20170315Application.pdf

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An TDACORP Company
LISA D. NORDSTROM
Lead Counsel
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March 15,2017
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-17-03
2016 Demand-Side Management Expenses
ldaho Power Company's Application and Testimony
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an original and seven (7) copies of
ldaho Power Company'sApplication and attachment (2016 Demand-Side Management report
and supplements). However, as agreed, only five (5) copies of the attiachment have been
provided.
Also enclosed for filing are an original and eight (8) copies of the Direct Testimony of
Connie Aschenbrenner. One copy of Ms. Aschenbrenner's testimony has been designated as
the'Reporter's Copy.' Adisk containing a Word version of Ms. Aschenbrenner's testimony is
enclosed for the Reporter. An origina! and eight (8) copies of confidential Exhibit No. 4 to Ms.
Aschenbrenner's testimony are provided separately.
!n addition, enclosed is a Protective Agreement ldaho Power Company requests the
parties execute in this mafter. lf the Protective Agreement is satisfactory, please have the
attomey assigned to this case execute the same.
lf you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly )ours,
LDN:kkt
Enclosures
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd stro m @ id a hopower. co m
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Attomey for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION OF 2016 DEMAND.
SIDE MANAGEMENT EXPENSES AS
PRUDENTLY INCURRED.
CASE NO. IPC-E-17-O3
APPLICATION
In accordance with RP 052 and RP 2O1, et seg., ldaho Power Company ("ldaho
Powed'or "Company") hereby respectfully submits ils Demand-Side Management 2016
Annual Report ('DSM 2016 Annual Report") and makes application to the Idaho Public
Utilities Commission ("Commission") for an order designating ldaho Power's
expenditures of $31,321,862 in ldaho Energy Efficiency Rider ("Rider'') funds,
$7,059,420 of demand response program incentives funded through base rates and
tracked annually through the Power Cost Adjustment ("PCA"), and $1,860,901 of
incremental demand-side management ("DSM") labor expenses incuned from 2011
through 2016 that have not yet received a prudence determination, for a total of
$40,242,182, as prudently incuned DSM expenses.
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APPLICATION - 1
ln support of this Application, ldaho Power represents as follows:
I. THE DSM 2016 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 ldaho to develop and implement DSM programs in order to promote energy
efficiency." Case No. !PC-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,
Idaho 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
Gompany's total 2016 DSM expenses as prudently incurred, ldaho Power presents its
DSM 2016 Annual Report as Attachment 1 to this Application. The DSM 2016 Annual
Report also satisfies the DSM reporting obligation set forth in Order No. 29419, Case
No. IPC-E-03-19.
3. The DSM 2016 Annual Report consists of the main document and two
supplements. Supplement 1: Cost-Effectiveness ("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 2016, the Company continued its
commitment to third-party evaluation activities. lncluded in Supplement 2: Evaluation
("Supplement 2") are copies of all of ldaho Powe/s 2016 evaluations, customer surveys
and reports, evaluations conducted by the Company's third-party contractors,
APPLICATION - 2
Idaho Powe/s evaluation plans, general energy efficiency research, and demand
response research.
4. The DSM 2016 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 wel! as a section describing
other programs and activities that are not tied to direct energy savings. The DSM 2016
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. 2016 DSM PROGRAM PERFORMANCE
5. ln 2016, ldaho Power offered its customers a mature portfolio of energy
efficiency programs, demand response programs, participated in market transformation
efforts through the Northwest Energy Efficiency Alliance ("NEEA"), and offered several
educational initiatives and other activities. As explained in more detail in the Direct
Testimony of Connie Aschenbrenner ("Aschenbrenner Testimony") filed
contemporaneously with this Application, ldaho Powe/s annual energy savings
combined with NEEA estimated annua! energy savings increased by 4 percent over
2015 energy savings-enough energy to supply electricity to more than 14,000 average
homes a year. DSM 2016 Annual Report at 1.
6. On a system-wide basis, ldaho Power achieved 170,792 megawatt-hours
("MWh") of incremental annual energy efficiency savings in 2016, including the
estimated NEEA market transformation savings. ld. at3. The 2016 savings consisted
of 42,269 MWh from the residential sector, 88,161 MWh from the commercial/industria!
APPLICATION - 3
sector, 15,747 MWh from the irrigation sector, and an estimated 24,616 MWh of energy
efficiency market transformation savings through NEEA initiatives. DSM 2016 Annual
Report at 1-4. The lndustrial Projects (formerly Custom Efficiency) program contributed
33 percent of Idaho Powe/s direct program savings, while the residential sector Energy
Efficient Lighting and Educational Distributions programs contributed 86 percent of the
residential savings. ld. at 4.
7. ldaho Powe/s 2016 energy savings exceeded the annual savings target
identified in ldaho Powe/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 Rider was implemented. ldaho Power contracts 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 and does not consider the
achievable potential as a ceiling limiting energy efficiency acquisition. Aschenbrenner
Testimony at 9.
8. ldaho Power successfully operated all three of its demand response
programs in 2016. From an enrolled capacity of 392 megawatts ("MW"), the total actual
demand reduction from the Company's demand response programs was 378 MW. ld.
at7.
III. 2016 DSM NON.LABOR EXPENSES AND ADJUSTMENTS
9. Funding for ldaho DSM programs in 2016 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, Idaho demand response program
incentives are included in base rates and tracked annually through the PCA. Energy
APPLICATION - 4
efficiency and demand response-related expenses not funded through the Rider are
included as part of ldaho Powe/s ongoing operations and maintenance ("O&M') costs.
10. ln 2016, the Company's tota! system-wide expenditures on DSM-related
activities totaled $42,763,464. DSM 2016 Annua! Report, Appendix 2 at 174. 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 $40,242,182 were prudently incurred in 2016
($31,321,862 in Rider expenses, $7,059,420 in demand response program incentives,
and $1,860,901 of incremental DSM labor expenses incuned between 2011 and 2016
that have not yet received a prudence determination). A summary of 2016 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 2016 Annual Report. The Company requests that the Commission reflect
the following adjustments in its records:
a. Current Year-End Adiustments. ldaho Power discovered three
incorrect accounting entries that occurred in 2016: (1) $+,200 related to the Residential
Energy Efficiency Education lnitiative was charged to the Rider but should have been
charged to O&M, (2) $SO,SZ1 related to the Weatherization Solutions for Eligible
Customers Program was charged to the Oregon Energy Efficiency Rider but should
have been recorded to the Idaho Rider, and (3) an invoice of $22,022 related to the
Fridge & Freezer Recycling program was charged twice to the program when it should
APPLICATION - 5
have been charged once. These entries were identified after the 2016 accounting
books had closed, but they were conected in2O17. The conected entry results are
included in the 2016 DSM expenses to accurately represent the amount incuned related
to 2016 DSM efforts. Aschenbrenner Testimony al 12-13.
b. 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 annua! 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. 33526. The
Rider account balance at December 31 , 2016, was a positive $10,730,1 51 . ld. at 14.
IV. DSM COST.EFFECTIVENESS AND EVALUATIONS
12. The DSM 2016 Annual Report and accompanying Aschenbrenner
Testimony provide a sufficient basis for the Commission to determine whether ldaho
Powe/s DSM expenses were prudently incuned. These documents set forth the
following in greater detail:
13. Cost-Effectiveness Measurements for Enerov Efficiencv Proorams. ln the
DSM 2016 Annua! 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 2016 Annual Report, Supplement 1,
includes detailed results of the cost-effectiveness tests by program and by measure.
APPLICATION.6
The DSM 2016 Annual Report, Appendix 4 shows the historical TRG and UC results for
each of ldaho Powe/s energy efficiency programs from a program-life perspective.
a. Portfolio. ldaho Power's portfolio of energy efficiency programs is
cost-effective, passing the TRC test, the UC test, and the PCT with ratios of 2.56, 3.58,
and 2.93 respectively. The Company's energy efficiency programs' sector portfolios
were also cost-effective from a TRC test, UC test, and PCT perspective. DSM 2016
Annual Report at 9.
b. Proqram. ln 2016, 1 1 of the 15 energy efficiency programs offered
in ldaho for which the Company calculates cost-effectiveness were cost-effective. The
Home Improvement program, the Fridge and Freezer Recycling program and the
weatherization programs for income-qualified customers were not cost-effective from
either the TRC or the UC test perspective, or both. Aschenbrenner Testimony at 19-20.
ldaho Powe/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 works with the Energy Efficiency Advisory Group ('EEAG") to
get input on a continued offering for Commission approval. ld. at 14-15.
. Home lmprovement Program. After careful consideration, the Company
plans to discontinue the Home lmprovement program in the summer of 2017. The
Home Improvement program had a benefiUcost ratio below 1.0 from the TRC and PCT
perspectives in 2016. This is the second consecutive year that the program had a
benefiUcost ratio below 1.0 from the TRC percpective and the first year the PCT ratio
was less than 1.0. Prior to making a decision to discontinue the prcgram, the Company
discussed its plans with EEAG, performed analyses to determine if modification to the
program would improve the overall cost-effectiveness, and performed additional
APPLICATION - 7
analyses to determine if the program cost-effectiveness would improve when the 2015
DSM altemate costs are used in 2017. The Company plans to discontinue the Home
lmprovement program beginning on June 30, 2017. For further detail, refer to
Aschenbrenner Testimony at 25-31 .
o Fridge and Freezer Recycling Program. The Fridge and Freezer
Recycling program experienced an unplanned program suspension as a result of the
Company's contractor abruptly going out of business, which impacted the 2016 cost-
effectiveness of the program. The Company is currently evaluating the program and will
discuss its findings with EEAG prior to making any final decision about the continuation
of the program.
c. Measures. Eleven individual measures in various programs are
shown not to be cost-effective from either the UC or TRC perspective. DSM 2016
Annua! Report at26. 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.
AschenbrennerTestimony at20-21; and DSM 2016Annual Report, Supplement 1.
14. Cost-Effectiveness Measurements for Demand Response Proqrams. ln
2016,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 2016, the system-wide cost of operating the three demand
response programs was approximately $9.5 million ($7.S million of incentives and $2
million of program costs). Aschenbrenner Testimony at22. The amounts attributable to
APPLICATION - 8
the ldaho-only jurisdiction were $8.9 million ($Z.t 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 a!!owed, the total costs would have been approximately $12.9 million on a
system-wide basis. /d.
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 Powe/s programs. ln 2016, these independent,
third-party consultants conducted six program impact evaluations and two program
process evaluations. DSM 2016 Annual Report at 29-30; Aschenbrenner Testimony at
33-34. ln 2016, Idaho Power administered surveys on several programs to measure
program satisfaction. Participant surveys were conducted for the Drying Rack Project,
Flex Peak Program, Home Energy Audit, Shade Tree Project, Smart-saver Pledge,
Weatherization Assistance for Qualified Customers, and Weatherization Solutions for
Eligible Customerc. ld. at 34. Copies of these reports can be found in the DSM 2016
Annual Report, Supplement 2. !n addition, ldaho Power conducts annual cost-
effectiveness analyses for each program. Details on cost-effectiveness analysis can be
found in the DSM 2016 Annual Report, Supplement 1.
V. STAKEHOLDER INPUT
16. ldaho Power relies on input from EEAG to provide a customer and public-
interest review of energy efficiency and demand response programs and expenses.
EEAG provides input on enhancing existing DSM programs and on implementing new
DSM programs. Cunently, EEAG consists of 13 members from Idaho Poweds service
area and the Northwest. Members represent a cross section of customers from the
APPLICATION - 9
residential, industrial, commercial, and inigation sectors, as wel! as representatives for
low-income individuals, environmental organizations, state agencies, public utility
commissions, and ldaho Power.
17. ln 2016, the Company held four meetings and two conference calls with
EEAG. During these meetings, Idaho 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 occuning in the region. DSM 2016 Annual Report at
145. The notes from the 2016 EEAG meetings are included in the DSM 2016 Annual
Report, Supplement 2.
VI. 20ll.2016INCREMENTALLABOREXPENSES
18. The Company is seeking a prudence determination on $1,860,901 in
incremental Rider-funded labor expenses above the 2010 baseline that were incuned
as part of the pursuit and acquisition of 943,719 MWh in total DSM energy efficiency
savings, as well as the provision of demand response capacity between 2011 and 2016.
The Company believes that the labor expenses were prudently incurred and necessary
to acquire the total energy savings and demand response capacity achieved in each of
those years. Further, these labor expenses were included in the DSM portfolios cost-
effectiveness tests in each of those years. The direct testimony and exhibits of Connie
Aschenbrenner that accompany this Application explain the Company's incremental
labor request and provide the data necessary to facilitate the Commission's review.
APPLICATION - 1O
VII. COMPLIANCE WITH COMMISSION ORDER NO. 33583
19. ln Order No. 33583, the Commission directed ldaho Power to (1) provide
a proposal for revising its DSM Rider percentage filed with the Commission by Friday,
December 30, 2016, (2) work with Staff to determine how to obtain the most usable data
from the participating Community Action Partnership agencies, and (3) work with Staff
and EEAG to develop a DSM portfolio that considers more residential behavioral
programs and small-medium business efficiency programs. On pages 52-54 of her
direct testimony, Company witness Connie Aschenbrenner describes the Company's
collaborative efforts to satisfy each of the Commission's directives.
VIII. MODIFIED PROCEDURE
20. ldaho Power believes that a technica! 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
testimony in support of this Application in a technical hearing if the Commission
determines such a hearing is required.
IX. GOMMUNICATIONS AND SERVICE OF PLEADINGS
21. 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 rd strom @ ida hopowe r. co m
dockets@ idahopower. com
Connie Aschenbrenner
ldaho Power Company
P.O. Box 70
Boise, ldaho 83707
caschenbrenner@idahooower. com
APPLICATION - 11
X. REQUEST FOR RELIEF
22. As described in greater detail above, ldaho Power respectfully requests
that the Commission issue an order designating Idaho Powe/s DSM expenses of
$40,242,182 including expenditures of $31,321,862 in Rider funds, $7,059,420 of
demand response program incentives included in base rates and tracked annually
through the PCA, and $1,860,901 of incremental DSM labor expenses incurred from
2011 through 2016 that have notyet received a prudenoe determination, as prudently
incuned DSM expenses.
DATED at Boise, ldaho, this 15h day of March 2017.
D.
Attomey for Idaho Power Company
APPLICATION - 12
BEFORE THE
IDAHO PUBLIG UTILITIES COMMISSION
cAsE NO. IPC-E-17-03
IDAHO POWER COMPANY
ATTACHMENT 1
D EMAAID-S'D E MAN AG EM ENT
2016 ANNUAL REPORT