20080430final_order_no_30543.pdf

Office of the Secretary
Service Date
April 30, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF P ACIFICORP DBA ROCKY MOUNTAIN
POWER FOR AN INCREASE TO THE
SCHEDULE 191 CUSTOMER EFFICIENCY
SERVICES RATE ADJUSTMENT AND
ENHANCEMENT TO ENERGY
EFFICIENCY PROGRAMS FOR
COMMERCIAL, INDUSTRIAL,
AGRICUL TURAL AND RESIDENTIAL
CUSTOMERS
CASE NO. P AC-08-
ORDER NO. 30543
On February 14, 2008 , PacifiCorp dba Rocky Mountain Power (PacifiCorp;
Company) filed an Application with the Idaho Public Utilities Commission (Commission)
requesting authority to (1) adjust the collection rate of the existing demand-side management
(DSM) cost recovery mechanism (Schedule 191) from 1.5% to 3.72% of retail revenue for a net
increase of 2.22% (a monthly increase of about $1.56 for the average residential customer); (2)
add a new energy efficiency program for commercial and industrial customers; and (3) make
several enhancements and changes to existing programs for business and residential customers
intending to improve program performance. The Company proposes a May 1, 2008 effective
date. The Commission in this Order approves the Company-requested changes to its DSM
program offerings and authorizes an increase in the Schedule 191 DSM tariff rider surcharge to
DESCRIPTION OF REVISIONS
72% of retail revenue for all customer classes (except special contracts).
Schedule No. 191 - Customer Efficiency Services
The Company proposes to adjust the collection rate for Schedule No. 191 from 1.5%
to 3.72% of retail revenue for a net increase of 2.22%. This collection rate is designed to fund
projected program activity for 2008 and 2009 and retire the current back balance of $349 000 by
the end of2009, for an average of$4.86 million per year.
Schedule No. 115 - FinAnswer Express
The FinAnswer Express program has been available to Idaho customers since
January 2006 and provides prescriptive incentives for common energy efficiency measures.
Enhancements proposed in this filing are based on proven program design and delivery
ORDER NO. 30543
experience in other jurisdictions. These changes: (1) add new measures eligible for prescriptive
incentives; (2) add a separate incentive table for lighting retrofits and new construction/major
renovation; and (3) revise some delivery mechanisms, including moving premium efficiency
motors from point of purchase to post-purchase, and modifying new construction/major
renovation lighting from a pre-purchase incentive agreement to post-purchase incentive
application. In addition, the application of percentage of project cost incentive caps moves from
the measure level to the project level.
Similar to the services provided by the Company in its other jurisdictions, the
Company is offering sales support functions to assist equipment distributors and contractors in
their sales and installation of high-efficiency equipment.
Schedule No. 155 - Irrigation Energy Savers
Equipment exchange has been the most popular measure and has been available since
spring 2006. The only change proposed to Schedule No. 155 is removal of the "funding
availability" language. Current information indicates customers are now primarily interested in
system upgrades, including the installation of variable frequency drives on pumps. Based on the
program focus moving from an equipment exchange approach to an analysis-based approach, the
Company is seeking proposals for program administration to help ensure that program delivery is
done by a program administrator with the best combination of competitive pricing, irrigation
and electric energy efficiency experience.
Schedule No. 118 - Home Energy Savings
The Home Energy Savings program has been offered since May 31 , 2006, and
provides incentives for more efficient products and services for residential customers with new
or existing homes.The program encompasses equipment categories including appliances
lighting, cooling equipment, insulation, and windows, and services such as duct sealing and air
conditioning equipment tune-ups. A dedicated program web site may be found at
www.homeenergysavings.net/idaho/home and provides full information, including incentive
levels and eligible equipment specifications. Changes to increase participation and to better
align incentive levels with Idaho markets are proposed for the following program offerings:
Washing machines, dishwashers, water heaters, lighting, evaporative cooling, insulation, and
heat pumps.
ORDER NO. 30543
DESCRIPTION OF NEW PROGRAM
Schedule No. 125 - Energy FinAnswer
In this filing, PacifiCorp proposes to offer the incentive-based energy FinAnswer
program which provides Company-funded energy engineering, incentives of $0.12 for fust-year
energy savings (kWh) and $50 per average monthly demand savings (kW), up to 50% of the
approved project cost. The program is designed to target comprehensive projects requiring
project-specific analysis and will operate as a complement to the FinAnswer Express program.
The enhancements are designed to increase new construction participation and early program
involvement to capture lost opportunities. Enhancements include design-team honorariums
(finder fees for new projects) and design-team incentives (in addition to enhanced customer
incentives) for new construction projects exceeding the current Idaho energy code by at least
10%.
PROGRAMS FUNDED BY SCHEDULE 191 NOT CHANGED IN THIS FILING
Schedule No. 117 - Refrigerator Recycling
Schedule No. 21 - Low-Income Weatherization Services
This program was recently modified pursuant to a January 10, 2007 Settlement
Stipulation entered into between PacifiCorp, Community Action Partnership Association of
Idaho (CAP AI) and Commission Staff and approved in Order No. 30239 in Case No. P AC-06-
10.
Schedule Nos. 72 and 72A Irrigation Load Control Credit Rider
This program was enhanced per the agreement reached in the Company s general rate
case approved by the Commission in Case No. PAC-07-05. Additional modifications were
proposed in Tariff Advice No. 08-01 and approved by the Commission on February 11 , 2008.
Changes included new incentive levels, reduction in maximum dispatch hours, increase in
dispatch duration, and revision of the minimum pump size.
DESCRIPTIONS OF TARIFFS BEING CANCELLED
Schedule Nos. 120 and 122 - Commercial Energy Services
These schedules were closed to new service with the 2006 filing but remained as
approved schedules to administer the loans originated under the schedules.
ORDER NO. 30543
On February 28, 2008, the Commission issued a Notice of Application and Modified
Procedure in Case No. PAC-08-01. An April 24, 2008 deadline was established for filing
comments. Comments were filed by five customers (including Tim Shurtz and Agrium-
NuWest), the NW Energy Coalition (NWEC; Coalition), and Commission Staff. All customers
oppose the surcharge increase. Tim Shurtz recommends that the increase be deferred until the
BP A credit is reinstated. NWEC urges approval with some recommendations. Staff
recommends approval of the Schedule 191 rate increase as well as approval of all other proposed
tariff additions and changes necessary to implement the new energy FinAnswer program and
changes to other programs.
Customer Comments
Company customers say that PacifiCorp should work to improve the efficiency of its
product without charging customers; efficiency program costs should be funded from Company
profits and/or only by those who participate in the program; that rates have already increased
enough to be a hardship and are high enough to encourage conservation; and that the
commenters have already funded their own efficiency improvements, so why should they help
pay for everyone else
NWEC Comments
The NW Energy Coalition supports PacifiCorp s filing. NWEC contends that
PacifiCorp has been underfunding and underachieving energy savings and believes the time is
ripe for a significant expansion of effort. The Coalition expresses concern that there is no
programmatic increase in a number of programs. Capacity savings such as those captured in the
Irrigation Load Control Program, the Coalition states, are important and should be pursued and
acquired in addition to capturing all cost-effective efficiency savings.
As part of its approval of these new and expanded programs and increased funding,
the Coalition suggests that the Commission should make it clear that it will judge utility
performance not on the expenditure of funds but on the savings acquired. The Coalition is
pleased to see program evaluation built into the program budget. The Coalition recommends that
the evaluation and verification of program savings and effectiveness be done by third-party
evaluators and reported to the Commission.
To tap into customer willingness to undertake cost-effective energy efficiency
measures and actions, NWEC contends that PacifiCorp must market and promote its programs in
ORDER NO. 30543
a simple and compelling manner. Coalition allies in Utah support PacifiCorp s FinAnswer
program but urged more aggressive marketing of this program as it is rolled out in Idaho.
The Coalition contends that PacifiCorp s Schedule 118 Home Energy Savings
program should be expanded to include more incentives and education around a growing element
of residential and commercial usage - plug loads. The Coalition contends that PacifiCorp should
educate its residential and commercial customers to make them aware of plug load draw, to
purchase lower power devices and how to use power management features. The Coalition
recommends that PacifiCorp participate in national marketing and incentive programs such as the
80+ power supply program, ENERGY STAR PCs, monitors, TVs, TV signal converter boxes
battery charges, and other ENERGY STAR electronic products. Electronic devices are evolving
quickly, the Coalition notes, and consumers make changes and upgrades at a similar pace.
Staff Comments
PacifiCorp s existing resources are insufficient to meet the Company s projected
system-wide energy demand from 2008 to 2017. The most expensive electricity resources are
additional generation, transmission and distribution facilities, regardless of whether the
generation facilities are thermal, hydro, wind, solar, or other alternatives. The least costly
electricity resource alternative available to the Company, Staff contends, is customers increasing
the efficiencies of, and efficient use of, their buildings, appliances, lights, irrigation systems, and
industrial processes without utility intervention and administration. Staff believes the second
least costly electricity is available when utilities or other entities prudently administer cost-
effective programs that provide monetary incentives and educational opportunities for customers
to increase their efficiencies.
Staff contends that demand-side management (DSM), including energy efficiency
programs and load management programs, is a significant resource available to help ensure
reasonable system reliability. A review of the Company s program data leads Staff to believe
that no major customer classes are being disproportionately disadvantaged by the distribution of
the programs' energy savings. The data provided is not sufficient to fully assess the cost
effectiveness results and estimates of the Company programs. When reviews of program
processes and results are required for prudency determination during future rate cases, Staff
expects that all necessary information will be made available.
ORDER NO. 30543
Staff appreciates the comments of customers and acknowledges that additional rate
increases create hardships for some customers and are not welcomed by any. Nevertheless, Staff
believes expansion of DSM programs will ultimately reduce the bills of all customers below
what they otherwise would be absent such programs.
Commission Findings
The Commission has reviewed the filings of record in Case No. PAC-08-
including the Company s Application and the comments and recommendations of customers, the
NW Energy Coalition and Commission Staff. Based on our review of same, the Commission
continues to find it reasonable to process this case pursuant to Modified Procedure, i., by
written submission rather than by hearing. IDAP A 31.01.01.204.
PacifiCorp in this case proposes to change and revise its DSM program offerings
adding the previously deferred Energy FinAnswer incentive program. It also requests an
increase in the Schedule 191 surcharge (tariff rider) percentage from 1.5% to 3.72% of retail
revenue to pay for the added administrative and program expense. We find it reasonable, based
on our review and consideration of the filings in this case, to approve the Company-requested
changes to its DSM program offerings and to increase the surcharge.
As reflected in the Company s recent 2007 Integrated Resource Plan, PacifiCorp
projects a deficiency in energy resources to serve summer peaks and future electric load
requirements beginning in 2008. Based on preliminary cost effectiveness screens and third-party
assumptions surrounding participation, the Company estimates available annual energy
efficiency resources in Idaho of 13 140 MWh per year. This estimate is greater than the
approximate 8 000 MWh the Company reports it acquired in 2007 with existing programs funded
at the currently authorized collection amount. We find that demand-side management
conservation and energy efficiency measures continue to be the least-cost resource that utilities
can acquire to serve new load. While DSM program participants will benefit most, all
customers, including those with fixed and limited income, will benefit from deferring the cost of
acquiring new supply-side resources and reducing the jurisdictional allocation of system power
supply costs to Idaho.
The proposed program changes will provide enhanced program opportunities for all
customer classes. We commend the Company for its continued commitment to provide its
electric customers with increasing DSM and energy efficiency options. To provide the necessary
ORDER NO. 30543
money for program implementation and administration, the Commission finds it reasonable to
authorize a 3.72% DSM tariff rider for all customer classes (except special contracts) effective
May 1 , 2008 and directs the Company to collect same as a separate line item on customer bills.
As previously directed (Order No. 29976), we expect the Company to file by May 1 of each year
an annual report of its Idaho DSM activities, related revenues and expenditures, and program
cost effectiveness. As part of its annual report and based on its experience, we expect that the
Company may recommend program changes.
In approving the Company s Application, we have reviewed the Company
submitted preliminary cost effectiveness assessment of its 2007 program performance and the
summary of its cost-effective analysis forecasts for 2008-2009. The Commission in this case
makes no findings regarding the ultimate prudence of any particular program or expenditure.
We note, as did Staff, that the Company has not provided sufficient data in this case to permit us
to fully assess the cost effectiveness results and estimates of the Company s DSM and energy
efficiency programs. We direct the Company to provide the information necessary for a
prudency determination in its next general rate case. As we stated in Order No. 29976:
The Commission will examine the distribution of DSM program dollars both
within and among customer classes, the cost effectiveness of the programsand the reasonableness and prudence of the Company programmanagement and administrative costs during general rate cases and in all
proceedings proposing an adjustment to the DSM tariff rider. Costsimprudently incurred will not be paid by customers.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Rocky
Mountain Power, an electric utility, and the issues presented in Case No. PAC-08-01 pursuant
to the authority granted under Title 61 of the Idaho Code and the Commission s Rules of
Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described and qualified
above, IT IS HEREBY ORDERED and the Commission does hereby approve implementation of
the Company-proposed revisions to its tariff Schedule No. 118 (Home Energy Savings),
Schedule No. 155 (Irrigation Energy Savers), and Schedule No. 115 (FinAnswer Express) DSM
ORDER NO. 30543
programs. We further authorize implementation of the proposed tariff Schedule No. 125 (Energy
FinAnswer) program. We further authorize cancellation of the Company s tariff Schedule Nos.
120 and 122 (Commercial Energy Services) programs. We authorize the changes in the DSM
programs for an effective date of May 1 2008.
IT IS FURTHER ORDERED and the Commission does hereby authorize
implementation of a 3.72% Schedule 191 DSM tariff rider surcharge for all Idaho tariff
customers (except special contracts) as a separate line item on customer bills for an effective date
of May 1 , 2008.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
ORDER NO. 30543
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 8CJ
H-.
day of April 2008.
MACK A. DFO
MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:PAC-08-01 sw
ORDER NO. 30543