20160316Staff Comments.pdf

NEIL PRICE RECTIVED
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION 2O16 t-If.R 16 PI{ 2; 39
PO BOX 83720
BOISE, IDAHO 83720-0074 l:, .r iil^;:.Uii,=lq- -
[phone] r-'i'ill-i1'l:'i CCUi-ttSSlON
BAR NO. 6864
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
PACIFICORP DBA ROCKY MOUNTATN ) CASE NO. PAC-E-16-02
POWER FOR AUTHORTTY TO TNCREASE )
SCHEDULE NO. l9l CUSTOMER EFFICIENCY )
SERVICES RATE. ) COVTMENTS OF THE) colrMrssroN srAFF
)
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
Modified Procedure issued in Order No. 33468 on February 11,2016, in Case No. PAC-E-16-02,
submits the following comments.
BACKGROUND
On January 19,2016, PacifiCorp dba Rocky Mountain Power ("Rocky Mountain" or "the
Company") submitted an Application to the Idaho Public Utilities Commission ("Commission"),
pursuant to Rules 52 and 201, IDAPA 31.01 .01.052, .201; Idaho Code $$ 61-301, 61-301, 61-
307,61-622, and 6l-623, seeking authority to increase its Schedule No. l9l Customer Efficiency
Services Rate to 2.70% in order to recover costs associated with acquiring and administering cost-
effective demand-side management ("DSM") programs in its Idaho service territory.
STAFF COMMENTS MARCH 16,2016
The Company's Application states that the Commission initially approved cost-recovery
of DSM programs, through the Schedule No. 191 Customer Efficiency Services Rate, beginning
May l, 2006. The Schedule No. 191 rate was originally set by the Commissionat l.5Yo.
Subsequently, the collection rate has fluctuated but is currently set at2.l0Yo. The Company's
Application provided calculations demonstrating that at the current level, Schedule No. 191
revenues would be approximately 53947 million. See Attachment A.
The Company asserts that its DSM expenditures have increased approximately 38% from
$3.2 million in 2014 to $4.4 million in 2015. Rocky Mountain attributes this $1.2 million
increase to the Wattsmart Business sectors. The Company claims that the increased expenditures
produced a coresponding increase in kilowatt-hour savings. For example, the Company
estimates Class 2 DSM savings increased from 1 1 ,410 megawatt hours (MWh) in 2014 to
approximately 15,440 MWh in 2015, a36Yo increase.
The Company's current forecast for DSM expenditures in 2016 and20l7 ranges from
$4.4 to $5.0 million per year. See Attachment B to Rocky Mountain's Application. The
Company's Attachment B summarizes the actual monthly DSM expenditures and Schedule No.
191 revenue collection through December 31,2015, with a net receivable balance owed to the
Company of $700,000. Attachment B also shows that at the current Schedule No. 191 rate, the
DSM balancing account will be under-collected by approximately $1.2 million as of December
31,2016.
Attachment C to the Application contains the same balancing account analysis as
Attachment B except the Schedule No. 191 rate is adjusted to 2.70o/o, effective April 1, 2016, as
proposed in this Application. The Company projects that, assuming Commission approval of the
2.70% rate for Schedule No. 191 revenue with an April l, 2016 effective date, the balance in the
deferred account will be under-collected by approximately $280,000 as of December 31,2016.
Attachment D to the Application contains a clean and legislative copy of the Company's
revised tariff sheets for Schedule No. 191. The Company also provided copies of the press
release and customer bill insert as Attachment E to its Application. The Company states that the
bill inserts were included in customers' bills starting January 26,2016, and will continue through
a tull billing cycle.
The Company estimates that its proposed0.6% increase in the Schedule No. 191 rate will
result in the collection of approximately $5.1 million on an annual basis.
STAFF COMMENTS MARCH 16,2016
STAFF REVIEW
Staff has reviewed the Application and supports the Company's request to increase
Schedule No. 191 Customer Eff,rciency Services Rate. Staff primarily investigated the trend in
previous changes to Schedule No. 191 , cost allocation between schedules, and customer impacts
from the proposed changes.
Previous Changes to Schedule No. 191
Upon receiving Rocky Mountain Power's Application, Staff had initial concerns regarding
whether the proposed rate would be a long-term adjustment, or whether it would need to be
updated in the near future. A review of the history of Schedule No. 191 shows that it was
established in2006 at arate of l.5Yo. In May 2008, the rate was increased to 3.72% and increased
again to 4.72Yo in July 2010. A few months later in December 20 1 0, the rate was decreased to
3.40% after the Company began phasing the costs associated with the Idaho Inigation Load
Control program to a system allocation rather than direct assignment to Idaho. Two years later
the rate was decreased again to 2.10o/o, where it has remained since.
At the proposed rate of 2.7%u the accumulated DSM balance will have a remaining under-
collected deficit of roughly $280,000 on December 31, 2016. At Staff s request, the Company
projected the account balance to year-end 2017 in order to evaluate the DSM account deficits over
a longer period. Rocky Mountain projected an accumulated DSM under-collection balance of
$700,000 by year-end2017. While the Company's Application anticipated DSM expenditures of
$4.4 to $5 million per year in2017, the new forecast anticipates 2017 DSM expenditures of
$5.5 million.
Nevertheless, Staff believes the Company's proposed rate increase to 2.7Yo should be
approved and remain in place until at least January 2018 to promote rate stability. Any Schedule
No. 191 rate change required at that time could be incorporated in general rate changes that can
occur on or after January 2018t.
Allocation between Schedules
Included in Rocky Mountain's Application were several attachments showing the impact
of the proposed adjustment to the various schedules, changes to the DSM balancing account, and
I See Stipulation in Case PAC-E-15-09.
STAFF COMMENTS MARCH 16,2016
the revisions to Schedule No. 191. Staff reviewed all Company attachments and determined that
the Company properly applied the new rate to all customer classes in developing its
expense/revenue forecast.
Staff notes that special contract Schedules No. 400 and No. 401 do not contribute towards
funding investment in demand-side management through Schedule No. 191. Accordingly, these
customers are not eligible to participate in the Company's commercial and industrial DSM
program which was implemented in Idaho in 2008.2
Customer Impacts
Staff recognizes an increase in electricity rates will not be viewed favorably by many
customers. However, Staff believes all customers realize a net benefit from the cost-effective
DSM program because of the reduced need for higher cost supply-side resources. This position is
supported by the Commissionin Order Nos. 30560 and. 29026, which state that "conservation
and DSM programs are powerful tools Idahoans can use to mitigate the impact of rate increases."
Furthermore, in Order No. 29952, the Commission states that "cost effective DSM provides
benefits to non-participants by reducing the overall cost of serving new load. It also benefits all
Idaho customers by reducing Idaho's allocation of system power supply costs."
The proposed increase to 2.7Yo equates to an additional cost of $0.61 per month, or $7 .32
annually for the average customer using 837 kWh per month. Although rate increases can impose
immediate economic burdens on customers, Staff believes that $0.61 per month is a reasonable
cost given the long-term benefits of DSM programs. Furthermore, Staff notes that amongst the
various DSM programs offered by Rocky Mountain, the Wattsmart Program offers residential
customers a Wattsmart Starter Kit at no cost. This kit contains CFL lightbulbs, high-efficiency
shower heads, and faucet aerators which can reduce customers' bills by up to $50 annually.
To help offset the proposed rate increase, Staff encourages Rocky Mountain customers,
specifically those who have expressed concerns in this case, to take advantage of DSM programs
offered by Rocky Mountain. Staff regularly verifies the prudency of program expenditures and
will continue to monitor the cost-effectiveness of Rocky Mountain's DSM programs.
2 See PAC-E-10-3 Rocky Mountain Power's response to IPUC Production Data Request (l-9) question number one.
STAFF COMMENTS MARCH 16,2016
STAFF RECOMMENDATIONS
After examining the proposed increase to Schedule No, 191, Staff recommends that the
Commission accept the Company's Application to increase Schedule No. 191 Customer
Efficiency Services Rates to 2.7Yo.
Respectfully submitted this Ub^*orMarch 2016.
Technical Staff: Mark Rogers
Donn English
Stacey Donohue
i:umisc:comments/pace I 6.2npmrdesd comments
Neil Price
STAFF COMMENTS MARCH 16,2016
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16th DAY OF MARCH 2016,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-8.16.02, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
MICHAEL SNOW
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I16
E-MAIL: [e-mail]
michael. snow@racificorp. com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datareque st@pacifi corp. com
DANIEL E SOLANDER
ROCKY MOUNTAIN POWER
1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84116
E-MAIL: [e-mail]
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH ST
BOISE ID 83702
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE