20201118Comments.pdf

Benjamin J. Otto (ISB No. 9292)
710 N 6ft Street
Boise,ID 83701
Ph: [phone] x 12
Fax: [phone]
botto @idahoconservation. org
Attorney for the Idaho Conservation League
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BEFORE THE IDAHO PUBLIC UTILITIES COMN{ISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORITY TO
REVISE THE ENERGY
EFFICIENCY RIDER, TARTFF
SCHEDULE 91
CASE NO.IPC.E.2O-33
COMMENTS
The Idaho conservation League (ICL) and NW Energy Coalition (NryEC) recommend
the Commission approve an increase to Idaho Power's Energy Efficiency rider that will align
with expected program spending.l The Commission has repeatedly instructed Idaho power to
pursue all cost-effective energy efficiency. ICL and NWEC shongly support this clear policy
directive because acquisition of cost effective energy efficiency anywhere in Idaho power,s
system benefits all customers by avoiding the need for higher cost alternatives. Ensuring
adequate funding for expected program spending is a necessary step to align utility finances with
this laudable public policy goal. For the reasons explained below, we recommend the
commission establish a rider level between3.75Yo and 4.05yoto achieve a balance between
forecast program expenditures and expected rider revenues.
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I ICL i' a party to this docket. NWEC joins ICL's comments and is represented here by virtue of ICL,s councilbeing the NWEC board chair.
IPC-E-20-33
ICLAIWEC COMMENT I yovember lg, ZO20
Idaho Power Consistently Exceeds Efficiency Targets
ICL and NWEC are pleased to see that in 2019 Idaho Power achieved the highest level of
energy savings in program history, continuing a strong trend of increased achievements since
2013. The chart below from page 9 of Idaho Power's 2018 Demand Side Management report
documents that Idaho power has consistently exceeded the energy savings targets the Company
chooses to use in the Integrated Resource Plan, a trend that continued in2}l9,which led to the
underfunding we are addressing in this docket'
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As members of Idaho Power's Integrated Resource Plan Advisory Committee and/or
Energy Efficiency Advisory Committee, we are aware that2020 program performance continues
this trend and is expected to result in the Company again acquiring cost effective savings that
rPC-E-20-33
ICL/T{WEC COMMENT November 18,2020
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exceed persistently low targets reflected in the IRP. Idaho Power's Application confirms this
trend, but again relies on IRP targets that the Company will almost certainly exceed.2
This known and persistent mismatch between expected and actual program savings is a
primary cause of the current underfunding and request to increase the rider. ICL cautiously
supported Idaho Power's 2019 request to reduce the efficiency rider, based on the Company,s
promise to pursue all cost-effective energy conservation. As expected Idaho power did so and
now just one year later we are faced with the need to retum to at least the same rider level as
before. For its part, NWEC previously provided comments suggesting that amaximum reduction
of 25 basis points, to 3.5%o, would provide a pathway to acquisition of even more cost-effective
energy efficiency, developing programs to acquire deep retrofit efficiency in buildings and
explore concepts such as pay-for-performance.3 Even without these program augmentations,
which should still be pursued, we note that Idaho Power's Application shows the Company
proposal is not sufficient to cover expected program costs and will result in continuing rider
account deficits by the end of next year.a
our analysis of Idaho Power's unrecovered balance for prior-year programs, forecast of
future program costs, and expected revenues supports a rider level ranging from 3.75%to 4.05%o.
The Company's Application, Attachment l, shows a rider balance of negative $12.7 million by
year-end 2020. For the 2021 program forecast, the Company shows a low-case estimate of $33.2
million in program expenses. A3.l%rider would cause the negative balance to grow to $13.2
million, while a3.75% rider would achieve a balanced budget for the low-case forecast. Using
the more realistic high-case forecast, a3.l%orider would cause a negative balance of $1g.9
2 See IPC Application at 3-4.
3 See NWEC Comments in IPC-E-19-06a See IPC Application Attachment l.
IPC-E-20-33
ICLA{WEC COMMENT November 18,2020J
million by year-end 2021, while a4.\So/orider would achieve a balanced budget. Instead of
making apartialadjustment to 3.lo/obecause of a coincidental alignment with unrelated
Boardman costs, we recommend seffing a rider level that aligns with Idaho Power's own forecast
of future program costs.
Any rider level below 4%o ishighly likely to cause Idaho Power to pursue another rider
increase in the very near future, based on Idaho Power's track record of delivering prudent
programs, and the initial results of the most recent conservation potential study.s Setting an
arbitrarily low rider that does not match Idaho Power's own forecasts of program achievements
would set a path to continue the trend from 2008 through 2019 of near- annual rider adjustments,
counter to customers' desire for certainty. Setting the rider at 4.05Yo is most likely to match the
forecast, address the current and growing negative account balance, and provide certainty and
stability for everyone.
Take A Long-Term View of Efficiency Progrom Costs
Another cause of the current rider deficit, and the ongoing annual mismatch of rider
funding and program costs, are the commercial and Industrial programs. These large projects
often last over two or more years, which makes annual forecasting challenging. We have
repeatedly encouraged the company to take a multiyear view of expected programs and costs to
achieve a smoother cycle of funding needs for customers. We recommend the Commission take
up Idaho Power's offer here to "update a longer-term analysis of energy saving targets" and
o,better align collection with expenses".6 But instead of waiting for another two years as Idaho
s See Idaho power Application at 5 ("the high-case is based on a recently completed potentia! study which will be
used in the CompanY's 2021 lRP")
6 See Application at 4.
IPC-E-20-33
ICLAIWEC COMMENT November 18,20204
Power proposes, we recommend the Commission direct Idaho Power to engage with
stakeholders at the conclusion of the 2019 IRP review process to design an efficiency funding
model that aligns with the biennial IRP process to avoid the continuation of annual rider
adjustments.
Consider Meoningful Rate Pressure Mitigation
Idaho Power states the proposed rider increase is designed to align with an expected
decrease in rates attributable to the Company's exit from the Boardman coal plant. This is
creative thinking and appreciated from a customer impact perspective, but we do not support
using unrelated issues as a basis to set efficiency funding levels. Simply put, cost-effective
energy efficiency should be funded to the level necessary to acquire all cost-effective energy
efficiency: nothing more, nothing less. Setting the rider based on outside rate determinants, on
the other hand, is arbitrary and not based on proper ratemaking techniques. Chronic
underfunding of efficiency programs harms customers because Idaho power charges interest on
unrecovered balances. If the Commission approves Idaho Power's proposal to continue incurring
a deficit in the rider balance, we recommend the Commission deny any ability to apply a
carrying charge that would further increase customer costs without any possible customer
benefit.
Of course, we acknowledge that rate increases can be difficult for customers, especially
in the current economic climate. However, setting an accurate rider level now, along with the
unrelated decrease attributable to Boardman, will mitigate this impact while also avoiding the
need for another rate increase in the near future. Further, other issues cause a much larger impact
to customers'bills than the relatively minimal impact from setting an accurate rider level. For
example, Idaho Power continues to hold approximately $45 million in tax credits, intended to
rPC-E-20-33
ICLA{WEC COMMENT November 18,20205
prop up earnings but never used for this purpose, that could be used instead to mitigate rate
increases.T Similarly, Idaho Power continues to spend approximately $330 million annually in
capital expenses and none ofthese projects are evaluated in the Integrated Resources Plan or
otherwise reviewed and approved by the Commission.s Small changes to these enonnous
amounts would have a far larger impact on customer bills than a modest adjustment to the rider
that funds programs that directly benefit customers'
Conclusion
For the reasons stated above, ICL and NWEC recommend the Commission:
. Increase the rider level to 4.05%.
o If the Commission approves a rider that will underfund programs, deny any carrying
charge applied to deficits.
. Adopt Idaho power's proposal to take a long-term view to balance efficiency program
expenses with rider amounts beginning in202l '
o Consider rate pressure mitigation that uses either existing tax credits or limits capital
expenditures planned for by Idaho Power, but not yet reviewed by the Commission'
Respectfully submitted this lSth day of November 2020'
/s/Be-niamin.I.
Benjamin J. Otto
Idaho Conservation League
7 See IDACORp presentation to the Edison Electric Institute Financial Conference, page 10. November 9-10'2020'
Available at: https://www.idacorpinc.com/-/media/Files/I/IDACorp leventslEBlo/o2}Fallo/o202020%20-
o/o2}lnv e stof/o2 Olnformatio n.p df
8 Id at 14.
IPC-E-20-33
ICLNWEC COMMENT November 18,20206
CERTIFICATE OF SERVICE
I hereby certify that on this lSth day of November, 2020,Idelivered true and correct
copies of the foregoing COMMENTS to the following persons via the method of service noted:
/s/ BenjaminJ. Otto
Electronic mail only (See Order 34602):
Idaho Public Uilities Commission
Jan Noriyuki, Secretary
[e-mail]. gov
Idaho Power
Lisa D. Nordstrom
Connie Aschenbrenner
lnordstrom@idahopower. com
caschenbrenner@idahopower. com
[e-mail]
Industrial Customers of ldaho Power
Peter Richardson
Richardson Adams PLLC
peter@richardsonadams. com
Dr. Don Reading
[e-mail]
IPC-E-20-33
ICLAIWEC COMMENT 7 November 18,2020