20141016Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03 l4
BAR NO. 6864
Street Address for Express Mail:
472W, WASHINGTON
BOISE, IDAHO 83702.5918
Attorney for the Commission Staff
IN THE MATTER OF THE APPLICATION OF
ROCKY MOUNTAIN POWER FOR
AUTHORITY TO CANCEL ELECTRIC
SERVICE SCHEDULES 115, 125 AND 155 AND
REPLACE WITH NEW SCHEDULE 140 WITH
CHANGES.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. PAC.E.14.O8
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Neil Price, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice of Intervention Deadline issued in Order
No. 33138 on September 25,2014, in Case No. PAC-E-14-08, submits the following comments.
BACKGROUND
On August 22,2014, PacifiCorp dba Rocky Mountain Power ("Rocky Mountain" or
"Company") filed an Application, pursuant to ldaho Code $$ 6l-301, 6l-307,61-622, and 61-
623,withthe Commission seeking to consolidate Electric Service Schedules: No. I 15 -
FinAnswer Express; No. 125 - Energy FinAnswer; and No. 155 - Agricultural Energy Services,
with modification, under a new Electric Service Schedule No. 140, Non-Residential Energy
Efficiency.
STAFF COMMENTS ocroBER t6,2014
Rocky Mountain states that in filing its Application it seeks to: (1) consolidate three non-
residential energy efficiency programs into a single program, wattsmart Business; (2) enable any
future modifications to the tariff similar to Schedule I l5 format; (3) increase incentive levels; (4)
expand the tariff to include energy management services and incentives; (5) update and expand
the prescriptive incentive offer; and (6) include a new offer for small businesses. Accordingly,
the Company states that the wattsmart Business program is cost effective.
STAFF REVIEW
Staff s analysis consisted of a review of the program changes, cost effectiveness
calculations and compliance with the Demand Side Management Memorandum of Understanding
("DSM MOU").
The Company's proposal attempts to increase program participation and avoid participant
confusion by consolidating its three non residential programs into a single Idaho program called
wattsmart Business. The Company also proposes to modi$ and expand some incentives due to
code and standard changes, third party recommendations, and new market data. Prescriptive
measures changes, such as lighting, HVAC, food service, compressed air, farm and dairy have
been modified and updated.
Currently, when the scope of a project changes, the participant is often moved to a
different program and is subject to new program requirements. After reviewing the Company's
Application and Testimony, Staff believes the current program could unintentionally impede
program performance by making customers move between different commercial/industrial
programs because the scope of a project changes. Staff believes the Company's proposed
modifications may make the programs more comprehensive and increase participation. Staff also
notes the Company has previously consolidated its nonresidential programs in its Utah service
territory. Staff will discuss the Company's modifications in more detail below, but Staff supports
the Company's overall proposal.
OVERVIEW OF MODIFICATIONS
The Company proposes to add several new programs in an effort to increase the reach of
commercial and industrial energy savings. The Energy Management program provides
participating businesses with a systematic approach toward integrating energy management into
STAFF COMMENTS ocToBER 16,2014
everyday business practices, such as commissioning and Strategic Energy Management. Rather
than being limited to expensive capital projects, the program will engage participants for 12 -24
months in improving the daily business operations, maintenance and management practices
surrounding energy management. Based upon third party analysis, the Company proposes to
incent Energy Management at $.O2lkwh. It estimates the program will result in approximately
three percent energy savings per customer site (usage of at least 500,000 kwh). The savings are
specifically separated from capital equipment project savings by establishing an operational
baseline with savings measured by continuously monitoring operational data. Should any capital
projects occur, the Company will quantify those savings and adjust the Energy Management
savings accordingly. Staff cautions the Company to avoid double counting energy savings from
its various programs.
In addition to Energy Management, the Company proposes to co-fund a contractor or staff
position within a participating business that will identify and implement energy efficiency and
energy management objectives. To participate in the Energy Project Manager Co-funding offer, a
business will submit a detailed performance plan with savings benchmarks clearly defined for
Company approval. The Company proposes to provide the participants $.025/kWh for all energy
saved up to 100% of the energy project co-managers salary and overhead. The Company
anticipates 1,000,000 kWh of energy savings per project or funding of approximately $25,000 per
participant. To protect ratepayers from non-performing customers, repayment of unearned co-
funding will be required should energy savings benchmarks or goals go unmet.
The Company also proposes to offer a new program to target the historically difficult to
reach small business class. The Company's analysis indicates that99o/o of small business
customers have not participated in energy efficiency, yet the largest savings potential of all
measure categories is in commercial lighting. The Company believes many small business
customers simply lack the knowledge, time and capital to fund energy efficiency projects. To
address these barriers, the Company proposes that customers served under Schedules 23 and23A
be provided a list of approved contractors with an enhanced retrofit lighting upgrade offering.
Staff supports the proposal and believes it is reasonable to target these customers at this time.
The proposal could incent contractors to work with more small businesses as opposed to focusing
only on larger businesses. Larger businesses generally have larger energy efficiency potential,
projects may be more economical and, consequently, more profitable for contractors.
STAFF COMMENTS ocToBER 16,2014
COST EFFECTIVENESS
The Company performed a program cost effectiveness analysis on both an annual basis
from 2015 - 2017, and on a three-year basis using a combined forecast over the same period. The
Company maintains that the wattsmart Business program is expected to be cost effective annually
from both the Utility Cost Test (UCT) and Total Resource Cost (TRC)r, ranging annually from
2.31 - 2.48 and 1.45 - 1.49, respectively. The Company also analyzed the cost effectiveness for
"Business-as-Usual" absent any programmatic changes. Finally, the Company analyzed each
proposed program change or new measure that had a material impact on program cost-
effectiveness. The benefits and costs of each proposed change were then added to the benefits
and costs of the "Business-as-Usual" case. Three of the thirteen new programs, or measure
categories, are forecasted to fail either the UCT or TRC perspective (but not both).
Specifically, Energy Management is not cost effective from the TRC, but is cost effective
from the UCT perspective. Staff believes the Energy Management program fails the TRC
because the Company conservatively estimates customer costs for implementation. Neither the
Increase Energy FinAnswer (EF) nor the Agriculture System Re-design programs are cost
effective from the UCT, but both are cost effective from the TRC2. The Company proposes to
increase the incentives and outreach costs offered for these programs. While participation and
energy savings are forecasted to increase, the cost increase is disproportionately higher than the
utility specific savings increase resulting in UCT failure. Nevertheless, Staff supports the
Company's proposal and believes the changes still comply with the intent of the DSM MOU.
The DSM MOU requires the Company to analyze cost effectiveness from a variety of
perspectives, including the TRC and UCT, with the overall goal of being cost effective. If a
measure or program is not cost effective on a standalone basis, the utility must explain why the
measure or program was implemented or continued. During a DSM prudency review, Staff takes
into consideration the reasonableness of all measures and programs offered (or not offered) in the
' The TRC test reflects the program's total costs and benefits to all customers in the utility's service territory. A
benefit/cost ratio greater than 1.0 means that the program is beneficial to the utility and its ratepayers on a total
resource cost basis. Generally, the TRC is more difficult to pass than the UCT.
The UCT calculates a program's costs and benefits from the utility's perspective (i.e., how the program will impact
the utility's revenue requirement). For additional information, please see Understanding Cost-Effectiveness of
Energy Efficiency Programs by the National Action Plan for Energy Efficiency (2008).
' From 2Ol5 -2017, Energy Management Program is not TRC cost effective (ranges from .80 - .85). The two
programs that are not UCT cost effective include the Increase EF (ranges from .70 - .75) and Agriculture System Re-
design (ranges from .77 - .87).
STAFF COMMENTS ocToBER 16,2014
context of a broad based DSM portfolio. Staff notes that all measure categories are forecasted to
pass either the TRC or UCT on a standalone basis and the wattsmart Business program is cost
effective from both the TRC and UCT.
Staff recognizes in this case the merits of utility-offered behavior based energy efficiency
programs as opposed to the traditional 'widget-based' approach. The emphasis is on
systematically changing individual or organizational behavior towards energy management.
These programs have been increasingly implemented around the country and in the Northwest
with demonstrated energy savings and overall cost effectiveness.
Staff believes the Company's additions and modifications to its program are appropriate.
The proposal consists of traditional DSM offerings, such as capital projects, and relatively newer
approaches such as Energy Management. Staff believes the proposed changes appear to be
reasonable and are focused on improving participation.
STAFF RECOMMENDATION
Staff recommends the Commission approve the Company's Application. However,
Staffls recommendation to approve program changes is not an endorsement of any particular
program expenditure. Staff will analyze the prudency of the Company's DSM expenditures in the
Company's next DSM prudency case.
Respecttully submitted this lbyOay of Octob er2014.
Technical Staff: Nikki Karpavich
i :umisc:comments/pace I 4.8npdenk comments
Deputy Attorney General
STAFF COMMENTS ocToBER 16,2014
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16th DAY OF OCTOBER 2014,
SERVED THE FOREGOING COMMENTS OF THE COMISSION STAFF, IN
CASE NO. PAC.E.14.O8, BY E-MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON DANIEL E SOLANDER
ID REGULATORY AFFAIRS MANAGER SENIOR COUNSEL
ROCKY MOUNTAIN POWER
2OI S MAIN ST STE 23OO
SALT LAKE CITY UT 84111
E-MAIL: [e-mail]
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest@pacifi corp. com
ROCKY MOLINTAIN POWER
2OI S MAIN ST STE 23OO
SALT LAKE CITY UT 84111
E-MAIL: daniel.solander@nacifi corp.com
BENJAMIN J OTTO
IDAHO CONSERVATION LEAGUE
710 N 6TH STREET
BOISE ID 83702
E-MAIL : [e-mail]
CERTIFICATE OF SERVICE