20210126Comments.pdf

JOHN R. HAMMOND, JR.
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
(208) 334-03s1
IDAHO BAR NO. 5470
IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY'S
APPLICATION FOR AUTHORITY TO
IMPLEMENT A COMMERCIAL ENERGY
EFFICIENCY PROGRAM AND FUNDING
MECHANISM
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Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, D 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO.INT-G-20.04
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission ("Staff'), by and
through its attorney of record, John R. Hammond, Jr., Deputy Attorney General, and in response
to the Notice of Modified Procedure issued in Order No. 34869 on December 11, 2020, in Case
No. INT-G-}O-O4, submits the following comments.
BACKGROUND
In Case No. INT-G-16-02, the Commission authorized the Company to implement a
Residential Demand Side Management ("DSM") program. Order No. 33757.
In Case No. INT-G-17-03, the Commission approved the Company's proposed residential
DSM program with some modifications and authorized a $0.00367 per therm surcharge for
Residential ("RS") customers. Order No. 33888.
On August 3,2O2O,Intermountain Gas Company ("Company") applied for authority to
implement a Commercial Energy Efficiency ("Commercial EE") Program that would be funded
STAFF COMMENTS JANUARY 26,2021I
by a $0.00320 per therm surcharge from its General Service ("GS-1") customers. Application at
8. The Company requested that the Application be processed by Modified Procedure. Id. at 10.
The Company proposed an October L,2020, effective date for the Commercial EE Program
coincident with the effective date of the price change related to the Company's annual Purchased
Gas Cost Adjustment. Id. at9-10.
On September 3,2020, the Commission issued a Notice of Application and Notice of
Intervention Deadline setting a2l-day intervention deadline. See Order No. 34771. The
Commission also suspended the Company's proposed effective date for five months and 30 days.
Id. at4. The Idaho Conservation League ("ICL") was the only party to intervene. See Order No.
34790.
STAFF ANALYSIS
Summarv
Staff recommends that the Commission authoizethe Company's proposed Commercial
EE Program, and that the Company be authorized to collect a $0.00320 per therm surcharge from
its GS-1 customers. Staff also recommends that the proposed Energy Savings Kit ("ESK")
measure be treated as a limited pilot program until sufficient data has been gathered to determine
its cost effectiveness. Staff further recommends that the Company be required to file an annual
Commercial EE report that includes overall program costs, as well as the cost effectiveness and
realization rates for each of its Commercial EE measures. Last, Staff recorlmends that additional
representatives from the GS-l class be included in the Company's Energy Efficiency Steering
Committee ("EESC").
New Commercial EE Program
The Company seeks authority to implement a Commerciall EE Program and funding
mechanism that is separate from the Company's current Residential DSM program and funding
mechanism. The Company's request is atypical of how incremental EE/DSM programs and
funding have been implemented by other utilities in Idaho. Generally, program expansions have
been implemented through modification of existing EE/DSM programs and funding mechanisms,
and not by creation of a new program.
I Commercial customers are served under Tariff Rate Schedule GS-l
STAFF COMMENTS 2 JANUARY 26,2021
Staff believes that the Company's request to establish a separate Commercial EE Program
is reasonable. The energy savings realizedby the Commercial EE Program would primarily
accrue to GS-1 customers; thus, Staff believes that it is appropriate for the GS-1 rate class to bear
the costs of the new program. However, Staff also notes that EEfl)SM measures that reduce the
need to invest in new utility plant can benefit all customers. If the Company's proposal is
approved, a consolidation of Residential and Commercial EE Programs should be considered
when the Company's EE/DSM programs have matured to the point that plant deferrals or
reductions to capital investments can be identified and quantified.
Implementation of the separate Commercial EE Program, if approved, will require
revisions to current Residential EE (Residential Energy Efficiency Rebate Program) and EEC
(Residential Energy Efficiency Charge) tariffs, creation of new General Service EE (General
Service Energy Efficiency Rebate Program) and EEC (General Service Energy Efficiency
Charge) tariffs and establishing a separate tariff rider and balancing account. The Company
included the applicable modified and proposed tariffs with its Application.
Proposed Commercial EE measures
The proposed Commercial EE Program includes seven measures. Staff recommends that
the Commission authorize them as proposed by the Company with the exception of the ESK
measure. Staff's concerns and recommendations regarding the ESK measure are detailed below.
In its Application, the Company describes the Conservation Potential Assessment
("CPA") performed on its behalf by Dunsky Energy Consulting ("Dunsky"). Dunsky concluded
that for the Company's commercial customers, HVAC measures provide about 75Vo of potential
savings, and that commercial kitchen appliances accounted for another l4%o of potential savings.
Dunsky also stated that hot water savings potential would continue to grow over the CPA's 20-
year study period. Application at 5.
The Company is proposing rebates for three different high efficiency heating appliances:
Boilers with inputs of 300,000 British Thermal Units per Hour ("BTUH") or more, installation of
boiler reset controls, and condensing unit heaters. Id. at 7. Using the energy consumption and
savings values from the Dunsky CPA, Staff verified that these measures should all be cost
effective with Utility Cost Test ("UCT") ratios of 1.0 or better.
STAFF COMMENTS JANUARY 26,2021J
The Company also proposes rebates for three different high efficiency kitchen appliances:
Energy Star Certified griddles, Energy Star Certified Fryers, and Energy Star Certified Steamers.
Application at7 . Using data from the Dunsky CPA, Staff verified that all three of the kitchen
measures proposed by the Company should be cost effective, with UCT values of 1.0 or better.
Energy Savings Kits
Staff is concerned about the cost effectiveness and implementation of the ESK measure
and recommends that the Company implement the measure as a pilot project, limiting the number
of kits it purchases and distributes to 350 until it has gathered sufficient data to verify savings and
cost effectiveness. The ESK measure is the second most costly measure proposed by the
Company.
The ESKs consist of sink aerators and spray valves for kitchens and bathrooms, which the
Company say would save 53 therms per year by limiting the use of hot water. Each ESK has a
relatively high marginal cost, $100 per ESK, and that the Company would provide them to
commercial customers for free. The Company has proposed having HVAC and plumbing
contractors distribute some of the ESKs, but it's not clear that HVAC contractors would be able to
install the ESK's plumbing equipment for commercial customers. The Company would also
distribute ESKs directly to commercial customers, who would self-install the equipment.
The Company estimates the UCT ratio for the ESKs at 1.0. Given the marginal UCT
value, the relatively high marginal cost of the ESKs, and the Company's plans to distribute these
for free, Staff is concerned that customers could receive the kits but not install some or all of the
components, which would reduce the therm savings and could make the measure cost ineffective.
The Company has proposed some steps to implement this portion of the Commercial EE
Program 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.
Staff recommends that the Company operate the ESK as a pilot measure, ordering and distributing
350 ESKs it forecasted being installed in one year,2 then complete a customer survey to determine
how many aerators and valves were installed and measure customer satisfaction with the
2 See Exhibit No. I
4STAFF COMMENTS JANUARY 26,2021
Commercial EE Program. The Company should share survey results and preliminary cost-
effectiveness data with Staff and the EESC before continuing the measure.
Administrative Costs
Staff is concerned about the relatively high projected administrative cost, which is 43
percent of the total Commercial EE Program budget. The budgeted administrative cost consists
entirely of a split between the Commercial and Residential EE programs, with the Commercial
EE Program incurring 20Vo of shared costs. The 20Vo allocation was used for budgeting the new
program; however, Staff encourages the Company to directly assign all costs incurred to the
proper EE program, whenever feasible, so that costs are properly allocated to customer classes.
For costs that cannot be directly assigned, Staff recommends that costs be allocated based on
factors that are driving the costs to be incurred. The Company proposes allocating between the
Commercial and Residential EE Programs based on actual therm savings.3 Staff accepts this
allocation method as a starting point but expects to review cost allocations and cost drivers in a
future prudency case.
Reporting
Experience with the Company's Residential EE program suggests the desirability of a
well-defined process for reporting the cost effectiveness of the Company's proposed Commercial
EE measures. Staff believes that the Company should be required to file an annual report that
includes information about program cost, energy savings, and the cost effectiveness of each
measure.
Staff believes that a CPA, such as that conducted by Dunsky, is a reasonable starting point
for designing an EE program, selecting cost effective measures, and setting initial rebate levels;
however, Staff also believes that the savings estimates obtained from the CPA are preliminary and
that the Company should endeavor to obtain more accurate estimates once a new measure has
been implemented. In most cases, Staff believes that the best savings estimates will be derived
from billing data; however, in some cases, it may be possible to develop reasonably good
estimates using other sources, such as consumption information obtained directly from
commercial equipment using data loggers. In any event, Staff believes that the Company should
3 See Response to Production Request No. 2.
STAFF COMMENTS 5 JANUARY 26,2021
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.
In its Application, the Company did not propose a plan for monitoring or evaluating the
cost effectiveness of its Commercial EE Program. Staff recommends that the Company include
an evaluation plan for each of the seven measures currently under consideration, and any
additional measures the Company will propose in its first (CY 2022) annual report.
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. Staff notes that an EM&V can be costly, and does not
believe it to be either necessary or desirable for the Company to evaluate every Commercial EE
measure every year using an EM&V. Some measures may have relatively small participation, so
that two or more years may be required to collect sufficient data to accurately evaluate their cost
effectiveness. The savings from other measures may be relatively stable, and once proper
incentive levels have been established, it may not be necessary to evaluate their cost effectiveness
using an EM&V more often than every two or three years. Staff believes that the initial EM&V
should include the Company's most costly measures. Currently, the Company anticipates this to
be the High Efficiency Condensing Boiler ($153,000), the ESKs ($35,000), and the Energy Star
Certified Fryer ($3 t ,ZOO;; however, Staff also believes that determination of which programs
should be included in the initial EM&V should wait until the Company files its first annual report
and has actual cost information on which to base its decisions.
Realization rates are an important result of an EM&V. A realization rate is the ratio of the
savings determined by the independent EM&V evaluator to the savings estimated by the
Company. Staff believes that when reporting savings, the Company's estimates should be
adjusted using the results of the most recent EM&V.
Stakeholder Involvement
Staff believes that the Company's EESC could benefit from the addition of members that
are on the GS-l rate schedule and would represent commercial customers' interests.
6STAITF COMMENTS JANUARY 26,2021
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 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 timely comments with the Commission by the
January 26,202I, deadline. As of January 26,202I, one customer filed comments expressing
concerns about EE and increased costs to ratepayers.
STAFF RECOMMENDATIONS
Staff recommends that the Commission approve the Company's proposed Commercial EE
Program and funding mechanism. Staff makes additional recommendations listed below.
1. The Commission order the Company to file an Annual Commercial EE Program report
that includes:
a. A complete accounting of the Energy Efficiency Rider (rider reconciliation);
b. 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;
c. Billing data, when available, should be used to determine the cost effectiveness of
each measure;
d. Beginning with the CY 2023 annual report, the Company should include the
results of an EM&V study conducted on selected measures; and
e. The Company should use realization rates from the most recent EM&V to adjust
program savings estimates and adjust incentive levels.
2. The purchase and distribution of ESKs be limited to 350 until sufficient data is
obtained to evaluate their cost effectiveness.
3. The Company include representatives from the GS-1 rate class in its EESC.
4. The Company be allowed to collect a $0.00320 per therm surcharge on sales to its GS-
I customers.
STAFF COMMENTS JANUARY 26,20217
Respecttully submitted this 2ft Uurof January 2021.
Hammond, Jr.
Attorney General
Technical Staff: Mike Morrison
Kevin Keyt
Brad Iverson-Long
Curtis Thaden
i:umisc:commentsy'intg20.4jhmmblkk comrrcnts
8STAFF COMMENTS JANUARY 26,2A21
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 26M DAY OF JANUARY 2021,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. INT-G-20-04, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
LORI BLATTNER
DIR _ REGULATORY AFFAIRS
INTERMOUNTAIN GAS CO
PO BOX 7608
BOISE D 83707
E-MAIL: [e-mail]
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE D 83702
E-MAIL:@idahoconservation.
PRESTON N CARTER
GWENS PURSLEY LLP
601 W BANNOCK ST
BOISE ID 83702
E-MAIL: prestoncarter@ givenspursley,com
kendrah @ eivenspursley.com
,ln/)n-,-,
SECRET-ARY-
CERTIFICATE OF SERVICE