20231116Comments of the Commission Staff.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL :0IDAHOPUBLICUTILITIESCOMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.11714
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S APPLICATION FOR A )CASE NO.IPC-E-23-10
DETERMINATION OF 2022 DEMAND-SIDE )
MANAGEMENT EXPENSES AS )
PRUDENTLY INCURRED )COMMENTS OF THE
)COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
through its Attorneyof record,Michael Duval,Deputy AttorneyGeneral,submits the following
comments.
BACKGROUND
On March 15,2023,Idaho Power Company ("IdahoPower"or "Company")requested that
the Commission determine $31,585,110 in Idaho Energy Efficiency Rider ("Rider")funds and
$8,311,328 in demand response ("DR")program incentives-for a total of $39,896,437-were
prudentlyincurred in 2022.The Company requested its Application be processed by Modified
Procedure.
On April 14,2023,the Commission issued a Notice of Application and set an intervention
deadline allowing interested parties to intervene.Order No.35742.The city of Boise City
intervened.
STAFF COMMENTS 1 NOVEMBER 16,2023
The Company's Application also included the Demand Side Management("DSM")2022
Annual Report ("Annual Report").Supplement 1 to the DSM 2022 Annual Report shows the
results of the cost-effectiveness tests for each program and Supplement 2 contains program
evaluations and customer surveys and reports.
STAFF ANALYSIS
Financial Review
Staff audited the Company's Rider expenses,which included samples and reviews of
more than 190 transactions across the Company's programs.Staff found that expenses were
well-documented and controls were in place and adjusted as needed to regulate proper payment
of incentives and other costs.Additionally,the Company's internal review process identified
and corrected mistakes prior to the filing of its DSM reports.Based on Staff's audit,the
Company's rider expenses appear to be prudent with one adjustment to expendituresdiscussed in
further detail below.
During Staff's audit of EE expenses,Staff identified two ads installed in the Boise
Airport that Staff believes do not meet the requirements for energy efficiency ("EE")funded
advertising.The Airport advertisements were focused on Idaho Power providing 100%clean
energy by 2045,which enhance the Company's public image,but do not help customers lower
their energy bills or encourage customers to access the Idaho Power EE website.In its Response
to Production Request No.20,the Company stated they spent $9,467 on these ads in 2022;
therefore,Staff removed this amount from the Company's prudence request.
Staff recommends that the Commission find that the Company prudentlyincurred
$39,886,970 in DSM-related expenses for 2022.This total consists of $31,575,643in Rider
expenses and $8,311,328 in DR incentives.DR incentives were included for recovery and
audited in the 2022 Power Cost Adjustment in Case No.IPC-E-23-12.
The Company identified three prior year-end adjustments to its 2021 Rider expenses.
The first prior-year adjustment of $1,044 was associated with the Commercial &Industrial
("C&I")program where an expense should have been charged to the Oregon Rider instead of the
Idaho Rider in 2021;this amount must be added back to avoid understating the 2022 prudence
request.The second prior-year adjustment of $1,356 is associated with Idaho activity for the
Residential New Construction program that was incorrectlycharged to the Oregon Rider in 2021.
STAFF COMMENTS 2 NOVEMBER 16,2023
The correction of adding the expense to the Idaho Rider was made in 2022.That amount
therefore needs to be subtracted from the 2022 prudence request because it was already deemed
prudent by the Commission in the 2021 request.The final adjustment of $7,260 was associated
with correcting a duplicate transaction.An amount of $7,260 of Idaho Small Business Direct
Install ("SBDI")expenses had originally been charged to the Oregon Rider.When this was
discovered in 2021,the Company transferred the amount to the Idaho Rider,but the transaction
was duplicated adding the amount twice.The duplicate transaction was identified and reversed
in 2022.Therefore,$7,260 needs to be added back to avoid understating the 2022 prudence
request.
In preparation to file its case,the Company also identified three current year-end
accounting adjustments to the Rider for 2022.The corrections were made after the 2022 year-
end financial books were closed.The first current-year adjustment resulted in a reduction of
$6,998,which was related to expenses associated with C&I overheads that should have been
charged to Operation &Maintenance ("O&M"),rather than the Idaho Rider.The second
adjustment required inclusion of $1,289 associated with the Residential Energy Efficiency
Education that was initially charged to O&M instead of the Idaho Rider.Finally,a reduction of
$89,680 was necessary to remove a program administration fee the Company paid in 2022 that
was refunded in 2023 due to services not being rendered.
Staff calculated the DSM Rider account balance as of December 31,2022,in Table No.1
below:
Table No.1 Tariff Rider Reconciliation:
2022 Idaho Power Beginning Rider Balance (Underfunded)$(6,937,705)
2022 Tariff Revenue $34,879,985
Interest on Tariff Rider Balance $(36,049)
Total Funds Available $27,906,231
2022 Reported Expenses $(31,673,550)
Prior Year-End Accounting Adjustments
2021 Commercial &Industrial Adjustment $(1,044)
2021 Residential New Construction Adjustment $1,356
2021 Small Business Direct Install Adjustment $(7,260)
STAFF COMMENTS 3 NOVEMBER 16,2023
Current Year-End Accounting Adjustments
2022 Commercial &Industrial Overhead Adjustment $6,998
2022 Residential Energy EfficiencyEducation Adjustment $(1,289)
2022 Residential Energy EfficiencyOverhead Adjustment $89,680
2022 Airport Ad Removal $9,467
2022 Total Prudent Expenses $(31,575,643)
2020 Ending Balance (Underfunded)$(3,669,411)
Table 1 shows that the Rider balance was underfunded by $6,937,705 on January 1,2022.
However,the underfunded balance decreased to $3,669,411 by December 31,2022.On June 1,
2023,Idaho Power filed a general rate case ("GRC")(IPC-E-23-11)where the Company
requested to reduce the EE Rider rate to 2.25%,from its current 3.1%.The parties in that case
reached a comprehensive settlement,a component of which will set the EE Rider rate at 2.35%.
The settlement is currentlybefore the Commission.
DSM Labor Expense
In Order No.33908,Case No.IPC-E-17-03,the Commission ordered a 2%cap on wage
increases charged to the Rider.In Reconsideration Order No.34874,the Commission ordered
that "the Company shall apply the 2%cap for DSM labor expense increases to the actual average
wage per full time equivalent ("FTE")based on the prior year's average wage per FTE."The
Company has complied with this Commission order.The Company is requesting $3,381,085 in
2022 DSM labor expense be collected through the Rider-which would equal the 2%cap above
last year's labor costs-even though their actual labor expense in 2022 totaled $3,392,286.
Expenses
In 2022,the Rider expenses increased by $3,662,770,or 13 percent,compared to the
DSM expenses reviewed in last year's prudence case.This is primarily due to the increase in
customers with large projects participating in the C&I programs -such as Custom Projects,New
Construction,and Retrofits options-eventhough the number of participants decreased by 293.
Total expenses in those three options amounted to $16,301,141-which is $1,925,959more than
the same options cost in 2021.
STAFF COMMENTS 4 NOVEMBER 16,2023
DSM Portfolio
In 2022,the Company's DSM portfolio was cost-effective with a Utility Cost Test
("UCC")ratio of 2.02.The programs in the portfolio captured a total of 169,889 Megawatt-
hours ("MWh")of energy savings-representinga 19%increase from 2021.These savings
included an estimate of 24,448 MWh of savings attributable to Northwest EfficiencyAlliance
("NEEA").Application at 6.In addition,the Company maintained a Utility Cost Test ("UCT")
ratio of 2.02 on its total energy efficiencyportfolio.At a sector level,the Company's C&I
programs continue to provide the majority of savings with 109,960 MWh.Next,the Residential
sector captured 28,525 MWh of savings.Finally,the Irrigationsector contributed 6,955 MWh of
savings.Of the Company's seventeen offerings across all sectors,eight are not cost-effective.
However,as detailed in the analysis of specific programs below,the Company has shown it is
actively managing its programs.In general,Staff believes the Company's DSM programs are
well managed and cost-effective.Staff notes that the lack of comment on any portion of the
Company's DSM offerings should not be construed as approval or support.
Energy Efficiency Programs
Educational Distribution Program
The Educational Distribution program currentlydelivers educational and energy savings
material through the Nightlightsas Giveaways,Student Energy Efficiency Kit ("SEEK"),and
Welcome Kit programs.In 2022,the Education Distributions program saw costs increase from
$433,963 to $1,061,898.While savings also increased,they did not match the increase to costs,
resulting in a reduced UCT of 1.31 from 2.39 in 2021.
Much of this increase can be attributed to the SEEK offering.In its Response to
Production Request No.12,the Company stated thataue to the timing of the SEEK offering in
the 2021-2022 school year-more costs were allocated to the 2022 program year.For this
school year,the Company selected a new vendor,which increased costs and delayedthe
offering.The Company expects that the 2022-2023 school year offering will be more in-line
with previous years.
The Welcome Kits offering also saw an increase in costs between 2021 and 2022.This
increase is due to the Company adjusting the contents of its Welcome Kits in 2022 to include
STAFF COMMENTS 5 NOVEMBER 16,2023
four 1100-lumen light-emittingdiode ("LED")bulbs.Annual Report at 43.These bulbs
produce more savings than the previous 800-lumen bulbs,therefore allowingmore costs to be
allocated to the cost-effective portion of the Welcome Kits offering.Of 32,700 kits distributed
in 2021,318 customers went on to participated in one of the Company's EE offerings.See
Response to Production Request No.11.While the offering was not cost-effective when
considering all Welcome Kit expenses,Staff believes that the Welcome Kits continue to provide
a valuable educational opportunityfor new customers.
In its Annual Report,the Company has indicated that it will no longer claim savings for
screw-in LEDs in June 2023 in response to the Energy Independence and Security Act ("EISA")
lighting backstop.At that time,the Company states it will reconfigure the kits again to include
only two lightbulbs and two nightlightsto reduce costs,continue to claim the cost-effective
portion of the kits,and allocate all other costs to the Residential Energy Efficiency Education
Initiative ("REEEI").Id.at 45-46.While the remaining nightlightsdo produce some savings,
Staff believes that the Welcome Kits have continuallybecome more of a marketing and
educational offering as the potential savings of the kits has decreased.Staff recommends that the
Company allocate future Welcome Kit expenses to the REEEI fund and continue to find ways to
reduce the cost of the kits.
Brio Market Transformation
In 2020,the Company,in partnership with Avista Corporation d/b/a Avista Utilities
("Avista"),began a Market Transformation Pilot Program.The program is intended to explore
the utilities'ability to accelerate the adoption of energy efficient technologies beyond what is
provided by NEEA in their Idaho service territories.Id.at 158.In its Response to Production
Request No.10,the Company describes that the pilottargeted the market for ductless heat
pumps because it had previouslybeen declared as transformed by NEEA;however,barriers
continued to exist in Idaho.The pilot is structured in two phases beginning April 2021 and
concluding in 2023.The program has identified 22,726 prospectiveparticipants and expects
approximately 300 installs per utility.The pilotwas marketed to these customers in two
concurrent phases of 11,373 customers using direct mail marketing offering cash incentives for
the installation of ductless heat pump systems.The Company expects to complete the pilotby
STAFF COMMENTS 6 NOVEMBER 16,2023
the end of 2023.Staff will review the results of the pilot and the lessons it can provide for
Idaho-specific market transformation efforts.
Home Energy Reports ("HER")
The HER program is designed to encourage customers to engage in energy efficient
behaviors through home energy reports.The Company contracts with a third-partyto deliver
quarterly a report detailing the customers energy use compared to similar homes along with
suggestions on how to reduce their energy usage.Of the residential sector,the HER program
contributed 20,643,379 kWh of savings which is more than twice the savings of the rest of the
residential sector combined.In 2022,the Company's HER program remained cost-ineffective
with a UCT of 0.71,however the Company continues to claim that the program is cost-effective
from a life cycle perspectivewith a UCT of 1.17.Id.at 71.
Staff believes the Company should not use a life-cycleperspective to evaluate the cost-
effectiveness of the program and should use the measure life instead.The Company assumes
that costs and savings extend over numerous years-includingafter the Company stops
delivering program reports in 2023.The Company assumes the savings per participant decreases
at a rate of 20%per year between 2024 and 2026.Id.at 74.Staff believes that as savings are
driven by customer behavior;there are many factors that can reduce or eliminate savings as
customers'behavior changes.While the contract for the current HER program ends in 2023,the
Company has stated that it will actively review the program's cost-effectiveness,overall savings,
and customer experience when considering future programs.Id.at 76.Staff recommends that
the Company closely review the persistence of energy savings beyond the measure treatment and
present its findings to the Energy EfficiencyAdvisory Group ("EEAG").
Energy House Calls
Followingthe resumption of the Energy House Calls program in November 2021,the
program has seen an increase in participation from 11 participants in 2021 to 52.However,
participation did not return to levels the program achieved prior to pre-pandemic levels.Much of
the reduction in participation can be attributed to the pandemic.The Company notes that the
program is only offered once per home and that participation has seen a steady decline.Id.at 53.
STAFF COMMENTS 7 NOVEMBER 16,2023
On June 30,2022,the Company closed the program to new participants and worked through its
backlog of participants until December 31,2022,when the program ended.
Heating and Cooling Efficiency Program
The Heating and Cooling Efficiencyprogram provides incentives for residential
customers,builders,and contractors for the installation of energy efficient heating and cooling
measures.Incentives vary dependingon the measure which can range from duct sealing to
heat pump systems.In 2022,the program saw a decrease in cost-effectiveness with a UCT of
0.98.
The Company describes that,while some offerings saw decreases in savings,new
programs and increased participation in other offerings buoyed the program's cost-effectiveness.
Additionally,the Company contracted a third-partyimpact evaluation of the program in 2021
with some expenses allocated to 2022.The Company states that if the costs associated with its
recent impact evaluation are removed,the program would be cost-effective in 2022 with a UCT
of 1.00.However,Staff remains concerned with an apparent downward cost-effectiveness of the
program.If the cost of the evaluation is removed from the 2021 program costs,the program for
the year would have had a UCT of 1.19.Id.at 57.Staff recommends that the Company continue
to monitor the programs cost-effectiveness and make changes as necessary to maintain a cost-
effective program.
MultifamilyEnergy Savings Program
In November 2021,the MultifamilyEnergy Savings Program resumed work after being
suspended due to the pandemic.The Company stated that the cost-effectiveness of the program
will be a challenge moving forward.Additionally,the program saw a reduction in savings for
most of its measures.In response,the Company-withsupport from the EEAG-closed the
program in December 2022.
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
STAFF COMMENTS 8 NOVEMBER 16,2023
designed to mirror the WAQC but is funded through the Energy EfficiencyRider.In 2022,the
Company's low-income weatherization programs remained cost-ineffective.The WAQC saw a
small reduction in participation and savings producing a UCT of 0.17.Weatherization Solutions
saw an increase in participation and savings;however,contractors report higher costs for
materials leading to a UCT of 0.15.Staff and the Company acknowledge the struggles of
achieving a cost-effective low-income weatherization program.The Company continues to work
to improve the cost effectiveness of these programs.
Due to the impact of the COVID-19 pandemic and a build-upof previously unspent
funds,a large sum of fundingwas carried over from previous years.As of the August 2023
EEAG meeting,the carryover balance has grown to $1,148,905.In case number IPC-E-22-15,
the Company proposed re-weatherization projects as a solution to deplete this increasing pool of
funding.Under these projects the Company would pay 100%of the HVAC upgrade costs for
homes that previouslyqualified for the low-income assistance upgrades but did not receive
HVAC upgrades.This program was approved in late 2022.Order No.35583.Staff looks
forward to reviewing the impact of the program as part of the 2023 annual report.
Commercial Energy SavingKits
The Commercial Energy-Saving Kit ("ESK")program offers commercial customers kits
containing several energy saving pieces of equipment such as LED lamps,faucet aerators,and an
exit sign retrofit kit.The program is conducted through a contract with a third-partyvendor who
mails kits directly to customers.In 2023,with the implementation of the EISA lighting back
stop,the removal of LED savings,and reduction in savings for the other measures the offering
will no longer be cost-effective.The Company continued to offer the Commercial ESK's until
the contract ended in June 2023.Response to Production Request No.13.
Commercial Custom Projects
For several years the Company's C&I Custom Projects was reported as the highest saving
program in its EE portfolio.In 2022,the Custom Projects program captured 56,157 MWh of
energy savings and accounted for 39%of the Company's entire energy efficiency portfolio.For
context,this is more than the next two C&I programs combined or the entirety of the residential
sector.In addition to capturing a large amount of energy savings,the custom projects program is
STAFF COMMENTS 9 NOVEMBER 16,2023
also the most expensive offering in terms of both incentive payments at seven million dollars and
cost to the Company at approximately nine million dollars.Because of the magnitude of these
savings,costs,and due to the custom nature of each project,Staff conducted an audit of the
supporting documentation and engineering calculations.The results of the audit show that the
custom projects savings are well supported by third-partyscoping evaluationsand engineering
reports.Additionally,the Company has multiplelevels of verification for incentive payments.
Staff appreciates the detailed support the Company maintains for its custom projects and will
continue to review the program's projects in future prudence filings.
Demand Response
The Company maintains three DR programs designed to reduce load during critical hours
and minimize or delay the need to build new resources.The A/C Cool Credit ("ACCC")
program,Flex Peak program,and IrrigationPeak Rewards program are designed to target the
residential,C&I,and irrigation sectors,respectively.In 2022,the Company's DR programs
incurred $9,852,529 in incentive payments funded through base rates.The programs achieved
200 MW of maximum demand reduction from its 312 MW of nameplate capacity.Staff
reviewed the Company's DR programs and believes that the programs were well-managed,
effective,and prudent.
In Case No.IPC-E-21-32,the Company proposed many changes to the DR programs.
These changes included the alignment of the DR program design to system capacity needs,an
updated assessment of available DR,and the removal of the marketing cost cap.In Order No.
35336,the proposed changes were accepted with an effective date of June 15th,2022,to coincide
with the DR season.For the 2022 DR season,Staff reviewed the impacts of these changes.
Alignment ofDRprogram design to system capacity needs
In Case No.IPC-E-21-32,the Company proposed moving to an Effective Load Carry
Capability risk-based methodology.This change is in response to the increasing effect of
variable resources on the Company's system shifting the primary hours of need for additional
resources.The Company's changes included extending the maximum event hours per week by
one hour,shifting the event window two hours later from 3:00 pm to l 1:00 PM,and extending
the season dates one month until September 15 h.In Order No.35336,the Commission directed
STAFF COMMENTS 10 NOVEMBER 16,2023
the Company to exercise one of its minimum number of DR events in the extended event
window of August 15th -September 15th,9:00 PM to l1:00 PM.In Response to Production
Request No.9,the Company provided detailed information for its 2022 season DR events
showing thirteen DR events during the extended season,six ACCC events with five during the
extended hours,four Flex Peak events all of which ran into the extended hours,and three
Irrigation Peak Rewards events all of which also ran into the extended hours.Staff believes that
the Company has demonstrated that there is significant load during the extended event window
and has the ability to reduce that load through the dispatch of its DR programs.
MarketingCost Cap
Under the previous requirements stipulated under the 2013 agreement in Case No.IPC-E-
13-14 for the DR programs,the agreement included a marketing limitation for DR programs due
to no-near term capacity deficits.In the more recent 2021 IRP,the Company predicted capacity
deficits much earlier.In response,the marketing limitation was removed in Order No.35336
allowingthe Company to activelymarket and recruit additional DR program participants.In the
August EEAG,the Company presented the effects of its efforts to market its DR programs.
The ACCC program focused its initial marketing on homes that have a switch installed
but are not enrolled.These homes have a higher cost-effectiveness because the Company does
not incur costs for the installation of new switches.The Company's marketing strategy used the
reduced costs to offer a $25 gift card.The first round of marketing was via letter to 5,000
customers in April,resulting in 137 enrollments and a 2.8%success rate.Six-hundred of these
letters included the gift card resulting in 40 enrollments or 6.7%success rate.The Company
reports that the ACCC program still has a decline in participation;however,the effect of
marketing has reduced the downward trend from an estimated two thousand participant reduction
in 2023 to only a 500-participant reduction.
The C&I sector's Flex Peak program saw the most successful increase in participation
from 2021 to 2022.The program saw a large increase in new participation while the program
optout rates remained relatively constant.However,the amount of DR capacity and actual
reduction has decreased.The Company is taking additional action on its Flex Peak program with
changes proposed in Case No.IPC-E-23-24.
STAFF COMMENTS 11 NOVEMBER 16,2023
The Irrigationpeak rewards program was the most impacted by changes in seasons.The
2022 program year saw a substantially higher loss rate of participating pump locations but also a
much higher increase in new enrollments,resulting in only a small decrease in participation.As
of the August EEAG,the Company reports a smaller loss of participating pumps while gaining
new locations,resulting in a net increase in participation.
Staff will continue to review the effects and costs of the Company's DR marketing efforts
in future DSM prudence filings.
Assessment ofAvailable Demand Response
Previously,the Company used the Northwest Power and Conservation Council
("NWPCC")DR potential assessment-scaled by the Company's relative share -for assessing
the amount of available demand response for planning purposes.As a result,the NWPCC
system did not account for the Company's service territory summer peaking profile in contrast to
much of the Northwest's winter peak.In February 2022,the Company initiated a process of
conducting a DR potential study specific to the Company's service region.The evaluation was
completed in late 2022 and is being used to support DR selections in the 2023 IRP.Case No.
IPC-E-23-23.Staff will review the Company's future DR selections in that filing.
NEEA Participation
In 2022,the Company spent $2,650,440 of Idaho Rider funds to participate in NEEA's
market transformation program.The Company began funding NEEA since the program's
inception in 1997 and has continued its funding.Funding is based on five-year cycles,which is
set to end in 2024.Currently,Idaho utilities fund 14.9%(Idaho Power 9.2%and Avista 5.7%)of
all of NEEA activities.NEEA states its purpose as "an alliance of utilities and energy efficiency
organizations that pools resources and shares risks to transform the market for energy efficiency
to the benefit of consumers in the Northwest."
In Staff's Comments in Case No.IPC-E-21-04,Staff noted concerns of claimed savings
that were not attributable to NEEA.In Order No.35270,the Commission directed the Company
to conduct an independent Evaluation,Measurementand Verification to verify the accuracy of
NEEA claimed savings.In cooperation with Avista,the utilities contracted with ADM
Associates ("Evaluator")to conduct the evaluation.On June 30,2023,the Company filed a
STAFF COMMENTS 12 NOVEMBER 16,2023
SupplementalApplication which included Direct Testimony from Theresea Drake and ADM's
"Evaluation of NEEA Impacts Allocated to Idaho Power Company and Avista Utilities Within
the State of Idaho"("NEEA Evaluation"),submitted on April 6,2023.On April 7th,the
Company sent the NEEA Evaluation to NEEA for comment.Since then,the Company and
NEEA have met several times to discuss the findings.
Summary of the NEEA Evaluation
Consistent with the direction provided by Order No.35270,the objectives of the
evaluation were to verify and validate the energy and demand impacts attributable to NEEA
activities while accounting for (1)the calculation methodologies used by NEEA;(2)the method
of allocating those savings;and (3)the cost-effectiveness of those savings based on the utilities'
DSM avoided costs.In addition,the Evaluator interviewed NEEA,IPC,and Avista staff to
understand the methodologies and impacts of NEEA efforts;provided findings,observations,
and recommendations;reviewed NEEA assumptions and savings calculations;reviewed
methodologies and energy impacts attributable to Idaho Power and Avista;verified calculations
with a 90/10 confidence where applicable;and proposed alternative-more accurate-methods
where applicable.Exhibit 4 at 14.
The NEEA Evaluation considered these objectives for each of the programs from which
NEEA claims savings,including:efficiency measures,federal standards,and state building
codes.NEEA's Efficiency Measures program functions similarly to the Company's EE
programs by lowering barriers to purchase and install EE measures.The Standards program
claims savings by influencingthe adoption of energy efficient federal standards.The Codes
program operates in a similar manner to the Standards program,by claiming savings through
influencingthe adoption of more energy efficient building codes at the state level.For the
savings claimed by NEEA for the Company between 2017 and 2021,the Measures program
provided the smallest contribution of savings ranging between 12%in 2017 and 23%in 2021.
The Standards program contributed as much as 55%of claimed savings in 2017 but decreased to
approximately 20%starting in 2019.The majority of claimed savings are provided by the Codes
program which provides as much as 66%of claimed savings in 2019.Id.at 34.
The Evaluator concluded that NEEA as a whole is cost-effective with a major caveat that
it believes that the savings from the Codes program are overestimated.The measures program
STAFF COMMENTS 13 NOVEMBER 16,2023
was not cost-effective in all years-onlyobtaining a maximum UCT of 0.28.The Standards
program is cost-effective in all years with an average UCT of 23.62.Finally,the Codes program
was reported as cost-effective with an average UCT of 40.83.The Evaluator describes that
NEEA does not conduct influence evaluations for state level code updates.Instead,it claims
100%of the savings attributable to code updates for the Codes program.Without influence
evaluations and no other references,the Evaluator operated with NEEA's assumption of
claiming 100%of code savings with the caveat that the savings are likelyoverstated.Id.at 104.
Evaluation recommendations
With the completion of its evaluation in April 2023,the Evaluator and the Company
presented the final report to NEEA.NEEA provided responses to the Evaluators
recommendations.The Evaluator worked with NEEA to review follow up information and
provided an addendum to its report with updated findings and recommendations in June 2023.A
list of the Evaluators findings can be found in Exhibit 4 at 17.The revised recommendations are
presented Staff Attachment A.
In its Response to Production Request No.21,the Company details its requests to NEEA
based on the evaluation recommendationNo.1,2,4,5,6,8,and 9 and NEEAs response to each
request.RecommendationNo.3 and 7 are not included in the Company's request as it believes
that the Company is best positioned to address these recommendations.See Response to
Production Request No.27.For recommendation Nos.1,2,and 4,NEEA has indicated that it
can implement the recommended change but notes that it expects additional labor costs.For
recommendation Nos.5,6,8,NEEA states that no change is necessary as these match current
practices.These changes address some of Staffs previous concerns;however,Staff remains
concerned with NEEA's response to recommendationNo.9 and the framework used to conduct
influence evaluations.
For recommendation No.9,NEEA states that it can possibly implement evaluations for
code updates.However,since NEEA's current approach to report code energy savings was
recommended by its Cost Effectiveness Advisory Committee ("CEAC"),any changes would
need to be discussed by that committee.Response to Production Request No.21.The
Addendum to the evaluation clarifies that NEEA's current policy is to claim one-third of code
savings by assuming a code life cycle of 10 years rather than 30 years.This decision was made
STAFF COMMENTS 14 NOVEMBER 16,2023
by the CEAC 25 years ago and it is unclear if this assumption has been reassessed by the CEAC
since its adoption.The Evaluator recommends that NEEA's policy is revisited in the CEAC.
Exhibit 6 at 12.Given the majority of NEEA's claimed savings are provided by codes savings,
Staff is concerned that a reduction to NEEA's savings as a whole will have a material impact on
the cost-effectiveness of NEEA's market transformation efforts.
In the addendum to its evaluations,the Evaluator provided feedback to NEEA that since a
framework for evaluating NEEA influence has been developed for quantifyingsavings from
standards,it believes that a similar influence evaluation could be developedfor claiming code
savings.Id.Staff is concerned with potential use of the NEEA's standards influence evaluation
framework for evaluating code savings and its continued use to quantifysavings for federal
standard changes.Table 3-35 of Exhibit No.4 details twelve third-partyevaluations conducted
to quantifythe energy savings claimable by NEEA for its influence in the relevant standard
changes.For each of these evaluation reports by third-partyevaluators,Staff discovered that a
"NEEA Standards Development Logic Model"was used to develop the quantifiable influence on
the standard.Therefore,Staff believes that,by using a NEEA provided model to inform the
influence evaluations,the results may not be entirelyindependentand may not be accurate.
Consequently,Staff is uncertain how much influence NEEA has on federal standard
changes.NEEA states that their influence is based on their participation and efforts in standard
update meetings,proposals,and comments.Exhibit 4 at 78.However,these numbers are
arbitrary to begin with and a best guess,when multipleother stakeholders from federal,state.and
local leaders all contribute to the result of these changes to codes and standards.Staff believes
there is a level of influence from NEEA on these but is uncertain as to what degree.
Regional Focus of NEEA Efforts
Staff is concerned that NEEA is no longer focused on the needs of its participants east of
the Cascades and in states without Renewable Portfolio Standards ("RPS").At NEEA's
inception,many of the Northwest states shared common attributes for the region.However,
since then states such as Washington and Oregon have developed RPS that utilities in those
states must abide by.This has resulted in NEEA prioritizing the needs of these fundingutilities
to further provide electrification and decarbonizationmeasures for market transformation.These
measures and efforts for these states are often well above what current federal or Idaho standards
STAFF COMMENTS 15 NOVEMBER 16,2023
may be.The Company states that "Idaho Power is concerned that these conflicting pressures
could push the alliance to lose sight of its initial vision of regional energy efficiencymarket
transformation,which does not align with the direction the Company has been given by the
Commission on spending Idaho Energy Efficiency."
An example of this fallout is with ductless heat pumps.In 2020,Avista and Idaho Power
initiated a contract with Brio to conduct market transformation pilot activities for ductless heat
pumps specific to Idaho.'The Company states in Response to Production Request No.10 that
the pilot:
Effort was a recognition of the uniqueness of the Idaho market as compared to the
greater Northwest...[Specifically,]this came at a time when the NEEA was exiting
the ductless heat pump market that it had declared to be transformed.However,
that was not the case in Idaho as market barriers preventing large-scale ductless
heat pump adoption persisted.
Additionally,from interviews conducted with NEEA and utility staff,the Evaluator
found that both utilities do not feel empowered to question NEEA's cost effectiveness
calculations as part of the CEAC meetings.Rather,the meetings are described as a basic report
of activities in contrast to NEEA's perception that the meetings are an opportunityto discuss the
models and assumptions.Id.at 61.
Staff is concerned that NEEA's priorities are shifting to these Northwestern states and
Idaho has become an afterthought in their market transformation efforts.Staff believesNEEA
activities need to provide benefit to Idaho;if NEEA activities do not benefit Idaho,participation
should be reevaluated.
Movingforward
The next funding cycle for NEEA is 2025-2029.The Company currentlyestimates that the
total cycle cost could cost approximately $20,290,440,or approximately $4,058,088 per year.
This is an increase of $5.6 million or approximately a $1.4 million yearly increase from the
current fundingcycle.NEEA also identified additional cost of $550,000 to implement the
recommendations No.1,2,4,and 9,to be shared by all NEEA funders.See Response to
Production Request No.22.Additionally,NEEA's CEAC is scheduled to hold a meeting on
i More informationon the Brio Ductless Heat Pump pilot can be found on page 7 of Staff's Comments.
STAFF COMMENTS 16 NOVEMBER 16,2023
November 30th.Staff believes that this meeting could provide important information for the
Company's to consider when deciding its next steps.
It is Staff's understandingthat the Company will begin negotiations in December and finalize
potential contracts (contingent on Commission approval)around February.However,the
Company indicated that it is undecided on participating in the next funding cycle at this time.
Drake Direct at 16.While the Company is currentlyundecided on continuing participation,Staff
believes it may be beneficial if the Commission weighs in on Staff's concerns with NEEA as the
Company is in the middle of crucial negotiations for determining Idaho's market transformation
path for the next five years with NEEA.Overall,Staff is concerned with NEEA participation.
Staff is concerned that NEEA's efforts will continue to be focused on Oregon and Washington's
RPS and clean standards.Overall,the majorityof NEEA's savings are claimed from the Codes
and Standards -which have the highest amount of uncertaintyof accuracy.NEEA claims 100%
of code savings and standards savings are based on a template that NEEA created for evaluating
their influence.Staff is uncertain about the amount of influence that NEEA provides for these
changes.Idaho utilities are at a crossroad with NEEA participation going into the next funding
cycle.Theycan continue funding,limit funding,or invest Idaho EE rider funds in other
programs that have a focused savings that is specific to Idaho,such as programs like Brio.Staff
recommends the Commission provide input on the matter of NEEA participation.
STAFF RECOMMENDATION
Based on its analysis provided above,Staff recommends that the Commission:
1.Find that the Company prudentlyincurred $39,886,970 in DSM-related expenses
for 2022;and
2.Provide inputon the matter of NEEA participation.
STAFF COMMENTS 17 NOVEMBER 16,2023
Respectfully submitted this 16th day of November 2023.
el Duva
Deputy AttorneyGeneral
Technical Staff:Jason Talford
Laura Conilogue
Rick Keller
i:umisc/comments/ipce23.10cslejjtrk comments
STAFF COMMENTS 18 NOVEMBER 16,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16th DAY OF NOVEMBER 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
IDAHO POWER COMPANY,IN CASE NO.IPC-E-23-10,BY E-MAILING A COPY
THEREOF,TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN CONNIE ASCHENBRENNER
LISA D NORDSTROM ZACK THOMPSON
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL:E-MAIL:[e-mail]
[e-mail] [e-mail]
[e-mail]
[e-mail]
ED JEWELL WIL GEHL
DEPUTY CITY ATTORNEY ENERGY PROGRAM MGR
BOISE CITY ATTORNEY'S OFFICE BOISE CITY DEPT PUBLIC WORKS
150 N CAPITOL BLVD.150 N CAPITOL BLVD.
PO BOX 500 PO BOX 500
BOISE ID 83701-0500 BOISE ID 83701-0500
E-MAIL:[e-mail] E-MAIL:[e-mail]
[e-mail]
[e-mail]
SECRETARY
CERTIFICATE OF SERVICE