20140515Comments.pdf

R[,CEIV[
I,'Benjamin I. Otto (ISB No. 8292)
710 N 6th Street
Boise,ID 83701
Ph: [phone] x12
Fax [phone]
[e-mail]
Attorney for the Idaho Conservation League
[PC-E-14-05
ICL Comments
?ortllrlr ,s Pil \t 23
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORJTY TO
IMPLEMENT POWER COST
ADIUSTMENT ('PCA") RATES FOR
ELECTRIC SERVICE FROM JUNE 1,
2014, THROUGH MAY 3t,20t5,AND
TO UPDATE BASE RATES IN
COMPLIANCE WITH ORDER NO.
33000.
The Idaho Conservation League (ICL) opposes Idaho Power's request to offset the 2014-
2015 Power Cost Adjustment (PCA) rate using energy efficiency funds. Using efficiency funds to
offset power cost increases, while attractive in the short term, is poor public policy for two
reasons. First, clouding true power cost hides the price signal to customers that would encourage
them to moderate consumption. This Commission wisely supports rate designs that send
conservation signals and should continue to send complimentary signals through the PCA.
Second, the balance in the efficiency rider account is due to Idaho Power's lackluster energy
savings acquisition in 2013 and subpar forecasts for future savings. Customers paid into the
efficiency rider account expecting the pursuit of cost-effective energy savings, not as a balancing
account to offset power costs. Maintaining accurate price signals and directing Idaho Power to
expand efficiency programs to pursue all cost-effective efficienry best serves the public interest.
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CASE NO. IPC-E-I4-05
IDAHO CONSERVATION LEAGUE
COMMENTS
May 15,2014
ICL recommends the Commission maintain the price signal function of the PCA. In
rejecting a PCA deferral last year the Commission stated the PCA "was implemented to properly
recover the Company's annual fluctuation in power supply costs and keep customers from
payrng either too little or too much of those costs."r The reason to keep customers from paying
too much is obvious--to ensure fair, just, and reasonable rates. But the reasons to keep customers
from paying to little are less obvious. One is to allow Idaho Power an opportunity for cost
recovery. Ensuring an accurate accounting of the PCA components protects the public interest
while providing this opportunity. A more important reason is to ensure customers receive
accurate price signals about the costs of energy. Balancing the public interest in avoiding rate
shock while sending meaningful price signals requires careful judgment by the Commission.' ICL
recommends the Commission maintain the cost-based price signal in the 2014-2015 PCA rate.
By a "cost-based price signal" ICL means a PCA rate consisting of known and forecasted
power supply costs without any dilution from a "one-time PCA mitigation measure".3 The PCA
captures differences between forecast and actual power supply costs. In broad terms, PCA rates
mirror the change in power supply costs; rising costs lead to rate increases, while falling costs lead
to rate decreases. Rising rates signal customers to reduce energy consumption, which is a critical
feedback loop for effective economic regulation. A PCA mitigation measure that masks rising
power costs by offsetting the increase with unrelated funds breaks this feedback loop and sends
inaccurate signals to customers.
Idaho Power's application makes clear that declining hydro generation levels and higher
than forecasted customer loads drove the PCA increase due to higher power supply costs and
I Order No. i2818 at 11. IPC-E-13-10.2ICL notes Order No. 32821 in IPC-E-13-10 where the Commission denied a PCA mitigation proposal to defer $50
million in costs due to countervailing public policies of avoiding the risk of rate shock and maintaining accurate PCA
costs.
3 See Direct Testimony of Tatum at p. 5, ln. 9-15.
IPC-E-14-0s
ICL Comments i|lf.ay 15,2014
lower surplus energy sales.n Lower river flows and higher customers demands were the largest
driver of the PCA increase this year, with the True-Up component of the PCA jumping by over
$22 million.t Signaling customers to reduce energy demands will help mitigate the impact of both
these factors. Reduced demands by Idaho Power customers can better match actual stream flows,
reduce power supply costs, and enable surplus sales. Of course a myriad of factors influence these
outcomes. But reducing customer demand is one of the few factors the Company can control.
Customers are more likely to take action when sent a strong price signal that rising consumption
requires Idaho Power to tap more expensive power supply sources and reduces lucrative off-
system sales. ICL recommends the Commission not dilute this price signal function of the PCA.
ICL opposes Idaho Power's proposal to transfer accumulated, but unspent, efficiency
funds to offset the PCA. Efficiency funds are collected from customers to fund the pursuit of all
cost-effective energy efficiency. In 2013 Idaho Power's energy savings accomplishments were
lackluster. Annual savings declined 38% from the prior year and 45o/o from the 2010 peak.u
Meanwhile vast amounts of available, cost-effective efficiency remain unpursued. In 2013 all
Idaho Power and NEEA programs produced savings of 107,284 megawatt-hours.'This is a
fraction of the 270,000 Mwh of savings, excluding special contract customers and NEEA,
identified as cost effective in Idaho Power's most recent DSM potential study.8 Instead of diluting
the price signal of the PCA ICL recommends the Commission direct Idaho Power to spend
efficiency funds on expanding available, cost-effective efficiency programs.
Idaho Power's forecast for efficiency savings shows the need for direction from this
Commission to expand Company efforts. In2O14-2015 PCA year, Idaho Power plans to pursue
o Tatum Direct at 14 - 16.
s See Tatum Direct at p. 13, Table 2 (Comparin 92013-104 PCA True-Up to 2014-2015 PCA True-Up).6 Seez}l3 Annual DSM Report, page 5, Figure 2.
'Id.8 See Attachm ent I Annual Savings, Idaho Power Energy Efficiency Potential Study prodaced by ENERnoc February 15,
2013, Appendix G, page 1.
rPC-E-14-05
ICL Comments May 15,2014
118,500 Mwh of energy savings,e while the IRP goal is 134,320 Mwh of savitrgs,'o and the
potential study shows 264,000 Mwh of cost-effective potential.tt The story for 2015 remains the
same; a plan to pursue 124,427 Mwh,r2 an IRP goal of 200,020 Mwh,t3 and cost-effective potential
of 210,000 Mwh.rn Again, the potential study only looks to core efficiency programs and excludes
additional savings from special contract customers and NEEA programs. The facts show Idaho
Power's efficiency plans and budget levels are insufficient to meet the Company's own IRP goals
or pursue the available, cost-effective potential. ICL recommends the Commission direct Idaho
Power to expand efficiency programs to meet or exceed the annual levels in the 2013 IRP.
Achieving these levels of identified, cost-effective savings will increase efficienry spending.
Idaho Power states they intend to spend roughly $20 million annually in the next two years." But
this level of spending is below levels necessary to meet the IRP efficiency goals. In 2009 spent
$21.74 million to acquire 143,146 Mwh and in 2013 spent $2L.36 million to acquire 107,272Mwh
of savings.'u These numbers are roughly inline with 2014 plans. But 2015 plans for 200,020 Mwh
is exceeds the 2010 savings where Idaho Power spent $28.6 million. ICL recommends the
Commission deny the transfer of efficiency funds and direct Idaho Power to invest these
accumulated customer assets into available, cost-effective efficiency programs.
Directing Idaho Power to expand efficiency savings is an important part of the
Commission's role in establishing the PCA rates. In setting the 2011-2012 PCA rate the Staff
recommended the Commission direct Idaho Power to expand the use of the irrigation demand
response program to avoid power costs. The Commission responded: "The Company should use
e See Attachment 2, IPC Response to ICL Request 3.b.
t0 See Idaho Power 2013 IRP Appendix C at32.n See Attachment I (Again, this potential study excludes additional savings from special contract customers and
NEEA programs).
12 See Attachment 2.
t3 See Idaho Power 2013 IRP Appendix C at 33.
ra SeeAttachment 1.
" Tatu- Direct at p.26,ln l6 - 18.
'u ldaho Power 20 t 3 DSM Annual Report at 5 - 6, (Savings in Figure 2 and Non-DR spending in Figure 4.)
IPC-E-14-05
ICL Comments May 15,2014
all available opportunities to reduce its power supply costs consistent with operating and
reliability constraints."r' Here, Idaho Power's IRP and efficiency potential study show available,
cost-effective means to reduce power supply costs that will improve reliability and operations.
Customers already contributed funds for efficiency. Instead of returning them unspent, ICL
recommends the Commission maintain the price signal function of the PCA and direct Idaho
Power to spend the funds as intended--to pursue all available, cost-effective energy efficiency.
Benjamin J. Otto
Idaho Conservation League
t7 Order No. i2250 at6, IPC-E-11-06.
rPC-E-14-05
ICL Comments May 15,2014
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ATTACHMENT I
Appendix G, Page I ldaho Power Energy Efficiency Potential Study by ENERnoc Utility
Solutions (Feb I 5, 2013)
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May 15,2014ICL Comments
ATTACHMENT 2
Idaho Power Response to ICL Production Request No. 3
REQUEST NO. 3: Mr. Tatum on page 26, lines 18 through 22, states the "DSM
rider balance is forecasted to be a surplus of $26 million by May 31, 2015". Please
provide:
a. All analysis, documentation, and explanation underlying this forecast
including planned DSM energy savings and expenses during the2014-2015 PCA year.
b. Documentation of the expected energy savings from DSM programs
during lhe 2014-2015 PCA year in ldaho Powe/s 2Ol3lntegrated Resource Plan.
c. Documentation of the cost effective DSM potential during the 2014-2015
PCA year in the most recent ldaho Power Energy Efficiency Potential Study.
d. Documentation of the expected DSM eneryy savings during the 2014-
2015 PCA year in the Company's March 2014 Operating Plan.
RESPONSE TO REQUEST NO. 3: Please note that some of the information
requested is only calculated on a calendar year rather than a PCA year, however, the
annual savings or forecast numbers reported would not differ significantly if reported on
a PCA year basis.
a. Please see the monthly expense forecast provided in the Company's
response to ICL's Request No. 12. ldaho Power does near-term planning of energy
savings and the related expenses on an annual basis. The planned and budgeted
energy efficiency savings for the 2014 calendar year total 118,500 MWh of savings from
ldaho Power adrninistered prograrns (see the Company's response to Staffs Request
No. 15). Savings lor 2015 forecasted in ldaho Powe/s 2013 IRP are 124,427 MWh
(see the Company's response to Staffs Request No- 15). ln accordance with the
Memorandum of Understanding signed by ldaho's investor-owned utilities and ldaho
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO CONSERVATION
LEAGUE'S FIRST PRODUCT]ON REQUEST TO IDAHO POWER - 6
IPC-E-14-05
ICL Comments May 15,2014
ATTACHMENT 2
Idaho Power Response to ICL Production Request No. 3
Commission Staff in January 2010, ldaho Power included plans for 2O14 DSM activities
in the 2013 DSM Report. Planning for DSM activities also included inputfrom ldaho
Powe/s Energy Efficiency Advisory Group ('EEAG") for 2O14 DSM activities and
proposed program changes.
b. Forecast energy savings for the 2014-2015 PCA year from ldaho Power's
2013 lRP totaled 130,419 MWh. Documentation for the monthly energy savings
correspondlng to the 2O14-2015 PCA year can be found in the 2013 IRP Appendix C
Technical Report in the Load and Resource Balance section pages 31-32. Note that
the monthly savings for the total energy efficiency contribution in the load and resource
balance analysis are in aMW units and are cumulative savings beginning in January
2013. !n order to anive at the forecast energy savings for the 2014-2015 PCA year, the
energy savings were converted to monthly MWh and then accumulated for the 2014-
2015 PCA year. The forecast energy efficiency savings included in the 2013 IRP
include all of the achievable cost-effective savings frorn lhe ldaho Power Energy
Efficiency Potential Study produced by ENERNOC Utility SOLUTIONS Consulting dated
February 15, 2013. ldaho Power does not consider these forecast estimates as a
ceiling for achieving energy efficiency. The Company will continue pursuing all cost-
effective eneqy efficiency beyond any forecast amount.
c. The analysis to show the cost-effective or economic potential savings by
month which would enable the savings to be reported by 2014-2015 PCA year has not
been conducted. The economic potential energy savings that is estimated by calendar
year in the ldaho Power Energy Efficiency Potential Study are reported as 264,000
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO CONSERVATION
LEAGUE'S FIRST PRODUCTION REQUEST TO IDAHO POWER. T
rPC-E-14-05
ICL Comments May 15,2014
ATTACHMENT 2
Idaho Power Response to ICL Production Request No. 3
MWh in the year2014 and 21O,O(X) MWh in 2O15. Please seethe Company's response
to ICL's Request No. 2.d. for further detail.
d. Please see the Gompany's nesponse b ICL's Request No. 2.e.
The response to this Request is sponsored by Pete Pengilly, Custorner Research
and Analysis Leader, and Tim Tatum, Senior Manager of Gost of Servfce, ldaho Power
Cotnpany.
IPC-E-14-05
ICL Comments May 15,2014
CERTIFICATE OF SERVICE
I hereby certiry that on this 15th day of May, 20I4,I delivered true and correct copies of
the foregoing COMMENT to the following persons via the method of service noted:
Hand delivery:
fean |ewell
Commission Secretary (Original and seven copies provided)
Idaho Public Utilities Commission
427W. Washington St.
Boise, ID 83702-5983
Electronic Mail:
Lisa D. Nordstrom
Timothy E. Tatum
GregoryW. Said
Regulatory Dockets
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
[e-mail]
[e-mail]
[e-mail]
dockets@idahopower. com
IAP
Peter J. Richardson
Gregory M. Adams
Richardson & O'Leary, PLLC
515 N.27th Street
Boise,lD 83702
[e-mail]
greg@richardsonandoleary. com
Dr. Don Reading
6070 Hill Road
Boise,Idaho 83703
dreading@mindspring. com
IPC-E-14-05
ICL Comments
IIPA
Eric L. Olson
Racine, Olson, Nye, Budge & Bailey,
Chartered
P.O. Box l39l;201E. Center
Pocatello, Idaho 83204-1391
[e-mail]
AnthonyYankel
29814 Lake Road
BayVillage, Ohio 44140
[e-mail]
Benjamin J. Otto
10 May 15,2014