20201117Comments.pdf

Peter J. Richardson tSB No. 3195
Gregory M. Adams ISB No. 7454
Richardson Adams, PLLC
515 N.27th Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter@:richardsonadams. som
sreg@richardsonadams. colu
IN THE MATTER OF THE APPLTCATION OFIDAHO POWER COMPANY FOR
AUTHORITY TO REVISE THE ENERGY
EFFICIENCY RIDER, TARIFF SCHEDULE
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Attomeys for the Industrial Customers of ldaho power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC-E-20-33
COMMENTS
OF THE INDUSTRIAL CUSTOMERS
OF IDAHO POWER
COMES NOW, The Industrial Customers of Idaho Power, ("ICIP") and pursuant to
Commission Order No. 34824 issued in this matter and hereby lodges its Comments regarding
Idaho Power Company's ("[daho Power" or the "Company") application for a tl.ll%increase
in its energy efficiency rider (from 2.75 percent of base revenues to 3.10 percent of base
revenues). The ICIP respectfully requests the Commission reject the requested increase for the
reasons stated herein and also require ldaho Power to use current and verifiable data for
conducting the alternate cost test for determining whether its energy efficiency rider programs
are cost effective.
/t
IPC-E-20-33
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
PAGE I
PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS
A significant reason for the company's proposed large increase in the energy efficiency
rider is the recent jump in incentive payments to the Commercial and Industrial Custom Project
program. According to the Company's Application:
The proposed 0.35 percent Rider increasel is reasonable as a near-term step to mitigate
the growing under-iollected balance in the Company's 2020-2021 forecasts of the Rider
u""Junt u.iiuity. Idaho power has experienced significantly higher energy efficiency
incentive payments to participating customers over the January 2019 through July 2020
period comparcd to incentive payments anticipated for that period when the Rider
iunding wai last addressed, and t,luho Power expects that trend will continue for the
remainder of 2020. In the most-recent l9 months, incentives exceeded prior forecasts by
approximately $18 million, contributing to the current under-collected balance. Notably,
participation in the Company's Commercial and Industrial Custom Project option has
increased with the Company achieving the same kWh savings level in the six months
ending June 2020, as for all of20l9
Application at pages 3 -4.
An examination of Idaho Power's Commercial and Industrial Efficiency (C&E) incentive
payments from 2017 through July 2020 shows that four of the largest project payments occurred
in1121,with a fifth in 2019. These five largest ineentive payments totaled over $9 million or
27Vo of thetotal incentive payments for the entire three-and-a-half-year time period.2 There was
only one project slightly over $1 million prior to May 2019. This recent (and only) rush of very
large Custom Efficient projects (three over $l million and two over $2 million) does not justify a
permanent increase in the Rider. [n order to justify a pennanent increase of this magnitude based
on what appears to be an aberration would unfairly raise Idaho Power's rates based on mere
I To be clear, the Company's proposed Rider increase percentage is 12.75 percent and not
approximately one third of one percent as is apparently represented in its Application.
2 ldaho Power responsc to the lcIP's Second Production Request #9.
IPC-E-20-33
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
PAGE 2
conjecture. ldaho Power should be required to provide known and measurable facts supporting
the need for such a large rate increase.
FUTURE UNCERTAINTY IS NOT A JUSTIFIABLE
BASTS FOR RAISING TODAY'S RATES
Idaho Power also suggests that the change to a Utility Cost Test (..UTC,,) for cost
effectiveness determinations will create uncertainty for which a ratepayer funded cushion is
expected. The Company's Application states:
BY imPleme4tinr the near-term aption [translation: raisins rate$l ?s propo$ed in this caseto mitigate increases in under collestion. the Cornpanv
. ft. Co*panyt for,g_t"rm forecast willbe informed by two key inputs to be completed over the next several rnonths. First, theCompany will incorporate use of the Utility Cost Test ("UTC") for cost-effectiveness
screening in the determination of DSIM savings potential, and second , the Z02l tntegratedResource Plan ("IRP") (which includcs stakcholder engagement in developing the Jr.rgyefficiency savings level in the IRP) will inform the long-term energy efficiency programs
savings estimates. Idaho Power is committed to continue to maintiin a long-term view ofenergy efficiency funding and make future adjustments as necessary to betfir aligncollection with expenses.
Application at P. 4, emphasis provided.
ln essence, the Company is saying that it doesn't know what the impacts of using the UTC and
data from the 2o2l IRP3 will be on its energy efficiency revenue requirement. Therefore, it is
asking the Commission to approve its "near-term action" (translation: large rate increase) so that
the Company is "afforded time to update . . . [its] analysis' (translation: ratepayer funded
contingency fund)' Asking ratepayers to pay for future higher costs that may (or may not)
materialize is speculative and is not conducive to setting rates that are fair, just or reasonable.
Unless the Company can produce hard evidence of known costs that are measurable and
I The Company's 2019 IRP has not even been acknowledged. In addition, it has delayed evenstarting the process of developing the 2021 IRP until sometime next year. It is thus,disingenuous to assert that the 2021 IRP 'oincludes stakeholder engagement in developing theenergy efficiency savings lcvcl" bccause the 2al2lRp simply does not exist.
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COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWERPAGE 3
reasonable, it is incumbent on this Commission to deny the requested "near term action" plan or
rate increase.
THE COMPANY NEEDLESSLY USES STALE DATA TO CALCULATE THE COST-
EFFECTIVENESSoFENERGYEFFICIENCYPRoGRAMS
The alternative cost used to calculate the cost effectiveness of the Company's energy
efficiency (.,88") and demand side management ("DSM') programs is based on the company's
IRPs that are at least two and up to four years older than the year in which the programs are to be
in place. This is because the Company budgets and plans its EE/DSM programs using alternate
costs only from the most recently acknowledged IRP. For example, the following table matches
the IRP year with the DSM/EE cost effectiveness report year since 2OA4:
Age ojDataa
2 years old
3 years old
4 years old
3 years old
4 years old
3 years old
4 years old
IRP Year
2013
20r3
2013
2015
2015
2017
2017
DSM/EE Report Year
2014
201 5
2016
20r7
201 8
?019
2024
Thus, the date utilized by the Commission in determining the Company's altemate cost in order
to measure the cost effectiveness of its DSM/EE programs is, on average' over three years old'
lt is, of course axiomatic, that in the rapidly changing electric utility industry that the use of stale
(and hence inaccurate) data will naturally result in inaccurate findings as to the true alternate cost
of the company's EE and DSM measures - a.k.a'garbage in-garbage out'. The use of stale and
inaccurate data inputs is incompatible with the concept of setting fair, just and reasonable rates'
a IRp data already has a built in one-year lag. For instance, an IRP that is published in 2019 uses
data from 2018.
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COMMENTS OF THE TNDUSTRIAL CUSTOMERS OF TDAHO POWER
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There is no practical, legal or regulatory justification for the Company's continued use of
stale data to calculate alternate costs associated with its DSM/EE programs. From a practical
standpoint the Commission and Idaho Power are very familiar with and capable of updating
alternate costs. For instance, the Company's PURPA avoidcd cost rates are continuously (on an
annual basis) being updated using data in a calculation that closely mirrors the alternate cost
calculation used for the EE/DSM programs. of course, there is no legal basis for ostcnsibly
setting fair, just and reasonable rates based on data that is known to be stale and inaccurate. In
addition, there is no regulatory foundation for the Company's continued use of stale inputs as
demonstrated by the Company's response to the ICIP's l2th Data request which asked:
In response to ICIP Request for Production No. 8, the Company states that,..[daho power
uses the DSM avoided costs, discount raten and escalation rate irom the most recentlyacknowledged IRP at the time the assumptions were frozen to calculate the cost-effectiveratios" On what authority does the company rely for the use of the most recentacknowledged IRP for calculating cost-effectivsrations [sic]. please provide copies andcitations?
The current pyctice of relying on the DSM alternate costs from the most recentlyacknowledged IRP has been utilized by Idaho Power since 2014 and has been discussedwith and supported by members of the Company's Energy Efficiency Advisory Group("EEAG")' ldaho Power believes that its practiie of using the best available informant atthe time of budgeting and program planning, which o..u.i in September-octobertimeframe prior to the program year, comports with utility standards, is consistent withthird-party evaluator recommendations, and has been disclosed in multiple reports andfilings submitted to both the ldaho and oregon commissions.
The response to this Request is sponsored by Paul Goralski, Regulatory Analyst, IdahoPower Company.
The Company was asked to simply cite (and provide copies) of the "authority,o upon which it
relies to use its most recently acknowledged IRP for calculating its DSM alternate costs. It faited
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COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWERPAGE 5
to do so. [nstead it offered several unconvincing pretenses, stating only that the practice is (l)
"suppofted by [some?] members of the Company's Energy Efficieney Advisory Group" and, (2)
it.,believes that its practice . . . comports with [unidentified] utility standards" and (3) "is
consistent with [unidentified] third party evaluator recommendations [not provided], and finally,
(4) has been "disclosed in multiple reports and filings." Idaho Power simply has no authority
upon which it relies to support its intentional use of stale data inputs to the calculation of its
DSM/EE alternate costs.
Although Idaho Power uses data to measure cost effectiveness that is, on average, over
three years old, it professes just the opposite. In its 201 9 Demand Side Management Annual
Report the Company incongruously asserts that:
Prior to the actual implementation of energy efficiency or demand response programs'
ldaho Power performs a preliminary cost-effectiveness analysis to assess whether a
potential progftIm design or measure may be cost-effective. Incorporated in these models
are irputs frJm variou, .our..t that use the mqst cur,r.ent and reliable information
available.s
Although the Company does apparently acknowledge that "the most current and reliable
information,, is important to the process of determining cost-effectiveness, it inexplicably ignores
the fact that its data inputs are stale and anything but "current and reliable." As a result, its cost-
effectiveness test is likewise neither current nor reliable'
The magnitude of the Company's requested energy efficiency rider - over three percent
of the customer's billed revenue -- is not inconsequential to the Company's ratepayers. Thus, it
is incumbent upon this Commission to hold Idaho Power, and the energy efficiency stakeholder
community, to a realistic standard for determining cost cffectiveness. That standard must at a
5 ldaho power Demand-Side Management 2019 Annual Report, Supplement I at page l,
emphasis provided.
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COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
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minimum require that data inputs for determining cost effectiveness be as current as possible.
The Company already has the capability to make the appropriate alternate cost calculations.
lndeed, it already does so for the avoided cost calculations that are used for setting rates for
PURPA contracts, which are updated annually for SAR rates and whenever a contract is
requested for tRP based avoided costs. Such dispanate treatment between resources the company
acquires with ratepayer funds (EE and DSM) versus r€sources acquired via PURPA is neither
fair, just or reasonable.
WHEREFOR.E, the lndustrial Customers of ldaho Power respectfully requests that this
Commission reject tdaho Power's "near-term action" plan by not approving the energy
efficienc/ rider increase that is proposed in excess of 12 percent. In addition, the Commission is
respectfully asked to require ldaho Power to actually use the "most current and reliable
information available" for conducting cost effectiveness, altemate cost, tests as more fully
described herein.
this t 8th day of November 2020.
J
RTCHARDSON ADAMS, PLLC
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the l Srh of November 2020, a true and correct copy of the
within and foregoing PETITION TO INTERVENE OF THE INDUSTRIAL CUSTOMERS OF
IDAHO POWER TO TDAHO POWER in Docket No. IPC-E-20-33 was served, pursuant to
Commission Order No. 34602, exclusively via electronic mail to:
Idaho Public Utilities Commission
Jan Noriyuki, Secretary
j an. noriyuk i@puc. idaho. gov
Edward j ewe I I (O,puc. idaho. gov
Idaho Power Company
I nord stroE0(4 id4hqpower. com
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COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
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doc [e-mail]
Peter Richanlson,
Attoruey for the IndusEial Customers of Idsho Power
IPC-E-20-33
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