20160623Pengilly DI.pdf

E IC E IVED
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ii:.''ti;r i:1.!BLICjl 'il"i:i 0CI{MISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
rN THE MATTER OE IDAHO POWER
COMPANY'S APPLICATION TO MODIEY
OPTIONAL SCHEDULE 62, GREEN
ENERGY PURCHASE PROGRAM RIDER.
CASE NO. IPC_E-16-13
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IDAHO POWER COMPANY
DIRECT TESTTMONY
OF
PETER PENGILLY
O. Please state your name, address, and present
2 occupation.
A. My name is Peter Pengilly. My business
4 address is 7227 West Idaho Street, Boise, fdaho 83102. I
5 am employed by Idaho Power Company ("Idaho Power" or
6 "Company") as the Customer Research and Analysis Leader in
7 its Customer Relations and Energy Efficiency Department.
O. Pl-ease describe your work experience with
9 Idaho Power.
10 A. I was employed by Idaho Power in December of
11 L999 as a Senior Pricing Analyst in the Prlcing and
12 Regulatory Services Department. My duties as a Senior
13 Pricj-ng Analyst included the development of alternative
t4 pricing structures, management of pricing programs, the
15 analysis of the impact on customers of rate desi-gn changes,
L6 and the admj-nistrat j-on of the Company's tarif f s. In that
1-7 positlon, I helped develop several demand response
18 programs, a time-of-use pilot program, and a critical peak
1-9 pricing program.
20 In 2006, T was promoted to my current position as
2l Customer Research and Analysis Leader in the Customer
22 Relations and Energy Efficiency Department. In this
23 position, I am responsible for the research, analysis,
24 forecastJ-ng, and reporting assocj-ated with f daho Power's
25 energy efficiency and demand response programs. Part of my
PENG]LLY, DI 1
Idaho Power Company
1 current responsibilities is supervising the Company's Green
2 Power Program, net metering service, and the proposed
3 community solar pilot program.
4 Q. What is the Company's request in this
5 proceeding?
6 A. fdaho Power is seeking the approval from the
7 Idaho PubIic Utilities Commission ("Commission") to modify
8 Schedule 62, Green Energy Purchase Program Rider ("Green
9 Power Program" or "Program"). The changes inc1ude
10 modifications to the Program pricing structure, Renewable
11 Energy Certificates ('REC") sourcing and certifi-cation, and
L2 the treatment of certain program expenses.
13 O. What is the purpose of your testimony in this
74 proceeding?
15 A. The purpose of my testimony 1s to describe the
76 history and background related to the Program, detail how
1,7 the Green Power Program works currently, and discuss the
18 proposed modifications to the Program.
19 O. Are you sponsoring any exhibits in this
20 filing?
2L A. Yes. Exhibit No. 1 is a table that provides a
22 high-level comparison of the existing Program structure and
23 the proposed changes to the Program.
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PENGILLY, DI 2
Idaho Power Company
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A.
PROGRAM BACKGROT'IID A}ID MECHA}IICS
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establ-ished?
Why was the Green Power Program first
A.The Program was established to provide
customers an opportunity to participate in a Company-
sponsored program to acquJ-re renewable, or "glreenr" energy.
What is the Green Power Program?
Approved in Commission Order No. 28655, j-ssued
February 23, 2001,, Schedule 62's Green Power Program i-s an
optional program designed to provide customers and non-
customerl participants an opportunity to partlcipate in the
purchase of new2 environmentally friendly green energy. At
the tj-me of enrollment, customers select a fixed monthly
payment amount (any dol1ar amount) based on their deslred
l-evel of participation ("Do11ar Contribution Method"). The
designated amount is in addition to aI1 other charges
included in the service schedule under which the customer
receives electrical service and is added to the customer's
monthly electric bil-l. The Company has used the Bonneville
Environmental- Eoundation (*BEF") to facilitate the purchase
of green energy for the Program.
1 Non-customer participants may sign up to participate in the
Green Power Program. When they sign up, they receive an account number(not tied to any rate class) and are biLl-ed only for theirparticipati-on j-n the Program.
2 The term "new" is defj-ned, by Green-e Energy, to incl-ude anyeligible renewabl-e facility that began operation or was repowered inthe 15 years immediately preceding the sal-e of its generation.
PENGILLY, DI 3
Idaho Power Company
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o.Why dld the Company opt for the Doll-ar
Contribution Method for Program participation?
A.When the Green Power Program was initially
designed, Idaho Power's customers had expressed j-nterest in
a voluntdry, fixed monthly dollar amount of the customers'
choosing to stimulate green energy development. The
Company believed that the Dollar Contribution Method was
responsive to customers' interests at the time.
O.Please define the term "green" energy in the
context of t.he Green Power Program.
A."Green" energy, certified as such by vari-ous
orqanizations throughout the country, is primarily
considered to be generated from wind, solar, geothermal,
and other renewable resource facllities. Participant
contributions to the Green Power Program go towards the
purchase of Green-e certified RECs.
o.
A.
What is a REC?
A REC is created when a megawatt-hour ("MWh")
of renewable energy is produced and delivered to the grid.
A REC is a tradable, non-tangible commodity that represents
the environmental attributes associated with one MWh of
electricity generated from a renewable energy resource and
can be sold separately from the electricity commodity. The
owner of the REC can legally claim to have purchased
renewable energy.
PENGILLY, DI 4
Idaho Power Company
1 Q. Does the Program participant actually receive
2 the energy from the renewabl-e energy generation resource?
3 A. No. Because of the physj-cs of how the power
4 system works, electricity from a specific facillty or
5 source does not fl-ow directly to a specific customer. The
6 participant's financial contribution goes towards the
7 purchase of Green-e certified RECs, which as described
8 above, allows the owner to 1egaIly claj-m to have purchased
9 renewable energy. The el-ectrj-city that is spJ-it from the
10 REC is no longer considered "green" and cannot be counted
11 as renewable or zero emission by whomever buys it.
12 O. What is the signifj-cance of a Green-e
13 certi-fied REC?
1,4 A. Green-e Energy is the nation's leading
15 independent certification and verification program for
L6 renewable energy. The Green-e Energy National Standard
71 identifies many criteria renewable energy must meet to be
18 certified. Electricity must come from eligible sources of
1,9 supply like wind, soIar, geothermal, biomass, or 1ow-impact
20 hydropower. Only new renewable facilities built in the
27 most recent 15 years can be used. Electricity cannot be
22 used to fulfi1l a state renewabl-e energy goa1, and cannot
23 be "double counted" towards that goaI. The Green-e
24 certification process provides a thorough verification to
25 ensure that the RECs meet the criteria listed above.
PENGTLLY, DI 5
Idaho Power Company
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O. Why did the Company choose BEF as the broker
and certifying agent for the Program?
A.The Company has util-ized BEE as the broker and
certifying agency for the Green Power Program sj-nce its
inceptj-on. Headquartered in Portland, Oregon, BEF 1s a
non-profi-t organization dedicated to the replacement of
fossil fuel generation wi-th new renewabl-e generatj-on. The
Company chose to work with BEF in order to rely upon its
expertise, its close association with environmental groups,
and to avoid additional- costs of administration.
o.Has the Company evaluated the ongoing
rel-ationshlp with BEF?
A.Yes. To ensure BEF was still the best value
for participants, the Company submitted a Request for
Proposal ("RFP") for services in 207L. BEE's bid came in
lower or competitive with the other suppliers. While one
company's proposal had a lower price, it was new to the
industry and did not have BEE's favorable historical
performance record. Moreover, it could not provide some of
the value added services that BEE includes at no additional
charge, such as marketing assistance and research. The
Company plans to retaj-n its relationship with BEF in 2076
while the modifications to the Program are made; however,
the Company plans to submit a RFP to provide RECs for the
Green Power Program within the next three years. At that
PENGTLLY, DI 6
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point, Idaho Power wil-l- determine if BEF remains the best
val-ue for the Company and participants of the Program.
o.Besides the purchase of green energy, are
there other notable aspects of the Green Power Program?
A.Yes, in 2003, Idaho Power partnered with BEE
and the Green Power Program particlpants to bring "Solar 4R
Schools" to k-L2 schools located in ldaho Power's service
area.
o.Please provide an overview of the Solar 4R
Schools program.
A.As a program offered by BEE, Sol-ar 4R Schools
provides educators with an on-site sol-ar array,
connectivity to robust solar data monitoring centers on the
web wi-th visibility to other participating school's array
information, renewabl-e energy teacher training, teacher-
correl-ated to Next Generati-on Science Standards. Solar 4R
Schools provides one of the most comprehensive, teacher-
tested renewabl-e energy educational programs available
nationwide.
II. PROGRJAM MODIFICATIONS
o.Why is the Company proposing to make
16 generated classroom activitj-es, and customized science kits
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23 modj-fications to the Green Power Program at this time?
24 A.Over the last 1,6 years, the only change to the
25 Green Power Program was the partnership with BEF for the
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Solar 4R Schools program in 2003. In an effort to respond
to what Idaho Power believes are some customers'
preferences, the Company is currently working towards
offering a variety of green power options. The Program
modlfications discussed below are the resul-t of Company and
customer collaboration to modify the Program to make it a
more attractive renewable energy option for customers
taking service under any rate schedule.
The Company met with a group of customers from the
Wood River Va11ey, from February 2074 into early 2076, who
offered lnsight and opinion on a variety of Program
modifications. Based on all the information gathered, the
Company ultimately decided on modifications that, if
approved, would not only satisfy changes in customer
preference but would also align the Green Power Program
with the best practices of other green programs in the
industry.
O. Please describe the source of "industry best
practj-ces" that guided the Company's modifications to the
Program.
A.The Company contacted other utilities about
their "green power" programs and learned how they are
managed. The Company also reviewed reports from the
National Renewabl-e Energy Laboratory (NREL) and the U.S.
Environmental Protection Agency (EPA) Green Power
PENGILLY, DI 8
Idaho Power Company
I Partnership. In addition, the Company investigated current
2 Green-e (Center for Resource Solutions) and U.S. Green
3 Buil-ding Council (USGBC) Leadership in Energy and
4 Environmental Design (LEED) certification requirements.
O. Please provide a high-1evel- overview of the
6 proposed modificatj-ons to the Program.
A. As shown in Exhibi-t No. 1, the Company is
8 proposing to: (1) replace the current Dol-Iar Contribution
9 Method for participation with two new partici-pation
10 options; (2) source RECs based on proximity to Idaho
11 Power's service territory with the Company Green-e
12 certifying the RECs once they are purchased for the Green
13 Power Program; and (3) include a portion of the marketing
L4 costs in the customer payment.
15 A. Progran Participation Options.
!6 O. Pl-ease describe the new Program participatj-on
71 options.
18 A. The Company is proposing to replace the
19 existing Dol-lar Contribution Method with both a block
20 option and a 100 percent of usage option for customers who
27 wish to participate in the Program. Under the bl-ock
22 option, a customer will pay a premium of $1.00 per l-00
23 kilowatt-hour ("kwh") block of renewabl-e energy. The 100
24 percent of usage option will- allow customers to purchase
25 renewable energy equal to their total monthly kWh usage.
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Idaho Power Company
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O. Why is the Company requesting to change the
participation method for the Program?
A.When the Company implemented the Program in
2001, the Dol1ar Contribution Method was chosen based on
feedback from Idaho Power customers and their preference
for partlcipatlon in a Company-sponsored program to acquire
green energy. The Company is requesting a change to the
participation optj-ons at this time to a1low the RECs
purchased and retired for customers through the Program to
be Green-e Energy certified3, as well as to create a more
transparent program for current and prospective
participants to help them evaluate which of the Company's
green energy programs best fits their needs. In addition,
the proposed block option aligns the Green Power Program
with similar programs offered by utility peers in the
Northwest. Lastly, the Company's upgraded billing system
has the functj-onality to more easj-Iy bill participants
based on the new participation options.
0. How wil-l existing participants under the
Dollar Contribution Method be transferred to the new
structure?
3 The Green-e Energy standard requi-res that Green-e Energy
certified products soJ-d to customers must be a "percentage-of-use" or
"bIock" product. The Company does not befieve that the Dollar
Contribution Method complies with the standard necessary to be Green-e
certified. (Green-e Energy Natlonal Standard Version 2.8 Section III,Part A, page 10 , \LLpl1lt*gj-g!e9!-e, qIgld_gcF lengygy lGLe__g"!:
e-Eqe r g y'Na ! -'i 91q I S t 3l-9_e5-9.-p_d,I . )
PENGTLLY, Dr 10
Idaho Power Company
1 A. The Company plans to send each participant a
2 l-etter detailing the approved changes to the Program. The
3 majority of the approximately 7,100 Program participants
4 contribute a whole dollar amount each month. Those
5 participants will be transferred over to the bl-ock option.
6 Those that do not contribute a whole dollar amount wil-I be
7 transferred over to the b1ock optj-on rounded down to the
8 nearest dollar.
9 B. REC Sourcing and Certification.
10 O. What is the current REC sourcing practice?
11 A. The Company previously had an internal- policy
1,2 to not a1low RECs from resources connected to Idaho Power
l-3 or RECs owned by Idaho Power to be acquired for the Green
74 Power Program. The internal policy was in place to
15 demonstrate a clear separation between the Company-owned
1,6 RECs and RECs acquired with customer funds through the
L7 Green Power Program, avoidj-ng the possible perception that
18 customers were paying twice or a greater amount for RECs
19 connected to Idaho Power. Now that the REC market has
20 matured with tracking systems in p1ace, such as the Western
2L Renewable Energy Generation Information System (WREGIS) and
22 Green-e standards for REC tracking, the potential for this
23 misperceptj-on is lessened.
24 O. How will the sourcing of RECs for the Program
25 change from current practices?
PENGILLY, DI 11
Idaho Power Company
A. Currently, BEF sources RECs primarily from
2 Larqe-scale wind projects located in the Northwest with a
3 smal1 portion sourced from small solar projects. Going
4 forward, RECs wil-l sti1l be sourced from the Northwest, but
5 Idaho Power will- direct BEF to give preference to RECs from
6 sources located closest to or within Idaho Power's service
7 territory, when possible. I bel-ieve this change aligns
8 with customer preferences to support loca1 renewabl-e enerqy
9 investments.
10 O. What is the significance of Idaho Power Green-
11 e certifying the RECs once they are purchased through BEE?
72 A. Green-e certifying the RECs once they are
13 received is an industry best practice to ensure that the
74 marketing and claims about renewabl-e energy comply with the
15 Eederal- Trade Commission's truth in advertising rules.
76 Currently, Idaho Power purchases Green-e certified RECs
L7 through BEF, however, they are not re-certified before
18 being retired by Idaho Power for the Program. Whil-e Idaho
79 Power certification would add to the cost of the Program,
20 it provides an extra layer of assurance to participants
27 that the RECs were not used for multiple purposes and that
22 the certification complies with the national standards
23 detailed above.
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PENGILLY, DI L2
Idaho Power Company
1 C. Progiram E:q>enses.
O. Please describe the proposed chanqe in
3 recovery of the Program marketing expenses.
A. The Company is proposing that up to 15 percent
5 of the total Program funds be used for Program marketing
6 expenses.
a. How does the Company's proposal for marketing
8 expenses differ from the existing treatment?
A. Under the design of the current Program, the
10 funds received are only used to purchase green energy and
11- support Solar 4R School-s. No customer amounts are
L2 currently used to cover program overheads or marketing
13 expenses. A11 marketj-ng and overhead expenses of the
14 Program are currently funded through the Company's
15 operations and maintenance expenses.
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O. Why is the Company making this request?
A. The Program has operated with a minimal
18 marketing budget from which to grow the Program. This
19 change allows additional funds to be spent specifically on
20 marketing for the Program and be borne by the Program
2L participants. The Company believes that the customers
22 supporting this Program want to support renewabl-e energy;
23 having the additional marketing dol-l-ars will- allow the
24 Company to reach more customers and purchase more renewabl-e
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energy. Last1y, the change a11gns the Program with
industry best practices.
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expenses?
Will these funds be used so1e1y for marketing
A.The Company's request is to use up to 15
percent of the Program income for marketing expenses;
however, tf REC prices change significantly, the Company
may choose to use these funds to cover the increase 1n REC
prices rather than change the tariff price to participants.
In no case would these funds be used for purposes other
than the Green Power Program.
D. Other.
a.Has the Company considered any other Program
modifications?
A. Yes. The Company is investigating the
addition of a solar opti-on to the tariff as well as a bul-k
purchase option for large customers.
O. Please describe the potential solar option the
Company is considering.
A.Under the potenti-al solar option, the green
energy RECs that would be purchased would be provided 100
percent from sol-ar resources. The Company has received
informal feedback from customers that a solar option woul-d
be hiqhly desirable.
PENGTLLY, Dr L4
Idaho Power Company
I Q. Is the Company proposing to implement the
2 solar option as part of this filing?
3 A. No. While the Company is aware of the
4 potential demand for this optj-on from some customers, the
5 market for solar RECs is not liquid enough to be able to
6 offer this option right now. Once the solar REC market
7 matures, the Company wiII, dt that time, consider offering
8 a sol-ar-only option to customers under the Green Power
9 Program tariff.
10 A. Please descrj-be the potential bulk purchase
11 option the Company is considering.
12 A. Idaho Power is investigating a bulk purchase
13 option under which large customers would contract to
L4 purchase RECs over a specified period of tj-me. The Company
15 anticipates that the terms of these contracts, including
16 length and sales price, would be negotiated individually
77 with prospective customers.
18 O. fs the Company proposing to include the bulk
19 purchase optJ-on as part of this fiJ-ing?
20 A. No. Because these contracts would be
2L negotiated individually, the Company is not proposing to
22 include this option in the Green Power Program tariff. The
23 Company will- keep the Commission apprised of any future
24 action with respect to the bul-k purchase option that would
25 require regulatory approval-.
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E. Implementation.
O.How soon can the Company implement the Program
modifications after Commission approval?
A.The Company beLieves that it will- take a
minimum of 60 days from the date of Commission approval to
make ;ind test the changes within the billing system.
O. Why does the Company need 60 days to implement
the changes to the Green Power Program?
A.The Green Power Program changes will require
development and codinq changes in the billing system, which
demands a higher level of testing than a standard price
change. The majority of the changes will be made to the
invoicinq program, which is used for all customer invoices,
whether they are signed up for the Program or not. Because
this affects the invoicing program, the Company requires
additional testing to verify that the new Program changes
work correctly and do not affect j-nvoices for non-
participants.
IIT. CODICLUSION
O. Please summarize your testimony.
A. fdaho Power is proposing changes to the Green
Power Program to align the Program with utility peers as
well as respond to changing customer preferences. The new
participation options will- aIlow for more transparency as
compared to the current Dol-l-ar Contribution Method. The
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A.
RECs for the Program will continue to be sourced via a
broker, and preference wil-l be given to resources located
closest to or wj-thin Idaho Power's service territory. As
part of the Green Power Program, the Company wiII continue
to participate in the renewable energy educational program,
Solar 4R School-s. To reach more customers, the Company is
requesting that up to 15 percent of the Program funds be
used for Program marketing expenses. Under the current
Program structure, participants are not funding any of the
marketing expenses through their Program contributions.
Does this conclude your testimony?
Yes.
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STATE OF
County of
IDAHO )) ss.
Ada )
SUBSCRIBED AND
June 2016.
ATTESTATTON OE. TESTI!{ONY
SWORN to before me this 22"d day of
I, Peter Pengi11y, having been duly sworn to testify
truthfully, and based upon my personal knowledge, state the
following:
I am employed by Idaho Power Company as the Customer
Research and Anal-ysj-s Leader in its Customer Rel-ations and
Energy Efficlency Department and am competent to be a
witness in t.his proceeding.
I declare under penalty of perjury of the laws of
the state of Idaho that the foregoing pre-filed testimony
and exhibit are true and correct to the best of my
information and belief.
DATED this 22"d d,ay of June 2016.
PENGILLY, DI 18
Idaho Power Company
Pengilly
r:%0.0BLtc
Notary c for Idaho
Residing at:Bolse, Idahoexplres: 02/04/2021,My commissj-on
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-16-13
IDAHO POWER COMPANY
PENGILLY, DI
TESTIMONY
EXHIBIT NO. 1
PG P Modifi Ctieen Powe ram o caTron Lomoansons
Existing Program Proposed Program
Customer Cost of renewable
kwh
so.o8s / kwh Option 1: Block
sr.oo7100 kwh
Option 2: Total Usage
(1clkwh)
REC Sourcing Northwest
Large scale wind
Small solar project
No ldaho Power
connected resources
r Northwest
o Large scale windo Small solar projects
o Allow ldaho Power connected
resources (through a broker)
including:
o RECs owned by ldaho
Power (contingent they
meet the Green-e
Standard)
o Projects connected to
ldaho Power system
(including PURPA
proiects)
Certification o No Green-e re-
certification of Green
Power Program REG
after purchased
o Green-e certify Green Power
Program RECs after purchased
through the Program
Community Support Solar 4R Schools (1to 2 projects
per vear)
Continue Solar 4R Schools (1 or more
oroiects oer vearl
Marketing Funded by O&M only Use up to L5% of program funds for
marketing
Exhibit No. 1
Case No. IPC-E-16-13
P. Pengilly, IPC
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