ORDER NO. 97-104

ENTERED MAR 14 1997

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UE 92

Phase II

DISPOSITION: WEATHERIZATION ISSUE RESOLVED

The Commission resolved Docket No. UE 92 revenue requirement and other issues in Order No. 95-1240, issued on November 28, 1995. The order bifurcated the proceeding, reserving the weatherization issue to Phase II. Order Nos. 95-1240 and 96-056 resolved the issues in Docket No. UI 110.

The active parties in Phase II are Idaho Power Company (IPCO) and the Low Income Consumers Union and Wilma and Ernest Apodaca (together referred to as LICU). This order addresses the weatherization issue raised by LICU.

Background

IPCO provides most of its service in the state of Idaho. It also provides electric service to a sparsely populated area of eastern Oregon. In 1989 IPCO received approval from the Idaho Public Utilities Commission to implement a low income weatherization assistance program. Under that program, IPCO budgets $320,000 per year (plus administration fees) for grants to non-profit agencies providing relief to low-income persons. IPCO filed tariff schedules and applied to the Oregon Commission for approval of its low-income weatherization program in its Oregon service territory. The Commission approved the application at its public meeting on November 6, 1990. The Commission noted that the program was system-wide for IPCO and authorized IPCO to use the conservation program accounting standards approved by the Idaho Commission. The approved tariff requires IPCO to have a contract with the agencies which receive weatherization grants from IPCO.

The Malheur Council on Aging & Community Services (MCAC) has been implementing IPCO’s low-income weatherization program in Malheur County. IPCO has been funding 50 percent of the cost of weatherizing homes selected by MCAC. MCAC did not become a party to this proceeding. It did, however, provide an affidavit addressing its contractual relationship with IPCO that was introduced into evidence by LICU.

In Phase I of this proceeding, the Commission determined what rates would be just and reasonable for IPCO. Included in the calculations leading up to the approved rates was a yearly expense of $13,396 for IPCO’s Oregon low-income weatherization program.

LICU’s Arguments

LICU filed testimony recommending that the Commission order IPCO to spend a portion of any rate increase on a program of weatherization proposed by LICU. The recommended program would require IPCO to provide full funding for the weatherization of 100 residences per year. IPCO has been providing 50 percent of the funding for buildings selected for the program.

LICU is concerned that MCAC is in danger of losing a substantial portion of funding for the other half of the weatherization costs. LICU therefore wants IPCO to pay the weatherization costs in full. LICU believes the weatherization program administered by MCAC is cost-effective. LICU also argues that the number of houses that IPCO has been funding per year should be increased from the current level of 28 to 30 to at least 100. LICU estimates it would cost IPCO about $200,000 per year to fully fund the weatherization of 100 residences each year.

LICU contends that increased weatherization would reduce the amount of electricity supplied to the affected homes, thus reducing IPCO’s costs of generation, transmission, and distribution.

LICU also alleges misconduct by IPCO in its dealings with MCAC. LICU alleges that IPCO refused to sign a contract with MCAC for weatherization services in retaliation for LICU proposing an expanded weatherization program. LICU recommends that the Commission order IPCO to fund the additional weatherization program proposed by LICU out of stockholder funds as punishment for IPCO’s behavior.

IPCO’s Arguments

IPCO argues that if it is now ordered to spend more for the Oregon portion of its weatherization program, an additional rate increase will be required to pay for it, especially if it is ordered to spend the $200,000 per year recommended by LICU.

IPCO contends that its current low-income weatherization program is slightly non-cost effective, and increasing the program as recommended by LICU would makes it even less cost effective.

IPCO states that it offered a contract to MCAC to continue the existing weatherization program, but negotiations prior to signing the contract were unsuccessful. The breakdown in negotiations was related, at least in part, to how to treat uncertainty about IPCO’s future weatherization program in Oregon in light of the unresolved issues in Phase II of this proceeding. IPCO states that it is ready to sign a new contract with MCAC and hopes to do so soon.

OPINION

The Commission has authorized IPCO to charge rates to its Oregon ratepayers to offset approximately $14,000 in residential weatherization costs. To be fair, and to maintain just and reasonable rates, IPCO's rates would have to be increased to its other Oregon customers to fund the $200,000 per year program recommended by LICU. LICU's proposal to require IPCO to fund the program without contribution by ratepayers is unacceptable.

It is not clear that the expanded weatherization program would be cost-effective. Changing from 50 percent funding to 100 percent funding, and more than tripling the number of houses included in the program are significant expansions. LICU suggests that the expanded program would be cost effective; IPCO does not think it would be. It does not appear to the Commission that the substantial expansion of the weatherization program would be cost effective.

We approved IPCO’s weatherization program in Oregon to match IPCO’s weatherization program in Idaho, where IPCO provides the bulk of its service. We are persuaded that continuation of the current program is reasonable and fair.

MCAC did not offer testimony in support of an expanded weatherization program. We can infer that it would support an increase, but we would need a showing that it could handle such an increase before requiring IPCO to contract with MCAC for a significantly increased weatherization program.

We are not persuaded that IPCO acted improperly in its dealings with MCAC. The breakdown in negotiations for a continuation of the weatherization program resulted from different perspectives on how to handle uncertainty about the future, and perhaps from a lack of effective communication.

We are not convinced that the current IPCO weatherization program in Oregon should be changed. The record in this proceeding supports continuation of the current weatherization program.

ORDER

IT IS ORDERED that the previously-approved low-income weatherization program of IPCO may continue at the level calculated in Phase I of this proceeding.

Made, entered, and effective ________________________. 

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of service of this order. The request must comply with the requirements in OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070(2)(a). A party may appeal this order to a court pursuant to ORS 756.580.