20100924final_order_no_32072.pdf

Office of the Secretary
Service Date
September 24, 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR
AUTHORITY TO INCREASE ITS
SCHEDULE 191 - ENERGY EFFICIENCY
(PUBLIC PURPOSE) RIDER ADJUSTMENT ORDER NO. 32072
CASE NO. AVU-I0-
APPLICATION
On February 16, 2010, Avista Corporation dba Avista Utilities (Avista; Company)
filed an Application with the Idaho Public Utilities Commission (Commission) requesting a $1.
million (2.6%) increase in the Company s natural gas Schedule 191 - Energy Efficiency (Public
Purpose) Rider Adjustment. The Rider Adjustment is designed to recover costs incurred by the
Company associated with providing natural gas energy efficiency services and programs to retail
customers taking service under Schedules 101 , 111 & 112 and 131 & 132. The proposed
effective date requested in the Company s Application was April 1 , 2010 (suspended by
Commission Order No. 31017).
The Commission in this Order approves the Company s Application for an effective
date of October 1 , 2010.
Gas Demand-Side Management (DSM)
As reflected in the Company s Application, the proposed Schedule 191 increase is
necessary to continue to fund ongoing natural gas efficiency programs consistent with Avista
most recent Natural Gas Integrated Resource Plan (IRP). It will also serve to amortize
deficiency balance ($1 375 435 end of January 2010) resulting from the Company s response to
higher than expected customer demand for services. The proposed increase in revenues for DSM
will not increase or decrease the earnings of the Company. The proposed rate will have an
average monthly bill impact to residential customers using 66 therms of $1.52.
The 2009 natural gas savings target for Idaho and Washington was 1.6 million
therms. Over 2 million therms were saved. Customers look to the Company s DSM programs
for assistance in responding to increased natural gas prices. Existing and planned programmatic
expenditures by the Company are exceeding tariff rider revenues.
ORDER NO. 32072
Schedules 91 ( electric) and 191 (gas) public purpose funds support DSM programs
described in Company tariff Schedules 90 and 190. These programs include but are not limited
to the following measures:
. Appliance Measures
. Compressed Air Measures
HV AC Measures
. Industrial Measures
. Lighting Measures
. Maintenance Measures
. Motors Measures
. Renewable Technologies
. Northwest Energy Efficiency Alliance Participation
. Shell Measures
. Sustainable Building Measures
The Company s programs are based on providing a financial incentive or "rebate" for cost-
effective efficiency measures installed by customers with a simple payback of greater than one
year. This includes more than 300 measures packaged into over 30 programs.
A vista reports that it has long encouraged the direct use of natural gas by its electric
customers. The Company is continuing this effort with residential rebates for the conversion of
electric-to-natural gas space and water heat loads as well as a broad program for any non-
residential electric-to-natural gas conversions meeting specified criteria for relative British
Thermal Unit (BTU) efficiency. The cost-effective potential for these measures has been
incorporated into Avista s IRP effort and is contained within the identified acquisition goal.
Avista residential programs include high efficiency equipment, electric-to-natural gas
conversions, compact florescent lights (CFLs), "second" refrigerator recycling, weatherization
and rooftop dampers, as well as educational assistance provided through various community
events.
In addition to prescriptive programs , A vista offers "site-specific" programs for non-
residential customers. Site-specific programs are customized to the customer premise. The site-
specific offering provides incentives on commercial and industrial energy efficiency measures
with a simple financial payback exceeding one year. This is implemented through site analysis
customized diagnosis, and incentives determined for savings generated by the customers
premise or process. Commercial and industrial programs available to A vista customers include:
- -- - -- - -
ORDER NO. 32072
. Energy Smart Commercial Refrigeration
. Lighting and Controls
. Commercial Food Service Equipment
. Building Retro-commissioning
. Premium Efficiency Motors
. Power Management for Personal Computer (PC) Networks
. LEED Certification, Commercial HV AC Variable Frequency Drives (VFDs)
. Refrigerated Warehouses
. Vending Machine Controllers
. Demand-controlled Ventilation
. Side-stream Filtration
. Steam Trap Replacement and Repair
. Multi-family Development
. LED Traffic Signals
. Electric to Natural Gas Water Heater Conversions
. Commercial Clothes Washers
In addition to Avista s prescriptive and site-specific programs, the Company funds
and participates in the activities of the Northwest Energy Efficiency Alliance (NEEA). NEEA
focuses on using a regional approach to obtain electric efficiency through the transformation of
markets for efficiency measures and services. Historically, Avista has received approximately
1 aMW of savings in its service territory from NEEA programs.
The Company provided $1.9 million for low-income weatherization in 2009 in Idaho
and Washington. Effective October I , 2008, in Order No. 30647 in Case Nos. A VU-09-
and A VU-09-, $465 000 was directed to Idaho electric and natural gas low-income
customers and $25 000 was provided to Idaho (CAP) agencies for the purpose of underwriting
agency personnel assisting in low-income outreach and conservation education. The low-income
weatherization portfolio of the Company represents approximately 6.3% of its total energy
efficiency budget excluding utility support.
A vista reports that it is in the process of enhancing its evaluation, measurement and
verification (EM&V) protocols. EM&V includes "impact
" "
process
" "
cost " and "market"
analyses.
As reflected in its Application, the Company s energy efficiency programs are being
used by its customers at unprecedented levels. Customer participation continues to exceed
current funding. The Company s proposed Schedule 191 increase trues-up its natural gas tariff
rider to a level to meet customer demand and reduce existing negative balances, while providing
ORDER NO. 32072
funding for future energy efficiency programs. Energy efficiency, the Company contends
remains the lowest cost new resource and all customers benefit by its acquisition.
The energy charges of the individual natural gas rate schedules under the Company
Application are to be increased by the following amounts:
Schedule I 0 I
(General Service)
Schedules III & 112
(Large General Service)
Schedules 131 & 132
(Interruptible Service)
Existine:Pro osed
$0.03458 $0.05762 per therm
$0.03045 $0.05038 per therm
$0.02552 $0.04020 per therm
Electric DSM
Current projections of the Company indicate that the existing electric energy
efficiency tariff rider Schedule 91 may lead to a small negative balance of approximately
$600 000 at the close of 2010 based upon the current budget. This number, the Company
contends, is minor relative to the potential variation in customer demand caused by weather and
other factors beyond the Company s control. Therefore, Avista is proposing to retain the
existing electric Schedule 91 tariff rider rates. A vista s 2009 local energy efficiency savings
were over 82 million kilowatt hours (kWh) (approximately 9.4 aMW) or 143% of the
Company s IRP non-regional efficiency target goal for Idaho and Washington in 2009 (57.
million kWh). As of the close of January 2010, Avista s electric DSM tariff rider balance for
Idaho was a negative $2 417 322.
On March 9, 2010, the Commission issued a Notice of Application in Case No. A VU-
IO-02 and by Order No. 31 0 17 suspended the Company s proposed April I , 20 I 0, effective
date.
On April 8, 2010, the Commission issued a Notice of Modified Procedure and
established a June 9, 2010, comment deadline. To correct a customer notice problem, on May
, 2010, the deadline for comments was extended to June 30 , 2010.Comments and
recommendations were filed by customers of the Company (including one letter with 76
signatures) and Commission Staff.
ORDER NO. 32072
Customers filing comments oppose the Company s Application. Their comments can
be summarized by the following representative sampling:
This cost increase is not justifiable.
...
Now that the program has been
successful for them, they realize they have lost income from now efficient
homes using less fuel and electricity. So what do they want to do? They
want us common, middle-class American people, some of us still working
and others retired, to make up the difference in this lost income. Do they
not realize people on Social Security receive no increase on their funds
people working have not received pay raises in two years, others have lost
jobs, homes, insurance, many are now living on the streets, and our seniors
are out looking for work when they should be enjoying their retirement.
. Rebates, especially appliance rebates, should not be funded by other
ratepayers. I do not believe that current ratepayers should be rewarding
late adopters and holdouts. Responsible ratepayers who have undertaken
energy efficiency precautions in the 18 years since Energy Star appliances
have been made available should not be subsidizing irresponsible
ratepayers who have chosen to do nothing about replacing their energy
inefficient appliances. Regarding its non-rebate programs, A vista has not
justified why it needs to raise rates for all Idaho ratepayers in order to
continue to deliver it's efficiency programs for low-income households.
These programs should not be funded by ratepayers but rather as part of
Avista s community outreach service programs. I encourage the
Commission to decline Avista s request to raise rates and ask Avista to
instead be more efficient with the funds it already has from ratepayers.
The request for an increase at this time with so many people out of work
and no way to pay their existing bills now is appalling. Please stop
Avista s greediness now!
Staff Comments
For purposes of this case, Staff verified the estimated annual level of expenditures
required to fund existing DSM programs, reviewed the existing DSM deferral balance subject to
recovery and confirmed the proposed energy efficiency rider adjustment rate necessary to true-up
the DSM deferral balance. Based on this review, Staff supports the Company s proposal to
increase the energy efficiency tariff rider of Schedule 191 to collect an additional $1.6 million
annually, or approximately $1.52/month for the average residential customer using 66
therms/month. The proposed increase in revenues for DSM, Staff contends, will not increase the
earnings of the Company.
ORDER NO. 32072
As reflected in the Company s Application, the proposed increase is necessary to
continue to fund ongoing natural gas efficiency programs consistent with Avista s most recent
natural gas Integrated Resource Plan (IRP). It will also serve to amortize a deficiency balance
($1 375 435 end of January 2010) resulting from the Company s response to higher than
expected customer demand for services.
Staff recognizes that an increase in natural gas rates will not be viewed favorably by
many customers within the Company s service territory, particularly those on fixed incomes or
those using natural gas as their primary heating source, especially given the current economic
climate. However, Staff also asserts that all customers realize a net benefit from the cost-
effective use of DSM programs because of the reduced need for gas commodities storage as well
as distribution and transmission facilities. The total of all customers' bills will be lower than it
would be absent such programs.
Staff recommends that the Company s proposed increase of $1.6 million in annual
revenue from Schedule 191 - Energy Efficiency Public Purpose Rider be approved to fund the
costs associated with providing natural gas energy efficiency services.
Staff recommends that the Company provide in its annual DSM report clear
descriptions of each residential energy efficiency program, rebate or other incentive offered by
the Company.
Staff recommends that the Company provide to the Commission Staff periodic
updates of any changes made to or discontinuance of any program, rebate, or incentive.
Commission Findings
The Commission has reviewed the filings of record in Case No. A VU-10-
including the comments and recommendations of Commission Staff and customers. We have
also considered the Company s April 2010 Energy Efficiency Annual Report filing, the
December 2009 Memorandum of Understanding signed by the Company following a Staff-
convened DSM evaluation workshop, and the Stipulation and supporting testimony filed in the
Company s 2010 general rate case (A VU-10-01/A VU-10-01).
Energy efficiency measures and cost-effective demand-side management programs
have long been recognized by this Commission to reduce the need for higher-cost, supply-side
resources. While implementation of energy efficiency measures by customers without utility
participation is the least costly energy resource, the next is prudently administered cost-effective
ORDER NO. 32072
DSM programs, some providing monetary incentives to customers, others providing educational
opportunities. It is this second set of measures that we address in the Company s Energy
Efficiency Public Purpose Rider tariffs. As we have previously recognized, all customers benefit
from DSM and energy efficiency programs, participants and non-participants alike.
Reviewing Staffs audit results in this case, we find that the Company has accrued a
deficit balance in its Schedule 191 rider account. The unfunded balance as of December 31
2009 was $1 375 435.As reflected in the Company s Application, its energy efficiency
programs are being used by its customers at unprecedented levels. Customer participation
continues to exceed current funding. As the record reflects, the Company s Idaho natural gas
savings target for 2009, established in 2008, was 465 845 therm annual savings. Avista reports it
actually achieved 580 081 therm annual savings, exceeding its goal by approximately 25%. The
proposed Schedule 191 increase requested in this case trues up the Company s natural gas tariff
rider to meet customer demand, reduces the existing negative balances, and provides funding for
future energy efficiency programs.
The prudency of A vista s DSM expenses incurred in 2008 and 2009 has been
considered as part of the Company s 2010 general rate case. The Commission is convinced that
the Company s overall natural gas portfolio remains cost-effective. Staff identified a need for
the Company to (1) further assure that class benefits compared to contributions are reasonable;
(2) further improve program delivery; (3) make sure programs are cost-effective; (4) consistently
reassess baseline trends; and (5) clearly illustrate program evaluation, measurement and
verification. We find it reasonable for the Company to follow Staffs suggestions. We
encourage the Company to continue its efforts in improving the processes and transparency of its
program evaluations.
We note that at the conclusion of the Company s 2009 general rate case, Commission
Staff convened a DSM evaluation workshop in which A vista participated. The outcome of the
workshop was a Memorandum of Understanding (MOU) signed in December 2009 by Staff and
representatives of A vista Utilities, Idaho Power Company and Rocky Mountain Power. The
MOU included evaluation and reporting prerequisites that will enable a better evaluation of DSM
prudency requests by the utilities. As reflected in filings in the Company s current rate case, it is
reported that A vista has been diligently working on a comprehensive DSM evaluation
measurement and verification (EM&V) framework and to such end has contracted with
ORDER NO. 32072
nationally-respected evaluation experts. The Company s efforts in this regard are also reflected
in the Energy Efficiency Annual Report (formerly known as the Triple-E Report) filed with the
Commission on April 1 , 2010. To increase DSM and energy efficiency program transparency
and to aid in providing correct information to the Company s customers, we find it reasonable to
direct the Company to provide clearer descriptions of its DSM programs, rebates and incentives
and to provide the Commission with timely notice of changes to DSM programs, rebates or
incentives.
Pursuant to the Stipulation filed in Case Nos. A VU-1 0-0 lIA VU-1O-, we note
that the Company has agreed to hold at least five energy conservation workshops for senior
citizens in different Idaho communities prior to December 31 , 2011. This program is targeted to
seniors who might find themselves in tight financial situations that cause them to reduce their use
of space heating in order to cut monthly bills. The primary goal of the workshops is to provide
information on how to conserve energy without compromising comfort, health and safety.
The Company, we also note, has by the Stipulation further agreed to actively manage
the low-income weatherization and low-income conservation education programs to assure that
the stated goals and objectives of the programs are achieved and that costs associated with the
programs are prudently incurred. We support this effort. We find that low-income
weatherization and education programs assist customers in reducing their monthly bills. They
also save energy to the benefit of all customers.
In this case, the Commission finds it reasonable for the foregoing reasons to approve
the requested increase in the Company s Schedule 191 - Energy Efficiency Rider Adjustment.
CONCLUSIONS OF LA W
A vista Corporation dba A vista Utilities is a combination electric and natural gas
utility subject to the Commission s regulation pursuant to the authority granted by Title 61 of the
Idaho Code and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission hereby authorizes a $1.6 million (2.6%) increase in
the Company s natural gas Schedule 191 - Energy Efficiency (Public Purpose) Rider Adjustment
for an October 1 2010 effective date.
ORDER NO. 32072
IT IS FURTHER ORDERED and we hereby direct the Company to provide in its
annual DSM report clear descriptions of each residential energy efficiency program, rebate or
other incentive offered by the Company.
IT IS FURTHER ORDERED and we hereby direct the Company to provide the
Commission with periodic updates of any changes made to or discontinuance of any DSM or
energy efficiency programs, rebates, or incentives.
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 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;2 3
day of September 2010.
D. KEM SIDENT
-------
"r~
MARSHA H. SMITH, COMMISSIONER
\. ~, \, \ ""\~\~~"
MACK 1\.. REDF
ATTEST:
LO Lif'.J1- D. Jewell
Commission Secretary
bls/O:A VU-I 0-02 sw4
ORDER NO. 32072