20211201Comments.pdf

ldaho Public Utilities Commission
Office of the SecretarvRECEIVED
DEC0 I ?0?lDAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
(208) 334-03t2
IDAHO BARNO.9917
Boise, ldaho
Street Address for Express Mail:
I133I W CHINDEN BLVD, BLDG 8, SUITE 2OI.A
BOISE,ID 83714
Attorney forthe Commission Staff
BEFORE THE IDAIIO PTIBLIC UTILITIES COMMISSION
IN TIM MATTER OF INTER]VIOI'NTAIN
GAS COMPAIYY'S APPLICATION FOR
DETERMINATION OT 2O2O ENERGY
EFI'ICIENCY EXPENSES AS PRTJDENTLY
INCURREI)
CASE NO. INT-G-21{3
COMMENTS OT TIIE
coMlvflssroN sTAFr'
STAIT'OX'the ldalro Public Utilities Commission, by and through its Attomey of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUNI)
On July 14,2021, lntermormtain Gas Company ("Company") applied for an order
designaring expenses associated with its 2020Energy Efiiciency (*EE ) Program ("EE
Program") as prudently incurred. The Company requested its Application be processed by
Modified Procedure.
Total EE Program revenues collected from January 1,2020, through December 31,2020,
were $5,416,740. The EE Program expenditures for the sarne period were $3,656,158. Of the
expendittrres, $2,848,55G--approximafely l8o/o-were related to energy effrciency rebates paid
directly to customers. The remaining $807,608 of EE Program expenses were used for labor,
program delivery, special studies, and martet transformation.
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ISTAFF COMMENTS DECEMBER I,2O2I
On January 1,2020, the EE Prograrn had an under-collected deferral balance of
W2,385. As of December 31,2020, the EE Program had a $1,318,197 over-collected deferral
balance.
The Company believes customers will begin taking advantage of new EE Prograrn
offerings and that increased participation will reduce the over-collected deferral balance for the
EE Program. The Company did not propose to adjust the per therm arnount it collects from
customers to fund the EE Prograrn.
STAFF ANALYSIS
This is the third Demand-Side Management (*DSM'yEE prudency filiog made by the
Company since the EE Program's inception on October 1,2017. Staffexamined the Company's
Application, workpapers,2020 Energy Efficiency Annual Report ("EE Report"), EE Report
Supplement and additional information provided by the Company. The Company requested a
prudency determination on $3,656,158 of EE Program expenses for the 2020 planyear. Staff
recommends the Commission approve the Compally's EE Program expenses of $3,656,158 as
prudently incurred-
The comments below address the Company's prograrn financials, progftlm offerings,
avoided cost program results, and other issues. Absence of any discussion on additional points
should not be construed as Staffs support or endorsement for the Company's position without a
full evaluaion in the future.
X'inenciel Reviery
Staffaudited the Company's EE Program expenses, which included a review of the
Company's EE incentives, marketing campaign, program administration, and labor expenses.
Staffverffied that expenses were well documented and that intemal controls appeared to be in
place to prevent improper payment of incentives and to properly record EE Program expenses.
The TariffRider balance, labor expenses, and calculations are described in greater detail below.
TariffRider
ln Order No. 3,1454, Case No. INT-G-I9-05, the Commission approved an increase in the
Energy Efficiency Charge (*EEC") from $0.00367 per therm to $0.02093 per therm, effective
2STAFF COMMENTS DECEMBER I,2O2I
October 1,2019. The increased EEC, intended to reduce the underfunded rider balance, was
collected for only part of 2019 and all of 2020. The Tariff Rider balance increased by
$1,760,582 ln 2020, as prognrn expenses were lower than the TariffRider revenue. As noted in
the Application, the Company saw a 360lo increase in rebates paid in 2020. With new program
offerings becoming effective in April 2021, the Company expects customers will continue to
take advantage of new and existing rebate oppotunities which will reduce the over-collected
deferral balance. Staffdoes not recommend a change in the EEC TariffRider at this time and
will continue to monitor the TariffRider balance trends in the Company's quarterly updates
provided to the Commission Table No. I shows TariffRider activrty for the calendar year2020.
Table No. 1: TarifrRider Reconciliation
Beginning Balance, as of January 1,2020 (Underfrrnded)$ (42,385)
TariffRider Revenue $ 5,416,740
TariffRider Expenses $ 3,656,158
Ending Balance, as of December 1,2020 (Overfunded)$ 1,318,197
Revenue
Program revenues for 2020 were $5,416,740. The higher revenue collected was in part
due to the world-wide pandemic which caused customers to spend more time at home resulting
in increased natural gas consumption. Another reason for higher revenue is due to the rise in
natural gas prices toward the end of 2020. With revenue collection cyclicaf Staffexpects the
revenue balance to increase more during the winter months as consumption increases and
decrease throughout the summer months as gas consumption decreases. Staffwill continue to
monitor the TariffRider's revenue impact on the TariffRider balance. If the TariffRider
revenues continue to outpace progam expenditures, the Company should update the EEC
accordingly.
Labor Expenses
The total labor expense representedlT.5T% of total progam expenses lm2020, which is
less than the l7.75Yo of total program expenses over the previous 12 months.t 25'/o of certain
I EE Progrur labor expense increas€d to$@2387 m2020 from$497,726 un2019, an increase ot29.06%o-
,STAFF COMMENTS DECEMBER I,2O2I
employee labor expense is being directly assigned. Direct assignment of labor expense alleviates
concerns of the Company over-allocating labor expenses to the EE Program. Staffwill continue
to monitor labor expenses and encourages the Company to direct assign labor expenses
whenever possible.
DSM Cost-Efrectiveness
For 2020, the Company's EE Program portfolio was cost-effective with a benefit-to-cost
ratio of 1.5 for the Utility Cost Test (*UCT") when analyzdunder the Simulation Analysis.
However, the Company's portfolio was not cost-effective when evaluated under the Billing
Analysis with a benefit-to-cost ratio of 0.5 for the UCT.
For specific measures in the Company's portfolio, the Company's Water Heater and
Tankless Water Heater measures were cost<ffective under both types of analyses. BuL due to
minimal participation in the measures, they had an insignificant impact on total therms savings
for the Company's EE Program portfolio. The Company's two most popular rebates, the Whole
Home rebate and Fumace rebate, were cost-effective underthe Simulation Analysis and were not
cost-effective under the Billing Analysis. The two rebates account for 98o/o of the Company's
804,820 therm savings under the Simulation Analysis and,94o/o of the Company's 258,552 therm
savings for the Billing Analysis.
In the Company's recent prudency case, Case No. INT-G-20-06,the Commission
authorized widespread changes to the Company's DSM programs. Along with incentive and
measnre revisions to various progftlms, the Company removed the70o/o AFUE fueplace measure
and added a smart thermostat and high-efficiency boiler incentive. These changes took place in
the Spring of 2021when OrderNo. 34980 was issued. The recent changes to the program are
designed to increase cost-effectiveness as well as drive new customer participation. Stafflooks
forward to reviewing the cost-effectiveness of DSM progams incorporating the new changes in
the Company's next prudency filing.
Simulation and Billing Analysis
In its Application, the Company provided tw'o analyses-the Simulation Analysis and
the Billing Analysis-with both showing vastly different cost-effectiveness results and a large
difference in total therm savings. The Company stated that "sisnificant program revisions
4STAFF COMMENTS DECEMBER I,2O2I
focused on implementing requirements that directly impact therm s4vings and implementing
EM&V recommendations that will help the Company avoid potential under reporting or
overstating of therm savings. These changes took effect April l, 2021." EE Report at 8. Staff
appreciates the Company'5 analyses in this filing and agrees that the recent progrEm revisions
should help in overstating or understating therm savings when the Company evaluates its energy
effi ciency programs performance.
In the next prudency frling after the progam revisions have been implemented, Staff
expects the Company to comply with OrderNo. 34980, which directed the "Company to use the
most accurate evaluation method and clearly show why it is the most accurate evaluation
method--regardless of industy best practice.' Whatever evaluation method the Company
chooses, it should provide a detailed and convincing defense of the method- particularly if the
Company chooses not to use a billing data analysis." See Order No. 34980 at 8. While both
analyses are insightful to program perfonnance, ultimately the "most accurate evaluation
method" must be chosen to make key prograur decisions in the future to maintain a cost-effective
portfolio and measures.
Additionally, the Company showed a large difference in the UCT cost for each measure
between the two cost-effectiveness analyses provided. After further discussion, this was a result
of how the Company allocated its $807,608 of allocable overhead between each measure. For
each measure, the allocable overhead was allocated "based on the percentage of thenn savings of
each rebate to total therm savings of the portfolio." Response to Production Request No. 9.
Because of the difference in therm savings resulting from the two types of analysis, the
allocation method produced vastly different UCT costs for each rebate leading to an even greater
difference in the cost-efilectiveness results between the analyses. To help alleviate cost shifu in
future cost-effectiveness evaluations, Staffencourages the Company to directly assign costs to
individual rebates and programs whenever possible. If meastres and rebates have direct
administration fees, those cost should be directly assigned to that measure or rebate. This will
reduce the total allocable overhead improving the accuracy of individual measure and rebate cost
resulting in improved program management and more accurate cost-effectiveness calculations.
2 Allocable overhead consists of prograrn delivery and adminisnation costs
5STAFF COMMENTS DECEMBER I,2O2I
Markct Transformation
ln2020,the Company continued its participation in market tansforrration efforts with
the North American Heat Pump Collaborative ("Collaborative"). The Collaborative is a
coalition of 14 gas utilities and energy efficiency administrators focused on helping advance the
adoption of gas heat pump technology. The Company is a charter member of the Coalition since
its inception in 2019. While much of the Coalition's work is underway, Staffis encouraged by
the potential impact the Coalition's work can bring in gas heat pump technology and looks
forward to reviewing and monitoring the work performed by the Coalition Staffencourages the
Company to capture key deliverables and results from market transformation work perforrned
that results in energy efficiency savings for the Company's ratepayers.
Avoided Cost
In Order No. 34536, Case No. INT-G-19-04, the Commission ordered the Company to
review its avoided costs and update its avoided cost calculations. The Company created an
Avoided Cost Subcommittee (*Subcommittee") within the Energy Efiiciency Stakeholder
Commiuee to address issues identified in OrderNo. 34536. The Subcommittee reached a
consensus on the calculation of the commodity and tansportation cost components of an avoided
cost model. However, the Subcommittee has agreed ttrat additional discussion of a distribution
cost component is needed. In Production Response No. 6, the Company indicated they:
@plieve the IRP will provide the necessary data to inform the calculation
of avoided disfibution costs. Interrrountain plans to file the IRP in late Fall
of 2021. After the IRP is file4 the Company will reconvene the Avoided
Cost Subcommittee to continue the discussion on the best method for
incorporating distribution costs into the calculation.
Statrwi[ continue participating in the Subcommiffee and looks forward to discussing the
matter more after the Company has fited the 2021 IRP.
STAXT' RECOMMENDATIONS
Staffrecommends the Commission find thar the Company prudently incurred DSM
relaled expenditures of $3,658,158 in 2020.
6STAFF COMMENTS DECEMBER I,2O2I
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7STAFF COMMENTS DECEMBER 1,2W1
CERTIT'ICAIT OF SERVICE
I TIEREBY CERTIFY TIIAT I HAVE THIS I't DAY OF DECEMBER 202I,
SERVED THE FOREGOING COMMENTS OF TIIE, COMnTSSION STAf,'F, IN
CASE NO. INT.G-21.03, BY E.MAILING A COPY TIIEREOF, TO TI{E
FOLLOWING:
LORI BLATTNER
DIR _ REGULATORY AFFAIRS
INTERMOUNTAINGAS CO
PO BOX 7608
BOISE ID 83707
E-MAIL: [e-mail]
PRESTON N CARTER
GIVENS PURSLEY LLP
601 W BANNOCK ST
BOrSE D 83702
E-MAIL: [e-mail]
harmonywri ght@sivenspursley. com
trlM
SECRETARY
CERTIFICATE OF SERYICE