20021202min.doc

MINUTES OF DECISION MEETING
DECEMBER 2, 2002 – 1:30 P.M.
(SUBJECT TO COMMISSION APPROVAL)

In attendance were Commissioners Paul Kjellander, Dennis Hansen, and Marsha Smith.

Commissioner Kjellander called the meeting to order. The first order of business was approval of item 1 on the CONSENT AGENDA. There were no questions or comments. Commissioner Kjellander made a motion to approve the Consent Agenda, item 1. A vote was taken and the motion carried unanimously.

The next order of business was MATTERS IN PROGRESS:

Scott Woodbury’s November 29, 2002 Decision Memorandum re: Case No. PAC-E-02-7 (PacifiCorp). Idaho Compact Fluorescent Light Bulb Program. Request for Approval of Tariff and Deferred Accounting Treatment.

Commissioner Hansen stated that before Mr. Woodbury reviewed his Decision Memo, he would like to make a comment. He said he had heard some pretty good reports on PacifiCorp’s Demand Side Management program being administered in Utah. He said he had received some calls from Idaho customers who live near the border who wanted to know why they couldn’t participate in the DSM program. He stated that in talking to these customers, it seems like the program they have in Utah is much more than giving a customer two light bulbs. He said he didn’t have details about Utah’s DSM program but would like to receive a copy of the DSM program offered in Utah before the Commission further evaluates the proposed program for Idaho so that we might know if its comparable and what the differences might be. He asked if we could hold the agenda item one week in order to receive this information.

Commission Kjellander noted that Bob Lively and Jeff Baumgartner from PacifiCorp were present via teleconference and could possible address Commissioner Hansen’s request. Mr. Lively replied that the Company would be happy to provide information about the company’s DSM program in Utah. Commissioner Hansen asked Mr. Lively if there was a difference between what is offered in the proposed Idaho program and what is being offered to the customers in Utah. Mr. Lively replied that in Utah, the CFL program was a mailer-type program where they sent out mailers to customers and if they wanted to participate in the CFL program they sent the mailers back to the company and then the lightbulbs were only sent to those who had expressed an interest. He said in the Idaho program, they are proposing to do it a little differently, where they simply send the lightbulbs out to all customers. He said the company had found that it is easier to administrate that way and probably more cost effective. Commissioner Hansen said he was led to believe from Idaho customer who had contacted him from the Preston area that if they were to conduct energy efficiency upgrades to their lighting systems in an office or a business then they would be able to recoup a percentage of the expenses. Mr. Baumgartner responded that for residential customers, the company designed the CFL programs which involves getting two free bulbs. He said that the programs Commissioner Hansen is referring to are for commercial and industrial customers in Utah. He said that in Idaho, there is a comparable program called the Financer Program. He said the primary difference is that the Idaho program is based on giving the customer a loan, while the Utah programs are based on rebates. He said both the programs in Utah and Idaho will help the customers with free energy audits of their commercial or industrial facilities and provide either a low-interest loan to help them finance recommended improvements or a cash rebate based on improvements the customer finances. He said that within a reasonable period of time, the company will be coming in to revise its Idaho filings to make them more consistent with Utah in regards to the commercial and industrial portfolios. Commissioner Hansen said that pretty much answered his questions, and he would take back his request to hold the agenda item.

Scott Woodbury reviewed his Decision Memo. He said PacifiCorp had filed Reply Comments that morning and disagreed with Staff’s recommendation that amortization of the deferred costs begin when distribution is completed. He said the Company had noted that beginning amortization immediately eliminates the opportunity for the Company to recover its costs. He said PacifiCorp recommends that the amortization period begin when the costs are included in rates or January 1, 2004, whichever occurs earlier. He said in considering the Company’s reply, Staff had no objection to the Company-proposed amortization start date, assuming the Commission adopted Staff’s proposal to deny the Company carrying charges on the deferred balance. He said if the Commission is inclined to approve a carrying charge, Staff would oppose the Company’s proposed date and would go back to its original proposal. He said Staff recommends that the prudence of the CFL program and expenses be reviewed in the Company’s next general rate case, at which time the Commission would look into the costs of the bulbs, which was a point raised by the customers.

Commissioner Kjellander said that as he was reading a summary of the customer comments, one that jumped out was the contention that under the Company’s proposed program, the cost of $5.18 per CFL bulb was more expensive than what you would pay at a retail store. He asked if Staff looked into that and if it was an accurate assumption. Mr. Woodbury said he spoke with Lynn Anderson and Staff doesn’t dispute that CFL bulbs can be purchased at a cost less than $5.18. Commissioner Kjellander asked if Staff had any concerns that the program would end up costing more, especially when the question was raised about the vendor and how the vendor was selected. Mr. Woodbury replied that Staff’s recommendation that the program be approved is not a recommendation that the costs of the program are reasonable. Commissioner Kjellander asked about the comparison of PacifiCorp’s proposed CFL program with Idaho Power’s coupon program. He said he was curious if there were any comparisons being made to the coupon program versus actually distributing bulbs as to costs or impacts to local retailers. Mr. Woodbury said he was uncertain as to whether the company had considered that, although it would be appropriate to look into those things when assessing the prudency of the program.

Commissioner Hansen said the Staff had recommended evaluation of the effectiveness of this program by gathering and evaluating data, i.e. how many households actually used the bulbs, how many hours they used them, how many consumers purchased additional CFLs as a result of the program, how many were already using the bulbs, etc. He said he questioned if the cost to go trace and accumulate all this data was included in the $5.18, or are they going to be coming in to ask for more money because they have had to put together all this information. Mr. Woodbury stated that those are the kinds of questions Staff will be asking the Company. He said the Company has introduced this program in other jurisdictional states but at this time the Company does not have a cost benefit analysis. Commissioner Hansen said he questioned why Staff was recommending that the prudency review of the program is needed after the fact and not before it starts. Mr. Woodbury replied that Staff in its comments cited a Commission order dealing with Avista wherein the Commission indicated an appropriate time to assess the prudence of DSM or conservation programs is in a general rate case.

Commissioner Kjellander stated he wanted to make a general comment. He said he is proponent of CFLs and feels they are a good idea and are sustainable in the long-term as far as demand side management. He said he has a hard time looking at this program, however, and not comparing it to Idaho Power’s coupon program. He said part of Idaho Power’s rationale for using the coupon program was to avoid the packaging and distribution costs associated with the lightbulbs and perhaps to avoid the issues of selecting a vendor and the perception of being a competitor in the retail sales arena. He said he is having trouble with a statement in the Decision Memo that there is a perception among the customers, which hasn’t been refuted by anyone, that the cost per bulb is more than what customers will pay at a retail store. He said even though we are looking at the option of doing a prudency review later, it is kind of hard not to look at this up front and say it seems to be costing more than sending a coupon to someone and saying “go buy them” and get them cheaper and avoid all the shipping and handling costs.

Mr. Baumgartner volunteered to address the issues that had been brought up. Commissioner Kjellander asked if there were any further comments from the Commissioners before the Company responded.

Commissioner Smith commented that with any other utility we could probably go ahead and approve the program and say we will look at the cost later. She said the Commission’s relationship with the customers of PacifiCorp in Idaho has always been pretty rocky, however, especially recently, and if customers don’t want it, then don’t give it to them. She said the Company’s projected costs are higher than retail and no one disputes that, and the customers won’t understand if we say we are going to defer the costs and will look at them to see if they are reasonable in the future and if they are not, then we will pare them back. The customers will assume the Company will get to recover them and if we do disallow some of the costs in the future then the Company will feel it has been unfairly treated because we approved the program and told them to go ahead and do it in the first place. She said she is tired of trying to educate the customers on how the whole system works and being the brunt of their unhappiness and feelings that we aren’t doing things that in their best interest.

Commissioner Kjellander said that he didn’t want to put PacifiCorp through the exercise of addressing the issues that have been raised. He thanked PacifiCorp for its willingness in offering the information but said he didn’t think it would alter much in terms of what he was hearing at the bench today.

Mr. Baumgartner stated that the Company disputed the assertion that CFL bulbs with Energy Star quality and a two-year warranty could be purchased for $5.18. He said you won’t find that price in the retail marketplace. He said the price does include total program costs, including evaluation.

Commissioner Kjellander stated that based on the discussion, and acknowledging that we all probably agree that CFL programs make sense, there seems to be legitimate concern on behalf of the Commission with regards to this specific program and whether or not it is the best approach. He made a motion to deny the request but encourage the Company to continue to look for options related to CFLs and to take a look at Idaho Power’s CFL program to see if program costs can be reduced. He said perhaps the Company can find something that might be more palatable as far as easing some of the concerns we have about future load growth in the region.

There was no discussion on the motion. A vote was taken and the motion carried unanimously.

There were no further items on the agenda and Commission Kjellander adjourned the meeting.

DATED this _____ day of December, 2002.

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COMMISSION SECRETARY

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