20220801Application.pdf

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Avista Corp.
l4l I East Mission P.O. Box 3727
Spokane, Washin$on 99220-0500
Telephone [phone]
Toll Free 800-727-9170
August 1,2022
Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 W. ChindenBlvd.
Bldg. 8, Suite 201-A
Boise,Idaho 837L4
RECEIVED
2022 AUG -1 PM 5:00
IDAHO PUBLIC
UTILITIES COIUN/ISSION
Avu- b- aa'o5
Re:Avista Corporation Application for Determination of 2020-2021Natural Gas Energy
Efliciency Expenses as Prudently Incurred
Dear Ms. Noriyuki:
Enclosed for filing with the Commission is the Application of Avista Corporation, dba
Avista Utilities (Avista or "the Company"), requesting a deterrrination of prudence for the
Company's natural gas energy efficiency expenditures from January L,2020 through December
3l,202l.AlsoincludedinthisfilingareExhibitNos. l-3insupportoftheApplication,containing
Avista's 2020 Annual Conservation Report, 2021 Annual Conservation Report, and Idatro
Incentive Modification Methodology document.
If you have any questions regarding this filing, please contact Ryan Finesilver, Manager of
Energy Effi ciency, at (5 09) 49 5 -487 3 or ryan. finesilver@avistacom. com.
Sincerely
/r/9m(Tg*
Jaime Majure
Regulatory Policy Analyst
Enclosures
DAVID J. MEYER, Esq.
Vice President and Chief Counsel
Regulatory & Governmental Affairs
Avista Corporation
l41l E. Mission Avenue, MSC 27
P. O.Box3727
Spokane, Washington 99220
Telephone: [phone]
david.meyer(@ avistacorp. com
Attorney for Avista Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION FOR A
DETERMINATION OF 2O2O-202 1 NATURAL
GAS ENERGY EFFICIENCY EXPENSES AS
PRUDENTLY INCURRED
CASE NO. AYI'.G-22.O5
APPLICATION OF
AVISTA CORPORATION
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ln accordance with IDAPA 31.01.01 (Rules of Procedure, or RP), RP 052 and RP 201, et
seq'., Avista Corporation, dba Avista Utilities ("Avista" or "Company"), at l4ll East Mission
Avenue, Spokane, Washington, hereby applies to the Idaho Public Utilities Commission
("Commission") for an order designating Avista's natural gas energy efficiency expenditures from
January 1,2020 through December 31,2021, funded through the Company's Schedule 191 Energy
Efliciency Rider Adjustment in the amount of $4,928,907, as prudently incurred (hereinafter
"Application").
The Company also requests that this filing be processed under the Commission's Modified
Procedure Rules (RP 201-204) through the use of written comments.
APPLICATION OF AVISTA - I
All communications, pleadings, and orders with respect to this Application should be directed to:
David J. Meyer, Esq.
Vice President and Chief Counsel
Regulatory & Governmental Affairs
Avista Corporation
P.O.Box3727
l4l I E. Mission Avenue, MSC 27
Spokane, Washington 99220-37 27
Telephone: [phone] | 6
E-mail: [e-mail]
Shawn J. Bonfield
Senior Manager, Regulatory Policy & Strategy
Avista Corporation
P. O.Box3727
1411 E. Mission Avenue, MSC 27
Spokane, Washington 99220-37 27
Telephone: [phone]
E-mail: shawn.bonfi eld(rDavistacorc.com
Avista Dockets (Electronic O.ly) - Avi sta Dockets fa) avi stacorp. com
Avista has included the following attachments in support of this filing, which are also
referenced below:
a) Exhibit No. I - Avista 2020 Idaho Annual Conservation Report
b) ExhibitNo. 2 - Avista 2021 Idaho Annual Conservation Report
c) ExhibitNo. 3 - Idaho Incentive Modification Methodology
I. BACKGROUND
Avista has continuously offered energy efficiency services since 1978. Through these
offerings, the Company seeks to provide customers with programs and information that may help
them manage their energy use and to utilize cost-effective energy efficiency resources to meet the
energy and demand needs of the Company's electrical system. These efforts are funded through
Avista's Electric and Natural Gas Energy Efficiency Rider Adjustments (Schedule 91 and
Schedule I 9 1, respectively), or "tariff riders".
The Company's Energy Efficiency Program @rogram) consist of options for residential,
non-residential and low-income customer segments. These Programs are offered through
traditional prescriptive channels along with site-specific projects and upstream buy-down
programs. Each Program in the Company's natural gas Energy Efficiency Portfolio (Portfolio) is
designed to meet cost-effectiveness requirements and is evaluated by a third-party evaluator each
APPLICATION OF AVISTA. 2
year. The results of both the Company's and the third-party evaluator's annual assessments of the
Program are contained within Avista's Annual Conservation Report (ACR).
II. NATURAL GAS PROGRAM EXPENDITIJRES
The Company requests Commission determination that the expenditures incurred during the
2020-21Program years, totaling $4,928,907 for its natural gas Program, were prudent and in the
public interest. Of the total amount spent, $3,795,232, or 7'7o/o, of total expenditures were paid out
to customers in direct incentives.l This percentage does not include additional benefits such as
technical analyses provided to customers by the Company's Energy Efficiency engineering staff or
regional market transformation efforts through the Northwest Energy Efficiency Alliance (NEEA).
The Company reports the Schedule l9l balance on a monthly basis to Commission Staff
and its Energy Efficiency Advisory Group (EEAG or "Advisory Group"). As of June 30, 2022,
Avista's natural gas tariff rider balance was nearly $2.0 million underfunded, meaning that less
tariff rider funding was collected than actually needed to fund the ongoing Program operations.
This underfunded balance is a reflection of higher customer participation in Program offerings and
a higher level of incentive costs reaching customers. To remedy the underfunded balance and more
closely match projected future revenue with budgeted expenditures, the Company plans to file a
revision to its Schedule 191 rider concurrently with its other natural gas filings in Idaho (e.g.,
Purchased Gas Cost Adjustment (PGA) priorto the end of 2022.
The following Table No. I illustrates the balances for the 2020 and,202l Program years on
a monthly basis.
t $2,005,738 in incentives were paid to customers in2020 and $1,789,495 in202l.
APPLICATION OF AVISTA. 3
Table No. 1
Accounting
Period
Beginning
Belance
frogran
Erpenditurres
Taritr
Cotrlections
Ending
f,rhn6g
Jan-20 (s78.073)$169383 ($215,786)c$124.376)
Feb-20 ($124,376)$124.065
$185,313
$120,816
$174,473
($200,206)
Iller-20 ($200.517)($176,401)($191,605)
Apr-20 ($rel.605)($144,499)($215,288)
May-20 ($215.288)($75.984)($116,799)
Jun-20 ($116,799)$202,748 ($57,387)
($37,483)
$28,562
JUI-20 $28.562 $186,227 $177,306
Aus-20 $r77.306
_ $275,920__
$391.433
$128.7r0
$149.r66
$332,594
($30.097)$275,920
$391,433
$669.097
Sep-20 ($33.653)
Oct-20 ($54,931)
Nov-20 $669.097 $302,687 ($147.039)$824.745
Ihc-!0 $824,745 $405,974 ($209.219)$1.021.500
Jen-21 $1,021.500 $160,109 ($219,872)$961,738
Fcb-21 $961.738 $142,608 ($225,191)$879,155
$903.522Mar-21 $879.155 $236,369 ($212.002)
Apr-21 $903,522 $r59.573
$178.302
$196.689
($133.25e)$929.836
$1.033.778Mev-21 $929,836 ($74.360)
Jun-21 $r.033.778 ($49,749)$1,180,718
JuL2l $1.180.7r8 $157,512 ($37,483)$1.300.747
Aug-21 $1.300.747 $162.339 ($20,272)$1.442.814
Ses-21 $1.442.814 $224,538 ($33,782)$1,633,569
Oct-21 $1.633.569 $228,844 ($65,882)$1,796,531
Nov-21 _!lJlq.53_1_
$1,863,313
$196.384
$403,382
($r2e.602)
($199,648)
$1.863.313
Ilec-21 $2,067,047
($200,517)
III. 2O2O AND 2021 PROGRAM PERFORMANCE
The Company's energy effrciency targets are established on an annual basis through the
process of developing the natural gas Integrated Resource Plan (IRP). The targets derived through
the resource planning efforts provide a starting point for Prograrn planning, which is accomplished
through the annual business planning process where Program offerings are optimized for the
APPLICATIONOF AVISTA - 4
Company's service territory based on curre, rt economic and market conditions. Program savings
for 2020 were 352,548 therms, which fell short the natural gas savings target of 421,270 therms,
achieving 84% of the target. For 2021, the Company accomplished 84% of its 358,160 therm
target, achieving annual energy savings of 300,000 therms. This representsS4%o of the Company's
combined, two-year IRP target of 779,430 therms, which does not include the additional159,522
thenrrs acquired through NEEA. In support of these figures, Avista's 2020 and 2021 Natural Gas
Impact Evaluations are included as appendices within each respective year's ACR (See Exhibit
No. 1 for 2020 and Exhibit No. 2 for 2021).
Table No.2
Time Period of
R.poff Savings
Local Eveluetcd
Iherm Sevings IRP Tergct Perceat
Achieved
2020 352,548 42t,270 84o/o
2021 300,000 358,160 844/o
202l0-i2021 652,5{8 779,41O 81o/t
As shown in Table No. 2 above, from January 1,2020 through December 31,2021 the
Company achieved 652,548 therms of savings, excludins NEEA savings of 159,522 therms. Table
No. 3 below details the natural gas savings by residential, non-residential and low-income sectors,
which make up the Company's natural gas Portfolio.
Table No.3
Progrem
Sector
202u-^' 21 Verifcd Savings (Therms)
R€sid€dial 593,607
Non-Resideotial 50.229
Low-lncome 8.712
TotalPortfo[o 652,54S
APPLICATION OF AVISTA - 5
Avista evaluates the effectiveness of its natural gas Portfolio based upon a number of metrics,
including analyses utilizing four specific measurements to evaluate the cost-effectiveness of a
given program from both the Company's and from customers' perspectives: the Utility Cost Test
(UCT),2 the Total Resource Cost (TRC), the Participant Cost Test (PCT), and the Ratepayer
Impact Test (RIM). The most commonly applied metrics to provide insight into the net value to
all customers are the UCT-a benefit-to-cost test from the utility perspective that includes
incentives and excludes net costs and non-energy benefits (NEBsfand the TRC, which
represents the customer perspective by including all measure costs and NEBs, excluding
incentives. For 2020, the overall Portfolio achieved a UCT ratio of 1.26 and a TRC ratio of 0.68
based on verified savings. For 2021, the overall Portfolio achieved a UCT ratio of 1.24 and a TRC
ratio of 0.60 based on verified savings. The cost-effectiveness metrics are included in Table No. 4
below:
Table No.4
Cost-Efrectivencss Test 2020 2g2l
IJtilitv Cost Test (UCT)1.26 t_24
Total Rcsource Cost fiRC)0.68 0.60
TV. PROGRAM EVALUATION
ln addition to the cost-effectiveness analyses conducted for the Program, Avista also
contracts with independent, third-party consultants to provide program Evaluation, Measurement,
and Verification (EM&V) activities each year. These EM&V activities are used to validate and
report verified energy savings related to the Company's energy efficiency mea$,res and Program
2 Also known as the Program Administer Cost @AC) test.
APPLICATION OF AVISTA - 6
offerings, as well as provide viable recommendations to improve Program performance, enact
changes to Program components, and decide whether and when to phase out measures.
For both the 2020 and 2021, Program years, Cadmus (non-residential) and ADM
(residential and low-income) were retained by Avista to perfonn impact evaluations on Avista's
natural gas Energy Efliciency Program. The primary goal of impact evaluations is to provide an
accurate sunmary of the gross natural gas and demand savings attributable to Avista's Portfolio.
Cadmus was also retained to perform process evaluations on all Avista natural gas Progtam
offerings. The main purpose of a process evaluation is to identiff any improvements needed at the
Portfolio level to increase Program effectiveness and efficiency.
As part of its 2020-21 evaluations, the evaluators concluded that Avista's natural gas
Program achieved 652,548 therms and the Program addressed all impact and process evaluation
needs in accordance with industy and regulatory standards.
V. ADDITIONAL PROGRAM ACTIVITIES
Per Order No. 35129 in Case Nos. AW-E-20-I 3 and Aw-G-20-08-Avista's request for
a prudence determination of its 2018-2019 electric and gas energy efficiency programs-the
Commission ordered Avista to take several actions intended to improve its Program and associate
processes. The below section provides an update on these action items and related activities.
NEEA Evaluation
In its Order, the Commission deterrnined that Avista should pursue an independent EM&V
of the NEEA program in Idaho. The intent of this evaluation is to clariff whether the savings
claimed by NEEA, the allocation of those savings to Idaho, and the cost-effectiveness are accurate
and ultimately benefiting Idaho customers.
APPLICATION OF AVISTA - 7
Avista began its EM&V vendor selection eflorts early in 2022 and transitioned to pursing
a joint effort with Idaho Power for the NEEA review. Avista and Idaho Power have collaborated
to jointly issue a Request for Proposal (RFP) for the review of the program and is currently
reviewing responses to the RFP. Avista's selection criteria is heavily based on attaining a vendor
that can demonsffate independence and provide an objective analysis of the NEEA program.
Avista will continue to update Commission Staffon the EM&V progress.
Idaho Incentive Modification Process
ln response to concems that customers are negatively impacted by frequent incentive
changes, Avista was instructed to formalize an objective standard for changing rebate and
incentive levels. As a result of this request, Avista prepared a formal document to illustrate its
process and methodology for changing incentive levels in ldaho, meeting with Commission Staff
through the2020-2021 period to review the document and gather feedback. Avista also circulated
the document to its Advisory Group to gain further input. This document, inclusive of all feedback
received, has been included as Exhibit No. 3 to this filing as well as an appendix to the 2021 ACR
(ExhibitNo.2).
Cost-Effectiveness
Commission Staffnoted in the 2018-20L9 prudence review that errors existing in the cost-
effectiveness calculations conducted by Avista's third party evaluator would not have occurred
had Avista performed its cost-effectiveness testing intemally. As a result, Avista agreed to perform
its cost-effectiveness tests internally and committed to providing internally calculated cost-
effectiveness calculations for the 2021 program year and a combined 2020-2021 basis. This
analysis is included in the 2021 Annual Conservation Report (Exhibit No. 2) as Appendix I.
APPLICATION OF AVISTA - 8
Research and Development Fundine
In their comments in Case Nos. AW-E-20-13 and AW-G-20-08,3 Commission Staff
provided a recorrmendation that future funding for the Research and Development (R&D)
program be discontinued or suspended until the program could be redesigned to focus on R&D
that provides near-term, practical benefit for Idaho customers. While Avista agreed to this
provision in its reply comments,4 the Commission, in its OrderNo. 35129, instead directed Avista
to propose an updated R&D program that includes measurable targets and metrics. To date, Avista
has not renewed its contracts with its existing R&D partners and continues to evaluate
opportunities for R&D projects that return benefits to Idaho customers.
YI. REOUEST FOR RELIEF
As described in greater detail above, Avista respectfully requests that the Commission issue
an Order designating Avista's 2020 and 2021 total natural gas Energy Effrciency Program
expenditures of $4,928,907 as prudently incurred, with this Application being processed under
Modified Procedure through the use of written comments.
DATED this I't day of August2022.
Respectfully submitted,
Avista Utilities
By:/s/ David Mever
David J. Meyer, Vice President and Chief
Counsel for Regulatory and Governmental Affairs
3 https://puc.idaho.eov/Fileroom/PublicFileslELEC/AVU/AVUE20l3/Staff/202l0505Comments.pdf
a https://puc.idaho.gov/Fileroom/PublicFiles/ELEC/AVU/AVUE2013/Company/20210520Rep1y%20Comments.pdl
APPLICATION OF AVISTA - 9