20070110Hart direct.pdf

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BEFORE THE 11:1/\1\0 1):,):)-1C
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UT!LlTIES CO;."L,,jiSSIO,.
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
PACIFICORP DBA ROCKY MOUNTAIN POWER
TO DETERMINE THE APPROPRIATE FUNDING
STRUCTURE OF ITS SCHEDULE 21 (LOW
INCOME WEATHERIZATION PROGRAM).
CASE NO. PAC-O6-
DIRECT TESTIMONY OF WAYNE HART
IDAHO PUBLIC UTILITIES COMMISSION
JANUARY 10 , 2007
Please state your name and address.
My name is Wayne Hart.My business address is
472 West Washington , Boise, Idaho, 83702.
By whom are you employed , and in what capacity?
I am employed by the Idaho Public Utilities
Commission (IPUC Commission) as a Utilities Analyst.
What is your educational background?
I received a Master s Degree in Bacteriology
from the University of Wisconsin in Madison, Wisconsin
and a Bachelor s Degree in Biological Sciences from
Indiana Uni versi ty in Bloomington, Indiana.My Master
research studied the microbiology involved in the
production of methane from biomass.
Please outline your experience that is relevant
to your testimony.
I have designed , managed and implemented a
number of utility demand side management programs and
supervised a portfolio of programs with an annual budget
of over $20 million while at the Bonneville Power
Administration.Since joining the Commission Staff
have conducted Staff's analysis of Idaho Power
conservation expenditures for the 1994 rate case , and
reviewed numerous utility conservation plans.
Have you previously testified before this
Commission?
PAC-06-1/10/07
HART , W (Di)Staff
I presented testimony in US WEST's rateYes.
case , Case No. USW-96-5, as well as in Idaho Power
general rate case, Case No. IPC-E- 94 - 5.I al so presented
testimony in cases dealing with deregulation, extended
area service and rate rebalancing.
What is the purpose of your testimony in this
proceeding?
I will describe the Settlement Agreement
between Rocky Mountain Power (RMP) , the Community Action
Program Agencies of Idaho (CAPAI) and Commission Staff.
What are the basic elements of the Settlement
Agreement?
The Stipulation adds additional elements to the
list of measures that may be funded by Rocky Mountain
Power, changes the maximum percentage of the total cost
of a measure that may be funded by RMP from 50% to 75%,
precl udes CAPAI from seeking further changes to the
program for two years , keeps the overall Rocky Mountain
Power spending cap of $150 000 per year, and acknowledges
that RMP will conduct a cost effectiveness study of the
program after two years.
Please describe the changes to the list of
qual i fying measures?
The Stipulation specifies that all cost
effective U. S. Department of Energy (DOE) weatherization
PAC-06-1/10/07 HART, W (Di)Staff
measures for electrically heated houses will be eligible
for RMP funding.The primary impact of this change is
that RMP funding may now be used to help fund the cost of
heating system repairs and/or replacements, repair and/or
replacement of water heaters, and the incidental repairs
and Health and Safety measures that are eligible for DOE
funding but were previously not eligible for RMP funding.
These changes will be incorporated in amendments to RMP'
Tariff Schedule 21, which was filed with the Stipulation.
Will the inclusion of these measures impact the
cost effectiveness of the program?
It may change slightly, but most of these
measures are also subj ect to the cost effectiveness tests
that are built into the program.The cost effectiveness
test used by the Community Action Program (CAP) agents is
a Savings to Investment Ratio (SIR) of 1 or greater.
While overall cost effectiveness could decline by
including these additional measures, it could also
lncrease.For example, if insulation is added to a roof
that would not have been added before because of the
inability to use RMP funding to fix roof leaks, it may
produce additional savings that would have a positive
impact on the cost effectiveness of the program.Based
upon the results from other weatherization programs
around the Pacific Northwest, I expect the total change
PAC-06-1/10/07 HART, W (Di)Staff
to the overall cost effectiveness of the program to be
minimal.
What is the reason for changing the percentage
of the measure cost that may be funded by RMP from 50% to
75%?
The reason was to bring RMP' s program in closer
alignment with the other two electric utility funded
programs and to ensure installation of all available cost
effective weatherization measures.The existing program
requirements provided that RMP funds may be used to cover
50% of the cost of each approved measure, but because of
differences between the DOE program and the RMP program
the net result has historically been that RMP funding has
provided less than 40% of the total project funding for
electric homes.Raising this percentage to 75% on an
individual measure s cost is designed to allow the
overall proj ect cost percentages to increase from the
historical level and increase weatherization measures.
Why does the Stipulation retain the overall RMP
spending cap of $150 000 for this program?
This limit was raised very recently, and there
isn t even a full year of experience at this level.The
parties agreed that it would be prudent to retain this
cap to get more experience before seeking any changes.
How does the Stipulation limit CAPAI' s ability
PAC-06-1/10/07
HART, W (Di)Staff
to intervene in future Commission proceedings?
It only limits participation in proceedings
regarding RMP's Tariff Schedule 21.If the Stipulation
is approved, CAPAI has agreed to not contest any of the
elements of RMP's Tariff Schedule 21 in proceedings
before this Commission until March 31 , 2009.Schedule 21
specifies the details of RMP's participation in the low-
income weatherization program.
Why does Staff believe such a limitation is in
the public interest?
The negotiations that led to the Stipulation
addressed all of the significant issues that have been
raised by Staff and CAPAI regarding the program.While
not everyone got everything they wanted, it is reasonable
to let the program operate for two years and gain
experience with the changes that have been made before
pursuing any further changes.The Stipulation includes
all the changes for which a strong case could be made
with what Staff knows now.Gathering additional
information before seeking any further changes is prudent
and in the public interest.
What were Staff's goals in this proceeding?
Staff's primary goal was to structure a program
that obtained all the conservation potential that was
cost effective whenever a low- income residence was
PAC - E - 06- 101/10/07
HART , W (Di)Staff
weatherized through the program.It is important to get
all the eligible conservation measures with one visit, as
returning to the house at a future date to complete
measures not implemented is generally not cost effective
moreover, homes weatherized under the program since
September 30, 1993 are not eligible for additional DOE
funding.Staff also sought to reduce the administrative
differences among the low-income weatherization programs
operated by Idaho s three major electric utilities.
Were you concerned that the current program was
not obtaining all the cost effective conservation?
Somewhat.While I did not have definitive
evidence that the program failed to obtain all the cost
effective conservation available from a residence, CAP
staff expressed significant concern that some cost
effective conservation measures were not completed when
some of the residences were weatherized due to the
limiting terms of the existing program.
Is the information available to more accurately
identify cost effective measures not completed?
Not really.While the CAP agencies have good
information about measures that were completed,
information about measures not completed is not as good.
It is highly likely that gathering this information would
require additional , expensive visits to some of the homes
PAC-06-1/10/07
HART, W (Di)Staff
and is not necessary at this time.
Are you concerned that measures that are not
cost effective are being completed?
I am reasonably confident that, with prudent
management and diligent Company oversight, this will not
be a problem.The program design includes procedures to
analyze the savings and costs of all maj or measures
considered for installation , and if a major conservation
measure does not meet the program s cost effectiveness
cri teria, it is not completed.
Have these procedures been reviewed by an
independent party?
The methodology used to compute savingsYes.
and determine measure eligibility has been reviewed and
approved by the U. S. Department of Energy (DOE).
Is the DOE's methodology and criteria for
determining cost effectiveness the same as is commonly
used by electric utilities?
No, but the overall result, the savings
obtained for the utility s investment, has consistently
been found to be cost effective using the traditional
utility methodologies for similar programs operated by
other utilities in the region.
What are the differences between the
procedures?
PAC - E - 0 6 - 101/10/07 HART , W (Di)Staff
There are many minor differences, but the most
significant difference is the value used for the savings.
The DOE procedure uses retail rates in determining the
value of the savings.Utilities typically use levelized
avoided costs in determining the value of savings.
Has the Company expressed concerns about the
cost effectiveness of the program?
The Company s original petition in this case,
and the testimony of Company witness Brian S. Dickman
expressed concerns that the program was nearing the
limi ts of cost effectiveness and that any changes to the
program might push the program over the limit.
Do you share this concern?
I am always concerned about the cost
effectiveness of any utility conservation effort.
However, I am confident this program , even with the
changes identified in the Settlement Stipulation, will be
cost effective if prudently managed with diligent utility
oversight.
What is the basis of this confidence?
The low-income weatherization program operated
by Avista in Idaho also uses CAP agencies and the same
DOE-approved cost effectiveness methodology (SIR) for
determining measure eligibility.It does not contain the
programmatic restrictions that are being eliminated by
PAC-06-
1/10/07
HART, W (Di)Staff
the Stipulation, and Avista ' s review of its program
indicates that the program is cost effective.Bonneville
Power s thorough evaluation of its similar program
conducted by publicly-owned utilities throughout the
Pacific Northwest also supports the conclusion that a
well managed program that includes these changes will be
cost effective.
Has Rocky Mountain completed a cost
effectiveness analysis of its Idaho program?
, not an analysis that is specific to the
Idaho program.A cost effectiveness analysis was
provided with its Petition that used the average energy
savings for the DOE low-income weatherization programs
conducted throughout the nation and the old programmatic
investment limit of $1500 per home.These are not
savings or cost features specific to Idaho.
Does the study identified in the Stipulation
address this issue?
The Stipulation provides that the CompanyYes.
will conduct an evaluation of the cost effectiveness of
the Idaho program after March 31 , 2009.This study is to
use actual Idaho costs and savings.The results of that
evaluation are to be presented to the Commission.
Does the Stipulation address Staff's goal of
obtaining all cost effective conservation available from
PAC-06-1/10/07 HART , W (Di)Staff
a residence?
The changes in measures eligible for RMPYes.
funding, and the easing of the limitation of the
percentage of a measure s cost that is eligible for RMP
funding, addressed both program elements that Staff was
concerned might be preventing the program from obtaining
all cost effective conservation.These changes will
provide the programmatic flexibility to address nearly
all of the circumstances that might have been preventing
cost effective conservation measures from being
completed.More information is needed to determine
whether these changes have addressed every circumstance,
and the Stipulation provides for the gathering of that
information.
Does the Stipulation achieve Staff's goals of
creating uniformity among the three major utilities ' low-
income weatherization programs?
Not entirely, but it makes substantial progress
in that direction.On an operational level , in most
cases , the CAP representatives in the field should be
able to treat a residence the same, regardless of which
utility provides the electricity.At the administrative
end, there are still some differences CAP agencies will
need to watch for and address, but these changes should
greatly reduce the extent to which these differences
PAC-06-
1/10/07
HART, W (Di)Staff
cause problems and impede program operation.
Do you believe the Stipulation to be in the
publ ic interest?
Yes.The Stipulation provides additional
flexibili ty for the CAP agencies operating the programs,
and should result in more efficient program operation.
It should significantly reduce the circumstances that may
have been preventing the acquisition of all cost
effective conservation , and it does this at minimal risk
to the cost effectiveness of the overall program.
Does this conclude your direct testimony in
this proceeding?
Yes, it does.
PAC-06-
1/10/07
HART, W (Di)Staff
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 10th DAY OF JANUARY 2007
SERVED THE FOREGOING DIRECT TESTIMONY OF WAYNE HART, IN CASE
NO. PAC-06-, BY E-MAILING A COpy THEREOF, TO THE FOLLOWING:
DEAN BROCKBANK
P ACIFICORP
DBA ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2200
SALT LAKE CITY UT 84111
dean. brockbank~p acificorp. com
BRIAN DICKMAN
P ACIFICORP
DBA ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84111
brian. dickman~pacificorp. com
DATA REQUEST RESPONSE CENTER
ACIFICORP
825 NE MULTNOMAH STE 800
PORTLAND OR 97232
datareq uestlfYpacificorp. com
BRAD M PURDY
ATTORNEY AT LAW
2019 N 17TH ST
BOISE ill 83702
bmpurdv~hotmai1.com
~.K~
SEC TARY
CERTIFICATE OF SERVICE