20170518final_order_no_33766.pdf

Office of the Secretary
Service Date
May 18,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF PACIFICORP DBA ROCKY MOUNTAIN )CASE NO.PAC-E-16-14
POWER FOR A PRUDENCY )
DETERMINATION OF DEMAND-SIDE )ORDER NO.33766
MANAGE1’4IENT EXPENDITURES )
On October 11,2016,PacifiCorp dba Rocky Mountain Power applied to the
Commission for an Order establishing that the Company prudently incurred $7,460,715 in
demand-side management (DSM)expenses in 2014 and 2015.The Commission issued a Notice
of Application,and set deadlines for persons to intervene as parties and file comments in the
case.Order Nos.33639 and 33679.Staff filed comments supporting the Application,the
Community Action Partnership Association of Idaho (CAPAI)intervened as a party and filed
comments generally supporting the request.The Company also filed a reply.No other
comments were received.
BACKGROUND
Since the 1 970s,Rocky v1ountain has offered a variety of DSM programs to its
customers.In 2006,the Commission approved an enhanced set of DSM programs and provided
for cost recovery of the Company’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 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 subsequently seek permission to recover the deferred
costs of their 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.”Id.at 6.
ORDER NO,33766 1
THE APPLICATION
The Application,including the supporting testimony,describes the Company’s
energy efficiency activities,its expenditures on those activities,and their cost-effectiveness.The
Application addresses the Company’s expenditures,measures taken,and an evaluation of cost-
effectiveness.
A.Expenditures
The Company requested the Commission find that the claimed DSM expenditures
totaling $7,460,715 ($3,222,115 for 2014 and $4,238,600 for 2015)were prudent and in the
public interest.In support of its Application,the Company provided 2014 and 2015 annual
reports,and a categorized list of expenditures.The Company also provided monthly tracking of
the Schedule 191 balancing account.
During 2014 and 2015,the Company’s DSM portfolio consisted of five programs:(1)
Schedule 21 —Low Income Weatherization;(2)Schedule 117 —Residential Refrigerator
Recycling;(3)Schedule 118 —Home Energy Saver;(4)Home Energy Reports (no tariff);and (5)
Schedule 140 —Non-Residential Energy Efficiency,offering incentives for a wide variety of
energy efficiency measures to the Company’s residential,business and agricultural customers.
B.Energy Efficiency and Cost Effectiveness
The Company estimates that the annual savings achieved through its DSM programs
were 11,410 MWh in 2014 and 15,692 MWh for 2015.The Company analyzed its programs and
measures for cost-effectiveness under the Total Resource Cost test (TRC)and the Utility Cost
Test (UCT).Overall,the Company’s portfolio was cost-effective for each year under
consideration.Unpacked,the appliance recycling program was cost-effective in 2014,but not
2015,and the Low Income Weatherization program was not cost-effective in 2014 or 2015.
THE COMMENTS AND REPLY
Commission Staff and CAPAI filed timely written comments,and the Company filed
a timely reply.The parties’comments and the Company’s reply are summarized below.
A.Staff Comments
Rider Balance and Expenses
After an audit of the program expenses,Staff believed the Company’s DSM rider
expenses to be prudent,and recommended no adjustments be made to the request.Staff
ORDER NO.33766 2
recommended the Commission order that the Company prudently incurred $3,222,115 in 2014,
and $4,238,600 in 2015 DSM tariff rider expenses.Staff Comments at 2.
Staffs review showed that the Company continues to have an underfunded balance in
the tariff rider account—$714,687 as of December 31,2015,which is approximately 18.5%of
the 2015 rider revenue.Id.In March 2016,the Commission approved an increase in the
Company’s Schedule 191,and Staff confirmed that the underfunded balance is decreasing.
OrderNo.33491.See Id.
Staff noted the one-time customer credit was properly reflected in the Company’s
records.Based on Staffs review of the Company’s 2014 and 2015 DSM expenditures,Staff
determined the expenses were accurate and prudently incurred.Id.at 3.
Residential Programs
Staff provided an overview of the Company’s residential programs,noting that the
residential portfolio acquired 5,569,109 kWh in energy savings in 2014,and 8,137,029 kWh in
2015.Id.at 4.Taken together,the residential portfolio was cost-effective with a 1.29 UCT and
2.24 TRC.Id.Staff noted that Rocky Mountain’s low-income weatherization program remains
not cost-effective,but points out that “the Company has prudently managed this program and
recognizes that most utilities have similar challenges with [such]programs.”Id.at 5.Staff also
provided information on the Company’s refrigerator recycling program,which was discontinued
after the contractor responsible for administering the program went into receivership.Id.
Non-Residential Programs
Staffs review of the Company’s non-residential programs was that the non
residential portfolio acquired 5,841,257 kWh in energy savings in 2014,and 7,554,665 kWh in
2015.Id.at 5.Staff provided a concise overview of the Company’s evolving non-residential
programs,administration structure,and a review of the Company’s consolidation of non
residential programs into the wattsmart Business Program in 2014.Id.at 5-6,see also Order No.
33178.
Marketing
Staff provided an evaluation of the Company’s program marketing campaign.In
particular,Staff highlighted the Company’s wattsmart program,use of social media,energy kits,
and messaging in particular.Id.at 7.
ORDER NO.33766 3
Cost-Effectiveness of DSM Programs
With regard to cost-effectiveness,Staff provided comments relating to the evaluative
methods employed by the Company.Specifically,Staff annunciated that it prefers to emphasize
the UCT (over the TRC)when determining if a DSM program is cost-effective.Id.Staff
recommended that while the Company “continue[sj reporting the results of multiple cost-
effectiveness tests,...the Company conduct its CPA using utility,rather than total,costs.”Id.
B.CAPAI Comments
CAPAI provided comments focused on the Company’s Low Income Weatherization
Assistance (LIWA)program,CAPAI provided a brief overview of the LIWA program,
including participation trends,and the effect of natural gas prices.CAPAI Comments at 1-2.
Ultimately,CAPAT recommended that the Company form a working group to evaluate possible
changes in the LIWA program such as targeting more cost-effective weatherization measures.
Id.at 3-5.CAPAI claimed that it “is in the process of identifying and prioritizing the most cost-
effective and allowable weatherization measures,”though it also “proposes using the results of
the program evaluation as a starting point for this process of target selection.”Id.at 4.
C.Company Reply Comments
The Company provided reply comments addressing two issues:use of the UCT,as
recommended by Staff;and CAPAI’s request to form a working group.The Company supported
Staffs recommendation for use of the UCT for its CPA analyses for Idaho,but seeks direction
from the Commission on this matter.Company Reply at 2.The Company resisted CAPAI’s
recommendation to form a working group.Id.The Company noted that little has changed since
the last collaborative process,and repeating it would be unproductive and only increase the
burden on the LIWA program.Id.The Company provided additional details of the drivers
impeding cost-effectiveness,and noted that it “continually analyzes its programs and makes
ongoing adjustments to incentives and measures in response to market conditions....“Id.at 3.
The Company pointed to a third-party evaluation that will be completed in third quarter 2017,
and indicated that should the study yield new results,the Company would take appropriate
action.Id.
INTERVENOR FUNDING
On April 19,2017,CAPAI petitioned the Commission for a $4,897.50 intervenor
funding award.See CAPAI’s Petition for Intervenor Funding.In sum,CAPAI claimed $4,290
ORDER NO.33766 4
in attorney fees (28.6 hours at $150/hour);$457.50 in staff costs (15 hours at $30.5 0/hour);and
$150 in Miscellaneous Costs.
CAPAI provided five pages of comments on the LIWA program.The comments
included an analysis of market saturation,gas prices,and program targeting.CAPAI
recommended the formation of a working group to improve cost-effectiveness,though the
Company resisted this recommendation.
DISCUSSION
Based on our review of the record,and the undisputed comments of the parties,we
find that the Company prudently incurred $7,460,715 in DSM-related expenses in 2014 and
2015.We find that the recovery of DSM Rider account expenses,while underfunded,is
improving,and is projected to find balance in the near future,and is therefore just and
reasonable.
Generally,we find that the Company’s overall portfolio is practical and prudently
implemented.The programs’scoring reveals overall cost-effectiveness of the DSM programs.
The Company provided the results of a number of tests,but relies more heavily on the TRC and
UCT,which examine cost-effectiveness from different perspectives.
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
assesses whether the utility’s resource cost will increase.Under these tests,a program or
measure is deemed cost-effective if it has a benefit/cost ratio above 1.0.
We find that the UCT more accurately assesses the value of energy efficiency as a
resource.Moreover,we have previously approved using the UCT as the primary determinant of
cost-effectiveness.That said,the Commission encourages the use of a full suite of cost-
effectiveness evaluations,including the TRC,UCT,and participant cost test (PCT).These
measures each provide a different perspective and valuable results.
Afler reviewing the comments of CAPAI,and the Company’s reply,we decline the
recommendation of a working group.We note that the upcoming study will provide information
for the Company to evaluate its offerings,including LIWA.To implement a working group now
would only serve to increase costs and possibly duplicate efforts already underway.Instead,we
encourage the parties to monitor the outcome of the current study,evaluate those results,and
ORDER NO.33766 5
prepare to make specific recommended changes in the Companys next DSM prudencv filing,if
necessary.
Finally,with regard to intervenor funding:Idaho Code §61-61 7A is intended “to
encourage participation at all stages of all proceedings before this Commission so that all
affected customers receive full and fair representation in those proceedings.”To do so,the
statute allows the Commission to order any regulated utility with intrastate annual revenues
exceeding $3.5 million to pay all or a portion of the costs of one or more parties for legal fees,
witness fees and reproduction costs not to exceed a total for all intervening parties combined of
$40,000.1 Id.
The Commission considers the following factors when deciding whether to award
intervenor funding:(1)a finding that the participation of the intervenor has materially
contributed to the decision rendered by the Commission;(2)a finding that the costs of
intervention are reasonable in amount and would be a significant financial hardship for the
intervenor;(3)that the recommendation made by the intervenor differed materially from the
testimony and exhibits of the Commission Staff and (4)the testimony and participation of the
intervenor addressed issues of concern to the general body of users or consumers.Idaho Code §
61-617A(2).To obtain an intervenor funding award,an intervenor must comply with
Commission Rules of Procedure 161 through 165.Rule 162 provides the form and content for
the petition.IDAPA 31.01.01.162.
After reviewing the funding request submitted by CAPAI.we find that CAPAI’s
Petition satisfies the intervenor funding requirements.CAPAI stated that it “fully participated in
every aspect of this proceeding from start to finish and provided input and asserted issues not
raised by Staff and other parties.”Petition for Intervenor Funding at 5.CAPAI provided five
pages of comments addressing the LIWA program,and noted that it “was the only party to
propose collaborating with RMP to better identify and locate potential eligible LIWA recipients
[andi the assembly of an informal advisory working group for this purpose.”Id.at 8.Regardless
of our decision declining adoption of CAPAI’s proposal,it appears that CAPAI participated in
the process,reviewed and provided feedback on the LIWA program,and made suggestions to
address the issue.Thus,we find that CAPAI has materially contributed to the Commission’s
As a threshold matter,Rocky Mountain’s intrastate annual revenues exceed $3.5 million and the total claim for
fees and costs does not exceed $40,000.
ORDER NO.33766 6
decision.The documentation of the costs and fees incurred by CAPAI establishes that the
request is reasonable in amount,and that CAPAI would suffer financial hardship if the request is
not approved.Accordingly,we approve an award of intervenor funding to CAPAI in the amount
of $4,897.50.chargeable to the residential customer class.
CONCLUSION
The Company is an electrical corporation as defined by Idaho Code §61-119,and a
public utility subject to the Commission’s jurisdiction pursuant to Idaho Code §6 1-129.The
Company’s duties,and burden in presenting this Application to the Commission,are set forth in
Title 61 of the Idaho Code,and the Commission’s Rules of Procedure,IDAPA 31.01.01.000,et
seq.In particular,the Commission looks to Chapter 3 of Title 61 in reviewing this Application to
ensure the proposed action is “just and reasonable.”See,e.g.,Idaho Code §61-301 through 61-
315.
Based on our review of the record,and the discussion above,we find that the
Company prudently incurred $7,460,715 in DSM-related expenses ($3,222,115 for 2014 and
$4,238,600 for 2015).We further find it fair,just,and reasonable for the Company to take such
other actions as referenced above.
ORDER
IT IS HEREBY ORDERED that Rocky Mountain’s Application for a finding of
prudency related to its demand-side management expenditures for 2014-2015 is approved.The
Commission finds that $7,460,715 DSM-related expenses ($3,222,115 for 2014 and $4,238,600
for 2015)were prudently incurred.
IT IS FURTHER ORDERED that the Company take such actions as directed in the
body of this Order,including the award of intervenor funding.
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 §6 1-626.
ORDER NO.33766 7
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of May 2017.
ATTEST:
PAUL KfELLANDt.PRESIDENT
Diane M.Hanian
Commission Secretary
O:PAC-E-I 6-14bk3
ERIC ANDERSON,COMMISSIONER
ORDER NO.33766 8