20150313Application.pdf

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LISA D. NORDSTROMLeadCounset il,r,i,;', , .\..-.
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March 13,2015
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-15-06
2014 Demand-Side Management Expenses - ldaho Power Company's
Application and Testimony
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Application.
AIso 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 about the enclosed documents, please do not hesitate to
contact me.
Very truly yours,
Kr;- t,f(a*,*,,-)
Lisa D. Nordstrom
LDN/KKI
Enclosures
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street
P.O. Box 70 (83702)
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nord strom@ idahopower. co m
Attorney for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION OF 2014 DEMAND-
SIDE MANAGEMENT ("DSM') EXPENSES
AS PRUDENTLY INCURRED.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-15-06
APPLICAT!ON
ln accordance with RP 052 and RP 201, et seq., ldaho Power Company ("!daho
Powe/'or "Company') hereby respectfully submits its Demand-Srde Management 2014
Annual Report ("DSM 2014 Annual Report") and makes application to the ldaho Public
Utilities Commission ("Commission") for an order designating ldaho Powe/s
expenditures of $25,554,688 in ldaho Energy Efficiency Rider ("Ride/') funds and
$7,940,697 of demand response ("DR") program incentives included in the 2015 Power
Cost Adjustment ("PCA'), for a total of $33,495,385, as prudently incurred demand-side
management expenses.
ln support of this Application, ldaho Power represents as follows:
APPLICATION - 1
I. THE DSM 2014 ANNUAL REPORT
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. 32113 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 use and to achieve prudent cost-effective DSM resources to meet
the Company's electrical system's energy and demand needs.
2. ln support of this Application requesting the Commission deem the
Company's total 2014 DSM expenses as prudently incurred, ldaho Power presents its
DSM 2014 Annual Report as Attachment 1 to this Application.
3. The DSM 2014 Annua! 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
2014 Annual Report. Two Supplements accompany the DSM 2014 Annual Report:
Supplement 1: Cost-Effecfiveness ("Supplement 1") and Supplement 2: Evaluation
("Supplement 2").
APPLICATION - 2
4. As in previous years, the DSM 2014 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 2014
Annual Report uses the benefiUcost methodologies used in previous DSM annual
reports, including the total resource cost ("TRC") test perspective, the utility cost ("UC")
test perspective, the participant cost test ("PCT") perspective, and the ratepayer impact
measure ("RlM') perspective.
II. 2014 DSM ENERGY SAVINGS
5. ln 2014, ldaho Power offered its customers system-wide 18 energy
efficiency programs or pilots, three DR programs, participated in market transformation
efforts through the Northwest Energy Efficiency Alliance ("NEEA'), and offered several
educational initiative and other activities. As explained in more detail in the Direct
Testimony of Darlene Nemnich ("Nemnich Testimony") filed contemporaneously with
this Application, ldaho Power's annual energy savings from ldaho Powe/s efficiency
programs increased by 33 percent in 2014, with the energy efficiency programs
saving enough energy to supply electricity to over 9,000 average homes a year.
Nemnich Testimony at 3; DSM 2014 Annua! Report at 3.
6. On a system-wide basis, ldaho Power achieved 138,670 megawatt-hours
(.MWh") of incremental annual energy efficiency savings in 2014. DSM Annual Report
at 19. This value includes 118,670 MWh from Idaho Poweds energy efficiency
programs and an estimated 20,000 MWh of energy efficiency market transformation
savings through NEEA initiatives. ld. at 5. The increase in the 2014 savings was driven
APPLICATION - 3
primarily by industrial sector program savings and to a lesser degree from the
residential sector. ld. at3.
7. ldaho Poweds 2014 energy savings exceeded the annual savings target
identified in ldaho Power's 2013 lntegrated Resource P/an ("lRP"), and the Company
has exceeded those annual targets 12 out of 13 years. On a cumulative basis,
the Company's energy savings have exceeded the lRP targets every year since 2002.
ld. at 1.
8. ldaho Power successfully restructured and resumed two of its demand
response programs in 2014. The Company used all three DR programs in 2014 for a
total non-coincident demand reduction of 378 megawatts ("MW") and an enrolled
capacity of 390 MW. The reduced costs of these programs resulted in savings to ldaho
Power customers of approximately $6.5 million dollars, with only a slight reduction in
capacity of 11 percent from 2012. ld.
III. 2014 DSM EXPENDITURES
9. Energy efficiency program funding comes from the ldaho and Oregon
Energy Efficiency Riders ("Ride/'), Idaho Power base rates, and the annual power cost
adjustment ('PCA"). ldaho incentives for the Company's DR programs are recovered
through base rates and the annual PCA, while Oregon DR incentives are funded
through the Oregon Rider.
10. ln 2014, the Company's total system-wide expenditures on DSM-related
activities totaled $36,713,333. DSM 2014 Annual Report, Appendix 2. The
$36,713,333 of system-wide, DSM-related expenses in 2014 includes expenditures for
customers in Oregon and other operations and maintenance expenses that are not
APPLICATION - 4
before the Commission as part of this prudence request. DSM 2014 Annua! Report at
19. ln this filing, ldaho Power seeks a determination that a total of $33,495,385
expenditures were prudently incurred in 2014 ($2S,SS4,688 in Rider expenses and
$7,940,697 in DR program incentives included in the 2015 PCA). A summary of 2014
program expenditures by program, customer sector, and funding source for which the
Company is seeking a prudence determination is provided in the Nemnich Testimony,
Exhibit No. 1.
11. To calculate expenses for which the Company seeks a determination of
prudence, ldaho Power made several adjustments to the tota! dollar amounts contained
in the DSM 2014 Annual Report. Nemnich Testimony at 10-18. The Company requests
that the Commission reflect the following adjustments in its records:
a. Rider-Funded Labor-Related Expenses. The Commission declined
to decide the reasonableness of increases in the Company's Rider-funded labor-related
expenses for 2011 and 2012. Order Nos. 32667,32690, and 32953. Due to these
Commission decisions, ldaho Power has excluded from this filing its 2014 increase in
Rider-funded labor-related expenses amounting to $338,707. Nemnich Testimony at
12-15.
b. Prior Year-End Adiustments. In last year's prudence filing, Case
No. IPC-E-14-O4, ldaho Power proposed a $248 Home Energy Audit program labor
charge adjustment that increased the amount of 2013 expenses requested for prudence
determination. ln Order No. 33161, the Commission approved that adjustment. This
expense occurred in 2013 but was added to the Rider account via an accounting entry
made in 2014. ln order to arrive at the actual total program expenses for 2014, this
APPLICATION - 5
amount is removed from this yea/s prudence request to avoid a double counting of this
amount. Nemnich Testimony at 16.
c. Current Year-End Adiustments. ln 2014, two incentive payments in
the Energy House Calls Program were charged to the ldaho Rider when they should
have been charged to the Oregon Rider. This adjustment removes $1,153 from the
total amount of the prudence determination request. ld. at 16-17. ldaho Power
transferred this amount to the Oregon Rider in 2015 and has excluded it for the
Commission's review of whether such funds were prudently incurred.
12. ln 2014, ldaho Power worked diligently with NEEA and its funders to
procure a new plan for regional market transformation. This effort resulted in a 2015 to
2019 NEEA business plan to obtain 145 average megawatts of regional energy savings
at a cost of about $3 million less over the next five years to ldaho Power customers than
the previous five-year business plan. DSM 2014 Annual Report at 9.
!V. DSM COST.EFFEGTIVENESS & EVALUATIONS
13. The DSM 2014 Annual Report and accompanying Nemnich Testimony
provide a sufficient basis for the Commission to determine whether ldaho Power'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:
14. Cost-Effectiveness Measurements for its Enerqv Efficiencv Proqrams. ln
the DSM 2014 Annual Report, ldaho Power calculates cost-effectiveness from the TRC,
UC, PCT, and RIM perspectives at the program level, except for those programs with no
customer costs, in which case the PCT is not applicable. ldaho Power also evaluates
cost-effectiveness using the TRC and UC tests for each measure within a program
APPLICATION - 6
where the measures are not interactive. The DSM 2014 Annual Report, Supplement 1
includes detailed results of the cost-effectiveness tests by program and by measure.
The DSM 2014 Annual Report, Appendix 4 shows the historical TRC and UC results for
each of Idaho Powe/s energy efficiency programs from a program-life perspective.
a. ldaho Powe/s energy efficiency portfolio was cost-effective
resulting in a 1.89 benefiUcost ratio when evaluated at a TRC percpective and a 3.49
benefiUcost ratio when evaluated at a UC perspective. DSM 2014 Annual Report at 16.
b. Results show that of the 16 energy efficiency programs offered in
ldaho, 11 programs had benefiUcost ratios greater than 1.0 for both the TRC and UC
tests. Two programs had benefiUcost ratios less than 1.0 for the TRC test but greater
than 1.0 for the UC test. Three programs had benefiUcost ratios less than 1.0 for both
the TRC and UC. All programs for which the PCT is applied passed the PCT. Nemnich
Testimony at 20. An explanation of the cost-effectiveness analyses and steps ldaho
Power has taken to increase future cost-effectiveness of these programs is provided in
the Nemnich Testimony on pages 22-31. A major factor impacting cost-effectiveness
was that the 2013 IRP planning process resulted in lower DSM alternative costs and a
40-50 percent decrease to program benefits in the DSM alternative costs used to value
energy efficiency . ld. at 21 ; DSM 2014 Annual Report at 16.
c. ln 2014, ldaho Power determined the cost-effectiveness of its DR
programs based on the annual value of $16.7 million that was agreed upon in the public
workshops in conjunction with Case No. IPC-E-13-14 and subsequently approved in
Commission Order No. 32923. While benefiUcost ratios are currently not calculated for
APPLICATION - 7
the three DR programs, it is estimated that the programs would have remained cost-
effective if dispatched for the full 60 hours allowed. DSM 2014 Annual Report at 16.
15. Proqram 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 Powe/s programs. ln 2014, these independent, third-party
consultants conducted process evaluations on three programs and impact evaluations
on five programs. Nemnich Testimony at 31-33. ln addition, ldaho Power conducts
annual cost-effective analyses for each program. Copies of these reports can be found
in the DSM 2014 Annual Report, Supplement 2.
V. STAKEHOLDER INPUT
16. 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 wel! as staff members of the public utility commissions of ldaho
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.
In addition to the EEAG, Idaho Power works to build and maintain relationships with
trade a!!ies, trade organizations, and regional groups involved in DSM activities.
17. ln 2014, the EEAG held four meetings, two webinars, and an energy
efficiency potential study workshop. During these meetings, ldaho Power discussed
and requested recommendations on a broad range of DSM issues. Based upon input
from its stakeholders in 2014, ldaho Power increased the incentive paid under its
APPLICATION - 8
commercial and industrial programs and made several changes to its
commercial/industrial lighting measures. The EEAG also provides feedback on
potential new energy efficiency programs and offerings identified by the Company's
newly formed Program Planning Group, two of which have been implemented or are
being implemented in 2015. DSM 2014 Annual Report at 9-10.
VI. COMPLIANCE WITH ORDER NO. 33161
18. ln response to the direction provided by the Commission in the Enata to
Order No. 33161, ldaho Power organized an Energy Efficiency Working Group and
invited members of the lntegrated Resource Plan Advisory Committee ("IRPAC"), the
EEAG, and other interested parties to discuss issues raised by Commission Staff and
other parties in ldaho Powe/s 2013 prudence filing in Case No. IPC-E-14-04. Nemnich
Testimony at 33-39.
19. As a result of these efforts, ldaho Power has undertaken an investigation
of the extent to which transmission and distribution benefits result from energy efficiency
measures and programs, as well as the approximate value of such benefits. ldaho
Power anticipates discussing the preliminary findings with stakeholders at the June
2015IRPAC meeting.
20. The Company is also committed to continue evaluation of the program
delivery issues identified by workshop participants, and by Commission Staff, and some
interveners in comments filed in Case No. IPC-E-14-O4. The Company plans to use the
EEAG as the forum to provide customers, ldaho and Oregon Commission Staff, and
other interested stakeholders an opportunity to provide advice and recommendations to
ldaho Power in formulating, implementing, and evaluating energy efficiency and
demand response programs and activities.
APPLICATION - 9
VII. MODIFIED PROCEDURE
21. ldaho Power believes that a technica! 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
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!I!. COMMUNICATIONS AND SERVICE OF PLEADINGS
22. Communications and service of pleadings with reference to this
Application should be sent to the following:
Lisa D. Nordstrom
Regulatory Dockets
ldaho Power Company
P.O. Box 70
Boise, lD 83707
I no rd strom @ ida hopowe r. co m
dockets@idahopower. com
Darlene Nemnich
ldaho Power Company
P.O. Box 70
Boise, !D 83707
d nem n ich@idahopower. com
IX. REQUEST FOR RELIEF
23. As described in greater detail above, ldaho Power respectfully requests
that the Commission issue an order designating ldaho Powe/s 2014 DSM expenses of
$33,495,385 as prudently incurred.
DATED at Boise, ldaho, this 13h day of March 2015.
Attorney for ldaho Power Company
APPLICATION - 1O
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-I5-06
IDAHO POWER GOMPANY
ATTACHMENT 1
D EMAND-S'D E MAN AG EM ENT
2014 ANNUAL REPORT