20170925final_order_no_33888.pdf

Office of the Secretary
Service Date
September 25.2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF INTERMOUNTAIN GAS COMPANY )CASE NO.INT-G-17-03
TO IMPLEMENT A DEMAND SIDE )
MANAGEMENT PROGRAM FUNDING )ORDER NO.33888
MECHANISM AND CHARGE )
On July 27,2017.Intermountain Gas Company asked the Commission for authority
to implement a Demand Side Management (DSM)Program Funding Mechanism and DSM
Charge.The Company requested an October 1,2017 effective date.In its recent rate case,the
Company submitted a draft tariff for the program as an exhibit,and the Commission authorized
the Company to implement a residential DSM program.Order No.33757 at 37-38.The
Commission issued a Notice of Application and Notice of Modified Procedure in this case.
Order No.33839.The Commission received seven public comments,and comments from Staff
The Company indicated it did not intend to file a reply.With this Order,the Commission
approves the Company’s DSM Program Funding Mechanism and DSM Charge,with directions
for the Company to work with Staff to consolidate program incentives into a single tier.
BACKGROUND
“DSM”generally refers to utility activities and programs that encourage customers
(i.e.,on the “demand side”as opposed to the “generation side”)to use less overall energy or use
less energy during peak usage hours,improving their efficient use of energy.In the Company’s
recent rate case,the Commission authorized its DSM program,but rejected the Company’s
proposed fixed-cost collection mechanism,finding insufficient quantifiable evidence to support
it.Order No.33757 at 37-38.
APPLICATION
The Company stated it designed all DSM activities for its residential customers.
Application at 3.According to the Company,its costs for administering its DSM program
include energy efficiency program rebates;administration ramp-up expenses and incremental
staffing;DSM outreach;local support for promotion of tariff-approved DSM measures;and
encouraging market transformation through adaptation of energy efficiency technologies.Id.
The Company proposed to recover funding for the program by submitting its “annual budget of
anticipated administrative program costs”for the program,and the Commission’s ruling that its
ORDER NO.33888 1
“expenses are both reasonable and prudent.”Id.The Company’s budget would include “any
surplus or deficit associated with the collection of DSM funds and the incurrence of DSM-related
expenses.”Id,
The Company’s proposed 2017-2018 DSM budget totaled $777,000,including
$600,000 in rebate expenses,$147,000 in personnel expenses,and $30,000 in program delivery
and ramp-up expenses.Id.at 4.The Company’s proposed DSM tariff rider amount was
calculated by dividing the $777,000 budget by Rate Schedule RS 211,957,936 normalized 2016
therm sales,arriving at a surcharge of $0.00367 per therm.Id.For an average customer using
about 61 therms per month,this would equal about $0.22 per bill.Application at 4.
The Company asserted it will allocate the DSM program funds to pay the Company’s
costs to administer and deliver the program,and maintain accounting records to track actual
expenses against the DSM Charge collected from residential customers.Id.If collected funds
exceed actual expenses,the Company will use the over-collected amount to offset future
expenses or return it to customers.
The Company submitted tariff sheets defining the proposed measures and rebate
amounts,and proposing two incentive tiers:Tier One incentives would apply when customers
upgrade from standard to high-efficiency natural gas equipment;Tier Two incentives would
apply when customers upgrade from standard non-gas equipment to high-efficiency natural gas
equipment,and for qualified energy efficiency upgrades in the new construction sector.See Rate
Schedule DSM.
COMMENTS
A.Staff
Staff reviewed the Company’s Application and exhibits,and conferred with the
Company about the Company’s accounting treatment and reporting requirements.Staff supports
the Company’s proposed budget,charge,and accounting treatment as reasonable and
appropriate.Staff Comments at 2,5-6.Staff explained it worked with the Company to clarify
the proposed Rate Schedules DSM and DSM Charge,and Staff provided its proposed Rate
Schedules EE and EEC (in lieu of the Company’s proposed Rate Schedules).Id.at 6-7.Staff
indicated in its comments that the Company agreed with Staffs proposed rate schedules except
with regard to the Tier Two incentives.
ORDERNO.33888 2
Staff is concerned that Tier Two measures have the same measure costs and energy
savings as Tier One measures,but with higher incentive costs,rendering three of the seven
proposed Tier Two measures not cost-effective.Staff Comments at 4-5.Staff proposed that the
Company consolidate its incentives into a single tier at the Tier One incentive level (and retain
the proposed incentive amount for the Energy Star Homes measure).Staff believes
consolidating the tiers will not negatively impact “the cost,participation,or cost-effectiveness of
the DSM program.”Id.at 4.
B.Public Comments
The Commission received seven comments from members of the public.Six opposed
the Company’s filing.Those comments included:objection to the Company benefitting from the
program;objection to a “penalty for saving energy”;objection to the very marginal benefits of
the program at a very high cost.One comment supported the Application stating,“It is about
time that Intermountain Gas began a sufficient energy efficiency program.”
DISCUSSION AND FINDINGS
The Commission has reviewed the record,including the comments of Staff and the
public.In our recent Rate Case Order authorizing the Company to initiate a DSM program,we
found that “DSM,as both a least-cost resource and an important element of promoting energy
efficiency,is an important part of any utility’s provision of service.”Order No.33757 at 37.As
such,we look forward to seeing the Company’s program develop.
We find that identifying the rate schedules as Schedule EE and EEC is reasonable and
reflects the program’s focus on energy efficiency.We further find the proposed charge of
$0.00367 per therm,as set forth in Rate Schedule EEC,is reasonable and appropriate to fund the
Company’s proposed DSM program.However,we find there is inadequate support for the
Company’s proposed two-tier system.The higher incentive costs under the Company’s
proposed Tier Two render almost half of the Tier Two measures not cost-effective.See INT-G
16-02,Spector Exhibit 26.Incentives are designed to offset the higher cost of a more efficient
appliance.Since the cost of a more efficient appliance and the savings produced by that
appliance are the same in both tiers,we find that the incentive amounts should also align.
Accordingly,we find it reasonable to direct the Company to consolidate its DSM program
incentives into a single tier.Although initially proposed as Tier 2,we find it appropriate for the
Energy Star Homes measure to be included in Tier 1 and retain the proposed incentive amount of
ORDER NO.33888 3
$1,200.We encourage the Company to work with Staff on improving cost-effectiveness
calculations so a future proposal for Tier Two incentives can be better-supported.
We thus approve the revised Rate Schedules EE,EEC,and RS,effective October 1,
2017.We direct the Company to work with Staff to make further revisions as necessary,and to
file conforming tariffs.
ORDER
IT IS HEREBY ORDERED that the Company’s Application to implement its DSM
Program Funding Mechanism and Charge is granted as set forth above,effective October 1,
2017.The Commission approves the Company’s proposed $0.00367 per therm charge,and
approves the revised Rate Schedules EE,EEC,and RS.The Company shall file conforming
tariffs,effective October 1,2017.
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 §61-626.
ORDER NO.33888 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of September 2017.
ATTEST:
PAUL KJ LANdS,PRESIDENT
Diane M.Hanian
Commission Secretary
O:INT-G-17-03 djh2
ERIC ANDERSON,COMMISSIONER
ORDER NO.33888 5