PUC approves part of efficiency services rate request


July 7, 2010 – (RealEstateRama) — State regulators have allowed Rocky Mountain Power to increase its “Customer Efficiency Services Rate,” from 3.72 percent of customer bills to 4.72 percent effective July 1.

The company originally sought an increase to 5.85 percent of customer bills, but the Idaho Public Utilities Commission said there are some issues that need further examination before Rocky Mountain will be able to recover all its expenses related to funding programs that reduce demand on the utility generation system (often referred to as “demand-side management” or DSM programs). The efficiency services rate also funds programs that promote efficient use of electricity.

The issues that need further examination will be addressed during the course of Rocky Mountain’s base rate case pending before the commission. In that case, likely to continue through this year, Rocky Mountain is requesting an average 13.7 percent increase to base rates.

The Customer Efficiency Services Rate is a separate item from the base rate on customer bills. The revenue collected from this rate must be directed only to investment in DSM and energy-efficiency programs and, unlike the base rate, cannot be used to increase company earnings.

The commission said it “strongly supports” and commends Rocky Mountain Power “for its commitment to providing its customers with DSM and energy efficiency options.” When customers are able to reduce demand on Rocky Mountain Power’s generation through the irrigation load control or the Home Energy Efficiency Program, the need for the utility to build new generation or buy more costly power from other sources is delayed or eliminated, resulting in lower energy costs for both the company and its customers. “All customers benefit from deferring the costs of (the company) having to acquire new supply-side resources,” the commission said.

Rocky Mountain invests about $5.2 million in seven conservation programs, but the programs generated $17.1 million in customer benefits during 2009. Due in part to increased customer participation in the southeast Idaho utility’s conservation programs, Rocky Mountain sought to increase its yearly investment in the programs from $5.2 million to about $8.3 million. The increase approved by the commission results in a yearly investment of about $6.7 million.

The Idaho Conservation League and the Idaho Irrigation Pumpers Association said the expenses related to the irrigation load control program should be moved to base rates because of the size of the program. Even though the energy efficiency rate funds seven programs, about half the cost of the programs is related to the irrigation program.

The Idaho Conservation League said the irrigation program “most closely resembles a supply-side resource” operating much like a generation plant with a quantifiable amount of energy that can be dispatched as irrigators simultaneously reduce their consumption. Participation in the irrigation load control program provided Rocky Mountain with 285 megawatts of generation during 2009. One megawatt is one million watts, enough electricity to power about 650 average homes.

Moving the cost of the irrigation load control program to base rates would free up more revenue from the efficiency services rate to be directed to residential programs, the Idaho Conservation League said.

Residential efforts include the Home Energy Efficiency program, which offers financial incentives to customers to invest in energy-efficient washing machines; refrigerators; water heaters; dishwashers; lighting; cooling equipment and services; ceiling, wall and attic insulation; and windows. The lighting savings program resulted in a four-fold increase in lighting savings from 2008 to 2009. There is also a low-income weatherization program and a refrigerator recycling program, the latter resulting in 725 units recycled during 2009.

The Idaho Irrigation Pumpers Association said the costs of the irrigation load control program should be shared by other customers in Rocky Mountain’s region rather than solely Idaho customers because there is a system-wide benefit to reduced demand on generation. The irrigators said there should be no increase to the efficiency services rate. That could be accomplished, they argued, by removing expenses related to the irrigation control program and fund the remaining programs at the previously existing 4.72 percent level.

Rocky Mountain countered by saying the ability to recover its expenses for DSM and energy-efficiency programs removes a disincentive to invest in the programs because the resulting energy reduction could render the company unable to recover its prudent expenses and earn a rate or return.

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to Case Number PAC-E-10-03.

Gene Fadness (208) 334-0339, 890-2712
Website: www.puc.idaho.gov


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