20151120notice_of_application_order_no_33422.pdf

Office of the Secretary
Service Date
November 20,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION’S APPLICATION TO )CASE NO.AVU-G-15-03
RESUME NATURAL GAS EFFICIENCY )
PROGRAMS AND INCREASE THE RIDER )NOTICE OF APPLICATION
SURCHARGE IN SCHEDULES 190 AND )
191.)NOTICE OF
)MODIFIED PROCEDURE
)
______________________________
)ORDER NO.33422
On October 28,2015,Avista Corporation dba Avista Utilities filed an Application for
authority to:(1)resume natural gas energy efficiency programs and projects to residential
(including low-income),commercial and industrial natural gas customers under Schedule 190
(Natural Gas Efficiency Programs);and (2)fund these programs by increasing its “Energy
Efficiency Rider”surcharge rates in tariff Schedule 191.Application at 1.Avista proposes that
the gas demand-side management (DSM)programs “be offered through prescriptive rebates to
customer segments for eligible weatherization and high efficiency equipment measures as well as
custom incentives for 27 non-residential projects.”Id.Avista asks that the case be processed by
Modified Procedure,and that new Schedule 191 Rider rates take effect on January 1,2016.
In 2012,Avista filed and the Commission approved an application to suspend Avista’s
natural gas DSM programs.In its 2012 application,Avista advised the Commission that new natural
gas costs were about 50%lower than existing avoided costs and that these lower gas costs render the
“natural gas energy efficiency portfolio cost-ineffective going forward.”Order No.32650 at 1.
After evaluating a number of cost-effectiveness tests,Avista now seeks to re-establish those
programs.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Avista seeks to resume its previously
suspended natural gas DSM programs (Schedule 190)and to resume collecting a Rider surcharge
to pay for the DSM programs (Schedule 191).Avista claims that changes made to the avoided
cost calculation methodology used in the previously discontinued DSM programs will make the
natural gas energy efficiency portfolio cost effective going forward.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33422
YOU ARE FURTHER NOTIFIED that Avista claims that its historic method of
measuring cost-effectiveness,the Total Resource Cost test (TRC)metric,has a potential for bias
against conservation programs.Id.at 2.In its Application,the Company instead utilizes the
Utility Cost Test (UCT)metric as a measurement of cost-effectiveness.’Avista explains in its
Application that it prefers to emphasize the UCT over the TRC test when evaluating its DSM
programs because the TRC “typically includes the full costs,but not the full benefits to
customers because the risk reduction value of conservation and many non-energy benefits are
difficult to quantify.”Application at 2.
YOU ARE FURTHER NOTiFIED that Avista has proposed three changes to its
historic avoided cost methodology for natural gas:
1.LCostxCDcliver:Avista claims that “the demand portion of
Schedule 150 is a more accurate representation of the total costs to deliver
natural gas from the welihead to the customer meter,and therefore,that
should be a component of the natural gas avoided cost calculation.”Id.at
4-5.Thus,Avista has proposed inclusion of a $2.69/MWh long term firm
wheeling charge,based on the electric forward market prices of the Mid-C
market hub in its avoided cost calculation.Id.
2.Future Carbon Cost Assumptions:Avista states it is unable to come up
with an accurate future carbon cost assumption and there are a range of
legitimate projections from $0/metric ton to over $240/metric ton.Facing
this uncertainty,the company proposes using an estimate of $10/metric
ton starting in 2020 with a 3%annual escalation.
3.Discount Rate:Avista argues that the most appropriate method of
measuring the cost-effectiveness of its conservation programs is its
Weighted Average Cost of Capital (WACC).However,the Company also
claims that the tax benefits of debt financing and inflation adjustment
should be included in any discount rate.Accordingly,Avista has
proposed to move from a nominal WACC to a real WACC.
YOU ARE FURTHER NOTIFIED Avista requests a revision to Schedule 190 to
“provide customers with a levelized incentive of $3.00 per first year therm savings for any
project with a simple payback less than 15 years and capped at 70%of the project cost.”Id.at 8.
The Company uses analytical tests such as the TRC and UCT to measure the cost-effectiveness of its various DSM
programs.The TRC compares program administrator costs and customer costs to utility resource savings,and
assesses whether the total resource cost of energy in a utility’s service territory will decrease.The UCT compares
program administrator costs to supply-side resource costs,and assesses whether utility bills will increase.Under
these tests,a program or measure is deemed to be cost-effective if it has a benefit/cost ratio above 1 .0.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33422 2
YOU ARE FURTHER NOTWIED that Avista requests authority to resume collecting
an Energy Efficiency Rider surcharge (Schedule 191).Avista says this will generate
approximately $1.25 million in revenue,resulting in an increase in overall billed natural gas rates
by 1.7%.Id.at 1-2.If approved,the proposed Rider increase will increase the monthly bill of
the average residential natural gas customer using 61 therms by about $1.11 per month.
YOU ARE FURTHER NOTIFIED that Avista says for 2016-2017,its energy
efficiency programs and measures are estimated to result in a first year savings of 233,000
therms in Idaho.Id.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined the public
interest may not require a formal evidentiary hearing in this matter and that it will proceed under
Modified Procedure pursuant to the Commission’s Rules of Procedure 201 through 204,IDAPA
31.01.01.201 through .204.The Commission notes that Modified Procedure and written
comments have proven to be an effective means for obtaining public input and participation in
cases of this nature.
YOU ARE FURTHER NOTIFIED that anyone wanting to state a position supporting
or opposing this Application may file a written comment with the Commission no later than
December 10,2015.The comment must explain why the commenter supports or opposes the
Application.Persons who want a hearing must specifically ask for a hearing in their written
comments.Written comments concerning this Application shall be mailed to the Commission
and the parties at the addresses reflected below:
Commission Secretary Linda Gervais
Idaho Public Utilities Commission Manager,Regulatory Policy
P0 Box 83720 Avista Corporation
Boise,ID 83720-0074 P0 Box 3727
1411 E.Mission Avenue,MSC-29
Street Address for Express Mail:Spokane,WA 99220-37 17
E-Mail hndi1\Is’i\1sttLopu Ill
472 W.Washington Street
Boise,ID 83702-59 18 David J.Meyer,Esq.
Vice President and Chief Counsel
Regulatory and Government Affairs
Avista Corporation
1411 E.Mission Avenue,MSC-1 13
Spokane,WA 99220-37 17
E-Mail:
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33422
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail max’do so by accessing the
Commissions home page located at V.uc.idgog,Click the Comments and Questions”
icon,and complete the form,using the case number as it appears on the front of this document.
These comments must also be sent to Avista at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that the Company may file reply comments (if
necessary)by December 17,2015.
YOU ARE FURTHER NOTIFiED that if no written comments or protests are
received within the time limit set.the Commission will consider this matter on its merits and
enter its Order without a formal hearing.If written comments are received within the time limit
set,the Commission will consider them and,in its discretion.may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Commission finds it appropriate to
suspend Avista’s proposed effective date of January 1,2016,for a period of sixty days,until
March 1,2016,unless the Commission issues an earlier Order accepting,rejecting,or modifying
Avista’s Application.See Idaho Code §61-622(3-4).
YOU ARE FURTHER NOTIFIED that the Application has been filed with the
Commission and is available for public inspection during regular business hours at the
Commission offices.The Application is also available on the Commission’s web site at
www.puc.idaho.gov.Click on the “File Room”tab at the top of the page,scroll down to “Open
Gas Cases,”and then click on the case number as shown on the front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code §61-117,61-502,61-503 and 61-622.The Commission may enter any final Order
consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 3 1.01.01.000,et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons may file written comments no later than December 10,2015.The Company
may file reply comments (if any)no later than December 17,2015.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33422 4
IT IS FURTHER ORDERED that Avista’s proposed January 1.2016,effective date
is suspended for a period of sixty das.until March 1.2016.unless the Commission issues an
earlier Order accepting.rejecting,or modifying the Application.Idaho Code §61-622(3-4).
DONE by Order of the Idaho Public Utilities Commission at Boise.Idaho this 2O
day of November 2015.
70
PATJL KJELL NDR,PRESIDENT
MARSHA H.SMITH,COMMISSIONER
KRIS41NE RAPER,COfvfMJSSIONER
ATTEST:
Jewe1’
mmission Secretary
O:AVUG1 5O3bk
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33422 5