20160229Comments.pdf

NEIL PzuCE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
BAR NO. 6864
Street Address for Express Mail:
472W. WASHTNGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
RiC E IV ED
t0l6 FEB 29 Pl'1 3: 0l+
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
PACIFICORP DBA ROCKY MOUNTAIN
POWER TO CANCEL SCHEDULE II7,
RESIDENTIAL REFRIGERATOR RECYCLING
PROGRAM.
CASE NO. PAC.E.16.O4
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 Attomey General, and in response to the Notice of
Modified Procedure issued in Order No. 33462 on February 3,2016, in Case No. PAC-E-16-04,
submits the following comments.
BACKGROUND
On January 27,2016, PacifiCorp dba Rocky Mountain Power ("Rocky Mountain" or
"Company") filed an Application, pursuantto ldaho Code $$ 6l-301 ,61-307,61-622,61-623 and
Commission Rules of Procedure 52 and 201, et seq. , seekin g authorization to cancel Electric
Service Schedule No. 117, Residential Refrigerator Recycling Program ("Program").
On December 3, 2075, Rocky Mountain previously filed Tariff Advice No. 15-05
requesting Commission authorization to suspend the Program due to the Program vendor, Jaco
STAFF COMMENTS FEBRUARY 29,2016
Environmental ("Jaco"), going out of business. The Commission approved the Program
suspension on December 7,2075.
Rocky Mountain states that it issued a competitive Request for Proposals ("RFP") for its
Home Energy Savings Program. As part of the RFP process, the Company requested bids to
administer the Residential Refrigerator Recycling Program. Subsequently, two vendors submitted
bids under the RFP, including Jaco.
The Company, through a third-party vendor Navigant, conducted several cost-
effectiveness analyses to determine if re-instituting the Program was just and reasonable, and in
the public interest. A memorandum from Navigant to Rocky Mountain is attached to the
Company's Application. Table 5 in the Application is pulled from the Navigant memo and
demonstrates that the benefit/cost ratio is well below 1.0 for the Program according to five
different cost-effective tests. Under these tests, a program or measure is deemed to be cost-
effective if it has a benefit/cost ratio above 1.0.
The costs associated with delivering the Refrigerator Recycling Program have historically
been recovered through Electric Service Schedule No. 191 - Customer Efficiency Services Rate.
On January 19,2016, the Company filed an Application with the Commission requesting
authorization to increase the energy efficiency collection rate from 2.1 percent to 2.7 percent of
customers' bills. The Company asserts that the future demand-side management ("DSM") costs
included in the analysis did not include ongoing costs associated with delivering Electric Service
Schedule No. 117 - Residential Refrigerator Recycling Program.
The Company has provided revised tariff sheets for Schedule No. 1 17, indicating the
Program's cancelation. The Company also provided a copy of the revised index of schedules,
showing the removal of Schedule No. 117 from the list of electric service schedules.
STAFF REVIEW
Staff has reviewed the Application and supports the Company's proposal to cancel
Electric Service Schedule No. I l7 - Residential Refrigerator Recycling Program. Specifically,
Staff has investigated the resulting change in the cost-effectiveness of the Program having lost the
Program vendor, and the impact of the Program on Schedule No. 191 - Customer Efficiency
Services Rate.
STAFF COMMENTS FEBRUARY 29,2016
Program Vendor and Cost-Effectiveness
Following Jaco's bankruptcy, Rocky Mountain contracted a third party to analyze the
costs and benefits of the Program utilizing information provided by the Appliance Recycling
Centers of America (ARCA), the other vendor who submitted an RFP for the Program. Results of
the study show that the Program is not cost-effective under both the Total Resource Cost Test
(TRC) and the Utility Cost Test (UCT).t The analysis shows that the program delivery costs
would increase nearly 400% with ARCA as the Program administrator.
However, the cost-effectiveness of the Program is based off the delivery cost of the
Program vendor, consequently, Staff investigated whether or not the Program would be cost-
effective under a new vendor. Staff concluded that there are only three companies that operate
refrigerator recycling Programs near Rocky Mountain's service territory, Jaco, ARCA and
Consumers Energy (CSG). Jaco has filed for bankruptcy, ARCA has already provided Program
cost data to Rocky Mountain, and CSG currently operates solely in Iowa
Staff evaluated whether other investor owned utilities in the region utilize any other
vendors unknown to Staff and Rocky Mountain. Idaho Power Company, who also lost Jaco as its
Residential Refrigerator Recycling Program administrator, informed Staff at their most recent
Energy Efficiency Advisory Group meeting that a new company had submitted a bid for their
Program; however, this company does not operate in Rocky Mountain's Service territory.
Furthermore, although Idaho Power's Program is still under evaluation, the Program may not be
cost effective, even with roughly three times the participants and no payment incentive. Staff
recalculated the Program costs for Rocky Mountain with the $50 incentive removed, and
determined that the Program would still not pass the UTC and TRC tests, with a benefit/cost ratio
of roughly 0.60.
With ARCA being the only known vendor for Rocky Mountain's Program, Staff and the
Company discussed the Program costs with ARCA as the program administrator to see if a lower
delivery cost could be negotiated. Unfortunately, the price ARCA provided for the analysis had
already been reduced from the initial price they had provided in their bid for the vendor contract.
I The Company uses analytical tests such as the TRC and UCT to measure the cost-effectiveness of its various DSM
programs. The TRC compares program administrator costs and customer costs to utility resource savings, and
assesses whether the total resource cost of energy in a utility's service territory will decrease. The UCT compares
program administrator costs to supply-side resource costs, and assess whether utility bills will increase. Under these
tests, a program or measure is deemed to be cost-effective if it has benefit/cost ratio above 1.0.
STAFF COMMENTS FEBRUARY 29,2016
Staff also considered whether or not the Program could be internally administered, however, the
overhead costs of the Program are very high, and would not make the Program cost-effective.
Provided the Program is not cost-effective with ARCA as the Program administrator, and taking
into consideration the lack of other vendors in the area, Staff supports canceling Rocky
Mountain's Refrigerator Recycling Program at this time.
Impact on Schedule No. 191 - Customer Efficiency Service Rate
Historically, the costs associated with delivering the Residential Refrigerator Recycling
Program have been recovered through Electric Service Schedule No. 191 - Customer Efficiency
Services Rate. When Rocky Mountain requested to suspend the Program in December 2015, no
adjustment was made to Schedule No. 191. Currently, Rocky Mountain has f,rled an Application
for authority to increase Schedule No. 191 - Customer Efficiency Services Rate in Case No. PAC-
E-16-02. Staff notes that in this Application the Residential Refrigerator Recycling Program has
been correctly removed, and that the future DSM costs included in that case do not include
ongoing costs associated with delivering the Residential Refrigerator Recycling Program. Thus,
no future expenses are incurred as a result of canceling Schedule No. 117 - Residential
Refrigerator Recycling Program.
STAFF RECOMMENDATIONS
After careful examination, Staff recommends that the Commission accept the Company's
Application for authority to cancel Schedule No. 117 - Residential Refrigerator Recycling
Program.
n6i +^
Respectfully submitted this O - L day of February 2016.
Technical Staff: Mark Rogers
i :umisc:comments/pace I 6.4npmrde comments
STAFF COMMENTS
Neil Price
Deputy Attorney General
FEBRUARY 29,2016
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 29th DAY OF FEBRUARY 2016,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-E.I6.04, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
MICHAEL SNOW
ROCKY MOUNTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL: [e-mail]
michael. snow@pacifi com. som
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datareque st@paci fi c orp. com
DANIEL E SOLANDER
ROCKY MOI-JNTAIN POWER
1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84116
E-MAIL : Daniel. solander@f,acifi corp. com
CERTIFICATE OF SERVICE