20190913Comments.pdf

JOHN R. HAMMOND, JR.
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 5470
Street Address for Express Mail
472W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BBFORB THE IDAHO PUBLIC UTILITIBS COMMISSION
RECEIVED
?il19SIP l3 PH 2:39
CN
cCC
IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY
FOR AUTHORITY TO REVISE RATE
SCHEDULE EEC - ENERGY EFFICIENCY
CHARGE
CASE NO.INT.G.19-05
COMMENTS OF THE
COMMISSION STAFF
)
)
)
)
)
)
)
)
The Staff of the Idaho Public Utilities Commission, submits the following comments
regarding the above referenced case.
BACKGROUND
On August ll,z0lg,Intermountain Gas Company, a subsidiary of MDU Resources
Group, Inc. ("Intermountain Gas" or the "Company") applied to the Commission for an order
approving an increase in the Energy Efficiency Charge (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 Efficiency Rebate Program ("EE Program") expenses and to
fund forecasted future EE Program growth. Id.3-4.
The Company requests 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.
1STAFF COMMENTS SEPTEMBER 13,20I9
In Case No. INT-G-16-02, the Commission authorized Intermountain Gas to establish the
EE Program for its residential customers. See Order No. 33757 at 35-37 . 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 l; see also
Energy Eficiency 2018 Annual Report at 1, attached as Exhibit 1 to the Application in Case No.
INT-G-19-04. On July 27,2017,lntermountain Gas requested Commission authority to
implement a funding mechanism for the EE Program. See Order No. 33888, Case No.
INT-G-17-03. In Order No. 33888 the Commission approved this request and authorized the
Company to charge its residential customers $0.00367 per therm to fund the EE Program. See
Rate Schedule EE, Intermountain Gas Company I.P.U.C. Gas Tariff, Sheet No. 17 at l; see also
Application at3-4 & OrderNo.33888 at 3.
Intermountain Gas asserts from October 1,2077, through June 30, 2019, EE Program
expenses exceeded revenues by $1,097,907, which remains deferred and unrecovered to date.
Application at 4. Intermountain Gas asserts that due to the EE Program's success and anticipated
growth, its expenses are forecasted to be$.3,944,642 annually. Id. The Company estimates
$3,300,000, or 84%o of these future expenses, will be rebates paid to customers participating in the
EE Program. Id. Intermountain Gas requests Commission authority to increase the EEC to
$0.02093 per therm so the Company can collect $5,042,549 next year to recover EE Program
deferred expenses and to fund its operation and growth. Id.
Intermountain Gas requests that the proposed EEC take effect October 1,2019, to coincide
with the effective date of any rate changes resulting from the Company's annual Purchased Gas
Cost Adjustment. Id. at 5. Intermountain Gas states the typical residential customer's monthly
bill would increase by $ I .07 if the Commission approves the proposed EEC of $0.02093 per
therm. Id.
STAFF ANALYSIS
Staff has reviewed the Application and supports the Company's request to increase the
EEC. While the proposed new charge is a significant increase, the Company has reported strong
demand for its EE Program. Staff anticipates the new rate will align revenue for efficiency
programs with the Company's energy efficiency expenditures. The funds for the EE Program will
also be subject to Staff review in future prudency cases. Staff reviewed the Company's
2STAFF COMMENTS SEPTEMBER I3,20I9
Application, its forecasted budget for energy efficiency rebate payments, program delivery, and
administration costs, as well as its deferral balance for the EE Program.
Most of the Company's $3.9 million budget for the EE Program is $3.3 million in rebate
payments. The Company reported to Staff that its rebate payments in the first 8 months of 2019
matched its total payments for all of 2018, indicating the EE Program will continue to grow. As
stated in the Application, more builders and contractors are eligible for and using the rebates,
which would also lead to an increase in EE Program usage. See Application at 4-5. The
Company projects an 80 percent increase in rebates in2019, driven mostly by an increase in
ENERGY STAR rebates, and then a 39 percent increase in rebates in2020. The Company also
budgeted $225,000 for new residential efficiency measures in2020. Those new measures will be
identified by the Company's Conservation Potential Assessment study.
The Company's program delivery and administration expense of $644,642 represenf s 6.75
Full Time Equivalent employees, assorted travel and overhead expenses, and a $100,000
estimated expense for an Evaluation, Measurement and Verification (EM&V) study. Ongoing
EM&V studies are crucial to showing the efficiency and efficacy of energy efhciency programs.
Company officials told Staff they would discuss the scale and scope of EM&V studies with Staff
and other stakeholders in the future.
The Company has a $1,097,907 under collected EEC balance as of December 31,2018.
See Exhibit l. This balance has likely continued to grow in20l9, as EE Program usage has
continued to increase while the EEC has remained unchanged. All energy efficiency expenses,
including expenses that contributed to this deferral balance, must be prudently incurred by the
Company and will be reviewed by Staff in Case No. INT-G -19-04 and future prudency cases.
The Company's proposed increased EEC rate represents a 470 percent increase. The
increased EEC would be 4 percent of the Company's per therm charge for residential customers.
See Exhibit No. 3. Staff believes the Company's calculation for the new charge, calculated by
dividing the proposed annual EE Program budget by normalized residential sales volumes, is
reasonable. See Exhibit No. 2.
The 4 percent per-therm charge, while higher than the Company's initial EEC, is in line
with Demand Side Management ("DSM") charges from other utilities operating in Idaho. Avista
charges $0.01 8l 8 per therm for its Energy Efficiency Rider surcharge for its gas residential
aJSTAFF COMMENTS SEPTEMBER 13,2019
customers (approximately 3.60/o), which is similar to the $0.02093 proposed by Intermountain
Gas. See Order No. 33444.
Idaho Power currently charges a2.75 percent Energy Efficiency Rider. See Order No.
34345. Rocky Mountain Power currently charges a2.25 percent DSM charge. See Order No.
34255. Both electric utilities have had rider rates at or above 4 percent as recently as 2010.
Avista charges approximately a 4.3 percent energy efficiency charge for most residential electric
customers. See Order No. 33897.
Well run energy efficiency and DSM programs benefit all of a utility's customers by
reducing the need to invest in new utility plant in service and reducing the need to buy natural gas
on the open market. The Company's EE Program, launched in2017, appears to have significant
and growing interest from its residential customers and other stakeholders. Staff encourages the
Company to pursue all cost-effective DSM measures, regardless of revenues collected through the
EEC.
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Staff reviewed the documents and determined that both meet the requirements of Rule 125 of the
Commission's Rules of Procedure. IDAPA 31.01.01.125. The notice was, or will be, included
with bills mailed to customers beginning August 19, and ending September 16,2019.
For this case, the Commission set a comment deadline of September I 3, 2019. Because
the last customer notices will not be inserted in bills until September 16, and the final comment
date is September 13, some customers in the last billing cycles will not have received their notices
andlor had adequate time to submit comments before the deadline. Customers must have the
opportunity to file comments and have those comments considered by the Commission. Staff
recommends that the Commission accept late-filed comments from customers.
PUBLIC COMMENTS
As of September 12,2019, the Commission had received one comment, which opposed
the proposed rate increase.
4 SEPTEMBER I3,20I9STAFF COMMENTS
STAFF RECOMMENDATIONS
Staff recommends that the Commission approve the Company's Application to increase
the Energy Efficiency Charge, Rate Schedule EEC, to $0.02093 per therm, effective October l,
2019.
Respectfully submitted this I 3+5 day of September 2019
kl ! (/*.
E John R. Hammond, Jr.
Deputy Attorney General
Technical Staff: Brad lverson-Long
Jolene Bossard
Kevin Keyt
i:unrisc:comrnents/intg I 9.5jhkskblntmjb comments
5STAFF COMMENTS SEPTEMBER 13,20I9
CBRTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 13TH DAY OF SEPTEMBER 2019,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. INT-G-19-05, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
LORI BLATTNER
DIR _ REGULATORY AFFAIRS
INTERMOUNTAIN GAS CO
PO BOX 7608
BOISE TD 83707
E-MAIL: [e-mail]
PRESTON N CARTER
GIVENS PURSLEY LLP
60I W BANNOCK ST
BOISE TD 83702
E-MAIL: [e-mail]
kendrah@ givenspursley. com
J.22,-,,'-
SECRETARY /
CERTIFICATE OF SERVICE