20031230Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
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Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
ACIFICORP DBA UTAH POWER & LIGHT
COMPANY FOR APPROVAL OF PROPOSED
CHANGES TO ELECTRIC SERVICE
SCHEDULE NO. 72 IRRIGATION LOAD
CONTROL CREDIT RIDER PROGRAM.
CASE NO. PAC-O3-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Application, Notice of CommentlProtest Deadline and Notice of Schedule 72 2003 Program
Evaluation Report issued on December 10, 2003, submits the following comments.
BACKGROUND
On December 5, 2003, PacifiCorp dba Utah Power & Light Company (PacifiCorp;
Company) filed proposed changes to its electric Schedule 72 Irrigation Load Control Credit
Rider Program. Also filed was a copy of the Company s Schedule 72 2003 Program Evaluation
Report.
The Company in its filing recommends several changes to improve the Schedule 72
Program. The intent of the Company s recommendations is two fold: (1) streamline the
STAFF COMMENTS DECEMBER 30, 2003
enrollment process and (2) mitigate potential customer concerns that may have limited customer
participation in the 2003 Program. The Company proposes to:
1. Provide customers with a Load Control Service Agreement by January
15th of each year together with the Load Control Service Credit
notification (the credit the customer would receive should they elect to
participate). The Load Control Service Agreement will include the
amount of credit the customer would receive during the upcoming
irrigation season if participation is elected.
2. Require that customers sign and return the Load Control Service
Agreement by February 15th of each year to indicate their intention to
participate in the Program.
3. Notify participating customers of the scheduled hours for load control
during the irrigation season by March 15th of each calendar year.
4. Permit participating customers to notify the Company of their intent to
opt out of the Program without penalty by April 15th. Customers
notifying the Company of their intent to opt out of the Program after
April 15th would be subject to the terms of Special Condition No.
Early Termination (Schedule No. 72).
5. Not enforce the ineligibility for the 2004 irrigation season for customers
who submitted an Intent to Participate Notification in the 2003 Program
but subsequently failed to execute a Load Control Service Agreement.
This proposal is based on the Company recommendation to eliminate the
Intent to Participate Notification as part of the 2004 Program.
6. Limit the potential cost for participating customers under terms of Special
Condition No., Cost of Load Control Devices, (Schedule No. 72) to
such costs only to the extent that they exceed one thousand dollars.
The Company requests an effective date of January 7 2004 for its proposed Schedule 72
tariff changes. Should the Commission elect not to approve the proposed changes with the
January 7, 2004 effective date, the Company would consider it an acceptable outcome to
administer the Irrigation Load Control Credit Rider Program for the 2004 irrigation season based
on the existing conditions of Schedule No. 72.
STAFF COMMENTS DECEMBER 30, 2003
Accompanying PacifiCorp s tariff change request is a copy ofthe Company
November 28, 2003 Schedule 72 Program Impact Evaluation Report. The Evaluation Report
filing is a compliance filing pursuant to Commission directive in Order No. 29209, Case No.
P AC-03-, wherein the Company was directed to submit a Report at the end of the 2003
irrigation season summarizing the results of the Schedule No. 72 Irrigation Load Control Credit
Rider Program.
The Schedule No. 72 Irrigation Load Control Credit Rider Program was initially
approved by the Commission in Case No. P AC-03-, Order No. 29209. In that Order the
Commission addressed the methodology used by the Company to calculate the proposed credits.
The proposed credits are different for each month of the irrigation season to reflect the varying
costs of power, and hence, value of curtailment, in each of the months. In valuing the shift of
load from the super-peak to light load hours, PacifiCorp included a 30% uncertainty factor in
recognition of uncertainties with respect to (a) the amount ofload that actually shifted; (b) the
hours of the day that load is actually shifted to; ( c) the level of load control equipment failure;
(d) unexpected differences between estimated load and actual load; ( e) failure of customers to
shift load; and (f) customer termination from the Program for previously failing to shift load.
The proposed credits are thus 70% of the differences between expected super-peak and off-peak
market prices. The Commission characterized the Company s proposal as essentially a time-of-
use proposal and not a curtailment or buy-out proposal. The Program is also voluntary.
The Company intends to calculate the monthly credits for the 2004 irrigation season in
early January 2004 and to provide that calculation to the Commission for its review and
approval. The credit amount will be calculated pursuant to the methodology approved in Case
No. P AC-03-, Order No. 29209.
ANALYSIS -EVALUATION REPORT
The Company s Schedule 72 2003 Program Evaluation Report has been reviewed by the
Staff. The Report indicates that 207 customers and 403 metered sites participated in the
program. This represents about 10.3% of the customers, 9% of the metered sites and
approximately 12% of the irrigation load. This level of participation results in an average load of
about 21 MW that can be shifted or curtailed during the critical peak period, June 1 through
September 15, Monday through Thursday for a six -hour period from 2PM to 8 PM.
STAFF COMMENTS DECEMBER 30, 2003
The Company estimates that it has saved some 7 917 839 kWh during curtailment periods.
While the Company states on page 11-2 ofthe report that "program participants were not making
up for the foregone irrigation by increasing irrigation in non-control periods " it has not provided
data to support such a finding. Given the Commission statement on page 5 of Order No. 29209 -
We find the proposal submitted by the Company. .. recognizes that irrigator load in super-peak
periods will be shifted to other times or off-peak periods" - the Company should further study
the load shifting effect of the Schedule 72 program.
The reported cost of the program for 2003 was $550 900, or about $70/Mwh super-peak.
This includes $23 093, about 4%, for administration, management, evaluation, and reporting;
$250 223 , about 45%, for field expenses; and $277 584, about 50 %, for participation credits.
Participation credits are projected to remain stable in future years and all other costs except field
expenses are projected to escalate only slightly. The field expenses are expected to decline in
future years because first year expenses included the initial installation of equipment. While the
report listed the cost of recruiting new participants as a part of the field expenses, the Company
has clarified that any recruiting cost was minimal. Due to lower expected field cost, the
estimated project cost for 2004 is $386 370 or $49/Mwh super-peak.
The report indicates that the Program was cost effective in the first year from the
perspective of Total Resource Cost. From PacifiCorp s perspective however, the first year was
not cost effective because of the high first year field costs. For the participants, the report states
(page 111-3) that "the Program is cost effective in the first year, providing benefits of over
$657 000 at no cost to the participants." The benefits to the participants are clear, however, Staff
believes there are also participant costs, even though they may be indirect and sometimes
difficult to quantify. Such costs could include increased labor, change in cropping patterns and
yield reduction. If there were no costs, all irrigators would participate. As it is, each irrigator
must evaluate his individual situation and weigh the benefits against the cost. Staff believes this
next season will be important in determining if the program remains successful. If the
participants choose to participate again, it will confirm that they believe the program is cost
effective for them. Because the circumstances differ with each irrigator, it is important for the
Company to vigilantly survey irrigation customers and continue to monitor the program
watching for program modifications that might add value for both the participants and the
Company.
STAFF COMMENTS DECEMBER 30, 2003
The Load Control Credit is a key piece of this program. The Company intends to
calculate the monthly credit for the 2004 irrigation season using the same methodology used last
season, which was approved in Case No. P AC-03-3. Specifically, the Credit is based on 70%
of the difference between super-peak market prices and off-peak prices. Order No. 29209 notes
at page 4: "PacifiCorp included a 30% uncertainty factor in recognition of uncertainties with
respect to (a) the amount ofload that actually is shifted, (b) the hours of the day that load is
actually shifted to, (c) the level of load control equipment failure, (d) unexpected differences
between estimated load and actual load, ( e) failure of customers to shift load and (f) customer
termination from the program for previous failing to shift load. The proposed credits are thus
70% of the difference between expected super-peak and off-peak market prices.
Staff believes this valuation methodology offered a reasonable credit for use in the
program during the 2003 irrigation season. However, questions related to the methodology,
including whether 70% is the proper discount, should be addressed in greater detail in the 2004
evaluation report that we believe should be filed by December 2004. Staff recommends that
these individual uncertainties be evaluated, quantified where possible and the amount of the
discount adjusted accordingly. The analysis should be based on the experience of both years
2003 and 2004.
Staff believes this is an important program that will become even more important in the
future as BP A irrigation credits change and the cost of super-peak energy increases. It will be
critical to have program options like this for irrigation customers to be able to exercise some
control over their electric bills and for the Company to control power supply costs. Over the
next couple of seasons it will be important to familiarize more irrigators with this program and to
continue to refine it, including reevaluating the credit calculation.
ANALYSIS - PROPOSED CHANGES
The current Schedule 72 tariff requires that the Company provide customers notice of the
Load Control Service Credit (LCSC or credit) amount by January 15. Customers are required to
notify the Company of intent to participate by February 15. On March 1 the Company notifies
customers of the load control schedule and customers must return a signed agreement by
March 31. Failure to execute an agreement after submitting an "Intent to participate" makes
customers ineligible to participate in the program the following year.
STAFF COMMENTS DECEMBER 30, 2003
March 31. Failure to execute an agreement after submitting an "Intent to participate" makes
customers ineligible to participate in the program the following year.
In its filing, the Company recommended six changes, listed in the Background of these
comments, that Staff believes would improve the schedule 72 program. The proposed changes
would require that the Company not only provide customers with notice of the credit by January
, but also provide them with the Agreement by that date. Second, rather than submit to the
Company an "Intent to Participate " the customers would return signed agreements by February
15. Third, Notice to the customers of the Load Control Schedule would occur on
March 15 rather than March 1 and, fourth, the Company would add a provision that allows
customers to opt out of the program without penalty by April 15. The Company also proposes to
eliminate the requirement that customers failing to execute an agreement after submitting an
Intent to Participate" would not be eligible to participate in the program the following year. The
last change proposed by the Company would require customers to only pay the cost of
installation and control devices in excess of one thousand dollars. Previously the customer was
required to pay all these costs.
RECOMMENDATIONS
Staff recommends the following:
The Company should improve program evaluation by studying the extent and effect
of load shifting that results from implementation of the 2003 and 2004 curtailment
programs. The results of the study should be presented to the Commission and
irrigators by December 1 , 2004.
The Company should provide an evaluation of the individual uncertainties used to
establish the 30% discount in calculation of the Load Control Credit. Where possible
these uncertainties should be quantified and the amount of the discount reevaluated.
The Company should survey the irrigators and continue to monitor the program
watching for program modifications that might add value for both the participant and
the Company.
The Commission should approve the six program changes proposed by the Company.
STAFF COMMENTS DECEMBER 30, 2003
Respectfully submitted this
Technical Staff: Dave Schunke
i:umisc:comments/paceO3_14swdes
STAFF COMMENTS
300-day of December 2003.
Scott Woodbury
Deputy Attorney General
DECEMBER 30, 2003
CERTIFICA TE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 30TH DAY OF DECEMBER 2003
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. PAC-03-, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
DOUG LARSON
VICE PRESIDENT REGULATION
ACIFICORP
201 S MAIN ST, SUITE 2300
SALT LAKE CITY UT 84111
MAILED TO doug.larson(fYpacificorp.com
SECRETARY
CERTIFICATE OF SERVICE