20000229Comments.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO FUND ITS CONTINUING PARTICIPATION IN THE NORTHWEST ENERGY EFFICIENCY ALLIANCE, INC. )
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CASE NO. IPC-E-99-13

CONSUMER DIVISION
STAFF COMMENTS

COMES NOW the Consumer Division Staff of the Idaho Public Utilities Commission, in response to Order No. 28273, issued February 1, 2000, submits the following comments.
The purpose of these comments is to provide the Commission with information on what the public’s comments and perception is regarding NEEA and how to fund it. While the Utility Staff may find the benefits of NEEA to be reasonable and prudent the Consumer Division believes that the Commission must also take into consideration the comments and concerns of the public and the ratepayers who ultimately must pay the cost of these programs.
The Consumer Division would also encourage the Commission, before committing to funding NEEA for 5 more years, to consider opening a docket for the purpose of determining whether or not participation in NEEA is the most efficient and economic approach to energy conservation, and also determine whether or not it is duplicative of other programs. If conservation of kilowatt-hours is the Commission’s goal it should look at the supply side (utility side) as well, while NEEA claims to have saved 14 average megawatts in 3 years, Idaho Power reported 1.2 million-megawatt hour losses in its 1998 Annual Report to the Federal Energy Regulatory Commission. The Commission has stated in the past that “care must be taken to pay only for measurable conservation benefits and for those conservation benefits not otherwise available.” (Case No. U-1500-165, Order No. 22299 at p. 17.)
INADEQUATE NOTICE
The Consumer Staff must primarily rely on consumer sentiment gathered from previous cases and information that is available from various surveys, studies and websites. In this case the Commission will only hear from the public if they happen to read about the proposal in the newspaper. The Company was not required in this case to prepare a bill stuffer to advise its customers of this proposal. In the initial NEEA case IPC-E-96-26 the Company did notify customers of its plan to apply a surcharge to bills to cover the cost of participating in NEEA. In this case, the Company plans to notify customers only if the Commission decides to implement a surcharge or rate increase. In fact the Company recommends that if such a NEEA charge is implemented, then customer input should be solicited in order to best determine how to structure the charge. In that vein, Idaho Power suggests a workshop as a feasible forum to discuss the matter. The apparent difference in notice requirements between cases is the question of whether or not it will result in a rate increase to ratepayers. The question of whether or not to use revenue sharing funds which would not increase rates at this time or to apply a specific charge to recover demand side management (DSM) costs is currently before the Commission in this application. Should the Commission decide to order a specific charge for cost recovery it should also consider whether or not proper notice has been given to the ratepayers. It is the opinion of the Consumer Division that customers should also be given the opportunity to comment on a five-year commitment to NEEA. Idaho Power has agreed to include any questions regarding consumer interest in conservation programs in its quarterly customer satisfaction survey if the Commission so desires.
The Company recommended and the Staff supported a bifurcated proceeding in this case, where the Commission could first make a determination regarding whether it is in the public interest for Idaho Power to continue to participate in NEEA and then a separate proceeding could be conducted to determine how that participation would be funded.
The Commission’s decision to take up both questions under modified procedure may have limited customer notice on the possibility of a rate increase.
CONSUMER COMMENTS FROM IPC-E-96-26
The Commission received more than 50 public comments from consumers about Idaho Power’s proposed public purpose charge in that case. Nearly all were in opposition to the concept of NEEA. Attached to these comments is a sampling of typical comments, including the Idaho Farm Bureau claiming to represent 47,000 family members. Also attached are letters in support of the concept. In addition to the written comments from consumers the Industrial Customers of Idaho Power, Micron and the Rate Fairness Group, consisting of 13 members, intervened and testified in opposition to funding of NEEA.
Many of those who commented felt that NEEA had no benefit and that if the Company thought conservation was important that it should bear the cost, not the ratepayer. Others felt NEEA was duplicative of other projects including federal efforts and legislation requiring energy efficiency standards for many products. Some are tired of hidden taxes for every “good idea” that comes along being added to their utility bill. Consumers in general prefer to manage their own conservation efforts and resent and distrust government interference. The real motivator to conserve energy is money and saving money on utility bills. Others are just flat tired of conservation programs; they feel the effort has run its course. Consumers are clearly educated on the issue and see no individual benefit to them. Low-income consumers in particular do not see “market transformation” as a solution to their problems.
The theory behind NEEA was that it would be transitional and that once market transformation took place that would lessen the need for any intervention on the part of utilities or the legislature. In fact, Jim Baggs with Idaho Power testified at the prehearing conference in Case No. IPC-E-96-26 that “investor owned utilities should not continue to be the mechanism or the collection mechanism or the funding entity for energy efficiency and market transformation far out into the future.” The Commission should ask what is a reasonable transition period? Is it 3 years? Is it 8 years? 20 years? What if the transition never occurs? Should the ratepayers be forever liable for this experiment? And at what cost?
Consumer Staff research in preparation for this case indicates that the products and concepts promoted by NEEA are not new, energy efficiency and market transformation projects have been around for at least 20 years. The jury is still out on the benefits and probably always will be. Projects have ranged from trees (for shade) to energy codes. Even after 20 years, a recent survey found that 40% of people do nothing to reduce energy use in a new home.
SURVEYS
Through Internet research and a Bonneville Power Administration paper on “Renewable Resources and Conservation: What Consumers Want” Consumer Division Staff has extrapolated the following conclusions:
While it was clear in various surveys that consumers thought energy conservation was important, especially in lieu of new energy resources and especially resources that were not environmentally friendly, it was not so clear how much people were willing to pay for energy conservation policies and programs such as NEEA. Since most of the surveys were asking whether or not consumers were willing to pay more for “green power” a favorable response to that question does not equate to a favorable response for a market transformation energy conservation program.
Nationally, fewer than 6% of eligible households have taken advantage of free utility-provided energy audits. Of those customers who have received audits only a small percentage carry out the actions recommended by the auditor.
The same can be said for energy efficient products, consumers appreciate a choice but the efficiency of the product is not their top criteria, and they may or may not be willing to pay more for such products. A report on “Consumers and Compact Fluorescents” found that homeowners were happy enough to purchase CFLs as long as they were subsidized by the utility, but those same customers were unlikely to acquire CFLs on their own.
In a Western Montana Generation and Transmission Survey, consumers, when asked if they feel it is more important to promote energy programs to increase the efficient use of energy or to keep rates as low as possible, the results were split evenly between the two choices.
Washington Water Power’s 1994 survey of 300 randomly chosen customers found that 95% supported energy efficiency programs and 61% responded yes when asked, “Would you still feel that way if you knew that such programs would at least be partially funded by all energy customers (including yourself) in the form of higher energy rates?” Perhaps 34% of the 95% and 61% are the same 34% of customers who responded yes when asked if they had ever participated in a Washington Water Power sponsored energy program.
Not surprisingly, college graduates and higher-income people support conservation programs more often. A different survey found that those over 50, those earning under $15,000 and those with no children are less likely than others to want to spend anymore per month. Also, commercial and industrial customers were less inclined to pay more than residential customers.
The other observation worth noting is that survey results were inconsistent, the percentages were all over the board and while one survey found those over 50 were less likely to support such programs another survey found a majority of those over 50 to be in favor of such programs. In all fairness a case could be made for either side, however, none of the surveys had a choice of “none of the above” so it is hard to say what percentage of consumers would have said that they like things just the way they are and do not support any additional costs. Nor was anyone asked if they would support an energy conservation program that was ultimately determined not to be cost effective.
Idaho Power has not conducted any customer surveys on the subject but did agree to include questions in any future customer surveys if the Commission so desires.
RATE DESIGN FOR NEEA RECOVERY
While the Consumer Staff understands why the Commission would want to utilize revenue sharing funds to cover the cost of participating in NEEA in order to avoid a rate increase, consumers who view this as a tax believe it is in the public interest to reflect on the customer’s bill what the cost to them is for this policy. If this is a “public purpose charge” perhaps it is no different than a “universal service fee” or a “911 surcharge.”
The Consumer Staff and most of the commentors in IPC-E-96-26 also believe that the rate design for recovery of this cost should be based on a percent of the total bill because it is inherently more fair and has some built in conservation incentive.
It would also be unfair for some customer classes to be allowed to opt out, leaving the cost to be redistributed on the backs of the remaining customers.
COMMENTS RECEIVED AS OF FEBRUARY 24, 2000 IN IPC-E-99-13
The Idaho Department of Health and Welfare submitted comments stating in part “The funds Idaho Power is contributing to NEEA may not directly impact Idaho residents and therefore may not be in the best interest of Idaho. Idaho’s low-income population who may pay for proposed funding through rate increases will see no benefit in return.”
“In summary, the 6.2 million dollars that Idaho Power is proposing to give to NEEA may be utilized more effectively by supporting programs that directly impact Idaho families. Further, we maintain that NEEA’s programs show no measurable benefit to Idaho residents and therefore Idaho Power’s continued support of NEEA at the current level does not appear to be prudent nor in the best interest of Idaho Power’s customers.”
The Department also submitted several examples of weatherization success stories, including one that claimed a total overall savings-to-investment ratio of $3.27 of energy savings for each $1.00 investment.
A well-defined weatherization program would appear to have a more direct and significant impact on energy bills. The Commission should consider how many Idaho homes could be weatherized for $1.3 million per year.
Two other comments have been received; one encourages the Commission to deny this application and the other questions how the money has been spent and what was the benefit to customers.
(Insert aarp comments)
SUMMARY
Consumers have not been given an adequate opportunity to respond to the question of whether or not they support energy efficiency programs, and if so, what types would they find to be most beneficial.
The Commission has not determined whether or not NEEA programs are the most efficient and economic approach to energy conservation or whether or not it is duplicative of other programs.
The Consumer Staff therefore recommends that the Commission initiate a case to seek public input on these issues and conduct a more comprehensive evaluation of NEEA programs and an economic comparison to other programs.
DATED at Boise, Idaho, this day of March 2000.

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Tonya Clark, Administrator
Consumer Assistance Division

Attorney: Cheri C. Copsey

CONSUMER DIVISION MARCH 9, 2000
STAFF COMMENTS 6