20100301Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL

DATE: FEBRUARY 25, 2010

SUBJECT: CASE NO. AVU-G-10-02 (Avista)
SCHEDULE 191 – ENERGY EFFICIENCY RIDER ADJUSTMENT

Gas DSM
On February 16, 2010, Avista Corporation dba Avista Utilities (Avista; Company)
filed an Application with the Idaho Public Utilities Commission (Commission) requesting a $1.6
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 is April 1, 2010.
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. 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
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for assistance in responding to increased natural gas prices. Existing and planned programmatic
expenditures by the Company are exceeding tariff rider revenues.
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
HVAC 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 over 300 measures packaged into over 30 programs.
Avista 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 are contained within the identified acquisition goal.
Avista’s residential programs include high efficiency equipment, electric-to-natural gas
conversions, compact florescent lights (CFLs), “second” refrigerator recycling, weatherization,
rooftop dampers, as well as providing educational assistance through various community events.
For non-residential customers, in addition to prescriptive programs, Avista offers
“site-specific” programs. 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
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customers’ premise or process. Commercial and industrial programs available to Avista
customers include:
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 HVAC 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
2.1 aMW of savings in its service territory from NEEA programs.
The Company provided $1.9 for low-income weatherization in 2009 in Idaho and
Washington. Effective October 1, 2008, in Order No. 30647 in Case Nos. AVU-E-09-06 and
AVU-G-09-04, $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.
Avista reports that it is in the process of enhancing its evaluation, measurement and
verification (EM&V) protocols. The Company plans to initiate a collaborative, beginning in
March 2010 to review EM&V issues and will provide a report to the Commission on or before
September 1, 2010. That report will describe Avista’s enhanced EM&V protocols.
DECISION MEMORANDUM 4
As described in an EM&V draft plan circulated by the Company for review by its
Triple E Board in November 2009, EM&V is intended to reflect all of the analyses necessary to
supply information to stakeholders to adequately determine the prudence of Avista’s DSM
programs. EM&V includes “impact,” “process,” “market,” and “cost test” test analyses. The
Company has regularly convened the stakeholders forum known as the External Energy
Efficiency Board (Triple E). These meetings have included customer representatives,
Commission Staff members and individuals from the environmental communities. The increased
funding requested in the Company’s Application will continue to be subject to the existing cost-
effectiveness tests.
Installing energy efficiency measures, the Company contends, is a direct action
customers can take to respond to a period of increasing energy prices facing the Pacific
Northwest and the country as a whole. 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 request trues-up its natural gas tariff rider to a level to meet
customer demand and reduce existing negative balances, while providing 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 rate schedules under the Company’s Application
are to be increased by the following amounts:

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
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existing electric Schedule 91 tariff rider rates. Avista’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 (57.2
million kWh). As of the close of January 2010, Avista’s electric DSM tariff rider balance for
Idaho was a negative $2,417,322.
COMMISSION DECISION
Avista has filed an Application requesting a $1.6 million (2.6%) increase in the
Company’s natural gas Schedule 191 Energy Efficiency Rider Adjustment. The Company
requested effective date is April 1, 2010. Staff recommends that the Company’s Application be
noticed and the proposed effective date be suspended to allow sufficient time for Staff
investigation audit and analysis. Staff will bring the matter back to the Commission with a
further procedural recommendation as its investigation progresses. Does the Commission find
the proposed procedure acceptable?

Scott Woodbury
Deputy Attorney General

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