20160315Application.pdf

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LISA D. NORDSTROiI
Lead Counse!
! nordstrom@ida hopower.com
March 15,2016
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-16-03
2015 Demand-Side Management Expenses - ldaho Power Company's
Application and Testimony
Dear Ms. Jewell:
Enclosed forfiling in the above matter please find an originaland nine (9) copies of
ldaho Power Company's Application and attachment (2015 Demand-Side Management
report and supplements). However, as agreed, only five (5) copies of Supplement 2 have
been provided.
Also enclosed for filing are an original and (9) copies of the Direct Testimony of
ConnieAschenbrenner. One copy of Ms. Aschenbrenner's testimony has been designated
as the "Reporter's Copy." ln addition, a disk containing a Word version of Ms.
Aschenbrenner'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,
X--ilru^/-/r"*--
LDN:csb
Enclosures
1221 W. ldaho 5t. (83702)
PO. Box 70
Boise, lD 83707
Lisa D. Nordstrom
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 @ id a hopowe r. com
Attorney for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION OF 2015 DEMAND-
SIDE MANAGEMENT EXPENSES AS
PRUDENTLY INCURRED.
R.ICEIVED
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. !PC-E-16-03
APPLICAT!ON
In accordance with RP 052 and RP 201, et seg., Idaho Power Company ("ldaho
Power" or "Company") hereby respectfully submits its Demand-Srde Management 2015
Annual Report ('DSM 2015 Annua! Report") and makes application to the ldaho Public
Utilities Commission ("Commission") for an order designating ldaho Power's
expenditures of $28,495,701 in ldaho Energy Efficiency Rider ("Rider") funds and
$6,701,263 of demand response program incentives included in the 2016 Power Cost
Adjustment ('PCA'), for a total of $35,196,964, as prudently incurred demand-side
management ("DSM") expenses.
!n support of this Application, ldaho Power represents as follows:
APPLICATION - 1
I. THE DSM 2015 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 Idaho 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 2015 DSM expenses as prudently incurred, ldaho Power presents its
DSM 2015 Annual Report as Attachment 1 to this Application. The DSM 2015 Annual
Report also satisfies the DSM reporting obligation setforth in Order No.29419, Case
No. IPC-E-03-19.
3. The DSM 2015 Annual Report consists of the main document and two
supplements. Supplement 1: Cost-Effecfveness ("Supplement 1") shows the standard
cost-effectiveness tests for ldaho Power programs and includes a table that reports
expenses by funding source and cost category. ln 2015, the Company continued its
commitment to third-party evaluation activities. lncluded in Supplement 2: Evaluation
("Supplement 2") are copies of all of ldaho Power's 2015 evaluations, customer surveys
and reports, evaluations conducted by the Company's regional partners, ldaho Power's
evaluation plans, general energy efficiency research, and demand response research.
APPLICATION - 2
4. The DSM 2015 Annual Report contains in depth discussion of DSM
program expenditures, marketing, cost-effectiveness, and evaluations. 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 2015
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 lmpact Measure ("RlM') perspective.
II. 2015 DSM SAVINGS
5. ln 2015, ldaho Power offered its customers system-wide 19 energy
efficiency programs, three demand response programs, participated in market
transformation efforts through the Northwest Energy Efficiency Alliance ("NEEA"), and
offered several educationa! initiatives and other activities. As explained in more detail in
the Direct Testimony of Connie Aschenbrenner ("Aschenbrenner Testimony") filed
contemporaneously with this Application, ldaho Power's annual energy savings
increased by 18 percent over 2014 energy savings when considering ldaho Power's
efficiency programs alone. When the NEEA estimated savings are included, the 2015
energy savings increase over 2014 is 12 percent-enough energy to supply electricity
more than 14,000 average homes ayear. DSM 2015 Annual Report at 1.
6. On a system-wide basis, ldaho Power achieved 162,533 megawatt-hours
('MWh") of incremental annual energy efficiency savings in 2015, including the
estimated NEEA market transformation savings. ld. at3. The 2015 savings consisted
of 24,532 MWh from the residential sector, 102,074 MWh from the commercial/industrial
sector, 14,027 MWh from the irrigation sector, and an estimated 21,900 MWh of energy
APPLICATION - 3
efficiency market transformation savings through NEEA initiatives. DSM 2015 Annual
Report at 3-4. The industrial Custom Efficiency program contributed 40 percent of
ldaho Power's direct program savings, while the residential sector Energy Efficient
Lighting program contributed 65 percent of the residential savings. ld. al4.
7. ldaho Power's 2015 energy savings exceeded the annual savings target
identified in ldaho Power's lntegrated Resource Plan ("lRP"). On a cumulative basis,
the Company's energy savings have exceeded the IRP targets every year since 2002
when the energy efficiency riders began. ldaho Power contracted with a third party to
conduct an energy efficiency potential study to estimate the amount of achievable
energy efficiency to be included in the IRP for planning purposes. ldaho Power
considers the achievable potential as a reasonable planning estimate. lt does not
consider the achievable potential as a ceiling limiting energy efficiency acquisition. /d.
at 7; Aschenbrenner Testimony at 8.
8. ldaho Power successfully operated all three of its demand response
programs in 2015. From an enrolled capacity of 385 megawatts ("M\A/'), the total actua!
demand reduction from the Company's demand response programs was 367 MW. ld.
at 3. The Company reduced its demand response costs with a savings to ldaho Power
customers of over $1.6 million from 2014. ld. Almost a million dollars of these savings
resulted from ldaho Power's transition of the commercial/industrial demand response
program FlexPeak Management-administered by a third-party contractor-to the
newly renamed Flex Peak Program fully administered by ldaho Power. /d. On Monday,
June 29,2015, the Company used the lrrigation Peak Rewards program and reached a
system peak of 3,320 MW. ld. at 8. Had the program not been used, the Company
APPLICATION - 4
estimates the load would have been approximately 3,433 MW, which would have
exceeded the previous all-time system peak of 3,407 MW. /d.
III. 2015 DSM EXPENSES
9. Funding for ldaho DSM programs in 2015 came from several sources.
The ldaho Rider funds are collected directly from customers on their monthly bills at 4
percent of base rate revenues. Additionally, ldaho demand response program
incentives were paid through base rates and the annual PCA. Energy efficiency and
demand response-related expenses not funded through the Rider are included as part
of ldaho Power's ongoing operations and maintenance ("O&M') costs.
10. ln 2015, the Company's tota! system-wide expenditures on DSM-related
activities totaled $39,040,935. DSM 2015 Annual Report at 19. This includes
expenditures for customers in Oregon and other O&M expenses that are not before the
Commission as part of this prudence request. ln this filing, ldaho Power seeks a
determination that a total of $35,196,964 were prudently incurred in 2015 ($28,495,701
in Rider expenses and $6,701,263 in demand response program incentives to be
included in the 2016 PCA). A summary of 2015 program expenditures by program,
customer sector, and funding source for which the Company is seeking a prudence
determination is provided in the Aschenbrenner Testimony, Exhibit No. 1.
11. To calculate expenses for which the Company seeks a determination of
prudence, ldaho Power made several adjustments to the total dollar amounts contained
in the DSM 2015 Annual Report. Aschenbrenner Testimony at 9-16. The Company
requests that the Commission reflect the following adjustments in its records:
a. DSM Labor-Related Expenses. The Commission declined to
decide the reasonableness of increases in the Company's Rider-funded labor-related
APPLICATION - 5
expenses for 2011 and 2012. Order Nos. 32667, 32690, and 32953. Due to these
Commission decisions, ldaho Power has excluded from this filing its 2015 increase in
DSM labor-related expenses amounting to $441,856. Aschenbrenner Testimony at 13.
The cumulative amount of DSM labor expense increases that the Commission has not
issued a prudence determination on is approximately $1.3 million. ld. ldaho Power
continues to believe these amounts represent labor costs necessary to acquire DSM
savings and the amounts should be fully recoverable.
b. Prior Year-End Adjustments. 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. !n last year's prudence filing, Case No.
IPC-E-15-06, ldaho Power proposed an adjustment of $1,153 that decreased the
amount of 2014 expenses requested for prudence determination. ln Order No. 33365,
the Commission approved that adjustment. This correction occurred in 2015 and was
returned to the Rider account via an accounting entry. In order to arrive at the actual
total program expenses for 2015, this amount is added back to this year's prudence
request to avoid understating actual 2015 program expenses. ld. at 14-15.
c. Rider Funds Transfer. As part of the Company's 2014 annual PCA
filing in Case No. IPC-E-15-14, the Company proposed that the Commission approve
the continued application of an annual PCA credit related to the Rider in the amount of
$3,970,036 to maintain the revenue neutrality associated with the June 2014 update to
the normalized level of net power supply expenses included in base rates approved by
Order No. 33000. The Commission approved this transfer in Order No. 33306. The
Rider account balance at December 31 ,2015, was a positive $6,554,074. ld. at 15-16.
APPLICATION - 6
IV. DSM COST.EFFECTIVENESS AND EVALUATIONS
12. The DSM 2015 Annual Report and accompanying Aschenbrenner
Testimony provide a sufficient basis for the Commission to determine whether Idaho
Power's DSM expenses were prudently incurred. These documents set forth the
following in greater detail:
13. Cost-Effectiveness Measurements for Enerqy Efficiencv Proorams. ln the
DSM 2015 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
where the measures are not interactive. The DSM 2015 Annual Report, Supplement 1
includes detailed results of the cost-effectiveness tests by program and by measure.
The DSM 2015 Annua! Report, Appendix 4 shows the historical TRC and UC results for
each of ldaho Power's energy efficiency programs from a program-life perspective.
a. Portfolio. Idaho Power's portfolio of energy efficiency programs is
cost-effective, passing both the TRC test and the UC test with ratios of 232 and 3.57,
respectively. The Company's energy efficiency programs' sector portfolios were also
cost-effective from a TRC test and UC test perspective. DSM 2015 Annual Report at
15.
b. Proqram. !n 2015, all of ldaho Power's energy efficiency programs
were cost-effective, except the Home lmprovement Program and the weatherization
programs for income-qualified customers. ld. ldaho Power's goal is to have all
programs achieve cost benefit ratios of greater than one for all tests. When it
determines that a program is not cost-effective from one of these tests, ldaho Power
APPLICATION - 7
works with the Energy Efficiency Advisory Group (.EEAG") to seek alignment on a
continued offering for Commission approval. Aschenbrenner Testimony at 16-17.
c. Measures. Twenty-four measures in various programs are shown
not to be cost-effective from either the UC or TRC perspective. DSM 2015 Annual
Report at 15. These measures will be discontinued, analyzed for additional non-energy
benefits, modified to increase potential per unit savings, or monitored to examine their
impact on the specific program's overall cost-effectiveness. ld.; Aschenbrenner
Testimony at24-25.
14. Cost-Effectiveness Measurements for Demand Response Programs. ln
2015,ldaho Power determined the cost-effectiveness of its demand response programs
based on the annual value of $16.7 million that was established in the settlement
reached in Case No. IPC-E-13-14 and subsequently approved in Commission Order
No. 32923. While benefiUcost ratios are currently not calculated for the three demand
response programs, in 2015, the system-wide cost of operating the three demand
response programs was approximately $9 million ($7 million of incentives and $2 million
of program costs). Aschenbrenner Testimony a|20. The amounts attributable to the
ldaho-only jurisdiction were $8.5 million ($6.2 million of incentives and $1.8 million of
program costs). ld. lt is estimated that if the three programs were dispatched for the
full 60 hours allowed, the total costs would have been approximately $12.4 million on a
system-wide basis. ld. al20-21.
15. 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
estimates achieved through ldaho Power's programs. ln 2015, these independent,
APPLICATION - 8
third-party consultants conducted process evaluations on three programs and impact
evaluations on six programs. DSM 2015 Annual Report at 11-12; Aschenbrenner
Testimony al26-27. ln 2015, ldaho Power administered surveys on several programs
to measure program satisfaction. Participant surveys were conducted for Easy
Upgrades, Home Energy Audit, Shade Tree Project, Weatherization Assistance for
Qualified Customers, and Weatherization Solutions for Eligible Customers. /d. Copies
of these reports can be found in the DSM 2015 Annual Report, Supplement 2. ln
addition, ldaho Power conducts annual cost-effectiveness analyses for each program.
Details on cost-effectiveness analysis can be found in the DSM 2015 Annual Report,
Supplement 1.
V. STAKEHOLDER INPUT
16. Formed in 2002, EEAG provides input on enhancing existing DSM
programs and on implementing energy efficiency programs. Currently, EEAG consists
of 14 members from ldaho Power's service area and the Pacific Northwest. Members
represent a cross section of customers from the residential, industrial, commercial, and
irrigation sectors, as well as representatives for seniors, low-income individuals,
environmental organizations, state agencies, public utility commissions, and ldaho
Power. EEAG meetings are generally open to the public and attract a diverse audience.
ldaho Power appreciates the input from EEAG participants and acknowledges the
commitment of time and resources of individual members to participate in EEAG
meetings and activities. DSM 2015 Annual Report at 29-30; Aschenbrenner Testimony
at27-29.
17. ln 2015, the Company held four meetings and a conference call with
EEAG and contracted with a professional facilitator to improve the effectiveness of
APPLICATION - 9
EEAG meetings. During these meetings, ldaho Power discussed and requested
feedback on new program ideas and new measure proposals, marketing methods, and
specific measure details; provided a status of the ldaho and Oregon Rider funding and
expenses; updated ongoing programs and projects; and supplied general information on
DSM issues and important issues occurring in the region. ldaho Power relies on input
from EEAG to provide a customer and public-interest review of energy efficiency and
demand response programs and expenses. ld. The notes from the 2015 EEAG
meetings are included in Supplement 2.
18. Based upon feedback from EEAG, ldaho Power has focused on
increasing the scope and reach of its marketing efforts for its DSM programs. Idaho
Power enhanced its marketing and public relations efforts in 2015 with the addition of
airport signage, broadcast and on-line radio, television, and an on-line customer
research panel. DSM 2015 Annual Report at21-28. Additionally, ldaho Power had 14
energy efficiency themed guest appearances on two local television stations, KTVB and
KPVI. ln 2015, ldaho Power received two marketing awards for the Residential Energy
Efficiency Awareness Campaign from the ldaho Advertising Federation Rockie Awards,
which recognizes creative excellence in advertising in ldaho. ld. al l.
VI. MODIFIED PROCEDURE
19. 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 Aschenbrenner
Testimony in support of this Application. The Company stands ready to present the
APPLICATION - 1O
testimony in support of this Application in a technical hearing if the Commission
determines such a hearing is required.
VII. COMMUNICATIONS AND SERVICE OF PLEADINGS
20. 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, ldaho 83707
I no rdstrom@ ida hopower. com
dockets@ idahopower. com
Connie Aschenbrenner
ldaho Power Company
P.O. Box 70
Boise, ldaho 83707
caschen bren ne r@ idahopower. com
V!II. REQUEST FOR RELIEF
21. As described in greater detail above, ldaho Power respectfully requests
that the Commission issue an order designating ldaho Power's 2015 DSM expenses of
$35, 1 96,964 as prudently incurred.
DATED at Boise, ldaho, this 1sth day of March 2016.
Attorney for ldaho
APPLICATION - 11
BEFORE THE
rDAHo PUBLIc unilnEs coMMrssroN
CASE NO. IPC-E-16-03
IDAHO POWER COMPANY
ATTACHMENT 1
D EM A'VD-S'D E M AN AG EM E NT
2015 ANNUAL REPORT