015