20220803Comments.pdf

RILEY NEWTON
DEPUTY ATTORNEY GENERAL
TDAHO PUBLIC UTILTTIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. II2O2
Street Address for Express Mail:
I 133 1 W CHINDEN BLVD, BLDG 8, SUITE 20 I -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 2O2I DEMAND-SIDE
MANAGEMENT EXPENSES AS
PRUDENTLY INCURRED
CASE NO. IPC.E-22.08
COMMENTS OF THE
COMMISSION STAFF
Staff of the Idaho Public Utilities Commission, by and through its Attomey of record,
Riley Newton, Deputy Attorney General, submits the following comments.
BACKGROUND
On March 75,2022,Idaho Power Company ("Company" or "ldaho Power") requested
the Commission determine the Company prudently incurred $35,055,318 in demand-side
management ("DSM") expenses in 2021.
On April 6,2022, the Commission issued a Notice of Application and Notice of
Intervention Deadline, setting an April 27,2022, deadline for interested persons to intervene.
Order No. 35365. The Commission granted the City of Boise City's petition to intervene on
April27,2022. Order No. 35385.
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ISTAFF COMMENTS AUGUST 3,2022
The Company reports it spent $27,922,340 of Idaho Energy Efficiency Tariff Rider ("EE
Rider") funds and$7,132,978 on demand response ("DR") program incentives funded through
base rates and tracked annually through the Power Cost Adjustment mechanism.
The Company's DSM 2021 Annual Report is included as Attachment 1 to the
Application. Supplement 1 to the DSM 2021 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 2021 Annual Report also describes the Company's
DSM strategies for 2021.
The Company reports its energy efficiency ("EE") portfolio achieved a Utility Cost Test
("UCT") ratio of 2.17.
STAFF ANALYSIS
Staff believes the Company's programs are generally well-managed and recommends that
the Commission issue an order approving $35,054,668 in202l expenses as prudently incurred.
Staff has reviewed the Company's Application, the accompanying testimony of Robert
Thompson,the202l DSM Annual Report, and all the additional information provided by the
Company. Staff recommends the Commission make one adjustment to the Company's request,
decreasing its prudency request by $650 due to sales tax booked in error.
In the comments below, Staff addresses the Company's EE Rider account, expenditures,
and program management. Staff notes that the absence of any discussion on other issues
presented in the 2021 DSM Annual Report should not be construed as Staff support for the
Company's position on those issues.
Financial Review
Staff audited the Company's EE Rider expenses and DR expenses, which included a
sample of more than 60 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 $35,054,668 in DSM-related expenses for 2021. This total consists of
527,921,690 in EE Rider expenses and $7,132,978 in DR incentives. DR incentives were
included for recovery and audited in the 2021Power Cost Adjustment, Case No. IPC-E-22-ll
2STAFF COMMENTS AUGUST 3,2022
2021ldaho Power Beginning Rider Balance (Underfunded)
2021Tariff Revenue
Interest on Tariff Rider Balance
Total Funds Available
2021 Reported Expenses
2020 Oregon Jurisdiction Adjustment
2020 Green Power Program Adjustment
2020 Small Business Direct Install Adjustment
2021 Residential New Construction Adjustment
2021 Commercial & Industrial Adjustment
2021 Small Business Direct Install Adjustment
2021 Duplicate Sales Tax
2021 T otal Prudent Expenses
2020 Ending Balance (Underfunded)
$
$
$ (12,230,374)
$ 33,346,611
$ (110,846)
21,005,391
(27,943,096)
$ (6.916.299)
$ (2,159)
$57$ 15,910
$ (1,356)
$ 1,044
$ 7,260
$ 6s0
$ (21,921,690)
Staff calculated the DSM Rider account balance as of December 3 l, 2021, in Table No. I ,
below:
Table No. 1: Tariff Rider Reconciliation
During Staff s audit of EE expenses, the Company identified a duplicate $650 sales tax
expense booked in error. Staff removed this duplicate expense from the Company's prudency
request. In preparation of filing its case, the Company identified separate adjustments to its 2021
EE Rider expenses. The first adjustment adds $1,356 of expenses associated with the Idaho
Residential New Construction program that were incorrectly charged to the Oregon Energy
Efficiency Rider in202l. The second adjustment reduces $1,044 of expenses associated with the
Commercial and Industrial ("C&1") program that should have been charged to the Oregon Rider
instead of the Idaho Rider. The third adjustment removes a duplicate transaction of $7,260
associated with the Company's Small Business Direct Install program from the Company's
prudency request.
In2020, the Commission disallowed $2,159 in expenses that should have been allocated
to the Company's Oregon jurisdiction. Additionally, two other adjustments related to the
Company's Green Power program and Small Business Direct Install program were removed
from the Company's prudency request. Because the correcting entries to these 2020 expenses
JSTAFF COMMENTS AUGUST 3,2022
did not occur unt1l202l, these amounts need to be adjusted from the Company's net reported
expense to accurately reflect the Company's2021total EE Rider expenses.
DSM Labor Expense
In Order No. 33908, Case No. IPC-E-I7-03, the Commission ordered aTYo cap on wage
increases charged to the EE Rider. In Reconsideration Order No. 34874, the Commission
ordered that "the Company shall apply the2o/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 Order. As shown in Table 2 of Thompson's testimony, the Company's EE
Rider request is $28,722 under the allowed 2oh cap for 2021.
Staff remains concerned that, by applying the2o/o 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.
Energy Efficiency
In202l, the Company's EE portfolio reported 126,102 megawatt-hours ("MWh") of
energy savings and 17,870 MWh of market transformation savings from Northwest Energy
Efficiency Alliance ("NEEA"). The EE portfolio remained cost-effective with a2.17 UCT ratio
in2021, although a27Yo year over year decrease in saving occurred.
The Company's C&l Custom Projects program continues to be the EE portfolio's biggest
energy savings program, contributing 43% of the Company's EE portfolio savings. In total, the
program used $8,608,903 to achieve 53,728 MWh of savings. The C&I Custom Projects
program 2021 EE savings decreased 43Yo from the program's 2020 acquired savings.
Cost-lnef.fective Measures & P rograms
The residual impacts of the COVID-19 pandemic led to a difficult year for energy
efficiency programs due to program suspensions, supply chain issues, and increased labor and
materials costs. In particular, the residential sector was impacted by in-home work restrictions.
4STAFF COMMENTS AUGUST 3,2022
The Company had five programs that continued their program suspensions from 2020: (l) Easy
Savings: Low-income Energy Effrciency Education; (2) Energy House Calls; (3) Home Energy
Audit program; (4) Multifamily Energy Savings program; and (5) Weatherization Solutions for
Eligible Customers. These programs began to resume in-home work in November with all
programs returning to in-home work in December of 2021. The Company maintained a
customer waitlist for the Energy House Calls, Home Energy Audit, and the Weatherization
Solutions programs during the program suspensions. Staff looks forward to reviewing these
programs' performance in next year's prudency filing.
ln 2021 , 24 of the Company's 272 individual measures were cost-ineffective from the
UCT perspective. Of the 24 ineffective measures, 8 were part of the Energy House Calls
program. As a result of in-home work suspensions and reduced measure savings, the Company
anticipated significant challenges to the program's cost-effectiveness moving forward. After
consulting with the Energy Efficiency Advisory Group ("EEAG"), the Company decided to end
this program. The program will cease marketing and will work through the waitlist of 125
applications before transitioning the cost-effective duct sealing measure to the Heating and
Cooling Efficiency ("H&CE") program. Staff appreciates the Company's active management of
the program.
In202l, the HC&E program was cost-effective with a1.14 UCT benefit-to-cost ratio.
However, at a measure level, five of the ten programs' measures were cost-ineffective. Reduced
Regional Technical Forum ("RTF") measure savings caused the heat pump to heat pump
upgrades, ductless heat pumps, and prescriptive duct sealing measures to drop below a UCT ratio
of one, becoming cost-ineffective. Apart from the ductless heat pumps measure, the Company
claims these measures would be cost-effective without the inclusion of administrative costs.
DSM 2021 Annual Report at 59. Additionally, the Smart Thermostats measure in the H&CE
program has been cost-ineffective since 2019. In202l, the Company contracted ADM
Associates to complete an impact and process evaluation for the H&CE program with additional
focus on the individual measures in the program. The evaluation was submitted in March of
2022 and included numerous recommendations to improve the cost-effectiveness of the program
and its measures, such as revisiting the billing analysis for self-installed smart thermostats and
ensuring application requirements are met before fulfilling incentives or rebates.l The Company
I For a complete list of recommendations see DSM Supplement 2 at7-16.
5STAFF COMMENTS AUGUST 3,2022
indicated it will consider all recommendations, and that it will implement changes and update
savings assumptions in the 2022DSM filing. DSM 2021 Annual Report at 59. Stafflooks
forward to reviewing the recommendations implemented by the Company and their effect on
improving their cost-ineffective measures for the HC&E program in the 2022DSM annual
report.
Additionally, three of the cost-ineffective measures can be found in the Cohorts of the
C&I Custom Projects program. Cohorts are behavioral based measures that engage customers in
a group setting to capture economies of scale and allow customer interaction on energy saving
opportunities. The three cohorts that failed the UCT were the Municipal Water Supply
Optimization Cohort ("MWSOC"), the Wastewater Energy Efficiency Cohort ("WWEEC"), and
the Continuous Energy Improvement Cohort for Schools ("CEI"). The Company claims that the
MWSOC would be cost effective without the inclusion of administrative costs and that the
MWSOC and CEI Cohort for Schools is cost effective from a lifecycle perspective.
Additionally, the Company notes that the WWEEC cost-effectiveness is based on a facility that
was recently re-baselined. DSM Supplement 1 at9.
Of the remaining eight measures that were cost-ineffective from the UCT perspective,
four measures belong to the C&l New Construction and Retrofits program and four to the
Irrigation Efficiency Reward program. For the New Construction and Retrofits program, the
Company states that these measures will be monitored in2022and that the HVAC Fan Motor
Belts measure would have been cost-effective without the inclusion of administrative costs.
With respect to the Irrigation Efficiency Rewards program, the Company states that the savings
assumptions related to these measures will be updated in2022 and it expects these measures to
become cost-effective, or otherwise they will be removed from the program offering. DSM
Supplement I at 9. Staff recognized multiple measures across the EE portfolio that could
become cost-effective if administrative costs were not included. Staff encourages the Company
to work on reducing administrative costs (where possible) for these measures to help increase the
cost-effectiveness at the measure level.
6STAFF COMMENTS AUGUST 3,2022
Other EE programs
Educational Distributions Program & Welcome Kits
Previously administered under the Residential Energy Efficiency Education Initiative
("REEEI"),2 the Educational Distributions ("ED") program became a standalone program in
2015 focused on using low to no cost channels to deliver energy efficiency education materials
and energy savings items directly to customers. The ED program currently delivers educational
and energy savings material through the Nightlights as Giveaways, Student Energy Efficiency
Kit ("SEEK"), and Welcome Kit3 measures. In 202l,the Company reported the ED program as
cost-effective with an UCT benefit to cost ratio of 2.39. Additionally, the Company reported all
measures under the ED program as cost-effective. However, the Welcome Kits measure
currently splits its cost between the REEEI and the ED program, and when all cost for the
Welcome Kits are assigned under the ED program, the Welcome Kits become cost-ineffective
with benefit-to-cost ratio of 0.51. See Response to Production Request No. 9 and 10. In202l,
$278,626 was allocated under the REEEI from the Welcome Kit's measure. This included cost
related to education aspects of the ED program such as LED bulb sleeves, Welcome Kit
flipbooks, education cards, and portions of shipping and handling. Id. at9-ll.
As a result of changes to the RTF savings values for LED lightbulbs, the Company
modified the kit contents for the 2022Welcome Kits to now provide four 1100 lumen lightbulbs
and two nightlights versus two 800 lumen LED bulbs, two 1600 lumen LED bulbs, and one
nightlight. The changes to the kits resulted in a higher savings per kit, but it did increase the
total cost of the materials for the kits. Additionally, in2022, the ED "program will continue to
count the savings and pay for the cost-effective energy saving portion of each kit, while the
remaining costs associated with the kits will be included in Idaho Power's REEEI efforts." DSM
2021 Annual Report at 49. In 2022, if all kit costs are assigned to the ED program, Welcomes
Kits would be cost-ineffective. However, under the Company's cost allocation method, the kits
would be considered cost-effective with $81,752 assigned to the REEEI.
2 The REEEI promotes energy efficiency to the residential sector through the Kill A Water Meter Program, Teacher
Education, Customer Education, and Marketing.
3 "ldaho Power uses a vendor to mail Welcome Kits to brand new customers between 35 and 45 days after electric
service begins at their residence. Each kit contains four LED lightbulbs, a nightlight, a greeting card, and a small
flipbook containing energy-saving tips and information about Idaho Power's energy efficiency programs. The kits
are intended to encourage first-time customers to adopt energy-efficient behaviors early in their new homes." DSM
2021 Annual Report at 45.
7STAFF COMMENTS AUGUST 3,2022
The lighting industry has shown increased market adoption and saturation for EE
measures in the residential sector over the last few years. Many programs and measures that
were once cost-effective have now been dissolved, which was apparent in the Company's 2020
prudency filing. The Welcome Kits measure is facing the same issues with changes to savings
for LED bulbs; however, Staff agrees with the Company's view that this is a useful education
and marketing measure. The Company provided sufficient evidence that Welcome Kits often
lead new Idaho Power customers to pursue other EE programs offered by the Company.a Staff
cautions the Company in only assigning the cost-effective portion of costs to a program and all
cost-ineffective cost elsewhere. This method of assigning cost should be an exception, such as
the Welcome Kits measure where the intent of the kits is to educate and market. The kits as a
standalone measure are not cost-effective and, because of this, Staff encourages the Company to
reduce cost for the kits where possible and focus the intent of the program on marketing and
education.
Multifamily Energy Savings P rogram
The Multifamily Energy Savings program targets multifamily dwellings such as
apartments and townhomes for no cost direct installation of energy-saving products. The
program was suspended until November 2021 resulting in no claimed energy savings for 2021.
The Company has stated that the cost-effectiveness of the program will be a challenge moving
forward. In2020, the RTF reduced deemed savings on LED lightbulbs and deactivated
showerhead and faucet aerator measures, impacting potential energy savings of many of the
program's measures. In response, the Company modified its worksheets to calculate lighting
savings based on existing fixtures rather than deemed savings. The Company has communicated
these concerns to the EEAG and will work with a dedicated subcommittee to discuss saving
assumptions and alternative models. Staff appreciates the Company's foresight on these
challenges and will continue to monitor the program's development.
4 "Of the customers that received Welcome Kits in 2020,4,083 customers participated in another residential energy
efficiency program in2020 and 173 participated in a program in202l, [and]of the customers that received
Welcome Kits in 2021, 138 customers participated in another residential energy efficiency program in2021 and79
participated in a program in 2022 as of June 2022." Response to Production Request No. I 0d and e.
8STAFF COMMENTS AUGUST 3,2022
Re s ide ntial New Construct ion Program
The Residential New Construction program transitioned to its first year as a regular
program in2021. Piloted in 2018, the program provides an incentive to builders for the
construction of energy-efficient homes. As part of the program, builders must contract with
certified Residential Energy Services Network ("RESNET") raters to design homes at least 10%
more energy efficient than code. Despite participation being down to 90 homesin202l, from
246 in2020, annual modeled savings has increased by 2,619 kWh per home. The program
reports a UCT benefit to cost ratio of L64.
Low Income Weatherization
The Company maintains two low-income weatherization programs: The Weatherization
Assistance for Qualified Customers ("WAQC") which is funded through Company base rates,
and the Weatherization Solutions for Eligible Customers ("Weatherization Solutions") which is
designed to mirror the WAQC and is funded through the Energy Efficiency Rider. In202l,the
Company's low-income weatherization programs remained cost-ineffective. The Weatherization
Solutions program remained suspended until October 2021and only serviced 7 homes. The
WAQC was not suspended in202l and reports a UCT ratio of 0.19 and TRC ratio of 0.31. Staff
and the Company acknowledge the struggles of achieving a cost-effective low-income
weatherization program. To increase cost-effectiveness, the Company developed a job cost
calculator ("JCC") to be used when the WAQC program stops using the Energy Audit Version 5
("EA5") tool, which is expected to occur by the end of 2022. Response to Production Request
No. 13.
Due to the impact of COVID-19 a large sum of unspent funds was carried over from
2020. In202l, continued shortages and supply chain limitations grew the carry over funds
balance to $870,985. To address this increasing pool of funding, the Company worked with the
EEAG to propose re-weatherizationprojects as a solution to deplete these excess funds. Under
these projects the Company would pay l00oh of costs of HVAC replacement for homes that
previously qualified for the program but did not receive HVAC upgrades. The Company's
proposal is currently pending in Case No. IPC-E-22-15.
9STAFF COMMENTS AUGUST 3,2022
Northwest Energy Efficiency Alliance:
In Staff s Comments in Case No. IPC-E-21-04, Staff notated concerns with NEEA
claiming savings for out-of-state code changes for states such as Montana and Washington.
Subsequently, the Commission ordered the Company to conduct an independent Evaluation,
Measurement and Verification ("EM&V") report of NEEA claimed savings in the next DSM
filing. Commission Order No. 35270 at 9. The Company has begun to develop a request for
proposal for the EM&V in conjunction with Avista Corporation.s The evaluation is expected to
be completed by the end of 2022 and reported in the 2022DSM Annual Report. Staff looks
forward to reviewing the EM&V report and validating the savings NEEA claims for the
Company's service territory. In the claimed savings for 2021, Staff continued to find evidence
of claimed savings by NEEA for out of state code changes.
Demand Response
Staff reviewed the Company's DR programs and believes the programs were well
managed, effective, and satisfy the requirements as stipulated under the 2013 agreement in Order
No. 32923. The three DR programs: Irrigation Peak Rewards program, A/C Cool Credit
program, and FIex Peak program, incurredS7,132,978 in incentive payments funded through
base rates while achieving 313 MW of maximum demand reduction in202l. Of the three DR
programs, most demand reduction comes from the Company's Irrigation Peak Rewards program.
The program performed to expectations achieving a maximum demand reduction of 255.5 MW,
a decrease of 36.5 MW from 2020. The Company indicates this reduction is due to this program
using four individual participant groups not all of which are called for a given event.
In Case No. IPC-E-21-32, the Company proposed many changes to the DR programs.
These changes included the following: (1) alignment of DR program design to system capacity
needs; (2) revised cost-effectiveness calculation methodology; (3) assessment of available DR;
(4) impact evaluations; and (5) removal of the marketing cost cap. [n Order No. 35336, the
proposed changes were accepted with an effective date of March4,2022. The resulting order
superseded the terms of the 2013 Settlement approved in Order No. 32923. The changes
proposed have no direct impacts on the prudence in this case; however, the changes could impact
5 Similarly, Avista was ordered to conduct an EM&V for NEEA savings in Commission Order No. 35129
STAFF COMMENTS 10 AUGUST 3,2022
future operations and the performance of the Company's DRprograms and will be reviewed in
the Company's prudency frling in2023 for the 2022 program year.
STAFF RECOMMENDATIONS
Staff recommends the Commission find that the Company prudently incurred DSM-
related expenditures of $35,054,668, including $27,921,690 in Idaho Energy Efficiency Rider
expenses and$7,132,978 in Demand Response program incentives.
iRespectfully submitted this 3 day of Augtst2022.
Riley Newton
Deputy Attomey General
Technical Staff: Taylor Thomas
Jason Talford
Donn English
Laura Conilogue
i:umisc/commentVipce22.8mttdelc mmments
STAFF COMMENTS 1l AUGUST 3,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3'd DAY OF AUGUST 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-22.08, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
LISA NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
[e-mail]
ED JEWELL
DEPUTY CITY ATTORNEY
BOISE CITY ATTORNEY'S OFFICE
150 N CAPITOL BLVD.
PO BOX 500
BOISE rD 83701-0500
E-MAIL : ej [e-mail]
CONNIE ASCHENBRENNER
ZACK THOMPSON
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-MAIL : caschenbrenner@ idahopower. com
ahompson@idaho power. com
WIL GEHL
ENERGY PROGRAM MGR
BOISE CITY DEPT PUBLIC WORKS
150 N CAPITOL BLVD.
PO BOX 500
BOISE rD 83701-0500
E-MAIL: wgehl@cit),ofboise.ore
,h /M,^,,,
nxv /SECRET
CERTIFICATE OF SERVICE