ORDER NO. 97-381

ENTERED SEP 26 1997

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 768

DISPOSITION: INCENTIVE TARIFF SCHEDULES ALLOWED TO

REMAIN IN EFFECT

Procedural History

On April 6, 1995, PacifiCorp (Pacific) filed Advice No. 95-127, along with a request that the revised tariff sheets included in the advice become effective on April 19, 1995. The advice relates to the reward/penalty mechanism associated with the company’s Demand-Side Management (DSM) acquisitions. The tariff sheets revise Pacific’s Schedule 191 (DSM Cost Recovery Adjustment) and Schedule 192 (DSM Incentive Adjustment). On April 13, 1995, Pacific filed revised tariff sheets to replace those filed on April 6, 1995.

At its public meeting on April 18, 1995, the Commission authorized the substituted tariff sheets to become effective for service rendered on and after April 19, 1995.

On June 5, 1995, the Utility Reform Project (URP) filed a complaint and protest to the Advice No. 95-127 filing. The complaint was filed under ORS 757.210(1) and ORS 756.500. Pacific and the Commission’s Staff each filed a motion to dismiss the URP complaint filed under ORS 757.500. On July 21, 1995, the Commission issued Order No. 95-785 dismissing the complaint filed under ORS 757.500.

On December 6, 1995, Lowell Bergen, an Administrative Law Judge for the Commission, presided over a conference to discuss procedural matters. URP, Pacific, and Staff had presented evidence in a previous proceeding involving Pacific’s DSM program, and they agreed to incorporate that evidence into this proceeding. URP and Pacific also filed additional testimony in this proceeding.

Hearing sessions were scheduled, and then canceled at the request of the parties. On July 11, 1997, the parties filed a stipulation about the evidence of record in this proceeding. The stipulation recommends that the Commission receive into evidence in this proceeding the exhibits received into evidence in Docket No. UM 564, the pre-filed testimony of Pacific and URP in this docket, and specified letters and reports. The parties agreed to submit the matter for decision without a hearing, based on the stipulated evidence. On July 18, 1997, Pacific filed an initial brief in support of its evidence. On July 28, 1997, URP filed an opening brief in which it stated that it saw no difference between the Pacific proposals offered in Docket No. UM 564 and in this proceeding, so URP adopted the briefs it had filed in Docket No. UM 564. No party filed an optional reply brief.

The stipulation is adopted. The evidence offered in this proceeding, and the evidence received in Docket No. UM 564, are received into evidence in this proceeding. The decisions reached in this order are based on the preponderance of the evidence received.

Background

On November 23, 1992, in Order No. 92-1673, the Commission required Pacific, Portland General Electric Company, and Idaho Power Company to file proposals for mechanisms to remove disincentives and provide incentives to acquire demand-side resources (also called demand-side management, and, as previously mentioned, abbreviated to DSM in this order). The utility companies complied, and the Commission approved Pacific’s previous DSM proposals in Order Nos. 94-320, 95-800, and 95-1169, in Docket No. UM 564.

In Order No. 95-800, the Commission adopted a plan for estimating energy savings for commercial and industrial customers based on contracts between Pacific and its customers. The individual contracts were not put in the record of the proceeding, but the Commission approved a plan under which contracts will be evaluated as needed, including during the review of any proposed rate change.

Positions of the Parties

URP contends that the positions it took in Docket No. UM 564, and not adopted by the Commission, were correct. It doubts the accuracy of Pacific’s methods of ascertaining energy savings from residential showerhead programs. URP faults Pacific for not providing studies URP finds credible demonstrating the accuracy of Pacific’s savings estimates included in its shareholder incentives program. URP also criticizes Pacific for awarding installation work without using a competitive bidding process.

URP criticizes Pacific for using energy savings measurements included in private contracts with commercial and industrial customers rather than using measurement and evaluation studies open to the public.

URP contends that Pacific’s DSM program is anticompetitive because it uses ratepayer funds to implement conservation programs, while independent DSM providers charge individual customers for their services. URP argues that the federal Energy Policy Act of 1992 requires the Commission to consider the potential anticompetitive impacts of Pacific’s DSM program on small businesses engaged in conservation or other demand-side management activities. URP would like to see an open competitive bidding system administered by the Commission or the Oregon Office of Energy.

URP contends that Pacific’s ratepayer-funded program violates federal and state policies favoring competition. It cites the federal Energy Policy Act of 1992 section 111 in support of its contention.

In response, Pacific points out that it filed the Advice seeking authorization to extend its existing incentive program through calendar year 1996. It states that it has not been paid any incentive for its low-income weatherization program because that program has not been deemed to be cost-effective, so obviously Pacific has not been paid for estimated savings that did not materialize.

Pacific states that the deemed savings is 421 kilowatt hours (kWh) per showerhead kit, and Pacific is receiving incentive payments on 70 percent of that amount. However, preliminary evaluation results indicate that the kits are saving 1,225 kWh per kit. This means that Pacific is selling less electricity than the deemed savings assume. Therefore, Pacific’s revenue loss is greater than the deemed savings incentive allows.

On the issue of deemed energy savings included in contracts with commercial and industrial customers, Pacific states that it has offered to let URP look at the contracts, but the offer has not been accepted.

OPINION

We addressed the issue of the federal Energy Policy Act of 1992 in Docket No. UM 712, and declined to adopt the federal standards. We found that Oregon’s existing standards and procedures were adequate. See Order No. 95-627. We rejected URP’s arguments about the applicability of the Energy Policy Act of 1992 in Order Nos. 95-800 and 95-1063. Those orders explain our decision, and we will not repeat our explanation here.

We addressed the issue of deemed savings for commercial and industrial customers based on contracts with those customers in Order No. 95-800. We concluded that that method of estimated savings was valid and reasonable. Our opinion remains the same today.

URP suggests that the Commission or the Oregon Office of Energy undertake a bidding process for DSM projects. The Commission addressed competitive bidding issues, including competitive bidding for demand-side projects, in Order No. 91-1383. Our opinion has not changed since issuing that order. No evidence has been presented showing that Pacific is not complying with the requirements established in that order, or that it is not complying with its biennial least-cost plans.

We have carefully analyzed DSM issues in various dockets, including UM 316, UM 409, UM 564, and UM 712. We are confident that the policies we have adopted to encourage utility companies to acquire all cost-effective demand-side resources have been effective and are not anticompetitive. No evidence was presented in this docket to cause us to change the decisions we made in the previous dockets.

CONCLUSIONS

The reward/penalty mechanisms included in Pacific’s Advice No. 95-127 are just and reasonable;

The complaint and protest of URP should be denied.

ORDER

IT IS ORDERED that:

The cost recovery and incentive mechanisms filed in Advice No. 95-127 and contained in PacifiCorp Schedules 191 and 192 are approved and may remain in effect as decided at the Commission’s public meeting on April 18, 1995;

The claims set forth in the complaint and protest filed by the Utility Reform Project are denied.

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 OAR860-014-0095. 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.