20140725Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL (DAPHNE HUANG)

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: JULY 25, 2014

SUBJECT: ROCKY MOUNTAIN POWER’S APPLICATION REGARDING THE
PRUDENCY OF ITS DSM PROGRAM FOR THE YEARS 2010-2013, CASE NO.
PAC-E-14-07

On July 7, 2014, PacifiCorp dba Rocky Mountain Power filed an Application requesting the
Commission find that the utility’s demand-side management (DSM) expenses for the years 2010
through 2013 were prudently incurred. More specifically, Rocky Mountain seeks to recover $25.76
million in deferred costs for seven DSM programs. “DSM” generally refers to utility activities and
programs that encourage customers (i.e., on the “demand-side” as opposed to the “generation side”) to
use less overall energy or use less energy during peak usage hours.1 These DSM programs include:
Low Income Weatherization/Education (Schedule 21); Irrigation Load Control (Schedules 72 and
72A)2; FinAnswer Express (Schedule 115); Refrigerator Recycling (Schedule 117); Home Energy
Saver (Schedule 118); Energy FinAnswer (Schedule 125); and Agricultural Energy Services (Schedule
155).
BACKGROUND
The Company declares that it has offered a variety of DSM programs to its customers since
the 1970s. In 2006, the Commission approved an enhanced set of DSM programs and provided for
cost recovery of Rocky Mountain’s energy efficiency and DSM programs. Typically, DSM programs
have two parts. First, the utility designs and implements a variety of DSM programs to promote

1 DSM programs can be specific and focused such as the immediate and temporary curtailment of usage, or broad and less
immediate such as the installation of energy efficient equipment and other energy efficiency programs.
2 Schedule 72 and 72A were cancelled in Order No. 32760 (Case No. PAC-E-12-14) when the Irrigation Load Control
Program was treated as a system-wide benefit in 2011.
DECISION MEMORANDUM 2
energy efficiency and conservation, or reduce customer demand during periods of peak demand and/or
in times of supply constraint. Second, utilities periodically report on the effectiveness of their DSM
programs and seek permission to recover the deferred costs of the DSM programs.
In Order No. 29976 issued in March 2006, the Commission authorized Rocky Mountain to
establish a DSM tariff rate (or “rider”) as a separate line item on customers’ bills under tariff Schedule
191. The DSM tariff rider is the mechanism used to recover the costs of the DSM programs. The
Company was authorized to defer the costs of its DSM programs until such time as the Commission
finds that the “Company’s DSM expenditures and programs are or will be found to be reasonably and
prudently incurred and executed.” Order No. 29976 at 6.
THE APPLICATION
A. The DSM Programs
Rocky Mountain offers various DSM/energy efficiency programs to all major customer
classes including residential, commercial, industrial and agricultural. Exh. 1 at 324. The Company
offers residential customers three DSM programs: Home Energy Saver, Residential Refrigerator
Recycling, and Low Income Weatherization.
Home Energy Saver – this program is designed to provide a number of products and
services to customers in new or existing homes, multi-family housing units, or
manufactured homes for customers taking service under Schedules 1 and 36.
Services and products under this program include: attic insulation, floor insulation,
wall insulation, energy efficiency windows, CFL lighting, and other services. This
program is administered by PECI, a private non-profit corporation, which has been
implementing energy efficiency programs since 1990. Id. at p. 326.

Refrigerator Recycling – this program is designed to decrease electric usage through
the voluntary removal and recycling of inefficient refrigerators and freezers.
Customers receive a $30 incentive for each qualifying appliance and an energy
saving kit which includes two CFL bulbs, a refrigerator thermometer card and other
energy-saving educational materials. This program is administered by JACO
Environmental, which is one of the largest recyclers of household appliances in the
United States. Id. at 332-33.

Low Income Weatherization – this program provides energy efficiency services
through local non-profit agencies to residential customers meeting income-eligible
guidelines. Services are provided at no cost to eligible customers. Services
provided under this program including ceiling/wall/ floor insulation, furnace repair,
air infiltration, replacement door/windows, and other services. The Company’s
non-profit program administrators include the Eastern Idaho Community Action
Partnership and Southeastern Idaho Community Action Partnership. The Company
provides 85% of the cost of approved measures with the balance of funds provided
DECISION MEMORANDUM 3
by the Idaho Department of Health & Welfare. Id. at 335. In addition to
conservation services, the Company also provides energy conservation education to
low-income residential customers for Company customers that receive Low Income
Home Energy Assistance (LIHEAP) funds. The information packet includes items
such as a low-flow showerhead, outlet/switch plate gaskets, one CFL bulb, and
other efficiency products. Id. at 334-36.

The Company also provides three DSM programs for its commercial, industrial and
agricultural customers. These programs include:
The FinAnswer Express – this program is designed to help commercial and
industrial customers to improve the efficiency of their lighting, HVAC, electric
motors, building envelopes, and other equipment. This program is administered by
two contractors. Id. at 339.

Energy FinAnswer – this program is available to all commercial and industrial
customers with buildings in excess of 20,000 square feet. The program provides
energy engineering incentives of 12¢ per kWh for the first year energy savings and
$50 per kW of average monthly demand savings up to a cap of 50% of the approved
project cost. This program is operating in conjunction with the more streamlined
FinAnswer Express and also seeks efficiency improvements in HVAC systems,
motors, refrigeration, lighting, irrigation, and other equipment. Id. at 344-46.

Agricultural Energy Services – this program is designed to improve the overall
energy efficiency of irrigation systems for customers taking service on tariff
Schedule 155. Portions of this program were suspended in 2013 in Order No.
32879. Id. at 342-43.

B. The Deferred Expenses
In its Application, Rocky Mountain asserts that the seven DSM programs resulted in energy
savings for the years 2010-2013. Dir. Testimony, Table 1. The utility reports that five of the programs
were cost-effective in all years with two exceptions. Application at 4. First, the Company indicated
that the Agricultural Energy Service Program was not cost-effective in 2013 when its benefit/cost ratio
for the total resource cost (TRC) test was 0.84.3 Second, the Company stated that its Low Income
Weatherization Program was not cost-effective under the TRC or UCT tests in any of the years under
review. Dir. Testimony at 15-16. Rocky Mountain requests authorization to recover $25,765,486 in
DSM expenses from the DSM rider account and asserts these expenses were “prudently incurred.”
Application at 1. The requested expenses per year are set out below:
3 The Company uses several analytical tools to “test” the cost-effectiveness of its DSM programs. These tests include: the
TRC; the utility cost test (UCT) from the utility’s perspective; the participant cost test (PCT) from the average participating
customer’s perspective; and the PacifiCorp total cost test (PTCT) which is a variant of the TRC with a 10% adder to reflect
non-energy benefits. Dir. Testimony at 13.
DECISION MEMORANDUM 4
YEAR EXPENDITURES
4
Source: Direct Testimony at p. 2.

In support of its Application, the Company submitted prefiled testimony, an annual DSM
report for each year, the results of its cost-effectiveness analysis, and the third-party program
evaluation reports. Application at 1. The Company requests that its Application be processed under
Modified Procedure.
STAFF RECOMMENDATION
Staff concurs with the Company’s request to process its Application under Modified
Procedure. Staff recommends that the Commission issue a Notice of Application and set a 14-day
deadline for intervention. Once the intervenors to this case have been determined, then Staff
recommends that it convene an informal scheduling conference with the parties to develop a schedule
to process this case.
COMMISSION DECISION
1. Does the Commission wish to issue a Notice of Application and set a 14-day deadline
for intervention?
2. After the Commission Secretary issues the Notice of Parties, does the Commission
desire that Staff convene an informal conference for the parties to discuss the appropriate scheduling of
this case?
3. Anything else?

bls/M:PAC-E-14-07_dh

4 In 2011 the two Irrigation Load Control programs under tariff Schedules 72 and 72A were cancelled and a new program
was offered to customers using a third-party aggregator, EnerNOC. The load control expenses for 2011 and beyond are no
longer included the DSM rider from tariff Schedule 191. Order No. 32760.