20180315Application.pdf

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An IDACORP Company
JULIA A. HILTON
Senior Counsel
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March 15,2018
VlA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Case No. IPC-E-18-03
2017 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's Application and attachment (Demand-Side Management 2017
Annual Report and supplements).
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." A disk containing a Word version of Ms. Aschenbrenner's
testimony is enclosed for the Reporter.
lf you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly you
Julia A. Hilton
JAH:csb
Enclosures
1221 W. ldaho St. (83702)
PO. Box 70
Re
Boise, lD 83707
JULIA A. HILTON (lSB No. 7740)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
i h ilton@ idahopower. com
RECEIVED
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ii]A;-IC PUBLI
i t,_iiiElt c0i,4MISSION
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF ]DAHO POWER COMPANY FOR A
DETERMINATION OF 2017 DEMAND-
SIDE MANAGEMENT EXPENSES AS
PRUDENTLY INCURRED.
CASE NO. tPC-E-18-03
APPL!CATION
In accordance with RP 052 and RP 201, et seq., ldaho Power Company ("ldaho
Power" or "Company") hereby (a) respectfully submits its Demand-Side Management
2017 Annual Report ("DSM 2017 Annual Report") and (b) makes application to the ldaho
Public Utilities Commission ("Commission") for an order designating Idaho Power's
expenditures of $37,162,002 in ldaho Energy Efficiency Rider ("Rider") funds and
$6,983,314 of demand response program incentives funded through base rates and
tracked annually through the Power Cost Adjustment ("PCA') mechanism, for a total of
$44,145,316, as prudently incurred demand-side management ("DSM') expenses.
ln support of this Application, ldaho Power represents as follows:
APPLICATION - 1
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I. INTRODUCTION
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. IPC-E-10-09, Order No. 32113 at 8, citing Order Nos. 29784 and 29952. To
further the Commission's objective, ldaho Power informs its customers of a wide range
of opportunities to participate in DSM activities and receive information that allows them
to use electricity wisely. Through DSM programs, ldaho Power seeks to provide
customers with programs and information to help them manage their energy use and to
utilize cost-effective DSM resources to meet the Company's electrical system's energy
and demand needs.
2. For 2017, ldaho Power continued to offer a mature portfolio of DSM
programs, consisting of both energy efficiency programs and demand response
programs. Because of these programs, 2017 was ldaho Power's second largest energy
savings year since 2002. DSM 2017 Annual Report at 1. The total energy savings from
energy efficiency programs was 191,471 megawatt-hours ("MWh'), which is enough to
power nearly 17,000 average homes per year in ldaho Power's service area, representing
a 12 percent increase from the 2016 energy savings. DSM 2017 Annual Report at 1.
From its demand response programs, for 2017, ldaho Power achieved a total demand
reduction of 383 megawatts ("MW') from an available capacity of 394 MW. DSM Annual
Report at 1. These energy savings in 2017 exceeded the annual savings target tor 2017
in ldaho Power's 2017 lntegrated Resource Plan ("!RP"). DSM Annual Report at 1. The
Company's actions in2017, as reflected in the DSM 2017 Annual Report, evidence the
thoughtful work of ldaho Power's employees toward a broad suite of DSM programs and
activities and the judicious expenditure of funds on DSM programs and activities.
APPLICATION - 2
II. CONTENTS OF THE DSM 2017 ANNUAL REPORT
3. ldaho Power's DSM 2017 Annual Report is included as Attachment 1 to this
Application. The DSM 2017 Annual Report satisfies the DSM reporting obligation set
forth in Order No.29419 in Case No. IPC-E-03-19.
4. The DSM 2017 Annual Report consists of the main document (with
appendices) and two supplements. The main document provides information on items
such as DSM program descriptions, program performance, expenditures, and marketing
efforts. Supplement 1: Cost-Effecfiveness ("Supplement 1") to the DSM 2017 Annual
Report shows the results of the cost-effectiveness tests that ldaho Power has applied to
the programs and includes a table that reports expenses by funding source and cost
category. Supplement 2: Evaluation ("Supplement 2") to the DSM 2017 Annual Report
includes copies of ldaho Power's 2017 program evaluations, customer surveys and
reports, evaluations conducted by the Company's third-party contractors, ldaho Power's
evaluation plans, general energy efficiency research, and demand response research,
which are reflective of ldaho Power's continued commitment to its own review as well as
third-party evaluation of programs.
III. 2017 DSM PROGRAM PERFORMANCE
5. ln 2017, ldaho Power offered its customers a mature portfolio of energy
efficiency programs and demand response programs, participated in market
transformation efforts through the Northwest Energy Efficiency Alliance ("NEEA"), and
offered several educational initiatives and other activities. As noted above and explained
in more detail in the Direct Testimony of Connie Aschenbrenner ("Aschenbrenner
Testimony') filed contemporaneously with this Application, Idaho Power's annual energy
savings combined with NEEA estimated annual energy savings increased by 12 percent
APPLICATION - 3
over 2016 energy savings-enough energy to supply electricity to more than 17,000
average homes a year in ldaho Power's service area. DSM 2017 Annual Report at 1.
6. On a system-wide basis, ldaho Power's 191,471 MWh of incremental
annual energy efficiency savings in 2017, including the estimated NEEA market
transformation savings, were comprised of 65,506 MWh from the residential sector,
85,425 MWh from the commercial/industrial sector, and 16,888 MWh from the irrigation
sector, and an estimated 23,652 MWh of energy efficiency market transformation savings
through NEEA initiatives. DSM 2017 Annua! Report at 11. The lndustrial Custom
Projects (formerly Custom Efficiency) program in the lndustrial Energy Efficiency Program
constituted 27 percent of ldaho Power's direct program savings, while the residential
sector Energy Efficient Lighting and Educational Distributions programs constituted 90
percent of the residential savings and 35 percent of Idaho Power's direct program
savings. ld. at5.
7. ldaho Power's 2017 energy savings exceeded the annual savings target
identified in ldaho Power's lRP. DSM Annual Report at 1. 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 lRP 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 10. On a cumulative basis, the Company's energy savings
have exceeded the IRP targets every year since 2002, when the Rider was implemented.
DSM Annual Report at 8.
8. ldaho Power successfully operated all three of its demand response
programs in 2017. From an enrolled capacity of 394 MW, the total actua! demand
reduction from the Company's demand response programs was 383 MW. DSM 2017
APPLICATION - 4
Annual Report at 1 , Aschenbrenner Testimony at 11 . This value represents the maximum
realized, non-coincident load reduction from all three programs.
9. Table 1 on page 5 of the Aschenbrenner Testimony contains a list of ldaho
Power's DSM programs and the 2017 energy savings or demand reduction from each of
the programs. That table is illustrative of the broad suite of programs that Idaho Power
offers as well as the significant savings resulting from those programs.
IV, 2017 DSM EXPENSES AND ADJUSTMENTS
10. Funding for the ldaho DSM programs in2017 came from several sources.
The Idaho Rider funds are collected directly from customers on their monthly bills at a
specified percent of base rate revenues. ln accordance with Order No. 33736 in Case
No. IPC-E-16-33, Idaho Power reduced the ldaho Rider percentage from 4.0 percent to
3.75 percent, effective April 1, 2017. Additionally, ldaho demand response program
incentives are included in base rates and tracked annually through the PCA. Energy
efficiency and demand response-related expenses not funded through the Rider are
included as part of ldaho Power's ongoing operations and maintenance ("O&M') costs.
11. ln 2017, the Company's total system-wide expenditures on DSM-related
activities totaled $47,757,496. DSM 2017 Annual Report at 18, Appendix 2 at 170. 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 $44,145,316 were prudently incurred in 2017 ($37 ,162,002
in Rider expenses and $6,983,314 in demand response program incentives). A summary
of 2017 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.
APPLICATION - 5
12. ldaho Power identified one accounting adjustment for 2017, and five
accounting adjustments included in the 2016 DSM prudence request, which received
prudency determination in Case No. IPC-E-17-03, Order No. 33908, are included as
reversing adjustments for 2017, shown in Exhibit No. 1 to the Aschenbrenner Testimony.
The 2017 adjustment of $89,304 relates to labor expense not recorded as part of the
Rider expenses prior to closure of the 2017 accounting books. The 2016 adjustments
include a decrease of $56,571 (related to the Weatherization Solutions for Eligible
Customers program, which was charged to the Oregon energy efficiency rider in 2016 but
should have been recorded to the ldaho Rider) and four smaller separate increases
aggregating to $43,185. The adjustment and correcting reversals are included in the
2017 DSM expenses to accurately represent the amount incurred related to 2017 DSM
efforts. Aschenbrenner Testimony at 14-16.
13. 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
annual 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. ln Order No. 33736 in Case No.
IPC-E-16-33, the Commission directed ldaho Power to refund $13 million of previously
collected Rider funds with the 201712018 PCA mechanism, effective June 1,2017, and
eliminate the annual transfer of Rider funds through the PCA that had been approved in
Order No. 33526. ldaho Power has effected both actions, and at December 31, 2017 ,
the Rider account balance was a positive $407,603, compared with a Rider balance of
$10,730,151 at December 31, 2016. Aschenbrenner Testimony at 17 .
APPLICATION - 6
V. DSM PROGRAM COST.EFFECTIVENESS AND EVALUATIONS
14. The DSM 2017 Annual Report and accompanying Aschenbrenner
Testimony provide a sufficient basis for the Commission to determine whether ldaho
Power's DSM expenses were prudently incurred.
15. For purposes of calculating cost-effectiveness, the DSM 2017 Annual
Report uses the benefiUcost methodologies used in previous DSM annual reports,
including the Total Resource Cost ("TRC") test, the Utility Cost ("UC") test, and the
Participant Cost Test ("PCT"). ldaho Power calculates cost-effectiveness from the TRC,
UC, and PCT perspectives at the program level, except for those programs with no
customer costs, in which case the PCT is not applicable. ldaho Power's goal is to have
all programs achieve benefiUcost ratios of 1.0 or greater for the TRC test, the UC test,
and PCT at the program and measure level where appropriate. Aschenbrenner
Testimony at 17. 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 17-18.
16. The DSM 2017 Annual Report, Supplement 1, includes detailed results of
the cost-effectiveness tests by program and by measure. The DSM 2017 Annual Report,
Appendix 4, shows the historical TRC and UC results for each of ldaho Power's energy
efficiency programs from a program-life perspective. ldaho Power's cost-effectiveness
test results for 2017 energy efficiency programs are summarized as follows:
a. Portfolio Basis. On a portfolio basis, ldaho Power's energy efficiency
programs are cost-effective, passing the TRC test, the UC test, and the PCT with ratios
of 2.50, 2.75, and 3.67, respectively. Aschenbrenner Testimony at 22, Table 4. The
Company's energy efficiency programs' customer sector portfolios were also
APPLICATION - 7
cost-effective from a TRC test, UC test, and PCT perspective. Aschenbrenner Testimony
at22, Table 4.
b. Proqram Basis. On an individual program basis, in 2017, 11 of the
16 energy efficiency programs offered in ldaho for which the Company calculates cost-
effectiveness were cost-effective under both the TRC and UC tests. Of the five programs
that did not pass at least one of the tests, the Weatherization Assistance for Qualified
Customers and Weatherization Solutions for Eligible Customers programs failed to
achieve a benefiUcost ratio of greater than 1.0 for both the TRC test and UC test; the
Fridge and Freezer Recycling Program had a benefiUcost ratio of less than 1.0 for the UC
test but greater than 1.0 for the TRC test; the Heating & Cooling Efficiency Program had
a benefiUcost ratio of greater than 1.0 for the UC test and PCT, but less than 1.0 for the
TRC test; and the Home lmprovement Program had a benefit cost ratio of greater than
1 .0 for the UC test, but less than 1 .0 for the TRC test and PCT. Aschenbrenner Testimony
at 23. The Home lmprovement Program had a benefiUcost ratio of 2.54 under the UC
test, 0.41 forthe TRC test, and 0.70 forthe PCT in 2017, and on June 30,2017, the
Company discontinued the Home lmprovement Program, in accordance with the results
of Case No. !PC-E-17-03. Aschenbrenner Testimony at 32. Due to a lack of cost-
effectiveness, the Fridge and Freezer Recycling Program ended on December 31 ,2017,
and ldaho Power has re-directed customers to an unaffiliated website to identify recycling
centers in their area. For the other three programs that were not cost-effective under the
benefiUcost ratios, as explained in pages 25-31 of the Aschenbrenner Testimony, some
of the programs offer other benefits that are difficult to quantify, and ldaho Power intends
to continue the programs in 2018 and work with stakeholders and seek to adjust the
programs in an effort to make them more cost-effective.
APPLICATION - 8
c. Measures Basis. ln 2017, ldaho Power evaluated the benefits and
costs of 268 measures from both the TRC rest and UC test perspective. Aschenbrenner
Testimony at 23. Of those measures, 37 individual measures in various programs are
shown not to be cost-effective from either the UC test or TRC test perspective. DSM
2017 Annual Report, Supplement 1. 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 at24; and DSM 2017 Annual Report, Supplement 1.
17. For 2017, 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 not currently calculated for
the three demand response programs, in 2017, the system-wide cost of operating the
three demand response programs was approximately $8.8 million ($7.q million of
incentives and $1.4 million of other costs). Aschenbrenner Testimony al 25. The
amounts attributable to the Idaho-only jurisdiction were $8.3 million ($Z.O million of
incentives and $1.3 million of other costs). ld. ldaho Power estimates that if the three
programs were dispatched for the full 60 hours allowed, the total costs would have been
approximately $11.1 million on a system-wide basis. ld. The 2017 total program costs
are less than the value of demand, calculated in the 2017 IRP to be $19.8 million. /d.
18. Proqram Evaluations. ln addition to the annual cost-effectiveness analysis
that the Company conducts for each program, the results of which are summarized in
Supplement 2 to the DSM 2017 Annual Report, the Company retains independent, third-
party consultants to provide impact and process evaluations to verify that program
specifications are met, provide viable recommendations for program improvement, and
APPLICATION - 9
validate energy savings estimates achieved through ldaho Power's programs. ln 2017,
these independent, third-party consultants conducted two combined program impact
evaluations and program process evaluations. Aschenbrenner Testimony at 34. ln2017 ,
ldaho Power also administered surveys on several programs to measure program
satisfaction. Copies of the reports for evaluations and studies can be found in the DSM
2017 Annua! Report, Supplement 2.
VI. STAKEHOLDER INPUT
19. ldaho Power relies on input from the EEAG to provide a customer and
public-interest review of energy efficiency and demand response programs and
expenses. The EEAG provides input on enhancing existing DSM programs and on
implementing new DSM programs. Currently, the EEAG consists of members
representing a cross section of customers from the residential, industrial, commercial,
and irrigation sectors, as well as representatives for low-income individuals,
environmental organizations, state agencies, public utility commissions, and ldaho
Power.
20. ln 2017, the Company held four meetings with the EEAG. During these
meetings, ldaho Power requested and incorporated feedback from EEAG members 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 occurring in the region. DSM 2017 Annual Report at 13. Notes
from the 2017 EEAG meetings are included in the DSM 2017 Annual Report, Supplement
2.
APPLICATION - 1O
VII. 2017 INCREMENTAL RIDER.FUNDED LABOR EXPENSES
21. On page 6 of Order No. 33908, the Commission found it reasonable to
include actual Rider-funded wage increases up to an annual 2 percent cap in the Rider
expenses. The Commission also indicated that DSM-related labor would no longer be
examined in DSM cases; rather, the base amount and annual cap would be reset in
general rate cases. The Aschenbrenner Testimony, pages 16; 40-41, explains the
Company's methodology for determining the labor-related expenses.
VIII. COMPLIANCE WITH 2017 COMMISSION ORDERS
22. ln Order No. 33736, the Commission directed ldaho Power to (1) reduce
the Rider percentage from 4.00 percent to 3.75 percent, effective April 1 ,2017; (2) refund
$13 million of previously collected Rider funds with the 201712018 PCA mechanism,
effective June 1,2017; and (3) eliminate the annual transfer of approximately $4 million
of Rider funds through the PCA. As indicated on page 39 of the Aschenbrenner
Testimony, the Company complied with each of the Commission's foregoing directives
for 2017.
23. On page 42 of the Aschenbrenner Testimony, Company witness Connie
Aschenbrenner describes the actions the Company has taken in response to the directive
in Order No. 33908, which required that the Company address with the EEAG whether it
should use a 7- or 20-year deferred investment stream when quantifying the value of
deferred transm ission and d istribution i nvestments.
IX. MODIFIED PROCEDURE
24. ldaho Power believes that a technical 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 seq. ldaho Power has, however, contemporaneously filed the Aschenbrenner
APPLICATION - 11
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.
X. COMMUNICATIONS AND SERVICE OF PLEADINGS
25. Communications and service of pleadings with reference to this Application
should be sent to the following:
Julia A. Hilton
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
i h i lton@ idahopower. com
dockets@ idahopower. com
Connie Aschenbrenner
ldaho Power Company
1221West Idaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
caschen bren ner@idahopower. com
X!. REQUEST FOR RELIEF
26. As described in greater detail above, ldaho Power respectfully requests that
the Commission issue an order designating ldaho Power's DSM expenses of
$44,145,316, including expenditures of $37,162,002 in Rider funds and $6,983,314 of
demand response program incentives included in base rates and tracked annually
through the PCA, as prudently incurred DSM expenses.
DATED at Boise, ldaho, this 1Sth day of March 2018.
ON
Attorney r ldaho Power Company
A.
APPLICATION - 12
BEFORE THE
IDAHO PUBLIG UTILITIES COMMISSION
GASE NO. IPC-E-I8-03
IDAHO POWER COMPANY
ATTACHMENT 1
D EMAND-S'D E MANAG EM ENT
2017 ANNUAL REPORT