20170315Comments.pdf

BRANDON KARPEN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 7956
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA ROCKY
MOUNTAIN POWER FOR A PRUDENCY
DETERMINATION OF DEMAND-SIDE
MANAGEMENT EXPENDITURES.
l l,'r-l'./r.tl,I r'IU
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSTON
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CASE NO. PAC.E.I6.I4
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of record,
submits the following comments regarding the above referenced case.
BACKGROUND
On October 11,2016, PacifiCorp dba Rocky Mountain Power applied for an Order
establishing that it prudently incurred demand-side management (DSM) expenditures in 2014 and
2015 of $7,460,715. Generally, DSM refers to utility activities and programs that encourage
customers to use less overall energy or use less energy during peak usage hours. Rocky
Mountain's DSM programs include: Low Income Weatherization/Education (Schedule No. 21);
Refrigerator Recycling (Schedule No. I l7); Home Energy Saver (Schedule No. I l8); Home
Energy Reports (no tariff); Non-Residential Energy Efficiency/wattsmart Business (Schedule No.
140).
ISTAFF COMMENTS MARCH I5,2OI7
The Company declares that it has offered a variety of DSM programs to its customers
since the 1970s. In2006, the Commission approved the Company's current DSM portfolio, and
provided the Company with a cost recovery mechanism. Typically, DSM programs have two
parts. First, the utility designs and implements programs to promote energy efficiency and
conservation-reducing customer demand for energy. Second, utilities periodically report on the
effectiveness of those programs and seek permission to recover the deferred costs.
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 No. l9l. See Order
No. 29976. The DSM rider is the mechanism used to recover the costs of the DSM programs.
The Company is authorized to defer the costs of its DSM programs until 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.
STAFF REVIEW
Rider Balance and Expenses
Staff performed an audit of the Company's DSM expenses and internal processes for
paying incentives to customers. Staff believes that the Company's expenses were well
documented and controls were in place that are designed to eliminate improper payment of
program incentives. Additionally, the Company's extensive internal review process identifies and
corrects mistakes prior to the filing of its annual DSM reports. Based on Staff s audit, Staff
believes the Company's DSM rider expenses to be prudent with no adjustments. Staff
recommends that the Commission order that the Company prudently incurred $3,222,115 in20l4,
and $4,238,600 in 2015 DSM tariff rider expenses.
As shown on Table I below, the Company had an underfunded balance of $714,687 in the
tariff rider account on December 3 1, 2015. This underfunded balance is approximately I 8.5Yo of
the 2015 rider revenue, indicating that an adjustment to rider revenues was necessary. On
January 19,2016, Rocky Mountain filed an Application in Case No. PAC-E-16-02 to increase the
Customer Efficiency Services Rate from 2.lYo of ctstomers' bills to 2.7%. The Commission
approved this increase effective April 1, 2016, and allowed the Company to collect approximately
$ I . 1 million more per year in rider revenue. Staff confirmed that the underfunded rider balance is
decreasing, with an estimated underfunded balance of $195,000 on December 31,2016.
2STAFF COMMENTS MARCH I5,2OI7
Table 1: Customer Efficiency Services Tariff Rider Balance
20r4 20t5
Beginning Balance
Tariff Rider Revenue
Carrying Charges
One-Time Refund
DSM Expenditures
Ending Balance
(347,975\
3,835,750
(2,t82)
(4,200,280)
(347,975)(714,687)
The Company reports Customer Efficiency Tariff Rider expenses on an accrual basis in its
annual reports. Because of timing difference between accrual and cash accounting, the expenses
listed in the table above and used to calculate the tariff rider balance do not match the amounts in
the Company's Application for which it seeks a prudency determination. Staff has reviewed the
Company's reconciliation of year-end expenses for 2014 and 2015 and believes the actual
prudently incurred expenses during those years are 53,222,1 l5 and 54,238,600, respectively.
On November 7,2013, in Case No PAC-E-13-15, the Company filed for approval of a
one-time customer credit to refund an over-collection of Customer Efficiency Services Rate
funds. The refund was approved by the Commission on January 23,2014 and the refund was
completed in February 2014. [OrderNo. 32967] Table 1 above reflects the $1.4 million refund
to customers in 2014.
Enerry Savings
Rocky Mountain Power uses its energy efficiency tariff rider to fund programs for
approximately 75,000 customers in Eastern Idaho. During 2014 and20l5, it offered five
programs: Schedule No. 2l - Low Income Weatherization and Low Income Education, Schedule
No. 1 17 - Residential Refrigerator Recycling, Schedule No.1 18 - Home Energy Savers, and
Schedule No. 140 - Non-residential Energy Efficiency, also known as wattsmart Business.
Combined, these programs produced27,l02 MWh of savings over the 2014-2015 period. Table2
shows the annual savings, IRP targets, expendifures, and cost-effectiveness ratios for Rocky
625,565
3,806,315
498
(1,400,000)
(3,380,353)
JSTAFF COMMENTS MARCH I5,2OI7
Mountain Power's Idaho DSM portfolio for 2014 and 2015. Energy savings acquisition increased
38% from 2014 to 2015.
Table 2: Rocky Mountain Power's Idaho DSM portfolio, 2014 and2015
Metric 2014 20t5
Savings (at site)11,410 MWh t5,692 MWh
IRP target 10,920 Mwh 13,570 MWh
Expenditures $3,222,r15 $4,238,600
Utility Cost Test 1.69 r.44
Total Resource Cost Test 1.45 1.29
Residential Programs
Rocky Mountain Power's residential portfolio acquired 5,569,109 kWh of energy savings
in2014. The total expenditures of $1,235,376 were cost-effective with a 1.79 UCT and2.l5
TRC. The Company implemented several changes to its residential programs in 2014 that paid
off in 2015 when savings increased by 46%to 8,137,029 kwh and remained cost-effective with a
l.29UCT and2.24 TRC.
The Company offers a variety of energy efficiency programs for its residential customers.
The Home Energy Saver program provides incentives for insulation, duct sealing, CFLs, LEDs,
and other services. These incentives are available for new and existing homes, including multi-
family housing and manufactured homes. In 2014, the Company began distributing wattsmart
Starter kits that included EnergySTAR lighting and WaterSense products. The program was also
expanded to include direct install duct sealing for manufactured home customers who heat their
homes with forced air electric furnaces.
The Company also began developing a Home Energy Reports program in 2014. This
program is administered by OPower and launched in December 2014. Among the 17,600
customers who received reports, only 0.6%o requested to be removed. The program had high
customer satisfaction and saved nearly 3.5 million kWh in the first year with a UCT and TRC of
1.69. When the program launched, new participants received reports every month for three
months, at which point reports were then issued bi-monthly. An analysis of savings found that
4STAFF COMMENTS MARCH I5,2OI7
there was no impact to savings by reducing the frequency of reports, so the Company decided to
begin issuing reports quarterly. This minimized cost while maintaining savings.
The Company offered a refrigerator recycling program, See ya Later, Refrigerator, in
2014. The Company offered a $50 incentive and an energy savings kit (stocked with CFLs and a
refrigerator thermometer) to participating customers. In addition to residential customers,
business customers with residential refrigerators were allowed to participate. The Company also
provided a $20 incentive to retailers who collect old refrigerators from customers while delivering
a new refrigerator purchase. Despite its thoughtful design, the contractor responsible for
administering the program went into receivership. The Company was unable to find a cost-
effective replacement vendor for JACO and suspended the refrigerator recycling program in
December 2015. As a result of these unforeseen challenges, the program was not cost-effective in
2015 and had a UCT and TRC of 0.91.
Rocky Mountain Power also works with two Community Action Partnership (CAP)
agencies in its Idaho service territory to provide weatherization services to its low-income
customers. As a result of decreased avoided cost and paying the full measure cost, the program
was not cost-effective. Staff believes the Company has prudently managed this program and
recognizes that most utilities have similar challenges with programs serving this customer
segment.
Non-Residential Programs
Rocky Mountain Power's non-residential portfolio acquired 5,841,257 kWh of energy
savings in2014. The total expenditures of $1,724,368 were cost-effective with a 1.67 UCT and
1.32 TRC. The Company implemented a significant change to its non-residential programs in
20 1 5 that helped maintain a robust level of savings of 7 ,554,665 kWh and remained cost-effective
with a 1.60 ucT and 1.15 TRC.
Historically, Rocky Mountain has offered three non-residential energy efficiency
programs. These programs were known as FinAnswer, FinAnswer Express, and Agricultural
Energy Services. FinAnswer provided incentives for custom retrofits, FinAnswer Express
provided prescriptive rebates, and Agricultural Energy Services primarily provided incentives for
irrigation efficiency. In addition to rebating energy efficiency equipment, the Company provides
5STAFF COMMENTS MARCH I5,2OI7
energy management services, specifically facility and process advice to optimize energy use and
keep customers' bills low.
The non-residential programs are administered by third party companies, Nextant and
Cascade, who engage with trade allies, process incentives for participating customers, provide
custom project analysis, achieve savings targets within a cost-effective budget, and verify
measure installation. Project managers within Rocky Mountain Power engage with the
Company's large account customers to acquire savings through larger, more complex projects
with longer timelines.
ln20l4, Rocky Mountain proposed consolidating these three programs into a single
customer-facing program, called the wattsmart Business Program. The Company maintained that
this consolidation would create operational efficiencies and significantly improve the customer
experience. Previously, each customer had to determine and select which of the programs best fit
their needs, a process that could be confusing for new participants. In addition, a customer who
started down the wrong program path would have to start over with new paperwork and new
company contacts when a customer representative noticed they were in the wrong program. With
the streamlined and consolidated wattsmart program, non-residential customers now have a single
process that makes participation much easier. The Company filed to make these changes in Case
No. PAC-E-14-08 in order to "maximize energy savings and reduce costs by streamlining
program offerings and alleviating customer confusion." Staff supported this proposal and the
Commission approved it. Order No. 33 1 78.
In November 2014, the Company added a direct install small business offering for that
historically hard to reach market. Working with approved trade allies, the Company provides
eligible small businesses with energy assessments, cost-effective incentives, direct installation,
and short payback periods.
Also in 2014, the Company began offering energy project manager co-funding for large
customers who commit to 1,000,000 kwh annual energy savings. The co-funding allows the
customer to hire an internal dedicated project manager to manage energy efficiency projects
within the customer's company. This is useful for large customers who have significant savings
potential but do not have the staff capacity to manage complex projects.
6STAFF COMMENTS MARCH I5,2OI7
Marketing
In addition to program management, Staff reviewed the Company's marketing campaign
strategy and supporting materials. In particular, the Company has invested in a branded and
overarching campaign called wattsmart, to encourage its customers to make energy efficiency
choices. The campaign includes an ad series encouraging participation in its programs, and
general behavioral changes unassociated with any particular initiative. This sort of broad-based
lifestyle campaign normalizes energy efficiency and helps create a deeper understanding that both
supports and complements the direct savings achieved through the Company's other programs.
Launched in}}l4,the wattsmart marketing campaign uses social media to supplement the
message of printed wattsmart materials. ll/attsmart energy kits are distributed through the Home
Energy Savings program. With permission, businesses customers are photographed with the
Company's signature wattsmart "open sign" and the images are shared in print and social media
advertising. Quarterly e-mail blasts and digital search ads help focus customer attention on non-
residential energy efficiency opportunities on the Company's website.
In late 2014 and2015, a new initiative launched with a focus on distinct messaging, which
include incentives, weatherization, lighting, turning off lights/electronics, and keeping thermostat
at 68 degrees in the winter. These efforts include a twitter account (@RMP Idaho) which tweets
weekly efficiency tips.
Cost-effectiveness
Staff noticed that Rocky Mountain's annual DSM reports state that Idaho prefers to
emphasize the TRC as its standard cost-effectiveness test. Staff takes this opportunity to clarify
that it prefers the UCT. Staff believes that the UCT better reflects the value of energy efficiency
as a resource to customers and therefore should be weighted more heavily than the other cost-
effectiveness tests. Staff recommends that the Company continue reporting the results of multiple
cost-effectiveness tests, but also recommends that the Company conduct its CPA using utility,
rather than total, costs. Staff notes that the Company uses this methodology and standard for its
Utah DSM portfolio and that the Idaho Commission has accepted this approach.
7STAFF COMMENTS MARCH I5,2OI7
STAT'T' RECOMMENDATIONS
Staffrecommends that the Commission rule that the Company prudently incuned
53,222,115 in 2014 and $4,238,600 in 2015 DSM tariffrider expenses.
Respectfully submitted this fiV day of MarchzolT.
Deputy Attorney General
Technical Staff: Stacey Donohue
Donn English
Johnathan Farley
i:umisc:commantdpaccl6. l4bksddcbrjf commcnts
8STAFF COMMENTS MARCH I5,2OI7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15th DAY OF MARCH 2017,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. PAC-E-16-14, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
TED WESTON
DANIEL E SOLANDER
MICHAEL SNOW
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL : ted.weston@pacifi corp. com
daniel. solander@pacifi com.com
michael. snow@pacificom. com
BRAD M PURDY
ATTORNEY AT LAW
2019 N. ITTH STREET
BOISE ID 83702
E-MAIL: [e-mail]
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest@pacifi com. com
ARY
CERTIFICATE OF SERVICE