20210802Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03t2
IDAHO BARNO.99I7
::.I: lii\/i:i;)
'-.-:'. ;.:.,* -'L Pli h: ti+
Street Address for Express Mail:
1 1331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR A
DETERMINATION OF 2O2O DEMAND-SIDE
MANAGEMENT EXPENSES AS PRUDENTLY
INCURRED
CASE NO. IPC-E-21-04
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of record,
Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On March l5,202l,Idaho Power Company ("Company") requested the Commission
determine the Company prudently incurred $47,010,777 in demand-side management ("DSM")
expenses in2020.
On April 6,2021, the Commission issued a Notice of Application and Notice of
Intervention Deadline, setting an April 27,2021, deadline for interested persons to intervene.
Order No. 34986. Boise City, the Industrial Customers of Idaho Power, and the Idaho
Conservation League petitioned to intervene, and the Commission granted their petitions. See
Order Nos. 35026, 35043, 35044.
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STAFF COMMENTS AUGUST 2,2021
The Company reports it spent $40,477,043 of Idaho Energy Efficiency Rider ("EE Rider")
funds and $6,533,734 on demand response program incentives funded through base rates and
tracked annually through the Power Cost Adjustment mechanism.
The Company reports it saved 180,818 MWh from its energy efficiency programs and an
additional 15,991MWh from energy-efficient market transformation savings through Northwest
Energy Efficiency Alliance savings.
The Company reports it achieved a total demand reduction of 336 MW from its demand
response programs out of an available capacity of 366 MW.
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.
The Company's DSM 2020 Annual Report is included as Attachment I to the Application.
Supplement I 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.
STAFF ANALYSIS
Staff believes the Company's programs are generally well-managed and recommends the
Commission issue an order approving $47,008,618 in 2020 expenses as prudently incurred. Staff
reviewed the Company's Application and the accompanying testimony of Pawel Goralaski, the
2020 DSM Annual Report, and additional information provided by the Company. Staff
recommends the Commission make one adjustment to the Company's request, decreasing its
prudency request by $2,159 due to an expense that should have had 5%o allocation to the
Company's Oregon customers.
In the comments below, Staff addresses the Company's EE Rider account, expenditures,
and program management. Staff notes that the absence of discussion on other issues presented in
the2020 DSM Annual Report should not be construed as Staffs support of the Company's
position on those issues.
2STAFF COMMENTS AUGUST 2,2021
2020 Beginning Rider Balance (Underfunded)
2020 Tariff Revenue
Interest on DSM Rider
Total Funds Available
2020 Reported Expenses
Oregon Allocation
Green Power and SBDI adjustments
2019 DSM labor adjustment
2020 Ending Balance (Underfunded)
Financial Review
Staff audited the Company's EE Rider expenses and demand response expenses, which
included a sample of more than 100 transactions across the Company's programs. Expenses
were well-documented, and controls were in place and adjusted as needed to regulate proper
payment of incentives and other costs. Staff recommends that the Commission find that the
Company prudently incurred $47,008,618 in DSM-related expenses for 2020. This total
consists of $40,474,884 in EE Rider expenses and $6,533 ,734 in demand response incentives.
Demand response incentives were included for recovery and audited in the 2020 Power Cost
Adjustment, Case No. IPC-E-21-10. Staff calculated the DSM Rider account balance as of
December 31,2020, in Table No. 1, below:
Table No. l: Tariff Rider Reconciliation
$ (259,880)
s 28,594,651
$ (lo4,o7o)
$ 28,230,701
$ (40,409,911)
$ 2,159
$ (15,967)
$ (51,165)
$ (12,244,183)
During Staff s audit of energy efficiency expenses, the Company identified an expense
that was assigned directly to Idaho that should have had a 5oh allocation to Oregon customers.
Correcting that allocation lowers the Company's Idaho expenses by $2,159. Before filing this
case, the Company also made two adjusting entries, reversing a $57 credit to its Green Power
program and reassigning a $15,910 expense for the Small Business Direct Install program from
the Oregon rider to the Idaho rider. These two adjustments increased expenses by $15,967.
ln20l9, the Commission disallowed $51,165 in the Company's DSM labor expense.
Because the correction occurred in2020 as a negative entry, this amount needs to be added to the
net reported expenses to accurately reflect the Company's2020 total EE Rider expenses.
JSTAFF COMMENTS AUGUST 2,2021
DSM Labor Expense
In Order No. 33908, Case No. IPC-E-I7-03, the Commission ordered a2oh cap on wage
increases charged to the EE Rider. Last year, in Reconsideration Order No. 34874, the
Commission ordered that "the Company shall apply the 2o/o cap for DSM labor expense increases
to the actual average wage per FTE based on the prior year's average wage per FTE." The
Company complied with this Commission order. As shown in Table 2 of Goralski's testimony,
the Company's EE Rider request is $105,369 less than its claimed actual labor expense, due to the
cap tied to its 201 9 actual labor expense. However, if the 2o/o cap were applied to approved labor
expense rather than actual labor expense, the approved 202088 Rider labor expense would be
$5l,270less.
Staff remains concerned that applying the2oh cap to the previous year's actual wages
instead of the Commission approved wages, the Company could continue to significantly increase
its labor expense each year. Staff will continue to review the Company's annual EE Rider wage
increases and develop possible frameworks to discuss in the Company's next general rate case to
ensure that DSM labor expenses do not dramatically increase in years between rate cases.
Depending on the timing of the Company's next rate case, Staff may engage with the Company to
discuss such frameworks.
Energy Efficiency
In March of 2020, nearly all of the Company's energy efficiency programs were paused or
impacted because of the COVID-19 pandemic. 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. During the COVID-l9 pandemic, the Company regularly updated EEAG
members with the status of its programs and the precautions the Company was taking to ensure
the safety of its customers and its employees. As of April29,202l,the Company had five
programs that remained suspended due to in-home work: (l) Easy Savings: Low-lncome Energy
Efficiency Education; (2) Energy House Calls; (3) Home Energy Audit Program; (4) Multifamily
Energy Savings Program; and (5) Weatherization Solutions for Eligible Customers. Of those
programs, the Company has maintained a customer waitlist for Energy House Calls, Home
Energy Audit, and the Weatherization Solutions program. Aside from the Weatherization
4STAFF COMMENTS AUGUST 2,2021
Solutions program, the Company does not expect any issues with ramping up and serving the
customers for the suspended programs once it is deemed safe to do so. For the Weatherization
Solutions program, the Company states that the Community Action Partnership ("CAP")
agencies' staffing has been reduced as a result of the pandemic, which may result in delays to
weatherizing homes when in-home activity resumes.
In2020,26 of the Company's 281 individual measures were cost-ineffective from the
UCT perspective. Every measure in the Energy House Calls and Multifamily Energy Savings
program was cost-ineffective, accounting for l8 measures failing the UCT. The Company states
the cost-ineffective measures resulted from programs incurring administration costs after in-home
activity was suspended. I
Additionally, four measures from the Simple Steps, Smart Savings program were cost-
ineffective from the UCT perspective. The program is administered by the Bonneville Power
Administration ("BPA") and is promoted in two areas by the Company: Energy Efficient Lighting
program and the appliance promotion program (Simple Steps, Smart Savings program). The BPA
decided to sunset the program on September 30, 2020. The Company states that the "decision to
end the program was made because the lighting market transformed to high-efficiency lightbulbs.
With most of the Simple Steps sales coming from lighting products, the program could not be
cost-effectively maintained by just showerhead and appliance sales." In response to the BPA
sunsetting the Simple Steps, Smart Savings program, the Company is exploring altemative
options for administering a lighting buydown program and a program for providing incentives for
ENERGY STAR appliances. Staff appreciates that the Company is exploring alternative
programs and will be interested in reviewing the alternative programs offered by the Company in
the future. 1n2020, the Company's Simple Steps, Smart Savings and Energy Efficient Lighting
programs accounted for 38oh of the Company's residential energy effrciency savings.
Other Energy Efficiency Programs
Custom Projects
Custom Projects reported an increase of 33Yo in savings from 2019. The94,007 MWh
savings accounted for 48o/o of the Company's energy efficiency portfolio savings, while the
measure's approximately $18.1 million in expenses accounted for 38oh of the Company's DSM
t See DSM 2020 Annual Report, Supplement I at 8-9 for a comprehensive list of cost-ineffective measures.
5STAFF COMMENTS AUGUST 2,2021
expenses. Since 2018, the Custom Projects measures savings have increased l00o/o, contributing
the most savings of any program to the Company's overall savings. Staffapplauds the Company
for its continued success with the Custom Projects option for its Commercial and Industrial
customers.
Shade Tree Project:
In2020, all events for the Shade Tree Project, which typically occur in the spring and fall,
were canceled due to the COVID-19 Pandemic. In202l, the Company plans to continue the
program. Instead of customers collecting their trees at an in-person event, customers will now
receive their trees in202l through shipments.
Low Income Weatherization
In2020, 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. During the suspension of the program, a waitlist has been
maintained for customers waiting for weatherization services. As of April19,2021, the waitlist
was at 104 customers.
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. CAP agencies
suspended activities for the WAQC program in March of 2020, but the program resumed in early
summer 2020. The program did not use all the allocated funds in2020 and there will be a total of
$1,861,402 of available funds for the program in202l. In the spring of 2021, the Company
acknowledged the struggles of achieving a cost-effective low-income weatherization program.
The Company plans to address these issues with its stakeholders. Staff will continue to monitor
the Company's progression and efforts towards making the WAQC and Weatherization Solutions
programs cost-effective.
Educ ational Di str ibut ion P r o gr om
The Company's Educational Distributions program was cost-effective in 2020 with a 1.45
benefit to cost ratio from the UCT perspective. The program had multiple changes to its
individual measures and giveaways in 2020. These are discussed below.
6STAFF COMMENTS AUGUST 2,2021
ln 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
program, a 409oh increase from the piloted group in20l9. Similarly, the Company's cost
increased 349% during the transition. In 2020, the Company's savings increased 23o/o from2019
to 10,428 MWh of savings. The incremental increase in savings resulted in the program not being
cost-effective with a0.64 UCT ratio in2020. However, the Company states this is "largely due to
the additional cost associated with the expansion of the program. Additionally, the savings
associated with the expansion only reflect a partial year of savings and it generally takes six
months to ramp up savings." Staff looks forward to reviewing the perforrnance of the HER
program in202l after the program has been implemented as a full program for a year.
In December of 2020, the Company delivered its last Energy-Savings Kit and will no
longer be administering the program. The Company states that the program had reached just
under 50olo saturation in the market and that after reviewing the future of lighting savings the
Company decided to end the program with EEAG's support.
Similarly, the Company's Welcome Kits program experienced issues from a change in
lighting savings. ln202l, due to new Regional Technical Forum 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 estimates that the program will cost
approximately $610,605 and projects 22.86 kWh savings per kit. The Company will assign costs
under the Educational Distributions program with more costs being distributed to the Residential
Energy Efficiency Education Initiative; however, the specifics of the cost distribution have not
been decided yet.
In a July 14,2021meeting with the Company, Staff expressed its concem with the future
of Welcome Kits. Stating concems over the Welcome Kits no longer being evaluated for
performance by a cost-effectiveness test, the Company's plan to continue claiming the savings,
and how to analyze the savings impact on future load growth in the Company's Integrated
Resource Plan ("lRP").
7STAFF COMMENTS AUGUST 2,2021
Staff agrees with the Company that Welcome Kits are a useful "education and marketing"
program. Welcome Kits allow the Company to market other energy efficiency programs and to
promote energy efficiency to the Company's new customers. The Company stated it intends to
discuss the Welcome Kits in the upcoming EEAG meeting in August of 2021. Staff looks
forward to the discussion and how the Company can successfully utilize the program as a
marketing and education program. Staff intends to closely evaluate the Welcome Kits in next
year's prudency filing when the program changes have taken place.
The lighting industry has shown significant strides in market adoption and saturation for
energy efhciency measures over the last several years. Particularly, residential lighting programs
have presented cost-effectiveness issues in recent years due to lower deemed savings. Simple
Steps, Smart Savings (Energy Efficient Lighting program), Energy-Saving Kits, and Welcome
Kits have all been impacted by changes in lighting savings. Many of the programs are no longer
cost-effective or barely remain cost-effective in the Company's future outlook. Constant
adjustments, adoption, and removal of the various measures offered are necessary for making
measures and programs cost-effective going forward. Staff applauds the Company for making
necessary changes to programs and looks forward to how the Company will transition to other
areas for residential energy efficiency savings.
Northwest Energy Efficiency Alliance ("NEEA"):
ln2020,the Company spent $2,649,749-7% of Idaho rider funds-on regional market
transformation through NEEA. Through market transformation in the Pacific Northwest, NEEA's
purpose is to improve gas and electricity efficiency usage by endorsing and advancing energy-
efficient practices, services, and products. NEEA claims savings for its efforts in two areas: (l )
efficiency measures; and (2) codes and standards. NEEA reports these savings to the Company in
an annual report,2 using three different allocation methods that the Company can choose: the
2 The Company provided Staff the annual savings report in excel format. The report is referred to as the NEEA 2020
Annual Savings Report.
8STAFF COMMENTS AUGUST 2,2021
service territory3, the funder share4, or the funder specifieds allocation method. In 2020, the
Company's savings were allocated using the "funder share" allocation method. The Company's
current funding share for NEEA's business plan is 9.23yo, which started in2020 and ends in
2024.
After filing this Application, NEEA finalized its 2020 savings for the Company on
April 6, 2021. The finalized NEEA savings for the Company in2020 is 2.01 aMW or
17,614 MWh. [n total 16,734 MWh of the total savings is reported for the Company's ldaho
service territory.6 For the Company's Idaho savings, about 75% of NEEA's reported savings
(12,577 MWh or 1.44 aMW) originated from codes and standards and the remaining originated
from effi ciency measures.
In the NEEA 2020 Annual Savings Report, NEEA reports savings from Codes and
Standard across the Northwest with savings attributed to states including Montana and
Washington that are not within the Company's service territory. For example, a measure called
lnternational Energy Conservation Code ("IECC") 2009 code for residential homes built in
Montana was part of NEEA's "Efficient Homes" initiative that resulted in a Montana code.
NEEA claimed the measure saved 0.01 aMW for the Company. Similarly, NEEA claims 0.08
aMW of savings from a nearly identical ldaho code for the Company. NEEA reports these
savings from the IECC 2009 code for residential homes built in ldaho. Staff is uncertain how a
duplicative IECC 2009 code for homes built in Montana provides benefits to the Company's
Idaho customers. On pages 3l-34 in Supplement 2 of the DSM 2020 Annual Report, the
Company provided NEEA's Market Evaluations with hyperlinks to access various market
evaluations and performance reports. However, identifying the savings for the Company from the
associated codes and standards and efficiency measures that NEEA is claiming is difficult using
the Market Evaluations provided. If such savings are to be claimed for out-of-state codes and
3 Service Territory Allocation: "NEEA allocates the savings using the most disaggregated data available. The data
sources can range from service-territory level to regional. The Program worksheets note the data source. When
NEEA has only regional level data, NEEA allocates the savings using funding shares. NEEA applies the funder
shares to savings by initiative based on the initiative start." NEEA 2020 Annual Savings Report.a Funder Share Allocation: "NEEA allocates the regional savings (Idaho, Montana, Oregon, and Washington) using
funder shares. The shares vary based on the funding cycle. Savings from previous investments receive the previous
funder share. Savings from current investments receive the current funder share." NEEA 2020 Annual Savings Report.5 Funder Specified Allocation: "ln cases where a funder has more specific service territory data, NEEA will use the
information provided by the funder." NEEA 2020 Annual Savings Report
6 This is due to the Oregon Rider contributing to NEEA also.
9STAFF COMMENTS AUGUST 2"2021
standards, a transparent evaluation should be provided to Staff and outlined in the Company's
Annual Conservation Reports describing how such programs benefit ldaho customers.
NEEA currently claims 100% of savings for code-to-code changes. Staff is concerned
that NEEA claims savings it is not directly responsible for producing. If savings from codes and
standards are removed, NEEA would not be cost-effective. Staff believes that to support the
continued funding of NEEA, an independent Evaluation, Measurement, and Verification should
be conducted to (l) clariff 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.
Demand Response
Staff reviewed the Company's demand response programs and believes that the programs
were well managed and effective. The three demand response programs (Irrigation Peak Rewards
program, A/C Cool Credit program, and FIex Peak program) incurred $6,533,734 in incentive
payments funded through base rates while achieving 336 MW of maximum demand reduction in
2020. Of the three demand response programs, most demand reduction comes from the
Company's Irrigation Peak Rewards program. The program performed to expectations, achieving
a maximum demand reduction of 292 MW, an increase of 14 MW from 2019. The other two
programs were impacted in various ways by the COVID-I9 pandemic as described below.
In2020, due to more customers being at home because of the COVID-I9 pandemic, the
Company took additional precautions to minimize its impact of the A/C Cool Credit program.
For example, the Company reduced its cycling percentage from 55% to 50o/o. Additionally,
participation dropped by 1,266 homes from 2019 resulting in a maximum demand reduction of
19 MW for 2020 when 2019 achieved 24 MW of maximum reduction.
In the Company's Flex Peak program, business customers experienced an increase in
loads from the COVID-19 pandemic. The Company states that many businesses had increased
loads during the events because of increasing production to recoup lost revenues and increasing
fresh air flow into buildings resulting in higher cooling needs. This all resulted in an average
realization rate of 650Z across the three demand response events with a maximum demand
reduction of 24 MW as compared to the amount of committed 36 MW of load reduction.
Id. at 113.
STAFF COMMENTS t0 AUGUST 2,2021
Staff notes that many changes to the Company's demand response programs have been
proposed during the Company's development of the 2021 IRP. The Company is evaluating
changes to the available hours and length of season for demand response programs starting in
2022 to better align with the needs of the Company's power system. The changes proposed have
no direct impacts on the prudence in this case; however, if the changes proposed are implemented,
it will impact the future operations and the performance of the Company's demand response
programs. When the Company files its202l IRP with the Commission and in future prudency
and tariff filings, Staff intends to evaluate the proposed changes to the demand response programs
to ensure the proposed changes are the least cost and least risk for Idaho ratepayers.
Effective Load Corrying Capacity (" ELCC ")
The Company has made progress and continues to work with Staff to address the concerns
outlined in Staff Comments in Case No. IPC-E-20-15. In the calculation of determining cost-
effectiveness for 2020, the Company used the Value of Demand ("VOD") calculation that was set
in the 2013 settlement agreement in Case No. IPC-E-13-14. However, the Company did provide
an updated ELCC calculation in response to Production Request No. 14. The updated ELCC
calculation impacts the VOD, which is used as a benchmark to determine the cost-effectiveness of
demand response programs. The Company's change in calculating the ELCC is an improvement
over the previous ELCC calculations from the 2013 settlement agreement 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
demand response program availability at system peak.
The result of the updated ELCC calculation is an ELCC of 85% instead of the 93Yothat
was set in the 2013 settlement agreement. The updated ELCC resulted in a VOD of $18 million
versus the $19.6 million using ELCC established in the 2013 settlement. Staff believes the
updates in the ELCC calculation provided to Staff in response to Production Request No. l4 is an
improvement from the ELCC used in the 2013 settlement.
During the development of the 2021 IRP, the Company has provided additional updates to
the ELCC and VOD. The Company has discussed with Staff changes to the ELCC based on
potential demand response program changes. Staff will continue to engage with the Company
around the updates to the calculation of the VOD and ELCC, and other concerns previously
STAFF COMMENTS 11 AUGUST 2,2021
outlined in Staff Comments in Case No. IPC-E-20-15. When the Company files its 2021 IRP
with the Commission and in future prudency and tariff filings, Staff intends to closely evaluate
the updates to the ELCC, VOD, and any additional changes to the Company's demand response
programs.
STAFF RECOMMENDATIONS
Staff recommends the Commission find that the Company prudently incurred DSM-
related expenditures of $47,008,618, including $40,474,884 in Idaho Energy Efficiency Rider
expenses and $6,533,734 in Demand Response program incentives.
Respecttully submitted this U* day of August 2021.
Dayn
Deputy Attorney General
Technical Staff: Taylor Thomas
Brad Iverson-Long
Kevin Keyt
Michael Eldred
i:umisc/commentVipce2 l.,ldhttblkkme comments
STAFF COMMENTS t2 AUGUST 2,2021
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 2Nd DAY OF AUGUST 2021,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-21.04, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
LISA D NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
dockets@ idahopo wer.som
CONNIE ASCHENBRENNER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
PETER J RICHARDSON
RICHARDSON ADAMS PLLC
515 N 27TH ST
BOISE ID 83702
E-MAIL: peter@rich ardsonadams.com
MARY GRANT
DEPUTY CITY ATTORNEY
BOISE CITY ATTORNEY'S OFFICE
PO BOX 500
BOISE ID 83701-0500
E-MAIL : [e-mail]
Boi seC ityAttorney @c ityofboi se. org
ADAM LOWNEY
MCDOWELL RACKNER GIBSON PC
4I9 SW I lth AVE., SUITE 4OO
PORTLAND OR 97205
E-MAIL: [e-mail]
BENJAMTN J OTTO
ID CONSERVATTON LEAGUE
710 N 6TH ST
BOISE ID 83702
E-MAIL: botto@.idahoconservation.org
DR DON READING
6070 HILL ROAD
BOISE ID 83703
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE