20100604Comments.pdf

Benjamin J. Otto
ISB No. 8292
710 N 6th Stret
POBox 844
Boise, ID 83701
Ph: [phone] x 12
Fax: [phone]
botto~idahoconservation.org
RECE\VED
tnlD JUt! - 4 Pl'. 2: 45
\ DAJ1 Orl;;~;;h\~:; Ç~\ o;¡
llTIUllt;S vv¡.i..","~.
Attorney for Idao Conseation Lee
BEFORE THE IDAHO PUBLIC UTIITIES COMMSSION
IN THE MATTR OF THE
APPLICA nON OF ROCKY
MOUNAIN PO~R FOR AN
INCREASE TO THE CUSTOMER
EFFICIENCY SERVICES RATE
)
)
)
)
)
CASE NO. PAC -E-IO-03
COMMNTS OF IDAHO CONSERVATION LEAGUE
COMES NOW Idaho Conservation League with the following comments on Rocky
Mountain Power's request to increase the Customer Effciency Services Rate. This Commission
granted ICL's petition to intervene in this matter in Order No. 31071 issued on May 5, 2010.
Based on Rocky Mountain's Application and the yealy Demand Side Management reprt fied
in case PAC-E-Q5-1O, ICL generally support the requested increa. We agr with the
Commission and PUC Staff that, while any rate increase burdens rate payer, "demand-side
management, conservation, and energy efficiency measurs continue to be the lea-cst reure
that utilties can acquire to see new load." OrderNo. 30543, at 6.
BACKGROUN
Rocky Mountain Power began collecting a Customer Effciency Serices Rate in 200
initially set at 1.5% of retail revenue. Before collecting what the Commission labels a "DSM
COMMENTS OF ICL 1 June 4, 2010
Tarff Rider" Rocky Mountan had capitalized demand-side resoure cots and colleced them as
a component of ra~es. . See Order No. 29952, at 4. Rocky Mountain requested the switch away
from capitalization beuse they believed the regulatory lag associated with this mechanism
"made it financially diffcult to improve existing DSM programs or implement new ones." Id, at
4-5. The Commission approved the switch to the more immediate cost reovery mechanism
provided by a tarff rider, but cautioned Rocky Mountain this approval must not be consted as
a finding that DSM expenditues or progrs "are or will be found to be reonably and
prudently incured and executed." Order No. 29976, at 6.
Instead of determining whether any expense or progr was prudent, the Commission
explained the followig process for this review:
The Commission will examine the distrbution of DSM progr dollar both within and
among cusomer classes, the cost effectiveness of the progrs and the renablenes
and prudence of the Compay s program management and administrtive costs durng
general rate cases and in all proceedings proposing an adjustment to the DSM taff rider.
Id., at 7 (emphasis added).
Within two yea Rocky Mountain's DSM speding quickly outpaced the income
generated by the DSM taffrider, leading them to request an increas of 2.22% for a total rate of
3.72%. See Order No. 30543, Case PAC-E-08-Ql (April 30, 2008). The Company reested
this increase to fud DSM progrms for 2008- 2009 and "retire the back balance of $349,00 by
the end of2oo9(.l" Id. While the Commission approved the requested increas, beus the
Company did not submit suffcient data regarding cost effeciveness results or forets, it
refued to deterine "the ultimate prudence of any paricular prom or expeditu." Orer
No. 30543, at 7. Instead the Commission reiterated the review proess outlined above and
COMMENTS OF ICL 2 June 4,2010
directed the Company to provide suffcient information in its next gener rate cae. Id The
next general rate ~ase. ended with a stipulated settlement wherein the Staff accepted the
Company's 2006-2007 DSM expenditues as prudent. Order No. 30783, at 6-7, Cas No. PAC-
E-08-07 (April 16,2009).
This brings us to the curent sitution. The DSM taffrider is set at 3.72%, which
produces roughly $4.86 milion per year. Order No. 30543, at 1. The Commission has acceted
the DSM progrs and expenses though 2007 to be reasonable and prudently incurd. Orer
No. 30783, at 6-7. Now Rocky Mountain requests a rate incree to 5.85%, producing $8.325
milion per year, which is "designed to fud ongoing DSM progr expenditu and reduce the
back balance or yet to be recovered DSM expenses(.l" Application, at 5. The Commission has
not found 2008-2009 DSM progrms or expenses to be reasonable or prudent, and the most
recent general rate case filed by Rocky Mountain does not include this deterination. See
Application, Case No. PAC-E-I0-07 (May 4,2010). Therfore, based on the review proes
outlined in Order No. 29976, before grting Rocky Mountain's proposed adjustment the
Commission "wil examine the distrbution ofDSM program dollar both within and among
customer classes, the cost effectiveness of the progrs and the reasonableness and prudence of
the Company s progr management and administrtive costs(.l" Order No. 29976, at 7. ICL
stresses that this Order explained the Commission would perform this review "durng generl
rate cases and in all proceedings proposing an adjustment to the DSM taff rider." Id,
(emphasis added).
Despite this clear directive to review progr distrbution, cost effecivenes, and
prudency "in all proceedings proposing an adjustment to the DSM taff rider," the Staff
Comments in this case do not do so. See Staff Comments, at 2-3, (June 3, 2010). Instead the
COMMENTS OF ICL 3 June 4,2010
Staff proposes to "fuer evaluate" the DSM program in the next general rate cae. Id., at 3.
While general rate cases should include a comprehensive examination of utilty demands,
programs, and expenses, ICL contends that this Application to incre the DSM tarff rider
provides the opportity to focus on this discrete rate and associated suite of progrms and
expenses.
COMMENTS
ICL believes the taff rider is an importt mechanism for encouring DSM
investments in that it provides timely cost recovery. ICL wholeheaedly agr with the
Commission's prior statement "demand side management, conservation and effciency meaur
continue to be the least-cost resource that utilties can acquire to serve new load." Order No.
30543. at 6. ICL ålso'agrees with Staff ''tat demand-side management (DSM), including ener
efficiency progrms and load management progrms, is a significant resoure available to help
ensure reasonable system reliabilty." Id., at 5. We commend Rocky Mountain's effort thus far
in pursuing their DSM program and acknowledge the basis for the requested rate increa is to
adequately fud progrm growth that continues to exceed forecasts. In the following comments,
ICL intends to highlight some issues with individual DSM progrs as well as the rapidly
growing unecovered back balance and associated carring charge.
Curent DSM progrms
Load Management
Irrgation Load Control continues to be a highly successful progr as demonstrted by
passing the strngent Ratepayer Impact Measure. According to the California Stadad Prctice
COMMENTS OF ICL 4 June 4,2010
Manual, when the RIM reveals a beefit to cost ratio greater than one, the progr will result in
lower rates and bils overall. Due to the ru away success of the irrgation load contrl program
ICL encourges Rocky Mountain and the Commission to purue other load control progrms,
like for example Idaho Power's AlC Cool Credit or FlexPeak Management.
While load control proves to be not just cost effective, but actully a method to reuce
overall rates, ICL is concerned that the curent fuding mechanism is insuffcient to captu all
cost effective opportities. Rocky Mountain's Application explains the curt bifuted
fuding scheme wil continue whereby the progrm expenses are recoverd thugh the rider
while the incentive payments are recovered though generl rates. Application, at 12-13. The
Application also reveals the progrm expenses for irgation load control constitutes roughly
60% of the entire DSM program budget. i Id. Finally, the Application explains that as
paricipation and proir complexity continue to increase, the strin on company resour and
staff is proving to be unsustainable. Id. To resolve this strin Rocky Mountain forecats "a
greater reliance on exteral resources for deliver of the progr." Id
ICL believes it may be time for Rocky Mountain and the Commission to move the entir
irrgation load control progr out of the DSM taff rider. First, ratepayer ar war of any rate
increses durng the curent economic conditions. By removing roughly 60% of the DSM
progra expenses from the rider, the Commission maybe able to reduce the requested increse
without haring other progrs. Alternatively, removing the expenses associated with this
progrm could free up fuds for other cost effective progrs. Second, the load contrl progrm
most closely resembles a supply side resoure because it is a readily quatifiable amount of
disbatchable load. Third, Rocky Mountain's forecasted need to incringly tu to exteal
l In the 2008 DSM Reprt (Table 1, Page 4 and Table 2, Page 5) Irrgation Load Contrl progr expese
accounted for 61 % of the total. In the 200 DSM Repo (Table 2, Page 5) they accted for 5901.. Attent 3
of the Application foreasts 2010 progr expense to ac for 60% of the total.
COMMNTS OF ICL 5 June 4,2010
resources provides an appropriate opportity to rethink the strctu of this progr. ICL
suggests the Commission should order the Company to study this option and report back shortly.
Irrigation Energy Services
This is the only program that failed the Total Resource Cost test durg 2009. See
Application, at attachment 2. According to Rocky Mountain, this progr failed due to one-time
trsaction costs incurd when changing progr administrtors and "cusomer specific costs .
associated with equipment investments that delivered operational effciencies in addition to
energy effciency benefits." Id, at 10-11. After noting that seven customer accounted for 500,1
of the total cost of the progr but collected only 12% of the incentives, the Company explained
this seemingly economically irrational behavior by stating "ther must be additional beefits
beyond electrcal savings that compelled this set of customers to proceed with these projects."
Id, at 11. However, the Company had alredy identified these "additional beefits" - they are
the "opetional effciencies in addition to energy effciency benefits" delivered to specific
customers. While ICL believes increasing irgation operational effciency is a laudable goal,
because these are not energy effciency benefits they are not a legitimate use ofDSM taff
fuds.
ICL believes these ilegitimate costs may not be isolated to 2009. Looking backw the
Commission should require Rocky Mountain to isolate program spending that reults in energy
effciency benefits from broader operational effciencies and deem thes later costs imprudent.
Furermore, because Irrgation Effciency has a higher levelized cost per kilowatt-hour and
lower benefit/cost ratio across all tests when compared to any other progr, the Commission
COMMENTS OF ICL 6 June 4,2010
should direct the Company to focus futu DSM taff expenditus on this more prudent
portfolio of progrms;
Residential Programs
The Home Energy Effciency Incentives progrm focues on a rage of appliance and
building envelope meaures that captu long-term energy savings. After changing some
incentive strctues, progrm savings in 2009 doubled while spending incred only 20% when
compard to 2008. Application, at 6-7. For 2010, the Company foreasts expenditues to reain
about the same, but does not provide any forecast of projected savings. Id The Company
explains that the program administrtor believes there are "additional opprtity and potential
program expenditues in 2010," but does not include these in the Application. Id Morever, the
Application does not include "some of the key measures" related to heat pump water heater and
dustless heat pumps identified in the Nortwest Power and Coriseration Council 6th Power Plan.
Id The 6th Plan explains the largest remaining effciency gains in the reidential sector come
from improved heat pump technology for both water and home heating or cooling. Sixth
Northwest Conservation and Electric Power Plan, at 4-6 - 4_8.2 ICL believes the Commission
should direct the Company to focus more DSM resoures on the residential secor.
This shift in focus need not result in fuer increasing the DSM rider taff. The 200
DSM report reveals a massive imbalance between residential and irgation cutomer in ters of
revenue collected and expenditues made. 2009 DSM Report, at pp 31 - 33. Comparng Tables
16 and 17, residential customers contrbuted 44% of the DSM taff revenue but received only
18% of the expenditus. Id. By contrast, the irrgators contrbuted only 27% of the revenue but
received 72% of the expenditus not including the credit payments collected though generl
2 Available at: htt://ww.nwcouncil.orglenerg/powerplan6/default.htm
COMMNTS OF ICL 7 June 4, 2010
rates. Id Furer, according to the cost effectiveness tables in the Compay's Application, the
levelized cost per kilowatt-hour of savings available frm the Home Energy Savings progr is
less than the Irrgation Energy Savings program. Application, at attchments 2 (2009 reults)
and 4 (2010 forecasts.) As explained above, ICL believes some of the expenditus that occur
under the Irrgation Energy Saving program are not appropriate, therefore the Commission
should direct the company to shift futue expenditues to the more cost effective Home Energy
Savings program.
The Refrgerator Recycling Program continues to offer the best cost!efit ratios and the
lowest savings per kilowatt-hour of the entire suite ofDSM programs. Application, at
attchments 2 (2009 results) and 4 (2010 forecasts.) ICL is encourged the Company fore
increased customer paricipation in this program and urges the Company to fuer promote this
program.
Commercial/Industrial Programs
The Energy FinAswer programs continue to be cost effective meaurs with incring
paricipation levels. The Application explains the Company continues to refine these progrs
in other markets to better align with emerging technology, code changes, and market conditions.
Application, at 9-10. ICL encourges the Company to bring these refinements to Idao. Even
without these changes, the Company forecasts that in 2010 the Energy FinAswers progr wil
pass the strct Ratepayer Impact Measur test. Id, at attchment 4, page 3. Because commerial
and industral eff?ien.cy has the potential to captue large kilowatt-hour savings frm individua
paricipants, ICL encourages the Company to continue to purue these progrs.
COMMENTS OF ICL 8 June 4,2010
The Outstading Back Balance
Rocky MoUntain's Application fails to justify the recover of the accumulated back
balance. The Application provides a "forecated" balance of$3.5 milion by April 2010, but
explains the Company only intends to reduce this balance by $1.25 milion by April 2011.
Application, at 5. However, neither the Application, nor the 2009 DSM report, provides any
information on how the Company arved at this forecast. The Application does not explain why
the Company only intends to parially reduce this amount, it does not explain why continuing to
incur substantial caing charges is more prudent than fully retiring this balance, nor doe it
provide any forecast of the balance amount for 2011. Without these explanations and the data to
support them, the Commission and ratepayers have no way to know if thes carg chares are
prudently incured expenses. ICL submits that another use of the over fuding of the Irrgation
Energy savings program dollar would be to apply these fuds to fully retiring the back balance.
Moreover, Rocky Mountain's prior history indicates that incring the rider amount will
not reduce the accumulated balance; rather history indicates this balance will continue to expand.
Rocky Mountain's previous request to increase the rate in 2008 was "designed" in par "to retire
. . . the back balance," then totaling $349,000, by the end of 2009. Order No. 30543 at 1.
However, the balancing account activity detailed in the 2009 DSM report show the account
instead grw to approximately $2.2 milion. 2009 DSM Report at 31, Cas No. PAC-E-Q5-1O
(March 15,2010). Moreover, this report includes a caing charge incurd in April 2009 of
$15,755, an amount vastly out ofline with any previous monthly carng chae. Id ICL is
concerned that thi~ apparnt inabilty to control the accumulated balance and the reulting
caring charges divert money that otherwse would be available for DSM programs.
COMMENTS OF ICL 9 June 4, 2010
CONCLUSION
Managing 'the demand side of the electrcal meter continues to be the most cost effective
manner to meet the needs of ratepayers. Furermore, increasing overall effciency may fr up
existing supply side resources for new customers, thereby promoting economic development.
ICL believes the DSM tariff rider is a critical component of aligning rate incentives to encourge
utilty investments in effciency. However, ICL also believes DSM taff collections and
expenditues should achieve some rough level of party for each customer class and focus on the
most cost effective progrms available. ICL believes the Commission has previously explained
that before granting any adjustment to the DSM taff, they wil examine the distrbution of
program dollars, the cost effectiveness of individual programs, and deterine the prudence of
program spending. ICL respectfully requests the Commission to incorprate the above
comments when conducting this review.
Respectfully submitted this 4th day of June 2010.~~Benjamin J. Otto
Idao Conseration League
COMMENTS OF ICL 10 June 4, 2010
CERTIFICATE OF SERVICE
I hereby certify that on this 6th day of June, 2010, tre and corrct copies of the
foregoing COMMNTS OF IDAHOCONSERV ATION LEAGUE were deliverd to the
following persons via the method of service noted:
Hand delivery:
Jean Jewell
Commission Secreta (Original and seven copies provided)
Idao Public Utilties Commission
427 W. Washington St.
Boise,ID 83702-5983
ELECTRONIC MAL ONLY:
Daniel Solander
Senior Counsel
201 South Main, Suite 2300
Salt Lake City, UT 84111
Telephone: [phone]
Facsimile: [phone]
E-mail: Daniei.Solander~acifiCorp.com
Ted Weston
Idaho Regulatory Affairs Manager
201 South Main, Suite 2300
Salt Lae City, UT 84111
Telephone: [phone]
Facsimile: [phone]
E-mail: ted.weston~acifiCorp.com
Eric L Olsen
Racine Olson Nye Budge & Baily
P.O. Box 13691
Poctello, il 83204-1391
eio~cinelaw.net
Anthony Yanel
29814 Lake Road
Bay Vilage, OH 44140
tony~yanei.net
~ -t
Benjamin J. Oto
COMMENTS OF ICL 11 June 4, 2010