20191001final_order_no_34454.pdf

Office of the Secretary
Service Date
October 1,2019
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.INT-G-19-05OFINTERMOUNTAINGASCOMPANY)FOR AUTHORITY TO REVISE RATE )SCHEDULE EEC -ENERGY EFFICIENCY )ORDER NO.34454CHARGE)
On August 15,2019,Intermountain Gas Company,a subsidiary of MDU Resources
Group,Inc.("IntermountainGas"or the "Company")applied to the Commission for an order
authorizing an increase in the Energy EfficiencyCharge (the "EEC"),from $0.00367 per therm to
$0.02093 per therm.Application at 1.The Company asserts the EEC must be increased to recover
deferred Residential Energy EfficiencyRebate Program ("EE Program")expenses due to customer
demand and to fund forecasted future EE Program growth.Id.At 3-4.The Company requested
its Application be processed under Modified Procedure,and that the proposed change to the EEC
take effect on October 1,2019.Id.at 5-6.
On August 29,2019,the Commission issued its Notice of Application,Notice of
Modified Procedure and Order.Order No.34431.
On September 9,2019,the Commission Staff filed written comments containing its
review and recommendations on Intermountain Gas's Application.The Company did not file
reply comments,and one customer of the Company submitted written comments regarding its
Application.
BACKGROUND
On April 28,2016,the Commission authorizedIntermountain Gas to establish the EE
Program for its residential customers.Order No.33757 at 37 (Case No.INT-G-16-02).'The
purpose of the EE Program "is to encourage upgrades to,or use of,high efficiency natural gas
equipment."Rate Schedule EE,Intermountain Gas Company I.P.U.C.Gas Tariff,Sheet No.16 at
i In its Application in Case No.INT-G-16-02the Company represented the EE Program "would help customersdecreasetheirneedforgasthroughconservation,and thus decrease the amount of gas the Company would have tobuyfromanaturalgaswholesalertosupplythoseneeds."Order No.33757 at 3.
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1;see also Energy Efficiency 2018 Annual Report at 1,attached as Exhibit 1 to the Application in
Case No.INT-G-19-04.On September 25,2017,the Commission approved Intermountain Gas's
funding mechanism for the EE Program and the EEC that would be charged to the Company's
residential customers.Order No.33888 at 1,(Case No.INT-G-17-03).In Order No.33888 the
Commission found that the proposed charge of $0.00367 per therm for the EEC was reasonable
and appropriate.Order No.33888 at 3;see also Rate Schedule EE,Intermountain Gas Company
I.P.U.C.Gas Tariff,Sheet No.17 at 1 and Application at 3-4.
THE APPLICATION
Intermountain Gas asserts that the EEC is currently$0.00367 per therm and was based
on a budget of $777,000 for total annual EE Program expenditures "that included direct rebate
expenses,personnel expenses,program delivery,and ramp-up expenses."Application at 3.The
Company alleges that due to customer growth on its system the EEC is currently collecting
approximately $935,000 per year based on actual collections from July 2018 through June 2019.
Id.at 3-4.
Intermountain Gas asserted that from the start of the EE Program on October 1,2017,
through June 30,2019,it has collected $1,712,654 from customers through the EEC and incurred
$2,810,560in EE Program expenses.Id.at 4.The Company stated $2.2 million of these expenses
or 77%were rebates paid directly to customers.Id.The Company alleged that because of the
"positive customer response to the new EE Program,expenses outpaced revenues resulting in a
deferred balance through June 2019 of $1,097,907."Id.The Company requested that it be allowed
to recover this deferred balance from customers.Id.2
Intermountain Gas also asserted that to allow for participation in the EE Program for
all interested residential customers and to grow it,the Company anticipated annual costs of
approximately $3,944,642going forward.Id.The Company asserts the proposed increase of $3.2
million over the previouslyestablished annual budget of $777,000 is based on the overwhelming
success of the EE Program.Id.The Company estimates $3,300,000 or 84%of these future
expenses will be customer rebates and $644,642 will be for EE Program delivery and
administration.Id.
2 In its Application,the Company also stated that it had recently applied to the Commission for a determination that
EE Program expenses from the start of the EE Program on October 1,2017,through the program year ended December
31,2018,were prudently incurred.Applicationat 4;see also Case No.INT-G-19-04.
ORDER NO.34454 2
Intermountain Gas states that addingdeferred EE Program expenses,$1,097,907,to the
anticipated future annual expenses for it of $3,944,642,results in the total amount to be collected
from residential customers during a 12-month period is $5,042,549.Id.at 5.Based on these actual
and anticipated costs the Company proposes to increase the EEC from $0.00367 to $0.02093 per
therm.Id.The Company asserted that a typical residential customer would see a monthlyincrease
in their bill of $1.07 if this proposal is approved by the Commission.Id.
Intermountain Gas states its Application has been brought to the attention of its
customers through a Customer Notice and by a Press Release sent to daily and weekly newspapers,
and major radio and television stations in the Company's service area.Id.at 5-6.
STAFF COMMENTS
Staff reviewed the Application and supports the Company's request to increase the
EEC.Staff noted that the proposed EEC increase is significant,but the Company has reported
strong demand for its EE Program.Staff Comments at 2.Staff believed the proposed,increased
EEC will better align the revenue for EE Program with its expenditures.Id.Staff also
recommended that the funds collected and expended through the EEC and EE Program should be
subject to review in future prudency cases.Id.
Staff noted that the increased EEC would be four (4%)percent of the Company's per
therm charge for residential customers which is similar to other demand-side management
("DSM")charges for other utilities operating in Idaho.Id.at 3.
Finally,Staff stated that the Company represented it would have a $100,000 estimated
expense for an Evaluation,Measurement and Verification ("EM&V")study for the EE Program.
Staff asserted that studies like these are crucial to showing the efficiency and efficacy of energy
efficiencyprograms.Id.at 3.
COMMISSION DISCUSSION AND FINDINGS
The Commission has jurisdiction and authorityover Intermountain Gas,a gas utility,
and the issues raised in Case No.INT-G-19-05,pursuant to Title 61 of the Idaho Code,including
but not limited to,Idaho Code §§61-116,61-117,61-129,61-307,61-502 and 61-503 and the
Commission's Rules of Procedure,IDAPA 31.01.01.000 et seq.
In Order No.33757 containing Commission authorization for the Company's EE
Program we found:
ORDER NO.34454 3
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.Accordingly,
we find it reasonable to authorize the Company to implement its proposed DSM
program,recognizing that the Company represents that this program will be used
as a starting point from which to develop more robust DSM offerings.
Order No.33757 at 37.
Having thoroughlyreviewed the record in this case we find the Company's proposed
EEC of $0.02093 just and reasonable.Setting the EEC at this level will allow the Company to
collect the deferred balance of EE Program expenses that were incurred in furtherance of its goals.
Further,the Commission finds that setting the EEC at this level will allow for the continued
operationand growth of the EE Program.The Commission is encouraged by the positive response
to the Company's EE Program which according to Intermountain Gas has achieved an estimated
first-year savings of 283,067 therms,exceeding its initial goals significantly.See Application at 5
(Case No.INT-G-19-04).
The Commission commends the Company for meeting and exceeding its initial goals
for the EE Program and encourages Intermountain Gas's customers to take advantage of the
opportunities presented by the Company to conserve natural gas resources.However,the
Commission does not make any findingor determination regarding the reasonableness or prudence
of any of the Company's individual DSM activities or expenses in this case,which will be subject
to review and approvalin a separate case.Further,we also remind the Company to monitor,assess
and evaluate the ongoing cost-effectiveness of the EE Program.We expect that the Company shall
timely advise the Commission of any changes to the cost-effectiveness of the EE Program.
ORDER
IT IS HEREBY ORDERED that the Company's Application proposing an increase to
its Energy Efficiency Charge is approved.The Company is authorized to implement an Energy
Efficiency Charge of $0.02093 per therm and the Company's proposed Rate Schedule RS
RESIDENTIAL SERVICE and Rate Schedule EEC ENERGY EFFICIENCY CHARGE are
approved,to be effective October 1,2019.The Company shall file conforming tariffs with the
Commission within ten (10)days of the service date of this Order.
ORDER NO.34454 4
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 with regard to any
matter decided in 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.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this JA
day of October 2019.
PAUL KJEL ,PRESIDENT
KRÈTINERAPER,CÓMMISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
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