20180719Comments.pdf

EDITH PACILLO
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5430
IN THE MATTER OF'IDAHO POWER
COMPANY'S APPLICATION F'OR A
DETERMINATION OB 2OI7 DEMAND.SIDE
MANAGEMENT EXPENSES AS PRUDENTLY
INCURRED
Ii TC E IVED
iiil il,;t. t9 pH 2: t0
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC.E.18-03
COMMENTS OF
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attomey of record, Edith Pacillo, Deputy Attomey General, and in response to the Notice of
Application, Notice of lntervention Deadline and Notice of Modified Procedure issued in Order
No. 34052 on April 30,2018, in Case No. IPC-E-I8-03, submits the following comments.
BACKGROUND
On March 15,2018, Idaho Power Company (the Company) applied for a Commission
order finding that the utility's demand-side management (DSM) expenses for the year 2017 were
prudently incurred. The Company seeks to recover $44,145,316 in deferred costs for its DSM
programs, which includes $37,162,002 in Idaho Energy Efficiency (EE) Rider expenses, and
$6,983,314 in demand response program incentives. DSM generally refers to utility activities
and programs that encourage customers (i.e., on the "demand-side" as opposed to the "generation
1STAFF COMMENTS JULY 19,2018
Uf a l1\i.rulUrl
side") to use less overall energy or use less energy during peak usage hours. The Commission
will allow the utility an opportunity to recover its DSM expenses through rates if the
Commission finds the Company prudently incurred them. However, if the Commission finds the
Company did not prudently incur DSM expenses, then it will not allow the Company to recover
them through rates and the disallowed expenses will be borne by the utility's shareholders and
not by customers.
The Company states its 2018 DSM efforts included Northwest Energy Efficiency
Alliance (NEEA) market transformation activities, energy efficiency programs, demand response
programs, and several educational initiatives. Application at 3. The Company states these
efforts increased the Company's annual energy savings by 12% and exceeded the savings target
specified in the Company's Integrated Resource Plan. Application at2. The Company noted its
energy efficiency programs saved 191,478 megawatt hours (MWh), comprising 65,506 MWh
from the residential sector, 85,425 MWh from the commercial/industrial sector, 16,888 MWh
from the irrigation sector, and about 23,652 MWh from the NEEA initiatives. 1d
The Company funds its Idaho programs through the Idaho Energy Efficiency Rider, base
rates, and the annual Power Cost Adjustment (PCA). Application at 5. It funds its Idaho
demand response incentive payments through base rates and the PCA. Id. With this
Application, the Company asks the Commission to hnd that the Company prudently incurred
$44,145,316 in expenses to develop and run its DSM programs in2017. Id. The Company
states these expenses include $31,162,002 in Idaho Energy Efficiency Rider expenses and
$6,983,314 in demand response program incentive payments. Id. The Company made one
accounting adjustment for 2017 of $89,304 relating to labor expenses not recorded as part of the
Rider expense prior to disclosure of the 2017 accounting books. Id. at 6. The Company made
five adjustments for 2016, including a decrease of $56,571 related to the Weatherization
Solutions for Eligible Customers Program and four other increases totaling $43,185. Id.
The Company's Application describes the Company's evaluation of its DSM programs
and whether they were cost-effective in20l7. Id. at7. The DSM Report discusses the cost-
effectiveness of the Company's DSM programs and energy savings measures. Id. ln support of
its Application, the Company submitted prefiled testimony of Connie Aschenbrenner, Regulatory
Analyst, an annual DSM report, the results of its cost-effectiveness analysis, and the third-party
program evaluation reports. 1d
2STAFF COMMENTS JULY 19,2OI8
The Company explains it used the following benefit/cost tests to determine the cost-
effectiveness of its energy efficiency programs and measures: (1) the total resource cost test
(TRC); (2) the utility cost test (UCT); and (3) the participant cost test (PCT).t Id. The Company
reports that in 2017 its overall energy efficiency portfolio was cost-effective, passing the TRC,
UCT, and PCT, with ratios of 2.50,2.75, and 3.67, respectively. Id. Of the Company's l6 Idaho
energy efficiency programs, 11 programs passed the TRC and UCT. Aschenbrenner Direct
Testimony at22. Further, all energy efficiency programs with customer costs passed the PCT
with the exception of the Home Improvement Program which was discontinued on June 30,
2017. Application at 8. Due to a lack of cost-effectiveness, the Fridge and Freezer Recycling
Program ended on December 31, 2017. Application at 8. The Heating & Cooling Efficiency
Program and the Home Improvement Program had a benefit/cost ratio of less than 1.0 for the
TRC and PCT, but both had a ratio above 1.0 for the UCT. /d. Although they are not cost-
effective, Idaho Power intends to continue to work towards greater cost-effectiveness for the
Weatherization Assistance for Qualified Customers Program and Weatherization Solutions for
Eligible Customers Program, because they offer benefits that are difficult to quantify. Id.
When assessing the cost-effectiveness of its demand response programs, the Company
did not calculate a benefit/cost ratio. Id. at9. Rather, the Company determined the cost-
effectiveness of its demand response programs based on the $16.7 million demand response
portfolio value specified in Commission Order No. 32923, and estimated that the programs
would have cost approximately 1 1,I million on a system-wide basis and are less than the value
of the demand, calculated to be $19.8 million. 1d
The Company states independent, third-party consultants provide impact and process
evaluations to verify that program specifications are met, recommend improvements, and
validate program-related energy savings. Id. In20l7, two combined program impact
evaluations and programs process evaluations were completed. Id. at 10.
I The three tests examine a program's cost-effectiveness fiom different perspectives. The TRC compares program
administrator costs and customer costs to the value of the energy and capacity savings, and assesses whether utility
costs will increase. The UCT compares program administrator costs to the value of utility energy and capacity
savings, and assesses whether utility costs will increase. The PCT compares the costs and benefits of an average
customer installing the measure, and assesses whether an average customer will save money over the measure's life.
A program or measure is cost-effective ifit has a benefit/cost ratio above 1.0.
3STAFF COMMENTS JULY 19,2OI8
STAFF ANALYSIS
Staff has reviewed the Company's Application and the accompanying testimony and
exhibits of Connie Aschenbrenner, along with the 2017 Annual DSM Report and additional
information provided by the Company. Based on its review, Staff generally supports the
Company's DSM expenses and programs. In the comments below, Staff addresses the
Company's Energy Efficiency Tariff Rider account balance and expenditures, DSM labor
expenses, and demand response and energy efficiency program management. Staff notes that the
absence of any discussions on other issues presented in the 2017 DSM Annual Report should not
be construed as Staff support for the Company's position on those issues.
Financial Review
Staff performed an extensive review of the Company's DSM expenses, including
reviewing transactions across all of the Company's programs. Expenses were well documented
and controls were designed to eliminate improper payment of incentives. Based upon results of
its review, Staff recommends that the Commission issue an order declaring that the Company
prudently incurred $44,145,316 in DSM-related expenses during 2017. This amount consists of
$37,162,002 in Idaho Energy Efficiency Tariff Rider expenses and $6,983 ,314 in Demand
Response incentives that have been included for recovery in the 2017 Power Cost Adjustment.
Staff calculated the DSM Rider account balance as of December 31, 2017 as follows:
Table 1: Tariff Rider Reconciliation
$10,730,151
39,763,536
50,493,687
(37,162,002)
16,897
(56,57 I )
22,022
4,266
89,304
( 13,000,000)
$407,603
In the Company's previous DSM prudency request, Case No. IPC-E-17-03, the
Commission reduced the Company's request by $16,897 to account for a vehicle charge error
and expenses associated with the Boise Metro Chamber of Commerce and Rotary Club in 2016.
2017 Beginning Rider Balance (Overfunded)
2017 Funding plus Accrued Interest
Total2017 Funds
2017 Reported Expenses
Prior Year Adjustments
Weatherization Solutions Correction
Fridge and Freezer Recycling Correction
Residential EE Education Correction
Labor Correction
Transfer to PCA (Order No. 33736)
Balance as of December 31,2017
4STAFF COMMENTS JULY I9,2OI8
See Order No. 33908. The Company adjusted its books in2017 as directed in Order No. 33908.
This amount is added back to the Rider in2017 to avoid understating actual 2017 expenses and
reflected in the table above as Prior Year Adjustments.
The Weatherization Solutions Correction accounts for $56,571 that was incorrectly
charged to the Oregon Energy Efficiency Rider in2016 but should have been recorded to the
Idaho Rider. The adjustment was made in 20ll after the Commission already issued a prudence
determination for expenses in2016. This amount is removed from the prudency request and
reflected in Table l.
The Fridge and Freezer Correction is an amount that was incorrectly charged twice to the
Rider's expenses in2016. The adjustment correcting the error was made during 2017. This
amount is added back to the Rider to avoid understating the program's 2017 expenses.
The Residential EE Education Correction amount was incorrectly charged to the Rider in
2016, when it should have been charged to non-Rider operations and maintenance expense. The
correction was made during 2017, and thus is added back to the Rider to avoid understating
expenses.
In Case No. IPC-E-16-33, which was initiated after last year's DSM prudency request to
address the continual over-funding of the Tariff Rider, the Commission ordered the refund of
$13 million in previously collected Rider funds to customers through the Company's annual
PCA mechanism. See Order No. 33736. This amount reduces the Tariff Rider balance as
reflected in Table No. 1.
DSM Labor Expenses
In Order No. 33908, the Commission adopted a process for DSM labor expense that
attempted to remove the examination of incremental labor expense from the DSM prudency case
by allowing the Company "to include actual wage increases up to a2o/o cap in the DSM Rider."
During 2017, the Company classified $89,304 of Rider-funded labor to non-Rider funded O&M
expense because it believed that2017 Rider-funded labor had exceeded the 2%o annual cap
authorized by the Commission. When preparing the current filing, the Company stated that
Rider-funded labor in2017 was below the2o/o cap, thus the Company made an accounting
adjustment in 2018 to reverse the $89,304 that had been initially classified as non-Rider funded
O&M. This adjustment is listed as a Labor Correction in Table I above.
5STAFF COMMENTS JULY 19,2018
In2017, the Company incurred $3,296,704 in Rider-funded labor expense, which is an
increase of 6.44% over 2016labor expense. When calculating the2017 maximum allowable
labor expense, the Company applied the 2o/o cap to the average labor expense per full-time
equivalent employee ("FTE")2 instead of applying it to the 2016 total expense as illustrated in
Table No. 5 of Aschenbrenner's direct testimony and replicated below:
Table No. 2 - Annual Labor
The Company's calculation produces a maximum allowed labor expense for 2017 of
$3,341,600, which is7.9o/o greater than actual labor expense incurred in2016. lf the2o/o cap
were applied to Total Labor in20l6, the maximum allowed labor expense for 2017 would be
$3,159,255 which is $137,449 less than the amount the Company charged to the Rider in20l7.
The Company's calculation is consistent with the methodology used by Staff when
calculating labor adjustments for 201l-2016, however, Staff believes it is inconsistent with the
Commission's intent in Order No. 33908 to cap annual labor expense at2%o. Staff is concerned
that when the 2Yo is applied to the average labor expense per FTE, the Company can increase the
maximum allowed labor expense above 2%by having employees charge additional time to the
Rider, thus increasing the number of FTEs. If the Commission intended for Rider-funded labor
expenses to be cappe d at 2o/o of total labor each year, the Tariff Rider balance should be adjusted
by $137,449 to account for the amount of 2017 labor in excess of the 2Yo cap. The Rider balance
as of December 31 ,2017 would then be $545,052.
Demand Response
Idaho Power manages three demand response programs to curtail load at times when
system capacity is constrained: A/C Cool Credit, Flex Peak, and Irrigation Peak Rewards.
2 The Company calculates the number of FTEs by dividing the total number of hours charged to the Energy
Efficiency Tariff Rider by a "standard" l912 hours.
6
Column 1 2 J 4 5 6
20r6
Baseline
$/FTE
$/FTE plus
Annual2Yo
Increase
Maximum
Allowed
Labor
Expense
Amount
in Excess
of2Yo
capYear Total Labor FTEs
2016
20t7
$ 3,097,309
$ 3,296,704
25.36
26.82 s 124,593 $ 3,341,600 $
$ t22,150
STAFF COMMENTS JULY 19,2018
Together, these programs have enrolled capacity of 394 MW of demand reduction. As a result of
stakeholder workshops and Order No. 32923, these programs are considered cost-effective if
theycostlessthan$l6.Tmillionannually. In20lT,theldahojurisdictionalcostofoperatingthe
three programs was approximately $8.8 million ($7.4 million of incentives and $1.4 million in
other program costs). Aschenbrenner Direct at25. The Company estimates that if the three
programs were dispatched for all of the allowed 60 hours, the total costs would have been
approximately $ 1 1 . 1 million on a system-wide basis. Id. The Company's demand response
programs are well-managed and the Company has become adept at layering in blocks of each
program in combination with each other to smoothly flatten system peaks, rather than cause an
abrupt decline which causes diff,rculty for system operators.
With each new program season, the Company updates the data in its A/C Cool Credit
predictive analytics software to more accurately understand the amount of demand reduction
each demand response event will provide. The Company made several changes to Flex Peak this
year to make it more customer friendly: it created an automatic re-enrollment option for
customers who participate every season, added text messaging as a notification option, and
offered a bill credit option for incentive payments. In Irrigation Peak Rewards, the Company
replaced all EnerNOClM2M communication devices on customer pumps with Company-owned
devices. The Company believes this will lower costs by reducing reliance on contractors for
device management and communication services.
While the Company's demand response programs are a cost-effective resource to meet
system peaks, the size of these program are limited by the terms of the settlement stipulation
approved in Order No. 32923 which stated that the Company did not have an immediate capacity
deficit. The settlement stipulation was based on the 2013Integrated Resource Plan (IRP) and the
order "encourage[d] the Company to continue evaluating opportunities associated with DR
programs on an ongoing basis". Order No. 32923 at 7. IRPs since 2013 have not found near-
term capacity deficits, so the Company has continued to maintain that demand response is not
needed while simultaneously identifying supply-side resources to meet longer term capacity
deficits. Staff is concerned that expanded demand response has been considered after, rather
than alongside, supply-side options for future capacity deficits. Staff believes the Company
should rigorously examine the potential for expanded demand response in its 2019 IRP.
7STAFF COMMENTS JULY T9,2OI8
Energy Efficiency
2017 was a very successful year for the Company's energy efficiency portfolio. The
Company's savings increased 12 percent from 2016, which is its second largest energy savings
since 2002. Most importantly, the Company exceeded its IRP target. Energy savings were 1.3%o
of system sales and the portfolio was cost-effective with a2.75 UCT.
In recent years, the Company launched a very successful Energy-Saving Kits (ESK)
initiative for residential customers, greatly improved its marketing, and expanded its cohort
training programs for commercial customers. While significant progress has been made, other
notable opportunities for expanding programs and marketing also exist. Notwithstanding
program successes, Staff remains concerned that the Company cancelled the cost-effective Home
Improvement Program.
Achievements
The Company has taken a thoughtful approach to the barriers associated with energy
eff,rciency and developed a series of energy-saving kits for several customer segments to make it
very easy for customers to participate in and learn about energy efficiency.
The Company launched a very successful Energy-Saving Kits initiative for its residential
customers through its Educational Distributions program in 2016. ESKs containing LED light
bulbs, faucet aerators, energy efficiency showerheads, and several other measures were mailed to
customers at no charge upon request. The program was a very popular in 2016. In2017,the
Company replaced the standard energy efficient showerheads supplied within each kit with
showerheads that included a thermostatic valve in each energy efficient showerhead, which
increased the savings generated by each kit. In order to reach beyond early adopters, the
Company significantly increased the marketing for this programin2}lT with bill and newspaper
inserts, as well as radio ads. The kits were featured on the Apr1l20l7 Connections cover and the
Company distributed bilingual bookmarks explaining how to order the kits. The Company also
advertised the program by direct mail to between 18,000 and 49,000 customers. Savings for this
program increased from 15 million kWhs to over 21 million kWhs in20l7 and remained cost
effective with a 3.02UCT.
Building on the success of the residential ESKs, the Company developed energy-saving
kits for small commercial customers. This program will launch in 2018 and kits will be tailored
for three types of small commercial customers: restaurants, retail, and office spaces. Similar to
8STAFF COMMENTS JULY I9,2OI8
the residential ESKs, the commercial kits will be mailed upon request, but the Company will also
offering in-person delivery by Idaho Power Staff. In-person delivery could be an opportunity for
Idaho Power Staff to help deliver additional energy effrciency programs to this hard to reach
customer segment.
The Company's Student Energy Efficiency Kit distribution was also very successful.
This program provided energy efficiency education curriculum to fourth, fifth, and sixth grade
classes and delivered almost 9,000 kits to students in 112 schools in the Company's service
territory. While the Company only claimed savings of about 2,000 kWh for the measures in the
kits and did not claim other savings possibly driven by the curriculum, the program implementer
believes behavioral savings could be as high as 2.5 million kwh.
Educators and students were very pleased with the program. One hundred percent of
teachers who completed surveys would recommend the program to their colleagues and conduct
the program again. Sixty-seven percent of student survey respondents said their family changed
how they used energy as a result ofthe program and parents responded that the "program was
easy to use, they would like to see it continue in local schools, and they would continue to use kit
items at home after completion of the program." DSM Report, page 55. Staff supports the
Company's efforts to deepen the understanding of energy efficiency among its customers by
educating students.
Beyond mailing kits, the Company also launched Home Energy Reports through its
Educational Distributions. The program launched in2017, but savings will not be claimed or
reported until a full year of the program has elapsed in 2018. Staff supports the Company's
movement towards behavioral energy efficiency programs.
The Company's long standing residential Energy Efficient Lighting program increased
savings in 2017, climbing 79 percent from the previous year to nearly 37 million kWh. This
program alone provided almost a quarter of the Company's total portfolio savings. This program
provides incentives directly to manufacturers and retailers, which result in discounted prices for
customers. The number of bulbs incented through this program increased20% from 2016 to
2017 as more customers adopted the technology as a result of availability and declining costs.
One of the Company's newer programs, the Multifamily Energy Savings Program had a
successful second year in 2017. The program provides free, direct install energy saving
measures to the hard-to-reach multi-family housing sector. The program completed three
projects in20l6 and 12 projects (totaling 687 apartments) in 2017. Each apartment unit received
STAFF COMMENTS 9 JULY 19, 2018
LEDs, high efficiency showerheads, kitchen and bathroom faucet aerators, and water heater pipe
insulation, installed by a contractor.
Staff supports the expansion of this program because it is cost-effective and reaches a
potentially large and under-served customer segment. However, Staff is concerned that the
marketing efforts for this program are limited. The Company launched a new webpage for the
Multifamily Energy Savings Program and conducted outreach with brochures and at community
events, but the webpage only received about 350 unique visits during the year and the Company
mailed only l5 brochures. After two years, Staff believes the Company has sufficient experience
implementing this program to broadly advertise it.
In addition to its residential programs, the Company's Commercial and Industrial (C&f
Energy Efficiency Program had another impressive year, saving over 85 million kWh. Within
this program, the Company provides incentives for large custom projects, smaller customer
projects (under its "streamlined" custom offering), new construction, and retrofits. Custom
projects are long, complex, and can take years to complete. Despite the long timeline, the
Company completed 170 projects in20l7 for over 44 million kWh of savings and received 176
applications for future projects, which has the potential for 48 million kWh of future savings.
Staff recognizes the Company's continuing efforts to stock the pipeline with projects.
Within the C&I Program, the Company continued its successful cohort training. In2017,
the Company launched the first full year of the Continuous Energy Improvement Cohort for
Schools. Schools often have difficulty funding capital improvements, so these programs help
participants identify low cost or no-cost operational improvements by training facility operators
in energy management strategies. In addition to driving operational savings, these programs also
generate demand for capital projects that can be incented through the Company's custom or
retrofit incentives. The Company is adjusting its approach to some aspects of the school cohort
to ensure that people with the authority to make operational and budget decisions are sufficiently
involved. Staff appreciates the Company's efforts to work with schools and other cost-
constrained large electricity customers to find options for improving energy efficiency.
Despite these successes, the Company was foreed to cancel its residential Fridge and
Freezer Recycling Program. Staff supports this decision because the program did not pass the
UCT and the Company had already discussed and implemented adjustments to make the
program cost-effective in cooperation with the Energy Efficiency Advisory Group (EEAG).
STAFF COMMENTS l0 JULY 19,2OI8
Staff appreciates the Company's frequent and clear communication about the status and
challenges facing this program.
Value of Deferred Transmission and Distribution
In its IPC-E-17-03 comments, Staff raised concern with the Company's use of a 7-year
deferred investment stream for transmission and distribution benefits provided by energy
efficiency. Idaho Power discussed this issue with parties at the EEAG February 8,2018 meeting
and committed to using a2U-year analysis in the upcoming 2019 IRP process. Staff appreciates
this and believes it fulfills the directive in Order No. 33908. The Company is also working with
the Northwest Power and Conservation Council to establish a regional methodology for
determining the value of deferred transmission and distribution provided by energy efficiency
and will keep the EEAG apprised of its progress.
Opportunities for Improvement
Although 2017 was generally a successful year for the Company's DSM programs, there
are several areas of concern. The most glaring was the decision to discontinue the Home
Improvement Program in June 2017 despite the fact that it was clearly cost-effective from a
resource perspective with a UCT of 2.54 in both 2016 and2017. This program provided 500,000
kWh of savings in2016 and almost as many savings in2017, even though it only operated for
six months in that year. Staff continues to disagree with the decision to end a cost-effective
program.
In addition to ending a cost-effective program, the Company has not implemented a
program specifically designed for small business customers. This customer segment is often
difficult to reach because they often have limited financial and staff resources to research and
participate in energy efficiency programs. However, both Avista and PacifiCorp have
implemented cost-effective direct install programs for small business customers. When
questioned by the EEAG about the absence of a similar program in its service territory, Idaho
Power maintains that the menu retrofit portion of its C&I Efficiency program targets small
business customers. Staff disagrees-that program offering is for all C&I customers, it is not
designed to overcome barriers specific to small business customers. Staff recommends that the
Company examine program design options similar to what Avista and PacifiCorp have
implemented.
STAFF COMMENTS l1 JULY 19,2OI8
Lastly, Staff is concerned that the Company's efficiency programs will be very
negatively impacted when Phase 2 of the Energy Independence and Security Act (EISA) code -
which increases the efficiency of many lightbulbs by 60 or 70 percent - becomes effective in
2020. Because LED lighting has historically been such a large portion of the Company's energy
efficiency savings over the past few years (up to 90Yo of the Company's residential program
savings come from lighting), Staff recommends the Company work with the EEAG to ensure
that program savings remain healthy beyond 2020. Staff recognizes that customers will continue
to benefit from the resource savings provided by efficient lighting after 2020 because energy
savings will be in code rather than in utility programs. However, Staff believes it is incumbent
on the utility to continue pursuing the significant energy savings potential that will continue to
exist into the 2020s due to the high penetration of remaining installed incandescent and halogen
lighting as well remaining savings potential in underserved markets such as rural, low-income,
and elderly customers.
Staff notes that the Home Improvement Program is one of the few programs that does not
derive most of its savings from lighting. As lighting savings become more difficult to acquire
after 2020, the insulation and window measures cancelled by Idaho Power in the Home
Improvement Program are exactly the kind of measures that will become more important.
Evaluation Schedule
Energy efficiency programs are evaluated using impact and process evaluations. Impact
evaluations measure savings and process evaluations examine the program delivery methods.
According to industry standards, the savings produced by energy efficiency programs should be
evaluated every two to three years. Because savings are only verified during impact evaluations,
programs should be subjected to an impact evaluation every two or three years. The Company
has been evaluating its programs every two or three years, but only conducting either an impact
evaluation or a process evaluation in each cycle. This means that program savings are only
evaluated every four to six years rather than every two or three years. Staff believes waiting four
to six years between impact evaluations may not be sufficient to verify savings. Staff proposes
the Company consider a more frequent schedule and follow the industry norm of two to three
years for both impact and process evaluations for each program.
STAFF COMMENTS 12 JULY 19,2OI8
Marketing
The Company's marketing efforts remained very robust in2017. As it has for the past
few years, the Company continued and improved its well-rounded marketing campaign of TV,
radio, print, and social media ads to promote individual programs and energy efficiency in
general. Monthly energy efficiency segments on TV expanded from Boise into Twin Falls in
2018. A new ad campaign was launched featuring local businesses and recognizable local
landscapes that showed how different businesses easily saved money with Idaho Power's
programs. The Company continued to help C&I customers publicize energy efficiency projects
with optional large format checks and the offer to speak at public events. In addition, the
Company added eight customer solution advisors who make out-bound customer service calls to
commercial and irrigation customers on a range of issues, including energy efficiency. Staff
believes this may help create and sustain participation in energy efficiency programs.
Although the Company has maintained and refreshed its marketing campaign, Staff
believes opportunities remain for the Company to tailor its marketing more specifically to
customer segments most likely to take action.
For instance, the third party evaluator believes the Company's Rebate Advantage
program could benefit from micro-targeting ads "towards manufactured home buyers who
bypass dealers and purchase directly via the Internet." DSM Report at 90. This program incents
customers to buy new Energy Star-qualified manufactured homes.
In response to that recommendation, Idaho Power stated that it could not market this
directly to consumers interested in manufactured homes because the program was designed to be
"dealer driven." But the Company's marketing for the program appeared to focus far more on
customers than it did on dealers-375,000 mailers were sent directly to customers, 58,000
customers were reached through a Facebook ad, while dealer support consisted primarily of
visiting some dealerships and providing marketing material as needed. Since the Company is
already marketing the program to customers, Staff recommends that it consider tailoring its
efforts to achieve the micro-targeting proposed by the evaluator.
Staff also believes the Company has a significant opportunity to engage customers in
energy efficiency when they sign up for myAccount. As customers register, the Company can
request permission to email them updates on programs and energy savings news. The benefit of
this type of "permission marketing" is its low cost and the ability to target specific customers for
relevant programs and measures based on their patterns of use, home size, location, climate zone,
STAFF COMMENTS 13 JULY 19,2018
and other indicators. For comparison, banner ads and pop-ups on websites have low click-
through rates and cost more than permission marketing.
Customer Surveys
In20l6, the Company created the "empowered community," which is a self-selected
group of about 1,400 customers who volunteer to answer online surveys from Idaho Power.
Recruiting for the empowered community occurs annually and surveys are sent monthly to test
customer interest in program design and marketing approaches related to a range of topics,
including energy efficiency.
At several EEAG meetings, the Company has provided survey results from the
empowered community as evidence of customer interest in a topic or preference for a particular
outreach approach. Staff does not believe it is reasonable to rely primarily or significantly on the
opinions of a self-selected group of customers in order to ascertain customer preferences because
they do not appear to accurately represent Idaho Power's customers. For example,4l%;o of the
empowered community is made of people who have a college or graduate school education. By
comparison, only about 26oh of ldahoans have a college degree. Since education is associated
with income, Staff is concerned that the empowered community may not reflect the needs or
preferences of Idaho Power's customers as a whole. Staff cautions the Company not to over-
emphasize the results of its empowered community surveys when designing programs for all of
its customers.
RECOMMENDATION
After reviewing the Company's Application, including the accompanying testimony of
Connie Ashenbrenner, the 2017 DSM Annual Report and supplements, and other information
provided, Staff recommends the Commission find that the Company prudently incurred DSM-
related expenditures of $44, 1 45 ,316. This amount consists of $37 ,162,002 in Idaho Energy
Effrciency Tariff Rider expenses and $6,983,314 in demand response program incentives.
However, if the Commission's intent in Order No. 33908 was to implement an annual cap of 2oh
of total labor expense, the above Tariff Rider expenses will need to be reduced by $137,449.
STAFF COMMENTS t4 JULY 19,2018
Respectfully submitted this
Technical Staff: Cassie Koerner
Brad Iverson-Long
i :umisc:comments/ipce I S.3eddeblckyy dsm comments
gY day orJuly 2018.
Deputy Attomey General
STAFF COMMENTS 15 JULY 19,2018
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19th DAY OF JULY 2018, SERVED
THE FOREGOING COMMBNTS OF THE COMMISSION STAFF, IN CASE NO.
IPC-E-I8-03, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWNG:
JULIA A HILTON
REGULATORY DOCKETS
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-mail : [e-mail]
[e-mail]
ERIC L. OLSEN
ECHO HAWK & OLSEN PLLC
505 PERSHING AVE STE 1OO
PO BOX 6l 19
POCATELLO ID 83205
E-mail : [e-mail]
PETER J. RICHARDSON
RICHARDSON ADAMS PLLC
5I5 N 27TH STREET
PO BOX 7218
BOISE TD 83702
E-mail : [e-mail]
BENJAMIN J OTTO
IDAHO CONSERVATION LEAGUE
710 N 6TH STREET
BOISE TD 83702
E-mail : botto@idahoconservation. org
CONNIE ASCHENBRENNER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-mail: [e-mail]
ANTHONY YANKEL
I27OO LAKE AVENUE I-INIT 2505
LAKEWOOD OH 44107
E-mail : [e-mail]
DR DON READING
6070 HILL ROAD
BOISE ID 83703
E-mail : [e-mail]
SECRE
CERTIFICATE OF SERVICE