20200313Application.pdf

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LISA D. NORDSTROM
Lead Counsel
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Enclosures
RTCEIVED
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Lisa D. Nordstrom
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March 13,2020
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
11331 W. Chinden Boulevard
Building 8, Suite 201-A
Boise, ldaho 83714
Case No. IPC-E-20-15
201 9 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 (2019 Demand-Side Management report
and supplements).
Also enclosed for filing are an original and eight (8) copies of the Direct Testimony of
Paul Goralski. One copy of the testimony has been designated as the "Reporter's Copy." Adisk
containing a Word version of the testimony is enclosed for the Reporter.
lf you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly yours,
Re
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
LN ord strom @ idah opowe r. com
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Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR A
DETERMINATION OF 2019 DEMAND-
SIDE MANAGEMENT EXPENSES AS
PRUDENTLY INCURRED.
CASE NO. IPC-E-20-15
APPLICATION
ln accordance with RP 052 and RP 201, et seg., ldaho Power Company ("ldaho
Power" or "Company") submits its Demand-Srde Management 2019 Annual Report
('DSM 2019 Annual Report") and makes application to the ldaho Public Utilities
Commission ("Commission") for an order designating ldaho Power's expenditures of
$38,083,244 in ldaho Energy Efficiency Rider ("Rider") funds and $6,996,236 of demand
response program incentives funded through base rates and tracked annually through
the Power Cost Adjustment ("PCA") mechanism, for a total of $45,079,479, as prudently
incurred demand-side management ('DSM') expenses. To reduce duplicative reporting
and consolidate it in the DSM Annual Report, the Company also requests the Commission
APPLICATION - 1
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eliminate the separate, annual Flex Peak Program reporting requirement in Case No.
IPC-E-15-03.
ln support of this Application, ldaho Power represents as follows:
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 2019, 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, the 2019 energy savings represent ldaho
Power's all-time highest annual incremental energy savings achievement since the
establishment of the ldaho Rider in 2002. DSM 2019 Annual Report at 1. The savings
from ldaho Power's energy efficiency programs alone, excluding Northwest Energy
Efficiency Alliance ("NEEA') savings, was 1 84,934 megawatt-hours ("MWh') in 2019 and
158,412 MWh in2018-a 17 percent year-over-year increase. DSM 2019 Annual Report
at 1. From its demand response programs, for 2019, ldaho Power achieved a total
demand reduction of 333 megawatts ("MW") from an available capacity of 397 MW. DSM
2019 Annual Report at 1 . The Company's actions in 2019, as reflected in the DSM 2019
APPLICATION - 2
Annual Report, evidence the thoughtfulwork 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.
II. CONTENTS OF THE DSM 2019 ANNUAL REPORT
3. ldaho Power's DSM 2019 Annual Report is included as Attachment 1 to this
Application. The DSM 2019 Annual Report satisfies the DSM reporting obligation set
forth in Order No.29419 in Case No. IPC-E-03-19.
4. The DSM 2019 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 2019 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 2019 Annual Report
includes copies of ldaho Power's 2019 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. 2019 DSM PROGRAM PERFORMANCE
5. ln 2019, ldaho Power offered its customers a mature portfolio of energy
efficiency programs and demand response programs, participated in market
transformation efforts through NEEA, and offered severaleducational initiatives and other
activities. As noted above and explained in more detail in the Direct Testimony of Pawel
P. Goralski ("Goralski Testimony") filed contemporaneously with this Application, ldaho
APPLICATION - 3
Power's annual energy savings combined with NEEA estimated annual energy savings
increased by 10 percent over 2018 energy savings-enough energy to supply electricity
to almost 18,000 average homes ayeat in ldaho Power's service area. DSM 2019 Annual
Report at 1.
6. On a system-wide basis, ldaho Power's 203,041 MWh of incremental
annual energy efficiency savings in 2019, including the estimated NEEA market
transformation savings, were comprised of 40,380 MWh from the residential sector,
134,435 MWh from the commercial/industrial sector, and 10,118 MWh from the irrigation
sector, and an estimated 18,108 MWhl of energy efficiency market transformation
savings through NEEA initiatives. DSM 2019 Annual Report at 5 and 142. The Custom
Projects option in the Commercial and lndustrial Energy Efficiency Program constituted
38 percent of ldaho Power's direct program savings, while the residential sector Energy
Efficient Lighting and Educational Distributions programs constituted 67 percent of the
residential savings. ld. at 5.
7. ldaho Power successfully operated all three of its demand response
programs in 2019. From an enrolled capacity of 397MW, the total actual demand
reduction from the Company's demand response programs was 333 MW. DSM 2019
Annual Report at 1, Goralski Testimony at 11. This value represents the maximum
realized, non-coincident load reduction from allthree programs.
8. Table 1 on page 5 of the GoralskiTestimony contains a list of ldaho Power's
DSM programs by sector, operational type, and location. That table is illustrative of the
broad suite of programs that ldaho Power offers to its customers in energy efficiency,
demand response, and education. ldaho Power's energy efficiency portfolio was cost-
1 Because ldaho Power will not receive final 2019 savings from NEEA until May 2020, the NEEA-
attributabte savings is an estimate provided to ldaho Power by NEEA.
APPLICATION - 4
effective, resulting in a 2.72 benefiUcost ratio when evaluated from a Utility Cost Test
('UCT") perspective, a2.l2benefiUcost ratio when evaluated from a Total Resource Cost
('TRC') test perspective, and 2.79 benefiUcost ratio when evaluated from a Participant
Cost Test ("PCT") perspective.
IV. 2019 DSM EXPENSES AND ADJUSTMENTS
9. Funding for the ldaho DSM programs in 2019 came from several sources.
The ldaho Rider funds are collected directly from customers on their monthly bills at 2.75
percent of base rate revenues.2 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.
10. ln 2019, the Company's total system-wide expenditures on DSM-related
activities totaled $48,584,696. DSM 2019 Annual Report at 16, Appendix 2 at 160. 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 $45,079,479 were prudently incurred in2019 ($38,083,244
in Rider expenses and $6,996,236 in demand response program incentives). A summary
of 2019 program expenditures by program, customer sector, and funding source for which
the Company is seeking a prudence determination is provided in the Goralski Testimony,
Exhibit No. 1.
11 . ldaho Power identified one accounting adjustment for 2019 shown in Exhibit
No. l totheGoralskiTestimony. The2019 adjustmentof $13,264 relatesto2OlSOregon
activity for the Multifamily Energy Savings Program that was inadvertently charged to the
2 ln accordance with Order No. 34345 in Case No. IPC-E-19-06, ldaho Power reduced the ldaho
Rider percentage from 3.75 percentto 2.75 percent effective June 1 , 2019.
APPLICATION - 5
ldaho Energy Efficiency Rider. ldaho Power made a correcting accounting entry in 2019
to move the charges to the Oregon Energy Efficiency Rider and credit the amount to the
ldaho Energy Efficiency Rider. The reversing entry is excluded from the 2019 DSM
expenses to accurately represent the amount incurred related to 2019 DSM efforts.
Goralski Testimony at 13-14.
V. DSM PROGRAM COST.EFFECTIVENESS AND EVALUATIONS
12. The DSM 2019 Annual Report and accompanying Goralski Testimony
provide a sufficient basis for the Commission to determine whether ldaho Power's DSM
expenses were prudently incurred.
13. For purposes of calculating cost-effectiveness, the DSM 2019 Annual
Report uses the benefiUcost methodologies used in previous DSM annual reports,
including the TRC test, the UCT, and the PCT. ldaho Power calculates cost-effectiveness
from the TRC, UCT, and PCT perspectives at the program level, except for those
programs with no customer costs, in which case the PCT is not applicable. Goralski
Testimony at 18. 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.
14. As directed in Case No. IPC-E-19-11,3 the UCT perspective will be the
primary test for evaluating energy efficiency cost-effectiveness in the 2021 lntegrated
Resource Plan ("!RP") planning cycle. Changes to the cost-effectiveness test for energy
efficiency will be carried out over the 2020 program year to synchronize with the
Company's annual planning cycle. A new DSM Potential Study based on the UCT
perspective is currently underway and is expected to be finalized in the second quarter of
3 ln Final Order No. 34469, the Commission directed ldaho Power use the UCT perspective for
DSM programs in the integrated resource planning context. Order Nos. 34469 at 9 and 34503 at 4.
APPLICATION .6
2020. This timeline provides an opportunity for the Company to engage EEAG in the
review of the impacts to current and potential programs, as well as incorporate EEAG
feedback in developing the underlying energy efficiency assumptions included in the
Potential Study. The Company will also evaluate immediate opportunities to add
measures that are cost-effective under the UCT perspective to existing programs during
2020.
15. The DSM 2019 Annual Report, Supplement 1 , includes detailed results of
the cost-effectiveness tests by program and by measure. The Historical DSM Expense
and Performance report included in Supplement2 shows the historical results from2002-
2019 for each of Idaho Power's energy efficiency programs and the levelized cost per
kilowatt-hours for each program by year. Idaho Power's cost-effectiveness test results
for 2019 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 UCT, the TRC test, and the PCT with ratios of
2.72,2.12, and 2.79, respectively. Goralski Testimony at17, Table 3. The Company's
energy efficiency programs' customer sector portfolios were also cost-effective from a
TRC test, UCT, and PCT perspective. Goralski Testimony at 17, Table 3.
b. Proqram Basis. On an individual program basis, in 2019, 11 of the
16 energy efficiency programs offered in ldaho for which the Company calculates cost-
effectiveness were cost-effective under both the TRC test and UCT. 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 UCT; the Energy
House Calls program had a benefiUcost ratio of less than 1 .0 for the UCT but greater than
1.0 for the TRC test; the Heating & Cooling Efficiency Program had a benefiUcost ratio of
APPLICATION - 7
greater than 1.0 for the UCT and PCT, but less than 1.0 for the TRC test; and the
Residential New Construction Pilot Program had a benefit cost ratio of greater than 1.0
for the UCT and PCT, but less than 1.0 for the TRC test. As explained in pages 20-25 of
the Goralski Testimony, some of the programs offer other benefits that are difficult to
quantify, and ldaho Power intends to continue the programs in 2020 and work with
stakeholders and seek to adjust the programs to make them more cost-effective.
c. Measures Basis. ln 2019, ldaho Power evaluated the benefits and
costs of 285 measures from both the TRC test and UCT perspective. Goralski Testimony
at 18. Of those measures, 52 individual measures in various programs are shown not to
be cost-effective from either the UCT or TRC test perspective. DSM 2019 Annual Report,
Supplement 1.
16. For 2019, Idaho Power determined the cost-effectiveness of its demand
response programs based on the levelized annual cost of a 170 MW deferred resource
over a Z}-year life 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 2019, the
system-wide cost of operating the three demand response programs was approximately
$8.3 million ($7.+ million of incentives and $0.9 million of other costs). Goralski Testimony
at 19. The amounts attributable to the ldaho-only jurisdiction were $7.8 million ($7.0
million of incentives and $0.8 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 $11.5 million on a system-wide basis. ld. The 2019 total
program costs are less than the value of demand, calculated in the 2017 IRP to be $19.8
million. ld. at20.
APPLICATION .8
17. Prooram Evaluations. ln addition to the annual cost-effectiveness analysis
that the Company conducts for each program, the results of which are included in
Supplement 1 to the DSM 2019 Annual Report, the Company solicits and contracts with
independent, third-party consultants to provide program evaluations. Evaluations verify
that program specifications are met, provide viable recommendations for program
improvement, and validate energy savings estimates achieved through ldaho Power's
programs. !n 2019, these independent, third-party consultants conducted two combined
program impact and process evaluations, two program option impact evaluations, two
program summary analyses, a savings estimate analysis, and a demand reduction
analysis. Goralski Testimony at26-27. ln 2019, ldaho Power also administered surveys
on several programs to measure program satisfaction. Copies of these reports for
evaluations and studies, as well as ldaho Power's program evaluation plan for 2020-2021,
can be found in the DSM 2019 Annual Report, Supplement 2.
VI. STAKEHOLDER INPUT
18. ldaho Power relies on input from 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, 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 Idaho Power.
19. ln 2019, the Company held four meetings and one webinar with EEAG.
During these meetings, ldaho Power discussed and requested recommendations on a
broad range of DSM issues and requested feedback on new program ideas and new
measure proposals, marketing methods, and specific measure details.
APPLICATION - 9
VII. FLEX PEAK REPORTING REQUIREMENTS
20. As part of Case No. IPC-E-15-03 where the Company filed to implement a
Company-managed demand response program for commercial and industrial customers,
the Flex Peak Program, the Commission directed the Company to file an end-of-season
report each year within 80 days after the Flex Peak Program season ends for that year
as part of the Order approving the program. Order No. 33292 at 8.
21. Because Supplement 2 of the DSM Annual Report contains reports for all
three of ldaho Power's demand response programs, including the Flex Peak Program
with allthe Commission-ordered metrics, the Company requests to streamline the current
reporting requirements by eliminating the separate annual Flex Peak Program reporting
requirement to be filed 80 days after season end. ldaho Power commits to continue to
report on the Flex Peak Program, and its two other demand response programs, as part
of its annual DSM filing, centralizing all demand response program reporting in a single
case and on a single schedule.
VIII. MODIFIED PROCEDURE
22. 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 seg. ldaho Power has, however, contemporaneously filed the Goralski 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.
APPLICATION - 1O
IX. COMMUNICATIONS AND SERVICE OF PLEADINGS
23. Communications and service of pleadings with reference to this Application
should be sent to the following:
Lisa D. Nordstrom
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
lnordstrom@ida hopower.com
Connie Aschenbrenner
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
casch en b re n ne r@ ida hopowe r. com
dockets@idahopower. com
X. REQUEST FOR RELIEF
24. As described in greater detail above, ldaho Power respectfully requests that
the Commission issue an order designating ldaho Power's DSM expenses of
$45,079,479 as prudently incurred DSM expenses. Additionally, because the Flex Peak
Program information is repeated in the Company's annual DSM filing, the Company
requests to streamline reporting processes by eliminating the separate, annual reporting
requirement in Case No. IPC-E-15-03.
DATED at Boise, ldaho, this 13th day of March 2020.
LISA
Attorney for ldaho Power Company
APPLICATION - 11
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-20-15
IDAHO POWER COMPANY
ATTACHMENT 1
DEMAND-S'D E MANAG EM ENT
2019 ANNUAL REPORT