20221209Reply Comments.pdf

Preston N. Carter, ISB. No 8462
Givens Pursley LLP
601 W. Bannock St.
Boise,Idaho 83702
Telephone: [phone]
prestoncarter@ sivenspursley. com
Attorneys for Intermountain Gas Company
BEFORE THE IDAIIO PUBLIC UTILITIES COMI\{ISSION
IiIOEIVED
,-:i,n[i -9 PH 2: lr0
SSION
i" ri"il rruFlLii. ,'I11.1lIlti.- t \.!.ir,frr
IN THE IUATTER OF TIIE
APPLICATION OF
INTERMOTJNTAIN GAS COMPAIYY
FOR A DETERMINATION OF 2O2I
ENERGY EFFICIENCY E)(PENSES
AS PRTIDENTLY
CASE NO.INT.C-22.03
IxrunuouNTArN Gls Courn rw's
RnrlvCouunurs
lntcrmountain Gas Company ("Intermountain" or "Company") respcctfully submits the
following Reply Comments in response to Comments frled by the Idaho Public Utilities
Commission StaffC'Staff') and the city of Boise City ("Boise City").
BACKGROTTNI)
lntermountain filed an application on July 12, 2022, for an order designating $4,028,174
of Energy Elficiency Program ("EE Program") expcnditures as prudently incurred. On
November 10,2022, Staffand Boise City fild Comments in the case. Pursuant to the Notice of
Modified Procedure issued by the Commission in Order No. 35521, lntermountain submits its
RWly Comments.
INTERMoUNTaT Ges CotvtpA).Iy's Rspry ColvlldeNrs Pecs I or 12
REPLY TO STAFF COMMENTS
Intermountain appreciates Staffs recommendation to approve the Company's EE
Program expenses of $4,028,174 as prudently incuned and all recommendations regarding
Avoided Costs. Intermountain provides the following reply to aspects of Staffs comments.
Expense Allocation
As Staffdiscussed, the 80/20 allocation of expenses between the Residential Program and
the Commercial Program was agreed upon as an initial starting point for allocating expenses.
This approach was used for program planning and then applied to 2021expenses and cost-
effectiveness testing for continuity and consistency. The 2021 annual report reflects the first
nine months of existence of the Commercial Program which was launched April l,202L.For
2022 expenses, the Company is working to better identiff expenses that can be directly assigned
to the requisite program. For the pool of expenses that cannot be directly assigned, such as
promotional and educational activities with an audience of both commercial and residential
customers and contractors, the Company is investigating a justifiable allocation of expenses
between the two Programs based on "factors driving the costs," as recommended by Staff.
Furnace Program
The Company has not proposed to use the EM&V simulation analysis in selecting the
fumace therm savings reported in this case. lnstead, the Company used the therms savings of 87
therms from the 2019 CPA that was supported by an internal analysis.
The initial design of the furnace rebate began with a therm savings estimate of 112
thenns for a high-efficient fumace. This was an agreed upon starting point for the Program prior
to the Company conducting its first Conservation Potential Assessment ("CPA").
As Staff Comments point out, in the Company's Evaluation, Measurement, and
Verification ("EM&V") study ADM & Associates ("Evaluator") recommended using an
IxtsnuouNrerN GRs CorrapANy's Rrply Cotuurnrs Pecn 2 or 12
engineering-based evaluation approach. Implementing this particular recommendation into
forward planning would have resulted in using a therm savings estimate of 134 therms. The
billing analyses that was also performed as part of the EM&V analysis estimated energy savings
at 56 therms, which was much lower than the engineering analysis recommended by the
evaluators or the therm savings used in the initial program design.
Based on the EM&V analysis, the initial furnace savings estimate of 112 therms appeared
to be too high. However, the Evaluator raised concerns that the billing analysis method could not
isolate specifically for improved equipment efficiency which likely accounted for the low therm
saving indicated by the billing analysis. The data available for the EM&V study also did not
include much detailed information on what equipment was being replaced to allow for a more
granular analysis.
ln 2019, the Company commissioned a CPA. The CPA analysis showed an estimated
savings of 87 therms based on upgrading from a code (80% efficiency) furnace to the 95%
efficient or greater furnace required by the Company's program. As part of the 2021 program
redesign, the Company's updated rebate application also began requiring more information on
the furnace model replaced and conditions surrounding replacement to allow for befier, more
granular analysis in the future. As Staffnoted, the Company was able to use this better data to
perform an intemal analysis on the furnace measure. The Company's analysis showed that
customers upgrading from a code-level furnace (80% efficient) to a furnace that met the EE
Program requirement of 95% or greater efficiency saw an average therm savings of 81. This is in
line with the therm savings estimate found in the Company's 2019 CPA. Intermountain believes
it is important to calculate the fumace therm savings relative to code. Until a change is made to
code, a customer that currently has a high-efficient fumace installed in their home has the option
to install a less efficient (and less costly) model when selecting a replacement furnace. A
IurenuouurArN GAS CoMPAt'tv's REPLY CoMMEIts PAGE 3 oF 12
customer should not be penalized with a lower incentive for continuing to choose a high-efficient
furnace when the cost of the high-efficient model is the same regardless of the model the
customer is replacing. The same holds true for new construction. The therm savings should be
based on the difference between selecting a code-level 80% efficient furnace and, a95%6 or
higher efficient furrace. Including the entire population of fumace replacements in the interral
analysis conducted by the Company would have diluted the therm savings by reflecting limited
therm savings for high-efficient to high-efficient furnace replacements.
The Company took all of these factors into consideration when incorporating EM&V
results into future EE Program planning. In order to avoid over-estimating or under-estimating
energy savings, post EM&V, the Company used the 87 therm savings provided by the 2019 CPA
and supported by internal analysis as a savings estimate rather than the 134 therm simulation
analysis results recommended by the Evaluator. lntermountain agrees the Staffsuggestion to
explore other acceptable and vetted bases for deemed savings may be a good solution to this
ongoing discussion. The Company also intends to use the data collected in the new required
fields on the rebate form to continue with its internal monitoring of therm savings. The Company
will research options for deemed therm savings and discuss further with its Energy Efficiency
Stakeholder Committee.
In regard to the 761 blank fields identified in the intemal analysis, the Company
implemented a requirement to provide more data on the rebate application that was rolled out as
part of the program re-design on April 1,2A21. The new rebate application captures previous
equipment efficiency and identifies installation scenarios like new construction, replace on bum
out, and early retirement to provide a more robust energy savings picture as recommended by the
Evaluator. It has taken customers and contractors some time to switch to the new form and to
learn to provide the efficiency of the equipment being replaced. Implementing changes like this
INrrnuouxreru Ges Coupetw's Rrprv CouurNrs Pacn 4 or 12
are one of the reasons establishing and maintaining contactor outeach is vital to EE Program
success. Collecting this data, as recommended by the Evaluator, will help to address blank fields
as well as Staffs recommendation to *tighten its rebate measure eligibility requirements." The
Company has made significant progress in this effort since implementing these requirements as
outlined in the chart below.
2O2I BLAN K RESPONSE RATE
EXCTUDING NEW CCNSTRUCTION
10.096
0ffi
JAN TE8 MAN APR MAY JUN JUL AUG SEP OCT NOV DEC
PROGR,AM MONTH
Whole Home Program
StaffComments note "The Company acknowledged the different results but opted to use
an even higher saving value proposed by a calibrated simulation ('simulation analysis') for its
whole home measure." StaffComments at 6. Based on the comments, the Company would like
to clarify on the reporting of the Whole Home rebates. Because of the Residential program
redesign that was effective on April 1,2021, the annual report in this case includes rebates that
were paid under the old program as well the new program. The Whole Home rebate that uses 274
themr savings was retired l.lr,2021.
70.096
50.tri6
$ soor
9 aoov',Ip ro.or
Yz< 20ff56
IvrsRMouNterN GAS Couperw's Replv CoN,IIurNTs PAGE 5 oF 12
As a result of the EM&V recommendation that the Company redesign the Whole Home
incentive to target building practices and equipment that would directly impact therm savings,
Intermountain completely redesigned the Whole Home rebate to a two tier, Whole Home Tier I
and Whole Home Tier II stucture. The newly designed two-tier incentives have specific energy
perfornance targets designed to specifically secure natural gas savings. The Whole Home I
rebate uses savings of 161 thenns, while the Whole Home II uses 128 therms. Because the
original Whole Home rebate that used the274 therm savings has been retired, Intermountain was
not defending the therm savings of that particular incentive in this case. The Company included
all retired measures in the program analysis for completeness of reporting, however, the
Company agrees that the original Whole Home rebate with the 274therm svings will not be
used in the future. Only homes that were permitted before April 1, 2021 were allowed to be
rebated under the retired rebate. There will be no Whole Home rebates atthe274 therm savings
level in the 2023 Prudency Filing.
Marketing Program and Effectiveness
The Company agrees it can better measure and communicate how marketing initiatives
impact energy efficiency measures, incentives, and programs. Many initiatives are focused on
raising awareness, which in and of itself is hard to measure. The Company has experienced
continued growth year-over-year in the total numbers of rebates paid to customers, as one
indication of effectiveness of marketing and education activities.
Contractors are essential partners in promoting energy efficiency. Contractors have a vital
role in helping customers make energy saving decisions when it comes to purchasing equipment.
Customers and builders alike view their HVAC contractor as an energy expert they are present
at the time of decision, their recommendations are valued and acted upon, and contractors often
even take the additional steps of helping customers complete their rebate applications. Most
IlrreRMouNrenq Gls CoMpexv's REpLy CoMMENTS Pecn 6 or 12
peoplc don't think about their furnacc or nratcr heater until thcy don't havc onc, and thc HVAC
or plurnbing contractor is usually the first on the scexre. For these reasons, it is important to make
sure contractors are aware of the Program. The Company does attempt to measure awareness
building mcthods by asking customcrs on the rcbatc application, "How did pu hcar about the
program?" The following table provides a visual representation of how customers leam about the
EE Program. Bascd on this data, "cquipmqrt dcaler/insaller" is frcqucntly how customcrs learn
about the EE Program.
'How did you hear about the Program?' Equlpment Replacement Responses Monthly - 2021
roo 001r
8000.a
t0.fl)1r
m oo*
000q.5 llet MsY Jul s.p
tuwrng rll67 @ pd^B Iq{fr?rogilnDt tB 2421
As far as marketing to builders is concerned, new construction offers the best and easiest
time to impleme,nt energy efficiency measures, avoiding the need for installation of additional
pipe or re-piping equipment, sizing, fit and location of equipment. Envelope measures also have
some of the longest estimated energy-saving useful lives of approximately 25 years. For these
a cotilltr$TYarE {t
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. ECIU?TExI D€ArIR/I$TAT.ET
a rcatlN8€m
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II
INrrRr,touNranl Gas Coupar.rv's REPLY CoMMENTS PAGE 7 oF 12
reasons recruiting energy efficient home builders is a huge energy saving opportunity. Since
there is no one governing body over residential home builders, the Company has leveraged
existing memberships with the Building Contractors Associations ("BCA") throughout the
Company's service territory. Recognizing not all home builders belong to a BCA, the Company
is working to extend outreach and home energy efficiency education through direct mail to
builders who do not belong to an association. This effort has been less effective than the one-to-
one interactions facilitated through BCA member-to-member networking.
REPLY TO BOISE CITY COMMENTS
The Company appreciates Boise City's recognition and support of the Energy Efficiency
Programs and the unique and important benefits that energy efficiency delivers to all customers.
The Company agrees that making a zubstantial program revision mid-year can be
challenging, including reporting on the resulting split year. The Company believes EM&V
results were properly incorporated in the forward Program planning. As discussed below, the
Company plans to again commission an EM&V study once there is sufficient data, and data over
the important winter heating season, to make the study cost effective and the results useful. The
Company does not see a benefit to designating the Whole Home I and II rebates as pilot
programs. Leaving the rebates in place throughout the service territory will allow for greater
uptake, and thus a greater amount of data that will lead to a more robust EM&V study.
REPLY TO COMMENTS REGARDING EM&V
Given the debate among energy efficiency evaluation experts regarding the "best"
evaluation methods to be used, it's no surprise this has been a complicated issue for the EE
Program. For future evaluations, the Company will work with the Energy Efficiency Stakeholder
Committee ("EESC") to set evaluation expectations and parameters up front. It will be important
to determine the "when," "what," and "how" of evaluation; when should measures be evaluated,
INTERMoUNTITN Gas CoMpANv's Rrply CouurNrs P.q.cr 8 or 12
what is the best evaluation method for each measure, and how evaluation results should be used,
in order to get the most value from these resource-intensive studies. The Company agrees with
the Staffrecommendation to postpone formal evaluation of the boiler, combination boiler and
water heating measures until there is enough participation to justiS the cost of an impact
evaluation. However, the Company would like to work with the EESC to determine whether or
not there is enough history particularly during the heating season, to conduct meaningful impact
evaluations on the following measures: Furnace rebates, and Whole Home I and Whole Home II
rebates using April 1,2021through Program Year2022. As Staffpoints out, "the EM&V studies
are expensive and require significant populations of data to make meaningful recommendations
for the program." Staff Comments at 8. The following chart illustrates the distribution of Whole
Home Tier II rebates since this rebate went into effect April 1, 2022. As the chart shows, there
are a significant number of rebated homes that will not have a history that includes a full heating
season. The Company agrees EM&V studies will be direct assigned to the program being
evaluated.
INreRuourureIN Ges CotrlpeNv's Repl-y Cor,Ilvlel.rrs Pncr 9 on 12
Count of Whole Home Rebates Paid MonthlVO4l0ll2l Through Ogl30l22
200
lr5
t50
125
ro0
B
I
EoaI
75
s€p2o2l Ocr?o21 Nov2o21 k 2021 hn2o27 F62O22 l,,at2022 As2O22 Uat2O22 Jc 2022 lvt2o22 tu92022 *p2O?2
*Note: there were no Whole Home Tier I or II rebates paid until September 2021 , although the rebate was
fficially effective April l, 2021
CONCLUSION
In summary, Intermountain appreciates the recommendations of both Staffand Boise
City to approve the202l EE Program expenses as prudently incurred, as well as Staffs
recommendations regarding Avoided Cost calculation and reporting. [n addition, the Company
will direct assign EE Program costs when possible or provide explanations why costs are not
assignable going forward. Rather than directing the Company to implernent a specific EM&V
schedule, process and analysis method in this case, the Company requests that the Commission
direct the Company to work with the EESC to determine the most appropriate timing and process
for EM&V studies of the fumace and whole home incentives. In addition, the Company requests
INTERMoITNTAIN GAS Cotrrpauy's Rrply CourrrsNrs PecB l0 or 12
that the WholeHome I aodWhole Home trirceotives r€mainas ftey are arrcntlyiocltddin
the EE Program ffiitr
Dated: December9,2A22
GTVENS PI.]RSIEY LLP
a'
PrestonN. Carter
Gilrens PurslcyLLF
Attorneys for Intermountain Gas Cotpary
Irvrgnruounrew Ges Cotr,peNv's RsPrv Oolrfft Ei.trs PAGE 11 OF 12
CERTIF'ICATE OF SERVICE
I certiff that on Decenrber 9,2022, a tue and correct copy of INTERMOLTNTAIN GAS
COMPANY'S REPLY COMMENTS was served upon all parties of record in this proceeding
via the manner indicated below:
Commission Staff
Jan Noriyuki, Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise,ID 83714
Chris Burdin
Depu$ Attorney General
Idaho Public Utilities Commission
I l33l W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, D 83720
City of Boise
Ed Jewell
Deputy City Attorney
Boisc City Attorney's Office
150 N. Capitol Blvd
Boise,ID 83701
Wil Gehl
Energy Program Manager
Boise City Departrnent of Public Works
150 N. Capitol Blvd
Boise, ID 83701
Via Electronic Mail
j [e-mail]. gov
[e-mail]. gov
ej ewell@cityofboise. org
boisecityattomey@cityofboise. org
wgehl@cityo fboise. org
2
Preston N. Carter
INrsnvouurem Ges CoupANy's REpLy Couurgvrs Pecs 12 or 12