HomeMy WebLinkAbout20170720Comments.pdfPeter J. Richardson ISB # 3195
Gregory M. Adams ISB # 7454
RICHARDSON ADAMS, PLLC
515 N. 27th Street
Boise,Idaho 83702
Telephone: (208) 938-2236
Fax: (208) 938-7904
peter@richardsonadams. com
gre g@richardsonadams. com
TN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR DETERMTNATION OF
2OI 6 DEMAND-SIDE MANAGEMENT
("DSM") EXPENSES AS PRUDENTLY
TNCURRED
nE{1il\"/ED
CASE NO. IPC-8.17.03
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
Attomeys for the Industrial Customers of Idaho Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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COMES NOW, the Industrial Customers of Idaho Power ("ICIP") pursuant to that
Notice Application and Notice of Modified Procedure issued by the Idaho Public Utilities
Commission ("Commission") on March 30,2017, and hereby provides the following comments
on Idaho Power Company's ("Idaho Power" or the "Company") application for approval of
prudently incurred 2016 demand-side management ("DSM") expenses. On March 15,2017,
Idaho Power filed its Application for an order designating 940,242,182 in demand-side expenses,
including $3 I ,321,862 in Idaho Energy Efficiency Rider ("Rider") expenses and $7,059 ,420 in
demand response program expenses as prudently incurred. Also included was a request by ldaho
Power for a prudency determination of $1,860,901 in incremental DSM labor expenses incurred
for the 2011 through2016 period. If the Commission finds the DSM expenses are prudently
COMMENTS OF THE TNDUSTRIAL CUSTOMERS OF IDAHO POWER
rPC-E-17-11
PAGE I
incurred, it should allow the Company to recover the expenditures in customer's rates. On the
other hand, any imprudently incurred expenses should be disallowed and those costs borne by
the utility's shareholders. However, as discussed below, the Commission does not have
sufficiently reliable information to make those determinations based on Idaho Power's
application.
CONTINUED ICIP SUPPORT OF
COST EFFECTIVE DSM PROGRAMS
The ICIP has historically and consistently supported and encouraged Idaho Power's
energy efficiency ("EE") and peak load reduction ("FlexPeak") programs. The ICIP supports
and encourages continuance of cost effective programs going forward. The Commercial and
Industrial (C/l) conservation programs are not only important to ICIP members, but are also
important to the energy and demand reduction efforts of the Company as a whole and on behalf
of all of its ratepayers.
UPDATE TO COST EFFECTIVE DETERMINATION
ln times of dramatic reductions in energy costs, including natural gas, wholesale electric
markets and historic low debt costs coupled with flat or reduced load growth in energy markets
generally, it is critically important for the Commission to maintain the most up to date inputs into
its determination of the cost effectiveness of new resources. DSM resources are no exception.
Idaho Power's 2016 Demand Side Management Annual Report, dated March2017,
provides the following explanation as to the inputs for determining cost effectiveness:
Since Idaho Power's 2015 IRP was acknowledged by the IPUC and OPUC after the
budgets and goals were set for 2016, the 2013 IRP remains the source of all the financial
assumptions for the cost-effectiveness analysis. ... in the 2013 IRP, the annual avoided
capacity cost is $102 per kilowatt (kW).
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-17-03
PAGE 2
Supplement 1, at page 4.
It is incumbent upon the Commission to insure the integrity of the cost-effective analysis by
requiring the most current and up-to-date inputs are used by the Company. Using out of date
"financial assumptions" calls into question the validity of any prudence review.
In describing the cost-effective inputs for its demand response programs (AC Cool, Flex
Peak and lrrigation Peak Rewards) the Company explains:
As part of the public workshops on Case No. IPC-13-14, Idaho Power and other
stakeholders agreed on a new methodology for valuing demand response. The settlement
agreement, as approved in IPUC Order No. 32923 and OPUC Order No. l3-482, defined
the annual cost of operating the three demand response programs for the maximum
allowable 60 hours to be no more than $16.7 million. This $16.7 million value is the
levelized annual cost of a 170-megawatt (MW) deferred resource over a 20-year life.
And
The annual value calculation will be updated with each IRP based on changes that
include, but are not limited to, need, capital cost, or f,rnancial assumptions.
Id. atpage 3.
Four years ago the stakeholder agreement (a.k.a Settlement Agreement) referenced above
expressed identical values for the levelized annual cost ofthe deferred resource:
The annual value of demand response is equal to the levelized annual cost of the
minimum size deferred resource, measured over a period of 20 years.
Settlement Agreement at page 4, IPC-E-13-14.
The deferred resource was described as follows:
Calculate the avoided cost used for demand response by using the avoided capacity cost
of a 170 MW single cycle combustion turbine (SCCT) multiplied by the effective load
carrying capacity (ELCC) measured over 20 years, plus the corresponding deferred
energy savings for 60 program hours.
And
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
rPC-E-17-03
PAGE 3
As of the date of this Agreement [September 2013], the calculation leads to an annual
value of $16.7 million dollars for the entire DR Program portfolio.
Id. atpage 4.
It appears that none of the inputs to the annual valuation of demand response have been updated
since the initial valuation was calculated four years ago. This is apparently true despite the
provision in the settlement agreement specifically calling for the "annual value calculation [to]
be updated with each IRP based on changes that include, but are not limited to need, capital cost,
or financial assumptions."
Id.atpages4-5.
It appears to be timely for the Commission to initiate a process to update the inputs and
assumptions used to measure cost effectiveness of the Company's demand side programs,
including demand response and energy efficiency measures.
As stated above, the ICIP supports all cost-effective demand side and energy efficiency
measures. However, it appears that the yardsticks for making those determinations have grown
stale. Because of the apparent staleness of the inputs to the cost-effective determinations, the
ICIP is unable to either recommend approval or rejection of Idaho Power's request for a
prudence determination at this time.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-17-03
PAGE 4
RESPECTFULLY SUBMITTED this 20th day of July 2017.
RICHARDSON ADAMS, PLLC
Peter J. Richardson on behalf of
the Industrial Customers of Idaho Power
COMMENTS OF THE TNDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-17-03
PAGE 5
CERTIFICATE OF SERVICE
I hereby certify that on the 20th day of July 2077, copies of the foregoing Comments of
the Industrial Customers of Idaho Power were hand delivered to:
Lisa Nordstrom
Idaho Power Company
1221 West Idaho
Boise,Idaho 83707
lnordstrom@ idahopower. com
dockets@ idahopower. com
Connie Aschenbrenner
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
caschenbrenner@ idahopower. com
Brad Purdy
CAPAI
2019 North lTth Street
Boise,Idaho 83702
bmp urdy 6D, ho trrlalLsa![
Diane Hanian
Commission Secretary
472 W est Washington Street
Boise, Idaho 83702
diane.holt@puc. idaho. gov
Eric Olsen
Idaho Irrigation Pumpers Assn
P.O. Box 6l l9
Pocatello,Idaho 83205
elo@echohawk.com
Anthony Yankel
12700 Lake Avenue, Uni 2505
Lakewood, Ohio 44107
tony@yankel.net
Benjamin Otto
Idaho Conservation League
710 North 6th Street
Boise, Idaho 83702
botto @ idahoconservation. org
Kandi Walters
Administrative Assistant
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
IPC-E-17-03
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