20170315Redacted Comments.pdf

,:,:-[[iiJf DBRANDON KARPEN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 7956
'r'i'-. I f- D'J l.'l'.'; ' l; I-it l'J'r
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO REVISE TARIFF SCHEDULE 91 _ THE
ENERGY EFFICIENCY RIDER.
CASE NO. IPC.E-16-33
REDACTED COMMENTS OF
THE COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Brandon Karpen, Deputy Attorney General, and in response to the Notice of
Modified Procedure and Notice of Comment Deadline issued in Order No.33722 on February
24,2017, in Case No. IPC-E-16-33, submits the following comments.
BACKGROUND
On December 22,20l6,Idaho Power Company filed an Application requesting that the
Commission approve: (1) a decrease of 0.25Yo to the collection percentage of the Energy
Efficiency Rider (Rider) from 4Yo to 3 .7 5oh of base rate revenue effective March l, 2017 ; and (2)
a $13 million refund of previously collected Rider funds to be included in the201712018 Power
Cost Adjustment (PCA) mechanism, effective June 1, 2017; and (3) the elimination of the annual
transfer of $4 million of Rider funds through the PCA.
In Case No. IPC-E-I6-03, the Company's 2015 demand side management (DSM)
prudency request, the Commission directed the Company "to work with Staff and other
stakeholders in adjusting the Rider," and "submit a proposal for revising its Rider percentage to
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ISTAFF COMMENTS MARCH I5,2OI7
this Commission no later than Friday, December 30,2016." Order Nos. 33583, 33694. With
this application, the Company has complied with the Commission directive.
STAFF REVIEW
Staff met with Idaho Power, representatives from the Industrial Customers of Idaho
Power (ICIP), and Idaho Conservation League [CL) on November 7,2016, and November 22,
2016, to address concerns raised by the parties in IPC-E-I6-03. Staff had three main goals going
into these collaborative workshops: 1) decrease the Rider percentage to appropriately align Rider
revenue with expenses; 2) refund the surplus Rider balance to customers; and 3) eliminate the
annual transfer of energy efficiency rider funds to the PCA. After two meetings with the parties,
a consensus was reached and presented to the Energy Efficiency Advisory Group (EEAG) via
conference call on November 28,2016. All members of the EEAG were generally supportive of
the collaborative proposal filed by the Company in this case.r The following comments discuss
the proposal in greater detail.
Decrease in Rider Percentage
In Order No.32426 (Case No. IPC-E-I1-08), the Commission approved a partial
settlement stipulation authorizing Idaho Power to include demand response incentive payments
in net power supply costs to be recovered through the PCA. 1d. Moving demand response
incentive payments from the Rider to the PCA reduced the amount of tariff rider revenue
necessary for the Company to pursue all cost effective DSM. Therefore the Commission
approved a decrease in the Rider percentage from 4.75Yo to 4.0Yo.
While the record in that case indicates that a greater decrease could be warranted, Staff
cautioned against decreasing the Rider below 4.|Yo to avoid falsely signaling to customers that
the Commission and Staff were not supportive of Idaho Power's energy efficiency efforts. The
Commission accepted Staffls position to only reduce the tariff Rider to 4.0%. In the years since
that decision, Idaho Power has continually collected more in tariff Rider revenue than it has
expensed, accumulating a significant surplus of customer funds in the Rider balance.
I Lynn Tominaga, representing the Idaho Irrigation Pumpers Association, recommended that the parties consider
leaving the tariff Rider percentage at 4.lYo to build a surplus that could be used as an insurance policy to help offset
unforeseen increases in supply-side resources in the PCA.
STAFF COMMENTS 2 MARCH I5,2OI7
If the reduction in the tariff Rider percentage is approved in this case, expenses and
revenue will be properly aligned in20l9 and2020. However, it is important to point out that
any increase in base rates will cause a corresponding increase in Rider revenue. For example, if
the Company's Application to increase its rates to recover costs associated with the North Valmy
Power Plant were approved as filed in Case No. IPC-E-16-24, tariff Rider revenue will increase
by approximately $1 million annually. As base rates increase over time, it will be necessary to
review the Rider percentage to ensure that revenue and expenses remain aligned. Chart 1 below
illustrates the gap between the tariff rider funding and expenses from 2013-2016, with forecasted
amounts from 2017 -2020 .
Chart l: Tariff Rider Annual Funding vs. Expenses/Incentives
All parties agreed that the proposed reduction in the Rider percentage become effective
on March I ,2017 . Due to unforeseen circumstances in processing this case, the March 1,2017
effective date is no longer feasible. Staff believes that in the spirit of complying with the
agreement, the tariff Rider rate decrease should become effective on April 1,2017. A delay in
the effective date would allow Idaho Power to continue to collect more Rider revenue than
necessary to meet its expenses and would further increase the surplus balance.
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aJSTAFF COMMENTS MARCH I5,2OI7
Refund of Surplus Bolance
On December 31, 2016, the tariff Rider had a surplus balance of $10,730,151. The
balance grew to at the end of January 2017, and will continue to grow each month
in the near future. Because the parties could not predict the amount of the Rider balance at the
time of the refund, the parties agreed that $13 million was an appropriate estimation of the
surplus funds that should be refunded to customers. Staff notes that the Rider balance will
continue to have a surplus after the refund, but encourages the Company to expeditiously
continue its pursuit of cost-effective energy efficiency. Staff will continue to monitor trends in
the Rider balance and will raise any concerns with the Company and its Energy Efficiency
Advisory Group. Staff recommends that the Company keep the EEAG apprised of current tariff
Rider funding, expenses, forecasts, and balance at each advisory group meeting.
The Company proposed the refund coincide with the annual PCA, Fixed Cost Adjustment
(FCA), the commencement of seasonal rates, and other proposed rate changes set to occur on
June l, 2017. Though the parties expressed a desire to have the refund implemented sooner, for
pu{poses of forming a consensus to present to the EEAG and ultimately the Commission, Staff
and the ICL agreed not to oppose the June 1,2017 refund date. Additionally, the parties agreed
that the refund should be allocated on the basis of base rate revenue by customer class. Because
the energy efficiency rider revenue is collected as a percentage ofbase rate revenue, Staff
believes it should be refunded in the same manner in which it was collected.
Elimination of Annual Transfer to the PCA
In Order No. 33000 issued on March 21,2014, the Commission authorized Idaho Power
to increase the level of Net Power Supply Expenses collected through base rates by
$99,309,369.2 The Commission further ordered that the change to base level NPSE should be
"revenue neutral" for all customer classes and have no net impact on the overall revenue
collected through customer rates. The increase in base rates in that case increased the tariff
Rider revenue by 4% of the base rate increase, therefore $3,970,036 in tariff rider revenue was
refunded to customers through the PCA each year beginning on June 1,2015 in order to comply
with the revenue neutrality mandate in that order. The Company states in its Application that
2 On a total system basis, the normalized increase in NPSE in base rates was $ 105,691,091. After jwisdictional
allocation and PCA sharing, the increase to Idaho customers was $99,309,369.
4STAFF COMMENTS MARCH I5,2OI7
o'because this request involves a change to the future funding level provided by the Rider, the
goal of revenue neutrality included in Order No. 33000 is no longer applicable." Staff believes
that with this Rider rate decrease, and the consensus among the parties, this is the appropriate
time to eliminate the annual transfer from the Rider to the PCA. While making the annual PCA
filing cleaner and more transparent, eliminating the transfer also reduces the inherent confusion
of allowing the Company to collect money through the Energy Efficiency Tariff Rider and using
those funds to offset supply-side resource costs in the PCA.
STAFF RECOMMENDATIONS
After thorough review of the Application and supporting attachments, Staff recommends
that the Commission approve the Company's Application. Specifically, Staff recommends that:
l The Commission authorize the Company to decrease the Energy Effrciency Tariff
Rider percentage from its current rate of 4.0o/o of base revenues to 3.7syo of base
revenues effective April 1, 2017;
2. The Commission approve the refund of $13 million from previously collected Rider
funds effective June 1, 2017, coincident with the annual PCA, Fixed Cost Adjustment
(FCA), the commencement of seasonal rates, and other proposed rate changes set to
occur on that date;
3. The Commission order the refund to be allocated on the basis of base rate revenue by
customer class;
4. The Commission approve the elimination of the $3,970,036 annual transfer from the
Energy Efficiency Tariff Rider to the PCA mechanism effective June 1, 2017; and
5. The Commission order Idaho Power to present to the Energy Efficiency Advisory
Group at each meeting the current levels of tariff Rider funding, expenses, forecasts,
and balances.
5STAFF COMMENTS MARCH I5,2OI7
Respectfrrllysubmittedthis Lqy dayofMarch 2017.
General
Technical Staff: Donn English
Stacey Donohue
i:umisc,/oommemts/ipccl 6.33bkdcsd commonts
6STAFF COMMENTS MARCH I5,2OI7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15TH DAY OF MARCH 2017,
SERVED THE FOREGOING REDACTED COMMENTS OF THE COMMISSION
STAFF, IN CASE NO. IPC-E-16-33, BY MAILING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
LISA D NORDSTROM
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-MAIL: lnordstr:[e-mail]
(Confidential Comments)
do ckets (L? i dah opower. c om
(Redacted Comments)
EzuC L OLSEN
ECHO HAWK & OLSEN PLLC
PO BOX 6119
POCATELLO ID 83205
E-MAIL: [e-mail]
(Redacted Comments)
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
(Confi dential Comments)
TAMI WHITE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: twhite(Oidahopower.conr
(Redacted Comments)
ANTHONY YANKEL
I27OO LAKE AVE
UNIT 2505
LAKEWOOD OH 44107
E-MAIL: ton),@.yankel.net
(Confi dential Comments)
ELIZABETH A KOECKERITZ
DEPUTY CITY ATTORNEY
BOISE CITY ATTORNEY'S OFFICE
PO BOX 500
BOISE ID 83701-0500
E-MAIL: ekoeckeritz(@cityofboise.org
(Confi dential Comments)
SECRETARY
CERTIFICATE OF SERVICE