20160804Reply Comments.pdf

RE CE IVED
LISA D. NORDSTROM
2016 t\U., -4 PM 4: 19
I ;•.j, ~1 i) )E~1 IC
Lead Counsel
[e-mail]
August 4, 2016
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
\ \ , 11-:· COMMI SSION
Re: Case No. IPC-E-16-03
An IDACORP Company
2015 Demand-Side Management Expenses -Idaho Power Company's
Reply Comments
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven (7) copies
of Idaho Power Company's Reply Comments.
LDN:csb
Enclosures
Very truly yours,
o(c,;<.; Q '1_ ~
Lisa D. Nordstrom
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for Idaho Power Company
r~ECEIVED
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR A )
DETERMINATION OF 2015 DEMAND-SIDE )
MANAGEMENT EXPENDITURES AS )
PRUDENTLY INCURRED ) ________________ )
CASE NO. IPC-E-16-03
IDAHO POWER COMPANY'S
REPLY COMMENTS
Idaho Power Company ("Idaho Power" or "Company") respectfully submits the
following Reply Comments in response to comments filed by the Idaho Public Utilities
Commission ("Commission") Staff ("Staff') and the Industrial Customers of Idaho Power
("ICIP") on July 14, 2016. Idaho Power appreciates the comments provided in this case
and notes that Staff recommends the Commission find that the Company's 2015
demand-side management ("DSM")-related expenditures were prudently incurred, and
that ICIP does not suggest any disallowance of 2015 expenditures. In these Reply
Comments, the Company responds to and clarifies a few of the issues raised in Staffs
and/or ICIP's Comments.
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
I. IDAHO POWER'S RESPONSE
A. The Idaho Energy Efficiency Rider Ending Balance and Collection
Percentage.
In its Comments, Staff recommends that the Commission direct Idaho Power to
work with Staff and other interested parties to establish an appropriate Idaho Energy
Efficiency Rider ("Rider") collection rate that aligns the Rider revenues with forecasted
expenses through 2017, while also refunding any surplus balance.1 In its Comments,
ICIP recommends that the Commission reduce the Rider percentage to 3.5 percent and
eliminate any Rider fund dollars being transferred to the Power Cost Adjustment
("PCA") in the future.2
Idaho Power appreciates Staff's willingness to work with the Company and other
interested parties to determine if the Rider percentage needs to be adjusted and, if so,
the appropriate funding level for the DSM activities the Company pursues. While the
Company agrees that it is appropriate to begin working with Staff and other parties to
determine if the Rider percentage needs to be adjusted, given the timing of the 2017
Integrated Resource Plan ("IRP") preparation process and other rate adjustments that
are likely to occur on June 1, 2017, Idaho Power believes that any change to the Rider
percentage should not occur before June 1, 2017, and, ideally, would be timed to
coincide with any other rate changes that occur on June 1, 2017.
Idaho Power believes the amount of cost-effective, achievable energy efficiency
is an important input in determining the appropriate Rider percentage. During the IRP
process, Idaho Power contracts with a third party to conduct an energy efficiency
potential study ("Potential Study") that results in a forecast of "achievable" energy
1 Staff Comments, p. 5.
2 ICIP Comments, p. 5.
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
savings to be used in the 20-year IRP planning period. Although Idaho Power does not
consider the amount of energy efficiency that is identified in the Potential Study to be a
ceiling, it does inform Idaho Power and others as to the amount of energy efficiency that
may be achievable, an important input to determining the Rider collection percentage.
The Company expects the next Potential Study will be completed in early 2017 for
inclusion in the 2017 IRP.
The Company also recognizes that rate stability is important to its customers and
should be considered in determining when any decrease in the Rider percentage or
refund of Rider funds may occur. There are two annual rate adjustments associated
with the Fixed Cost Adjustment and the PCA rate mechanisms that, with Commission
approval, will occur on June 1, 2017. Either or both of these rate adjustments could be
an increase for customers. Idaho Power believes that timing any potential adjustment
to the Rider collection percentage to correspond with these other typical June 1 rate
adjustments will benefit customers by limiting the number of separate rate adjustments
they experience and potentially offsetting or mitigating any increases related to those
rate mechanisms.
In its Comments, Staff asks the Commission to order Idaho Power and other
parties to submit a recommendation regarding the appropriate Rider percentage within
90 days. 3 Because the Potential Study will not be available until early 2017, and
because timing a Rider collection percentage change to coincide with the typical annual
rate adjustments has the potential to provide customers with additional rate stability,
Idaho Power does not believe submitting a recommendation to the Commission within
90 days is needed. Rather, Idaho Power asks that if it is determined that the Rider
3 Staff Comments, p. 11.
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
collection percentage needs to be adjusted, the Commission allow a recommendation to
be submitted in the form of a filing by the Company no later than March 15, 2017 .
Regarding ICIP's suggestion that all transfers to the PCA should be eliminated,
the $3,970,036 annual transfer from the Rider to the PCA is necessary to ensure that
revenue neutrality for customers is maintained between the June 2014 update to the
normalized level of net power supply expenses included in base rates and the
Company's next general rate case. Staff also pointed out the necessity of the transfer
on page 4 of its Comments where it stated, "The $3,970,036 transfer to the PCA
maintains revenue neutrality associated with the June 2014 update to the normalized
level of net power supply expenses (NPSE) included in base rates and approved by
Order No. 33000." However, should the Commission direct parties to assess the
appropriate level of ongoing annual Rider collection, it may be appropriate to also
discuss the need for this annual transfer of funds as part of that assessment.
B. The Company is in Compliance with Commission Order No. 32923
Regarding the Marketing of its Demand Response Programs.
Staff recommends that the Company increase marketing of the A/C Cool Credit
program because system peaks are growing, there has been a decline in participants,
and the Company has what the Staff characterizes as a "stockpile" of inventory of
Advanced Metering Infrastructure ("AMI") switches.4
The Company has managed all of its demand response ("DR") programs,
including the A/C Cool Credit program, in compliance with the settlement agreement
entered into by the parties in Idaho Case No. IPC-E-13-145 and Oregon Docket No. UM
4 Staff Comments, pp. 6-7.
5 Commission Order No. 32923.
IDAHO POWER COMPANY'S REPLY COMMENTS -4
16536 ("Settlement Agreement"), which stated in part, "Idaho Power will not actively
promote the A/C Cool Credit program to solicit new participants through marketing
tactics, but will accept new participants in this program who request to participate,
regardless of whether they were previously participants in the program."7
In the Settlement Agreement, the Company, Commission Staff, and other parties
also agreed that "in order to use existing equipment," the Company would accept new
participants in the A/C Cool Credit program who requested to participate, contact and
attempt to recruit customers who move into a home that has a load control device
installed, and attempt to recruit participants who change residences to a location that
does not have a switch.8 Idaho Power has and is prepared to continue to manage the
A/C Cool Credit program in accordance with the terms agreed to in the Settlement
Agreement until directed otherwise by the Commission.
Regarding Staff's Comments about Idaho Power's system peak, the Company
agrees that its system peak demand is increasing but for the DR programs; however, it
does not believe the magnitude of potentially increasing peak demands warrants
increasing spending on DR programs at this time. In each IRP, the Company analyzes
the need for peak-hour resources and, in the 2015 IRP, Idaho Power determined that
the first peak-hour deficit is in July 2025 and the first significant peak-hour resource
deficit is in 2026.9 Idaho Power will again analyze its need for peak-hour resources,
including DR, in its 2017 IRP. Idaho Power does not believe that acquiring additional
6 Public Utility Commission of Oregon Order No. 13-482.
7 Settlement Agreement, p. 5 (emphasis added).
6 Id., Section 7.a.
9 2015 IRP, Appendix C, Technical Appendix, pp. 60-61 .
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
DR, at an incremental cost to all customers, is warranted given there is no near-term
need for additional capacity.
Staff also references rapid attrition in the A/C Cool Credit program as a rationale
for marketing the program to new participants. Participation has decreased between
2012 and 2016, but the majority of this decrease (11 percent) occurred between 2012
and 2013 when the program was temporarily suspended and customers only received a
one dollar per month continuity incentive payment. Further, in accordance with the
Settlement Agreement, customer incentives decreased from $21 per season pre­
suspension to $15 per season post-suspension. The Company believes the change in
the incentive payment, along with the suspension of marketing, contributed to the large
decrease in participation , but the current attrition levels are much lower.10
Lastly, Idaho Power must maintain an inventory of switches for new installations
and for replacing switches for existing participants when previous switches are removed
or if switches repeatedly fail to communicate. Idaho Power estimates that between the
A/C Cool Credit program and Irrigation Peak Rewards program, 11 the existing stock of
switches will be used within the next year and a half. 12
Consequently, Idaho Power believes that incurring additional expense for any
marketing of the A/C Cool Credit program is unwarranted and would be premature for
the immediate future. However, if ordered to do so, the Company stands ready to begin
10 Attrition between December 2014 and December 2015 was approximately 4 percent, while
participation increased approximately 1 percent between December 2015 and June 2016.
11 Idaho Power filed Tariff Advice No. 15-16 seeking authority for the Company to use AMI
switches for the Irrigation Peak Rewards program. The Commission authorized the Company's request
on January 19, 2016.
12 In response to Staff's Production Request No. 23, Idaho Power stated, "Idaho Power believes
that between the two programs, the existing stock of switches will be used within the next year and a
half."
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
marketing the program, up to 2012 pre-suspension levels, prior to the start of the 2017
DR season.
C. The Information Received by the Company from the Community Action
Partnership {"CAP") Agencies is Adequate to Ensure What Measures are
Installed and to Estimate Energy Savings.
The Company disagrees with Staff's positions that "the Company may not be
receiving adequate documentation from CAP agencies" and "sufficiently detailed
information about what measures were installed, the cost of each measure and
associated labor costs were not properly identified."13
In response to Staff's Production Request Nos. 1 ?14 and 18, 15 the Company
provided voluminous data in the form of a Job Order Sheet, the Idaho State WX Energy
Analysis ACTUAL ("EA5"), and the Community Action Weatherization Program Invoice
for each of the 225 Weatherization Assistance for Qualified Customers ("WAQC")
homes weatherized in 2015. In its response to Staff's request, the Company pointed
Staff to the EA5 where a list of measures installed in each home, the cost of each
measure, and the payment source of each measure was broken down for each
weatherization job. The Company also provided the Weatherization Solutions Home
Audit Tool ("HAT") for each of the 171 homes weatherized in the Weatherization
Solutions ("Solutions") program. The HAT breaks down funding for every measure by
material costs, labor costs, and support costs for a total job production cost of each
Solutions home weatherized .
13 Staff Comments, p. 8.
14 "Please provide or make available the EA5 audit reports and Job Order Sheets for each of the
225 Idaho homes completed during the 2015 WAQC program." Staff Production Request No. 17.
15 "For each of the 225 Idaho homes completed during the 2015 WAQC program, please provide
a list of measures installed at each home; the cost of each measure and the amount Idaho Power paid for
each measure." Staff Production Request No. 18.
IDAHO POWER COMPANY'S REPLY COMMENTS - 7
Staff also states that it is "concerned that without complete information pertaining
to installed measures, the Company cannot adequately estimate energy savings."16 As
explained in Idaho Power's WAQC 2015 Annual Report filed with the Commission on
April 1, 2016, Idaho Power does not use the savings estimate of each installed
measure, but, rather, uses a bill analysis method to estimate energy savings for both
the WAQC and Solutions programs. The Company conducts a billing analysis of actual
usage data to estimate savings for weatherization programs and monitors realized
energy savings through periodic billing analyses.
Idaho Power appreciates Staff's desire to develop a better understanding of how
the weatherization programs are currently administered.17 Idaho Power is willing to
provide assistance to any members of Staff who may be interested in better
understanding how Idaho Power's weatherization programs are administered, what
information is received from CAP agencies, and/or how the funding of the programs is
managed .
D. Idaho Power Pursues All Cost-Effective Energy Efficiency.
Idaho Power disagrees with ICIP's assertion that there is significant cost-effective
energy efficiency being "left on the table"18 and Staff's implication that Idaho Power is
not "aggressively and expeditiously pursuing additional cost-effective resources."19 As
shown on page 7 of Idaho Power's DSM 2015 Annual Report, and included below, the
Company has exceeded the annual cost-effective achievable energy efficiency potential
16 Staff Comments, p. 8.
17 Id.
18 ICIP Comments, p. 2.
19 Staff Comments, p. 5.
IDAHO POWER COMPANY'S REPLY COMMENTS - 8
incorporated in its IRP 12 out of the last 13 years and, on a cumulative basis, has
exceeded the achievable potential every year.
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Annual Cumulative Energy Efficiency Savings
(aMW) with IRP Targets (2002-2015)
-IPC Savings (with NEEA)
-IRP Targets
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
This achievable potential is identified through Idaho Power's IRP process and, in
2015, Idaho Power exceeded its cost-effective achievable energy efficiency potential,
excluding Northwest Energy Efficiency Alliance's estimated savings by 31 percent.
Idaho Power is continually adding measures to programs, as well as modifying existing
measures and programs based on customer preference, technology, cost-effectiveness,
and evaluation results.
Idaho Power also disagrees with ICIP's assertion that a high utility benefit/cost
("B/C") ratio indicates the Company is not pursuing all cost-effective DSM.20 Idaho
Power adheres to the guidelines found in the California Standard Practice Manual
regarding B/C ratios and compares program cost-effectiveness from all of the
recommended economic test perspectives, including the utility ("UCT" or PACT),
20 "[W]hile being very cost effective for the utility, a high cost benefit ratio is a symptom that there
are significant conservation kWh being 'left on the table'. It is an indication the program can be expanded
and more cost effective energy can be saved." ICIP Comments, p. 3.
IDAHO POWER COMPANY'S REPLY COMMENTS - 9
participant (PCT), ratepayer (RIM), and total resource perspective (TRC). It is only
through a comprehensive review of the results from all of the economic test
perspectives that one can make a fully informed conclusion regarding the appropriate
level of energy efficiency to be pursued.
The benefits included in the UCT are the avoided marginal supply cost of energy
and demand reduction for the periods when there is a load reduction and the costs
include the program costs incurred by the administrator (either the utility or a third party)
and the incentives are paid to the customer. Idaho Power incentives are usually no
more than 70 percent of the total cost of a measure or project; the remaining cost is
paid by the customer. A high UCT ratio viewed in isolation simply means that the cost
borne by the utility, and ultimately non-participating customers, is relatively low as
compared to the energy savings benefits.
E. Idaho Power Offers a Variety of Behavioral Energy Efficiency Programs.
In its Comments, Staff states that Idaho Power "has taken little or no action"21 to
advance residential behavioral efficiency. However, Idaho Power currently provides a
variety of residential behavioral efficiency offerings.
Idaho Power's residential behavioral offerings include: Kill-A-Watt™ meter
lending through the public libraries, Student Energy Efficiency Kits, direct-to-customer
Energy Saving Kits, a Drying Rack project, and components of the Home Energy Audit.
In each of these offerings, the Company educates and interacts with residential
customers to promote behavioral change and affect future decision making. In addition
to these offerings, Idaho Power's myAccount portal provides an opportunity for
customers to review their usage in a near real-time environment. The Company's
21 Staff's Comments, p. 9.
IDAHO POWER COMPANY'S REPLY COMMENTS -10
customers can see how their energy use compares to homes of similar size, occupancy,
heating source, and other household attributes to assist the customer in developing a
personalized home profile and customized home energy plan.
Idaho Power provides educational opportunities to its customers to encourage
behavioral changes. The Energy Efficiency Guide is published two times a year (winter
and summer) and both publications are distributed in newspapers and on-line
throughout Idaho Power's service area. The Company also participates in many events
throughout its service area where Idaho Power representatives educate customers on
behavior changes they can make in their homes to decrease their energy use and use
energy more efficiently.
The Company continues to investigate other residential behavioral based
opportunities and will continue to seek input and ideas from the Energy Efficiency
Advisory Group ("EEAG") regarding those potential opportunities.
F. The Company Will Present Preliminary Results of the Value of Energy
Efficiency on Deferred Transmission and Distribution Investments at the
August 30, 2016. EEAG Meeting.
The Company will provide a progress update with preliminary results of the
analysis quantifying the value of energy efficiency on deferred transmission and
distribution investments at the August 30, 2016, EEAG meeting.
II. CONCLUSION
Idaho Power appreciates the opportunity to respond to comments filed in this
case and respectfully requests that the Commission issue an order designating Idaho
Power's expenditures of $28,495,701 in Rider funds and $6,701,263 of DR program
incentives included in the 2016 PCA, for a total of $35,196,964, as prudently incurred
DSM expenses.
IDAHO POWER COMPANY'S REPLY COMMENTS -11
If the Commission desires the parties revisit the current Rider collection
percentage, Idaho Power recommends that any resulting adjustment to the Rider
percentage not become effective prior to June 1, 2017.
DATED at Boise, Idaho, this 4th day of August 2016 .
.-P~Q.[e ~
~NORDSTR
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS -12
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 4th day of August 2016 I served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Brandon Karpen
Deputy Attorney General
Idaho Public Utilities Commission
4 72 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-007 4
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North Sixth Street
Boise, Idaho 83702
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 2?1h Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Dr. Don Reading
6070 Hill Road
Boise, Idaho 83703
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IDAHO POWER COMPANY'S REPLY COMMENTS -13