20211227Final_Order_No_35270.pdf

ORDER NO. 35270 1

Office of the Secretary
Service Date
December 27, 2021

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On March 15, 2021, Idaho Power Company (“Company”) applied to the Commission
for an order finding that the Company’s demand-side management (“DSM”) expenses for 2020
were prudently incurred. The Company requested the Commission find the Company prudently
incurred $47,010,777 in deferred costs for its 2020 DSM program—consisting of $40,477,043 in
Idaho Energy Efficiency Rider (“EE Rider”) expenses, and $6,533,734 in demand response (“DR”)
program incentives. The Application summarized the Company’s 2020 DSM program
performance, expenses, adjustments, cost effectiveness, evaluations of the program, and input
from stakeholders. The Company requested its Application be processed via modified procedure.
On April 6, 2021, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 34986. City of Boise City (“Boise City”), the Industrial
Customers of Idaho Power, and the Idaho Conservation League petitioned to intervene, and the
Commission granted their petitions. Order Nos. 35026, 35043, and 35044.
On June 8, 2021, the Commission issued a Notice of Modified Procedure establishing
public comment and Company reply deadlines. Order No. 35069. Staff and Boise City filed
comments. The Company filed a reply. No other comments were received.
Having reviewed the record in this case, the Commission now issues this final Order.
BACKGROUND
“DSM” generally refers to utility activities and programs that encourage customers
(i.e., on the “demand-side” as opposed to the “generation side”) to use less overall energy or use
less energy during peak usage hours. 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 Idaho to develop and implement DSM programs in order to promote energy efficiency.”
Application at 2 (quoting Order No. 32113 at 8). To further the Commission’s stated objectives,
the Company asserted it “implements and manages a wide range of opportunities for its customers
IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR A
DETERMINATION OF 2020 DEMAND-SIDE
MANAGEMENT EXPENSES AS
PRUDENTLY INCURRED
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CASE NO. IPC-E-21-04

ORDER NO. 35270
ORDER NO. 35270 2

to participate in DSM activities, to be informed about energy use, and to use electricity wisely.”
Id. The Commission will allow the utility an opportunity to recover its DSM expenses through
rates if the Commission finds the Company prudently incurred those expenses. 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. See Order No. 29103.
THE APPLICATION
The Company reports it spent $40,477,043 of Idaho EE Rider funds and $6,533,734 on
DR program incentives funded through base rates and tracked annually through the Power Cost
Adjustment mechanism. Application at 1.
The Company reports it saved 180,818 megawatt-hours (“MWh”) from its energy
efficiency programs and an additional 15,991 MWh from energy-efficient market transformation
savings through Northwest Energy Efficiency Alliance (“NEEA”) savings. Id. at 2-3.
The Company reports it achieved a total demand reduction of 336 megawatts (“MW”)
from its DR programs out of an available capacity of 366 MW. Id. at 3.
The Company reports energy savings of 37,302 MWh from the residential sector,
130,633 MWh from the commercial and industrial sector, and 12,884 MWh from the irrigation
sector. Application at 4-5.
The Company’s DSM 2020 Annual Report was included as Attachment 1 to the
Application. Supplement 1 to the DSM 2020 Annual Report shows the results of the cost-
effectiveness tests for each program and Supplement 2 contains program evaluations and customer
surveys and reports. The DSM 2020 Annual Report also describes the Company’s DSM strategies
for 2021.
The Company reports its energy efficiency portfolio achieved a Utility Cost Test
(“UCT”) ratio of 2.71. DSM 2020 Annual Report at 1.
THE COMMENTS
1. Staff Comments
Staff believed the Company’s 2020 DSM programs were well-managed and
recommended the Commission issue an order approving $47,008,618 in 2020 DSM expenses as
prudently incurred. Staff recommended one adjustment to allocate an expense that should have
been partially allocated to the Company’s Oregon customers. The adjustment would decrease the
ORDER NO. 35270 3

Company’s prudency request by $2,159. Staff’s comments focused on (1) financial review; (2)
energy efficiency; (3) NEEA; and (4) demand response.
a. Financial Review
Staff believed the Company’s DSM expenses were well-documented, and the proper
controls were in place and adjusted as needed to regulate payment of incentives and other costs.
Staff recommended that the Commission find that the Company prudently incurred of $40,474,884
in EE Rider expenses and $6,533,734 in DR incentives. Staff discussed the adjustments made by
the Company prior to the filing and the Oregon allocation adjustment mentioned above. The
Company also included the disallowed 2019 DSM labor expenses of $51,165 which were included
as a negative entry to reflect the Company’s 2020 total EE rider expenses. See Case No. IPC-E-
20-15; Order No. 34874 (on Reconsideration). Combined, the adjustments represented a $64,973
increase in net expenses.
Staff discussed the history of the Company’s DSM labor expense 2% cap. Staff noted
the Company complied with Order No. 34874 issued last year directing the Company to “apply
the 2% cap for DSM labor expense increases to the actual average wage per FTE based on the
prior year’s average wage per FTE.” Staff Comments at 4 quoting Order No. 34874 at 6. Staff
noted the Company’s EE Rider request is $105,369 less than its claimed actual labor expense
because of the cap, however, according to Staff “if the 2% cap were applied to approved labor
expense rather than actual labor expense, the approved 2020 EE Rider labor expense would be
$51,270 less.” Staff Comments at 4. Staff continued to express its concern that applying the 2%
cap to the previous year’s actual wages instead of the Commission approved wages, could allow
the Company to continue to significantly increase its labor expense each year.
b. Energy Efficiency
In early 2020, the Company suspended in-home and on-location work, moved from in-
person to virtual Energy Efficiency Advisory Group (“EEAG”) meetings, postponed public events,
and modified several of its energy efficiency programs to administer them safely. As of April 29,
2021, the Company had five programs that remained suspended to in-home work: (1) Easy
Savings: Low-Income Energy Efficiency Education; (2) Energy House Calls; (3) Home Energy
Audit Program; (4) Multifamily Energy Savings Program; and (5) Weatherization Solutions for
Eligible Customers.
Staff stated that in 2020, 26 of the Company’s 281 individual measures were cost-
ineffective from the UCT perspective. Every measure in the Energy House Calls and Multifamily
ORDER NO. 35270 4

Energy Savings program was cost-ineffective, accounting for 18 measures failing the UCT. The
Company states the cost-ineffective measures resulted from programs incurring administration
costs after in-home activity was suspended early in 2020 because of COVID-19. Four measures
from the Simple Steps, Smart Savings program (“Program”) administered by the Bonneville Power
Administration (“BPA”) were also cost-ineffective from the UCT perspective.
Staff noted the lighting industry has shown significant strides in market adoption and
saturation for energy efficiency measures over the last several years. According to Staff, residential
lighting programs have presented cost-effectiveness issues in recent years due to lower deemed
savings. The Program, Energy-Saving Kits, and Welcome Kits have all been impacted by changes
in lighting savings. Many of the lighting programs offered by the Company are just—or no
longer—cost-effective. Staff believed constant adjustments, new adoptions, and removal of the
various measures offered are necessary. Staff applauded the Company for making necessary
changes to programs offered.
The BPA decided to sunset the Program on September 30, 2020. The Program is
promoted in two areas by the Company: (1) Energy Efficient Lighting program; and (2) the
appliance promotion program. In response to the BPA sunsetting the Program, Staff mentioned
the Company is exploring alternative options for administering a lighting buydown program and a
program for providing incentives for ENERGY STAR appliances. In 2020, the Program accounted
for 38% of the Company’s residential energy efficiency savings.
Staff stated that Custom Projects program, primarily for Commercial and Industrial
customers, reported an increase of 33% in 2020 savings compared to 2019 savings. The 94,007
MWh savings accounted for 48% of the Company’s energy efficiency portfolio savings, while the
measure’s $18.1 million in expenses accounted for 38% of the Company’s DSM expenses. Since
2018, the Custom Projects measures savings have increased 100%, contributing the most savings
of any program to the Company’s overall savings.
In 2020, the Company’s low-income programs remained cost-ineffective. The
Weatherization Solutions for Eligible Customers reported a UCT ratio of 0.13 and Total Resource
Cost (“TRC”) ratio of 0.23.
The Weatherization Assistance for Qualified Customers (“WAQC”), funded through
base rates—not the EE Rider—reported a UCT ratio of 0.2 and TRC ratio of 0.33. Staff noted the
WAQC program did not use all the allocated funds in 2020 and there will be a total of $1,861,402
of available funds for the program in 2021. The Company acknowledged the challenge of
ORDER NO. 35270 5

achieving cost-effective low-income weatherization programs and plans to address this with
stakeholders.
According to Staff, in June of 2020, the Company transitioned the Home Energy
Reports (“HER”) pilot into a full program. The transition resulted in an additional 106,491
treatment customers for the HER program—a 409% increase from the piloted group in 2019.
Similarly, the Company’s cost for the HER program increased 349% during the transition to a full
program. In 2020, the Company’s HER program savings increased 23% from 2019 to 10,428
MWh. The incremental increase in savings resulted in the HER program not being cost-effective
with a 0.64 UCT ratio in 2020. The Company stated this was in part due to the expansion of the
HER program.
In December of 2020, the Company delivered its last Energy-Savings Kit and will no
longer be administering the program due to the future of lighting savings. Similarly, according to
Staff, the Company’s Welcome Kits program experienced issues from a change in lighting savings.
In 2021, due to new Regional Technical Forum (“RTF”) deemed savings for lightbulbs, the kits
will no longer be cost-effective as a standalone item. However, instead of ending the program like
the Energy-Saving Kits, the Company will continue to offer the Welcome Kits as a promotional
item but will no longer conduct a cost-effectiveness test on the program. The Company plans to
claim the savings associated with the Welcome Kits in 2021 under the Educational Distributions
program. The Company estimated that the program will cost $610,605 and projected 22.86 kWh
of energy savings per kit.
Staff agreed the Welcome Kits are a useful “education and marketing” program and
permit the Company to market and promote energy efficiency to the new customers. However,
Staff expressed concern with the future of Welcome Kits because performance will no longer be
evaluated by a cost-effectiveness test, the Company’s plan to continue claiming the savings, and
the lack of clarity regarding how the savings impact on future load growth will impact the
Company’s Integrated Resource Plan (“IRP”). The Company committed to discussing the
Welcome Kits in future EEAG meetings.
c. NEEA
Staff stated that the Company spent $2,649,749—7% of Idaho EE rider funds—on
regional market transformation through NEEA. Staff explained that NEEA claims savings for its
efforts in two areas: (1) efficiency measures; and (2) codes and standards. The Company’s claimed
NEEA savings in 2020 were 2.01 aMW or 17,614 MWh—16,734 MWh of the savings originated
ORDER NO. 35270 6

from the Company’s Idaho service territory. About 75% of the Company’s Idaho clamed NEEA
reported savings—12,577 MWh or 1.44 aMW—originated from codes and standards.
Staff noted that NEEA’s 2020 annual Savings Report reported savings from codes and
standards across the northwest, including savings attributed to states not in the Company’s service
territory and that are duplicative to Idaho codes and standards. Staff expressed its concern with
NEEA’s method for allocating savings and noted the difficulty in identifying the savings in the
NEEA Market Evaluations provided by the Company in the 2020 DSM Annual Report. Staff was
concerned that NEEA claimed savings it was not directly responsible for producing, stating “if
savings from codes and standards are removed, NEEA would not be cost-effective.” Id. at 10. Staff
believed that to support the continued funding of NEEA, an independent Evaluation,
Measurement, and Verification (“EM&V”) should be conducted to (1) clarify the savings NEEA
claims; (2) the allocation of those savings to its member utilities: and (3) the cost-effectiveness of
those savings to the member utilities based on the utilities’ DSM avoided cost.
d. Demand Response
Staff believed the Company’s DR programs were well managed and effective. The
three DR programs (Irrigation Peak Rewards program, A/C Cool Credit program, and Flex Peak
program) incurred $6,533,734 in incentive payments funded through base rates while achieving
336 MW of maximum demand reduction in 2020.
Staff noted that most demand reduction came from the Company’s Irrigation Peak
Rewards program which performed to expectations, achieving a maximum demand reduction of
292 MW, an increase of 14 MW from 2019. The A/C Cool Credit program and Flex Peak program
were impacted in various ways by COVID-19. Due to more customers being at home because of
COVID-19, the Company tried to minimize the impact of the A/C Cool Credit program, this
included reducing its cycling percentage from 55% to 50%. The A/C Cool Credit program
achieved 19 MW of maximum reduction (compared to 24 MW in 2019). The Flex Peak program
achieved 24 MW of demand reduction in 2020 (compared to 36 MW in 2019) with an average
realization of 65% across three demand response events. According to the Company, many
businesses increased their loads in 2020 for many reasons after COVID-19 stay-home orders were
relaxed, including to recoup lost revenues and increasing fresh air flow into buildings, resulting in
greater cooling demands.
Staff stated the Company has made progress and continues to work with Staff to
address the concerns about the Effective Load Carrying Capacity (“ELCC”) outlined in Staff
ORDER NO. 35270 7

Comments in Case No. IPC-E-20-15. Staff noted the Company’s calculation to determine cost-
effectiveness for 2020 used the Value of Demand (“VOD”) calculation that was set in the
settlement agreement in Case No. IPC-E-13-14. However, the Company provided an updated
ELCC calculation that impacted the VOD—which is used as a benchmark to determine the cost-
effectiveness of DR programs. According to Staff, the Company’s change to its ELCC calculation
is an improvement over the previous ELCC calculations because it is based on current data and
the actual availability of DR programs. The updated ELCC calculation looks at the top 100 hours
of actual system peak load over a five-year period (2016-2020) to determine DR program
availability at system peak and resulted in an ELCC of 85% instead of the 93%. The updated ELCC
resulted in a VOD of $18 million compared to a $19.6 million VOD using the ELCC set in Case
No. IPC-E-13-14. Staff believed the updated ELCC calculation is an improvement from the
previous ELCC.
2. Boise City Comments
Boise City commended the Company for its 2020 DSM energy efficiency savings,
noting that it was the 2nd highest annual savings since the Company established its EE Rider. Boise
City’s comments addressed the negative ending balance of the EE Rider and supported appropriate
cost recovery. Boise City also supported any adjustments necessary to fund the EE Rider that
would allow the Company to pursue all cost-effective energy efficiency savings, including by
increasing the EE Rider collection percentage.
Boise City recommended the Commission direct the Company, along with the EEAG,
to seek increased participation and ensure the programs that were suspended because of COVID-
19 are available to residential customers who would have otherwise participated. Boise City noted
the Company’s success in administering cost-effective energy efficiency programs during
COVID-19 but proposed that the Company has an opportunity to achieve increased savings by
working through the backlog of demand for the previously suspended programs.
Boise City also recommended the Company evaluate additional residential energy
efficiency measures which might help the Company better align the DSM offerings with the
opportunities in the 2020 Energy Efficiency Potential Study (“Potential Study”). Boise City stated
that incorporating the results of the Potential Study into the residential DSM program offerings
would ensure future DSM spending is aligned with the Company’s IRP. Boise City cited the
Company’s limited programs aimed at incentivizing residential insulation despite there being
1,358 MWh of energy saving potential. According to Boise City, “[i]nsulation installation,
ORDER NO. 35270 8

behavioral programs, or other measures would encourage a whole-home approach to energy
conservation that empowers customers to take a more active role generating energy savings while
maintaining comfort.” Boise City Comments at 3.
3. Company Reply
The Company replied, noting the undisputed recommendations that the Company be
allowed to recover its prudently incurred 2020 DSM expenses, as modified by the adjustment to
exclude an expense that should have been allocated to Oregon. The Company appreciated Boise
City’s support of potential adjustments to the EE Rider collection percentage but noted its
reservations the timing of such adjustment and suggested it had no near-term plan to seek approval
of a modification. The Company committed to funding all cost-effective energy efficiency
programs regardless of the EE Rider balance.
The Company stated it believed customers benefited from its participation in NEEA
but expressed that it had mentioned similar concerns to Staff’s concerns in a past case, including
its concerns about savings attributed to codes and standards, the allocation method of savings to
customers, and cost effectiveness impacts from declining avoided cost in the current NEEA cycle.
The Company stated it could terminate funding to NEEA during the current cycle (2020-2024) if
concerns about cost effectiveness materialize. The Company supported Staff’s recommendation
that an EM&V be conducted. The Company indicated it would coordinate with Avista where
possible to conduct and co-fund the EM&V. If the Company concludes NEEA is no longer cost-
effective, it will notify the Commission.
COMMISSION DISCUSSION AND FINDINGS
The Company is an electrical corporation as defined by Idaho Code § 61-119 and a
public utility subject to the Commission’s jurisdiction under Idaho Code § 61-129. Based on our
review of the record, the Commission finds that the Company prudently incurred $47,008,618 in
deferred costs for its DSM programs—including $40,474,884 in Idaho EE Rider expenses and
$6,533,734 in DR program incentives.
The Commission appreciates the Company and its EEAG’s efforts to identify, select,
and offer DSM programs that offer value to Idaho customers and increase the DSM savings
available to the Company. DSM benefits depend on constantly evaluating opportunities and
identifying ways to improve available programs. We encourage the Company and EEAG to
continue working together to identify and offer the most cost-effective programs to the Company’s
Idaho customers, including programs identified in the Potential Study.
ORDER NO. 35270 9

Until the Company’s next general rate case, when the Commission can consider the
method for calculating total DSM labor expenses, we direct the Company to continue calculating
“its annual DSM labor expense using a 2% cap applied to the actual average wage per full time
employee (“FTE”) based on the prior year’s average wage per FTE.” See Order No. 34874 at 5.
We find that the Company calculated its 2020 DSM labor expenses correctly according to the
directive in Order No 34874.
The Commission notes Staff’s concern with NEEA claimed energy savings and directs
the Company to conduct an independent EM&V to clarify the NEEA claimed savings. We agree
it is concerning for NEEA to claim savings from electrical codes in jurisdictions outside of Idaho.
We direct the Company to verify the accuracy of these claimed savings through an independent
EM&V. If the savings from interjurisdictional codes and standards cannot be verified, then the
method for claiming NEEA savings should be adjusted to remove non-Idaho electrical code
savings. If NEEA is no longer cost-effective after an independent EM&V is conducted, the
Company should reexamine its continued participation. To the extent possible, the Company may
work with other Idaho regulated electric utilities that are conducting a similar EM&V to examine
NEEA claimed savings.
ORDER
IT IS HEREBY ORDERED that the Company’s total 2020 DSM expenditures of
$47,008,618, consisting of $40,474,884 in Idaho Energy Efficiency Tariff Rider expenses and
$6,533,734 in DR program incentives, are approved.
IT IS FURTHER ORDERED that the Company shall conduct an independent EM&V
for NEEA claimed savings to be included in the next DSM filing.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order regarding any matter
decided in this Order. Within seven (7) days after any person has petitioned for reconsideration,
any other person may cross-petition for reconsideration. See Idaho Code § 61-626.

ORDER NO. 35270 10

DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 27th day
of December 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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