20061024Comments.pdf

CECELIA A. GASSNER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 6977
RECEIVED
200G OCT 24 PH 3: 24
IDAHO FU:5L!C '
UTILITIES COMMISSIO!'J
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
A VISTA CORPORATION TO INCREASE THE
COMPANY'S ENERGY EFFICIENCY TARIFFSCHEDULE 191.
CASE NO. A VU-O6-
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of record
Cecelia A. Gassner, Deputy Attorney General, in response to the Notice of Application and
Notice of Modified Procedure in Order No. 30145 issued on October 4 2006, submits the
following comments.
BACKGROUND
On September 14, 2006, Avista Corporation dba Avista Utilities filed its Application to
increase the Company s Energy Efficiency Tariff Schedule 191. Schedule 191 (the Rider) is
designed to recover the costs incurred by the Company associated with providing natural gas
efficiency services to customers. The Company requested Modified Procedure and an effective
date of the new tariff of October 13 , 2006. On October 4, 2006, the Commission suspended the
effective rate of the tariff. Order No. 30145.
According to A vista s Application, the proposed increase in the Rider rate is necessary to
continue to fund ongoing natural gas-efficiency programs as set forth in A vista s more recent
Integrated Resource Plan (IRP) for natural gas service and to amortize a deficiency balance within
the natural gas Demand Side Management (DSM) tariff rider resulting from the Company
STAFF COMMENTS OCTOBER 24, 2006
response to customer demand for the services that was higher than expected. The Company
asserts that the proposed increase will not result in a change in profits for the Company.
Avista states that the existing and planned expenses for the DSM programs are far
exceeding revenues. The Rider for DSM programs has not changed since 2001. Avista states
that, as of the close of August 2006, its natural gas DSM tariff rider balance for Idaho is negative
$1.15 million. The proposed Rider increase is estimated to erase this liability balance by the end
of the second quarter of2008. The Application states that the proposed increase is a 1.4%
increase, as expressed as a percentage of present gas revenue, and that the proposed rates will
result in a 1.75% total charge for DSM.
A vista states that all funds from the Rider will remain within the natural gas efficiency
rider programs. Avista will continually assess demand for the services and program financial
balances and propose revisions to the Rider as needed. The Company states that the programs are
cost-effective and that the additional funding will expand the availability ofthe programs. The
Company provided a copy of its customer notice and press release announcing the proposed tariff
change.
STAFF ANALYSIS
Accounting Issues
Staff has reviewed the Company s Application, completed an audit of the accounting
treatment of the DSM expenditures from 2001 to present, and has reviewed the Company s DSM
budget for the coming years. The annual revenue received from Idaho customers under the
present DSM tariff rider, currently set at 0.5% of retail rates, is approximately $296 268, while
the Company has currently budgeted approximately $720 000 in Idaho for DSM expenditures in
2007. The proposed tariff rider will generate approximately $1,439 121 in additional Idaho
revenue for the Company. The additional revenue will be used to recover a deferral balance
estimated to reach approximately $1.25 million by end of 2006, at which time, the Company
plans to further increase its DSM expenditures to the level provided by the Rider.
STAFF COMMENTS OCTOBER 24, 2006
Demand Side Management Program
Activities
Expansion of Avista s DSM program as described in the 2006-2008 IRP will include all
identified measures that are cost effective and those measures which may not have passed a cost
effectiveness test, but which a customer or Avista engineer believe to have significant potential
net value in energy savings. A total of 27 different measures were identified in the IRP as
accepted for development in the Company s Washington/Idaho service territories, based on either
a preliminary evaluation or as evaluated by the computer model used by the Company for
selecting resources appropriate to meet the demand of its customers. (see Table 6.7 ofthe IRP
excerpted below.) These measures total 1 062 000 first-year therms savings. This is more than a
four-fold increase over the Company s prior DSM goal.
Table 6.7 - WA/JD Programs Accepted within the tAP Analysis
Residential pocl!spa measures
Single-family home HV AC measures
Residentiat thermostat measures
Non-resJdeotlal clothes dryers
Non-residential cooking measures
Kiln
Non-remdentiall:ow-ttow showerheads
Non-reskkmUal pre-riosesprayers
Non-residential pool measures
Non-residential shell measures
Non'f~jdential space heat meawres
Non-residential site--spebific program
Residential domestic hot water measures
Resrd$ntf.at lo""'flowshowerhead measures
Multifamily boiler measures
Multifamf1y domestic how water measures
Mu!tifami~y home duct measures
Multifamily furnace measures
MultUam'~ J-NAC measures
Multjfami~ shell measures
Multifamily window me-asures
Single4amilY home duct program
Single-family home shell program
Sin,glG-tamily home- window measures
Horizontal-axis washing machine proglraffl
Non-"resldentJaii water ~\eat program
Crematoria prograrn
Totai tdentffied co$t-effeotive meaSUfftS
(CQm~.:~ may I\Ol &elm dl)3 t,::, fOj!ndr.~ to. nel!riS11.JJ!XJI th"IW!'I$)
19,000
56,000
27.000
000
000
000
16,000
000
4,000
000
469.000
13,000
53,000
000
000
14.000
000
000
41.000
234 000
44,000
25,000
20,000
000
062.000
1st year therms
1,st year therms
1 st year therms
1st yeaftherms
1st year them'1S
1st yeartharms
1st year1lierms
151 year therrns
1$t year the~
1 sf year therms
1 st yeaii' therms
1st yeat thalmS
'1 st YOOJr' !harms
1st ye-ar therms
'1 st year tharms
1st year themls
1st year thermos
1st year therms
1st year therms
151: year them,s
1 st year thatm$
1st year lherms
1st y-ear therms
'1 st year tnerms
'1 st year therms
1 S1 year therms
1 st year therms
1 st year therms
STAFF COMMENTS OCTOBER 24, 2006
Revenue Use
In addition to direct design and installation of DSM measures with residential, commercial
and industrial customers, the program includes significant incentives paid to customers. These
incentives take the form of cash rebates for items such as weatherization, high efficiency hot
water heaters, thermostats, and high efficiency furnaces. The use of Idaho-derived DSM rider
revenues is split as follows (numbers are rounded):
Incentives
Labor
Expenses
79%
15%
Priorities
While each measure pursued must be cost effective, Avista looks at individual categories
within each measure to determine priorities. By working with customers and engineering, Avista
determines which categories and sub-categories have the highest potential. For example
maintenance of steam traps for customers who make steam from natural gas boilers has been
determined to have potential as a highly cost effective program. Within this sub-category,
customers with the largest combination of steam output and hours of operation have been
determined to be priority targets.
Results
In 2001 Avista set a goal of annually achieving DSM results that save a minimum of
240 000 first-year therms within its combined Washington and Idaho service territory. The
Company has met or exceeded that goal in each of the five years prior to 2006. A comparison of
the goal and the actual results is shown in Attachment A, excerpted from the Company s IRP.
These measures total 1 062 000 first-year therms savings. This is more than a four-fold increase
over the Company s prior DSM goal.
DSM Rider Tariff Determination
The Company has proposed to change not only the rate of the Rider Adjustment, Schedule
191 , but to also change how that rate is defined. In 2001 , the Rider was set equivalent to 0.50%
of the retail rates, but it is tariffed and billed in cents per therm increments. The Company
proposes to describe the Rider as only a fixed rate per therm that may change when an
Application is filed by the Company and approved by the Commission.
STAFF COMMENTS OCTOBER 24, 2006
Proposed DSM Rider Rates
The Rider adjustment proposed by the Company is an increase from $0.00426 per therm
to $0.02063 per therm for residential rates (Schedule No.1 0 1). Changes in other tariff Schedules
are similar to the Schedule 101 change. All of the proposed Rider changes are presented below.Present Proposed
$0.00426/therm $0.02063/therm
$0.00373 $0.01827
$0.00354 $0.01739
$0.00294 $0.01523
Schedule No. 101
Schedule No. 111 & 112
Schedule No. 121 & 122
Schedule No. 131 & 132
The proposed tariff is calculated to pay for the increased costs associated with the
increased scope and effort of the Energy Efficiency program going forward, and to recover the
costs of recent past DSM efforts that have been insufficiently funded by the existing Rider. The
proposed Idaho portion ofDSM expenditures, starting January 1 , 2007, is $720 095 annually and
the amount for recovery of past Idaho expenses is $1 242 805, as estimated to exist by December
, 2006. The Company expects the tariff to recover the accrued past costs by about July of 2008.
By that time, Staff expects that the Company will have reevaluated the Rider amount vis-a-vis its
DSM expenditure levels and will file to change the Rider rate as needed to accommodate and
manage its customers' participation in its cost-effective DSM programs going forward.
This large (400%) increase in the Rider will fund a 300% (and growing) increase in DSM
activities. The direct and primary beneficiaries of these expenditures will be the DSM program
participants whose natural gas bills will decrease soon after their participation. However, even
non-participants will indirectly benefit from an increasing level ofDSM due to its effects on the
infrastructure necessary to deliver natural gas and on the wholesale price of natural gas. The
DSM rate increase is less than the decrease requested in the Company s PGA application, Case
No. A VU-06-, which still results in a net overall decrease to customers of approximately two
percent.
STAFF RECOMMENDATIONS
Staff recommends approval of the Energy Efficiency Tariff Rider rates and determination
of those rates as requested in the Company s Application.
Staff recommends that the Commission order contain language encouraging all customers
to participate in A vista s DSM programs.
STAFF COMMENTS OCTOBER 24, 2006
Staff also recommends that the Commission order explicitly state that approval of the
tariff rider changes is not a determination of either the reasonableness or the prudence of A vista
DSM program or expenditures. The Company did not request such determination in this
Application and the Staff did not evaluate such.
Respectfully submitted this ;:;f"'ctay of October 2006.
Deputy Attorney General
Technical Staff: Donn English
Harry Hall
Lynn Anderson
i: umisc :comments/ a vugO6.4cgc gdeh h la
STAFF COMMENTS OCTOBER 24, 2006
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 24TH DAY OF OCTOBER 2006
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. A VU-06-, BY E-MAILING A COpy THEREOF AND BY MAILING A COpy
THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
DAVID J. MEYER
SR VP AND GENERAL COUNSEL
A VISTA CORPORATION
1411 EMISSION AVE, MSC-
SPOKANE W A 99220
E-mail dmever(Cl),avistacorQ.com
KELLY NORWOOD
VICE PRESIDENT - STATE & FED. REG.
A VISTA UTILITIES
1411 EMISSION AVE, MSC-
SPOKANE W A 99220
E-mail Kell v.norwood(Cl),avistacofP com
CERTIFICATE OF SERVICE