20210308Final_Order_No_34941.pdf

ORDER NO. 34941 1

Office of the Secretary
Service Date
March 8, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY’S
REQUEST FOR AUTHORITY TO
IMPLEMENT A COMMERCIAL ENERGY
EFFICIENCY PROGRAM AND FUNDING
MECHANISM
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CASE NO. INT-G-20-04

ORDER NO. 34941

On August 3, 2020, Intermountain Gas Company, a subsidiary of MDU Resources
Group, Inc. (“Company”) applied to begin the Commercial Energy Efficiency Program
(“Commercial EE Program”) and associated funding mechanism. The Company proposed an
October 1, 2020 effective date for the Commercial EE Program and Commercial Energy
Efficiency Charge (“Funding Mechanism”).
On September 3, 2020, the Commission issued a Notice of Application and Notice of
Intervention Deadline (“Notice”) setting a 21-day intervention deadline and suspending the
Company’s effective date for five months and 30 days. Order No. 34771 at 4. The Idaho
Conservation League (“ICL”) was the only party to intervene. See Order No. 34790.
On December 11, 2020, the Commission issued Notice of Modified Procedure and set
comment and reply comment deadlines for interested persons and parties and the Company. Order
No. 34869 at 1-2. Staff filed comments on January 26, 2021 and was the only party to do so. The
Company filed reply comments on February 9, 2021.
Having reviewed the record, the Commission issues this Order approving the
Company’s Application consistent with our findings below.
APPLICATION
The Company hired Dunsky Energy Consulting in 2018 to perform a Conservation
Potential Assessment (“CPA”).1 Application at 4. The Company asserts the CPA covers years
2020-2039, with an emphasis on the first five years, analyzing viable conservation and efficiency
measures and total savings that could be achieved. Id. The Company represents the CPA showed
strong potential for application of these measures for commercial customers. Id.

1 The CPA was attached as Exhibit A to the Company’s Application in Case No. INT-G-19-07.

ORDER NO. 34941 2

The Company states it developed the Commercial EE Program using the CPA and input
from the Company’s Energy Efficiency Stakeholder Committee (“EESC”). Id. at 4-6. The
Commercial EE Program focuses on therm-saving measures for HVAC, commercial kitchen
appliances, and hot water savings. Id. For HVACs this includes proposed rebates for three high-
efficiency appliances: boilers with 300,000 British Thermal Units per Hour (“Btuh”) input size or
greater, installation of boiler reset controls and condensing unit heaters. Id. at 7. The kitchen end-
use category offers proposed incentives for the installation of high-efficiency natural gas
commercial kitchen appliances. Id. The Company asserts all kitchen appliances must be
ENERGY STAR® certified to qualify. Id. The Company also believes there are benefits in
combining smaller conservation and energy efficiency measures into Energy Savings Kits (“ESK”
or “ESKs”). Id. at 6. The Company would provide ESKs to commercial customers for free that
focus on water saving measures such as a pre-rinse spray valve, restroom faucet aerators, kitchen
faucet aerators and a water temperature gauge. Id. Last, the Company notes the CPA reviewed
the cost effectiveness of commercial retrofit and commercial equipment programs and found that
a commercial equipment program would be most cost effective. Id. at 5.
For the first year of the Commercial EE Program the Company anticipates total costs
of approximately $411,000 ($170,000 for program administration and $241,000 in rebate
payments). Id. at 8. The Company represents that program administration costs and rebate
payments in future program years will be based on actual, ongoing program results. Id.
The Company proposes to apply 20% of the total residential energy efficiency
(“Residential EE Program”)2 and Commercial EE Program administration to the Commercial EE
Program. Id. At the end of the first program year, actual therm savings will be used to allocate
actual program administration between the Residential and Commercial EE Programs which will
be used in the cost effectiveness calculations and Energy Efficiency Charge true-up for each
customer class. Id.
The Company states the Commercial EE Program’s first year $411,000 budget would
equate to a per therm charge of $0.00320 for the Company’s GS-1 class, and result in an increased
bill of $1.02 per month, or 0.6%, for the Company’s average GS-1 customer. Id. The Commercial
EE Program and associated per therm charge is reflected in the Company’s proposed Rate

2 The Commission approved implementation of the Company’s first energy efficiency program for residential
customers, effective October 1, 2017. See Order No. 33888.

ORDER NO. 34941 3

Schedules EE-GS and EEC-GS. Id. The Company states customers using gas solely as
Compressed Natural Gas Fuel for their vehicles would be excluded from the Commercial EE
Program and exempt from the accompanying per therm charge. Id. at 8-9.
The Company also proposes to revise its tariffs if the Commission approves the
Commercial EE Program. Id. at 9. To avoid confusion, the Company proposes renaming its
Residential EE Program tariffs from Rate Schedules EE and EEC to Rate Schedules EE-RS and
EEC-RS. Id. The Company also proposes to update its Rate Schedules RS and GS-1 to incorporate
references, terms and conditions associated with the Commercial and Residential EE Programs.
Id.
The Company represents it notified GS-1 customers about the Application through a
Customer Notice and a Press Release sent to daily and weekly newspapers, and major radio and
television stations in the Company’s service area. Id. at 10.
COMMENTS
1. Staff Comments
Staff believes the Company’s request to establish a separate Commercial EE Program
is reasonable. Staff Comments at 3. Staff states there are seven measures in the Commercial EE
Program and recommends that the Commission authorize the Company to implement the
Commercial EE Program and all measures proposed except for the ESK measure. Id.
Staff believes GS-1 customers should bear the costs of the Commercial EE Program
since energy savings from it will primarily accrue to those customers. Id. Staff recommends that
the Commission authorize the Funding Mechanism, as proposed by the Company to recover the
costs of the Commercial EE Program from those customers. Id. Staff also asserts that the
Company should consider consolidating the Residential and Commercial EE Programs when they
have matured. Id.
Staff expressed concerns about the cost effectiveness and implementation of the ESK
measure and recommends that the Company employ it as a pilot project, limiting the number of
ESKs it purchases and distributes to GS-1 customers to 350, the number the Company forecasts
being installed in the first year of the Commercial EE Program. Id. at 4. Staff believes this will
allow the Company to gather sufficient data to verify the savings and cost effectiveness of this
measure. Id.

ORDER NO. 34941 4

Staff also has concerns about the high projected administrative cost of the Commercial
EE Program, which is 43% of its budget. Id. at 5. Staff states the budgeted administrative cost is
split between the Commercial and Residential EE Programs, with the Commercial EE Program
incurring 20% of shared costs. Id. Staff recognizes this cost allocation was used for budgeting
the new program. Id. However, Staff encourages the Company to directly assign all costs incurred
to the proper energy efficiency program, whenever feasible, so costs are properly allocated to
customer classes. Id. For costs that cannot be directly assigned, Staff recommends that costs be
allocated based on factors that are driving the costs to be incurred. Id. Staff believes the
Company’s proposed allocation method as a starting point is reasonable but expects to review cost
allocations and cost drivers in a future prudency case. Id.
Staff further recommends that the Company be required to file an Annual Commercial
EE Report that includes overall program costs, and the cost effectiveness and realization rates for
each of its Commercial EE Program measures. Id.
Staff believes that a CPA, such as that conducted by Dunsky, is a reasonable starting
point for designing an energy efficiency program, selecting cost effective measures, and setting
initial rebate levels. Id. But Staff also believes that the savings estimates from the CPA are
preliminary and the Company should obtain more accurate estimates once a new measure has been
implemented. Id. In most cases, Staff believes that the best savings estimates will be derived from
billing data; however, it may be possible to develop reasonably good estimates using other sources,
such as consumption information obtained directly from commercial equipment using data
loggers. Id. Staff believes that the Company should propose a plan for evaluating the energy
savings of each new measure, or modification to an existing measure, with input from the EESC
to be approved by the Commission. Id.
Staff recommends that the Company include a plan for the monitoring and evaluation
of the seven measures in it, and any additional measures the Company will propose in its first (CY
2022) annual report. Id. Staff also recommends that the Company retain an independent evaluator
to perform an Evaluation, Measurement, and Verification ("EM&V") for inclusion with the
Company’s subsequent (CY 2023) annual report. Id. Last, Staff recommends that representatives
from the GS-1 class be included in the Company’s EESC. Id.
Staff reviewed the Company’s customer notice and press release and determined they
comply with Rule 125 of the Commission’s Rules of Procedure. IDAPA 31.01.01.125. Id. at 7.

ORDER NO. 34941 5

The customer notice was included with bills mailed to customers beginning August 5, and ending
September 2, 2020, providing customers with a reasonable opportunity to file comments by the
January 26, 2021, deadline. Id. As of January 26, 2021, one customer commented with concerns
about energy efficiency measures and increased costs to ratepayers. Id.
2. Intermountain Gas Company Reply Comments
The Company agrees that reporting is an important part of any energy efficiency
program and is committed to providing an accurate Annual Commercial EE Program report that
includes the rider reconciliation; evaluation plan; EM&V results (CY 2023 report); and the use of
EM&V results to adjust program savings and incentive levels as outlined by Staff. Intermountain
Gas Company Reply Comments at 2.
The Company states the method for determining the cost effectiveness of any measure
in the Commercial EE Program should be based on the advice of the Company’s EM&V consultant
and discussions with the EESC rather than the “prescriptive approach” of using billing data as
recommended by Staff. Id.
The Company agrees with Staff that there are unknowns regarding the ESK measure
and believes Staff’s recommendation to operate the measure as a pilot program is reasonable. Id.
at 3.
The Company also recognizes the importance of including representatives from the
GS-1 rate class on the EESC. Id. If the Commercial EE Program is approved, the Company plans
to recruit GS-1 customers for the EESC. Id.
COMMISSION FINDINGS AND DECISION
The Company is a gas corporation under Idaho Code § 61-117, and a public utility
under Idaho Code § 61-129. The Commission has jurisdiction over the issues in this case under
Title 61 of the Idaho Code, including Idaho Code §§ 61-301, 501, 502, and 503.
In Order No. 33757, in which the Commission authorized the Company to begin an
energy efficiency/Demand Side Management (“DSM”) program, the Commission found:
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. 34941 6

Order No. 33757 at 37. Consistent with these findings, the Commission finds that programs like
the Commercial EE Program, have value to the Company and its customers.
Having reviewed the record in this case, the Commission authorizes the Company to
implement the Commercial EE Program and finds the associated Rate Schedule EE-GS–General
Service Energy Efficiency Rebate Program is fair, just, and reasonable. The Commission finds
that the proposed energy efficiency measures in the Commercial EE Program, except for the ESK
measure, are reasonable and may be implemented without modification. Due to questions about
the ESK measure’s cost effectiveness, the Commission, at least initially, only authorizes that
measure to operate as a pilot program. The Company may purchase and distribute up to 350 ESKs,
the number the Company forecasts will be installed in the first year of the Commercial EE
Program. We find the Company’s proposals to implement the ESK measure effectively, such as
requiring customers to fill out an application to receive an ESK, working with its HVAC and
plumbing vendors, and surveying customers after they receive them to be worthwhile and should
be employed. As the Company gathers data from this pilot program, we encourage the Company
to share survey results and cost effectiveness data with Staff and the EESC before seeking to
continue the measure on a larger scale.
The Commission finds that the Company’s GS-1 customers, who will realize the energy
savings from the Commercial EE Program, should bear the cost of funding it. The Commission
thus finds that approving the Company’s proposed Rate Schedule EEC-GS, which will allow the
Company to collect a $0.00320 per therm surcharge (“EEC”) from its GS-1 customers, is fair, just
and reasonable. The EEC will not apply to customers using gas solely as Compressed Natural Gas
Fuel in vehicular internal combustion engines as they would not be included in the Commercial
EE Program. Last, the Commission finds it reasonable to approve the Company’s request to
rename Rate Schedules EE and EEC, for the Company’s Residential EE Program, as Rate
Schedules EE-RS and EEC-RS and to make minor changes to the Company’s Rate Schedules RS
and GS-1 associated with the Commercial and Residential EE Programs.
We also find it reasonable to direct the Company to obtain an independent third-party
EM&V study for all Commercial EE Program incentives. The EM&V will serve as an important
tool for determining which Commercial EE Program incentives are cost effective and what
modifications should be made. The Commission appreciates the Company’s willingness to
undertake this step as represented in its Reply Comments. Reply Comments at 2. Rather than

ORDER NO. 34941 7

prescribing the method of conducting the EM&V, the Commission finds that the Company may
work with its EM&V consultant and EESC to set the parameters and content of such undertaking.
When reporting savings from the Commercial EE Program, the Company’s estimates should be
adjusted using the results of the most recent EM&V.
Because the Commercial EE Program is new, the Commission finds it reasonable to
require the Company to file an Annual Commercial EE Program Report (“Report”). The Report
should include, but not be limited to:
• An accounting of the Energy Efficiency Rider (rider reconciliation);
• A plan for measuring the effectiveness of each existing measure, modification
to existing measures, or new measure. Beginning with the Company’s CY
2022 Report, the Company should propose an evaluation plan for each of its
proposed measures, existing measures, or proposed modifications to existing
measures.
• Billing data should be included in the Report, when available, as an additional
tool to help measure the cost effectiveness of each measure; and
• Beginning with the CY 2023 Report, the Company should include the results
of an EM&V study conducted on selected measures.
Last, the Commission finds that the Company should include representatives from the
GS-1 rate class in its EESC. The Commission appreciates the Company’s willingness to take this
step as represented in its reply comments. Reply Comments at 3.
Overall, the Company’s desire to implement a cost effective energy efficiency program
is well placed. We look forward to seeing the Commercial EE Program evolve. We also encourage
the Company to collaborate with Staff, the EESC, and other advisory groups to tailor Commercial
EE Program incentives to attract GS-1 customers and enable the Company to offer cost effective
energy efficiency measures. However, the Commission makes no finding or determination about
the reasonableness or prudence of the Company’s Commercial EE Program, the energy efficiency
measures in it, or expenses in this case, which will be subject to review and possible approval in a
separate case. Further, we remind the Company to monitor, assess, and evaluate the Commercial
EE Program’s ongoing cost effectiveness. We expect the Company to timely advise the
Commission of any changes to the cost effectiveness of the Commercial EE Program.

ORDER NO. 34941 8

ORDER
IT IS HEREBY ORDERED that the Company’s Application for authority to
implement the Commercial EE Program and Funding Mechanism is granted as set forth above.
IT IS FURTHER ORDERED that the Commission approves the Company’s proposed
$0.00320 per therm charge to be assessed on the Company’s GS-1 customers. This charge will be
assessed as set forth in Rate Schedules EE-GS and EEC-GS, which are also approved, effective
April 1, 2021. The Commission also approves the proposed changes in the Company’s Rate
Schedule GS-1 to reflect the Commercial EE Program. The Company shall file conforming tariffs
with the Commission within ten (10) days of the service date of this Order.
IT IS FURTHER ORDERED that the Company’s request to rename Rate Schedules
EE and EEC, the tariffs for the Company’s Residential EE Program, as Rate Schedules EE-RS and
EEC-RS is approved. The Commission also approves the Company’s proposed changes to its Rate
Schedule RS – Residential Service to reflect the new tariff names for its Residential EE Program.
The Company shall file conforming tariffs with the Commission within ten (10) days of the service
date of this Order.
IT IS FURTHER ORDERED that the Company shall develop a plan to have an EM&V
study completed for its Commercial EE Program. The EM&V study will be used to assess and
modify the incentives offered through the Commercial EE Program to ensure its cost effectiveness.
IT IS FURTHER ORDERED that the Company shall prepare and file an Annual
Commercial EE Program Report containing the information required by the Commission.
IT IS FURTHER ORDERED that the Company should include representatives from
the GS-1 rate class in its EESC.
IT IS FURTHER ORDERED that the Company immediately and continuously
monitor, evaluate, and update its Commercial EE Program incentives with the best available data.
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.
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ORDER NO. 34941 9

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 8th day
of March 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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