DR 98-177
Granite State Electric Company
1999 Demand Side Management Program
Order Approving Program
O R D E R N O. 23,097
January 4, 1999
APPEARANCES: Carlos A. Gavilondo, Esq., for Granite
State Electric Company; David W. Marshall, Esq., for the
Conservation Law Foundation; Wynn E. Arnold, Esq. for the
Governor's Office of Energy and Community Services; Andrew
Bodnarik for the New Hampshire Department of Environmental
Services, Air Resources Division; Kenneth E. Traum for the
Office
of the Consumer Advocate for residential ratepayers; and
Robert
J. Frank, Esq. for the Staff of the New Hampshire Public
Utilities Commission.
I. PROCEDURAL HISTORY
On October 5, 1998, Granite State Electric Company
(GSEC) filed with the New Hampshire Public Utilities
Commission
(Commission) a petition for approval of its 1999 Demand Side
Management (DSM) Program Proposal effective for the period
January 1, 1999 through December 31, 1999. GSEC sought
approval
of a DSM budget of $2,283,900 with a projected shareholders'
incentive of $298,589. GSEC proposed to continue its
currently
approved DSM programs, with some modifications. GSEC also
proposed to introduce a new Efficient Clothes Washer
(TumbleWash)
Program and to establish a $100,000 set-aside for
initiatives
recommended by the New Hampshire Energy Efficiency Working
Group
(Working Group).
By an Order of Notice issued October 9, 1998, the
Commission scheduled a prehearing conference for October 29,
1998, set deadlines for intervention requests and objections
thereto, outlined a procedural schedule, and required the
Parties
and Commission Staff (Staff) to summarize their positions
with
regard to the filing for the record. On October 19, 1998,
the
Conservation Law Foundation (CLF) filed a Petition to
Intervene.
On October 26, 1998, the Governor's Office of Energy and
Community Services (ECS) filed a Motion for Full
Intervention.
The New Hampshire Department of Environmental Services, Air
Resources Division (DES) appeared at the October 29, 1998
prehearing conference and announced that it would be filing
its
motion to intervene within a couple of days. On October 30,
1998, DES filed a late Motion for Full Intervention. There
were
no objections to CLF's and ECS' motions to intervene. No
party
objected to DES' motion at the prehearing conference or
subsequently through a filing with the Commission. The
Office of
the Consumer Advocate (OCA) is a statutorily recognized
intervenor.
On November 13, 1998, the Commission issued Order
No.
23,067 approving the procedural schedule and the petitions
to
intervene. On November 24, 1998, Commission Staff requested
changes to the approved procedural schedule due to the
Commission's rescheduling of the hearing on the merits. All
Parties concurred with the request. On December 3, 1998,
the
Commission approved the requested changes to the procedural
schedule.
Pursuant to the approved procedural schedule,
GSEC, the
intervenors and Staff engaged in formal discovery. On
December
1, 1998, ECS filed the direct testimonies of Deborah
Schachter,
Director, and Heidi Kroll, Energy Policy Analyst; DES filed
the
direct testimony of Andrew M. Bodnarik, Administrator II;
and
Staff filed the direct testimony of Michelle A. Caraway,
Utility
Analyst III. On December 10, 1998, GSEC, CLF, ECS, DES and
OCA
(collectively the Parties) and Staff participated in a
Settlement
Conference.
Subsequent to the Settlement Conference, the
Parties
and Staff entered into an Offer of Partial Settlement
(Partial
Settlement). The Partial Settlement would resolve some of
the
issues in this proceeding and describes contested issues on
which
the Parties and Staff were unable to achieve consensus. The
Partial Settlement was filed with the Commission on December
16,
1998. On December 16, 1998, a hearing was held before the
Commission at which time testimony supporting the Partial
Settlement and detailing positions on the contested issues
was
presented to the Commission.
II. OFFER OF PARTIAL SETTLEMENT
As it pertains to the resolved issues, the Parties
and
Staff agree that GSEC's DSM proposal, as set forth in its
October
5, 1998 filing, is in the public interest and should be
approved,
subject to the following modifications:
Residential Programs
The Residential programs shall be implemented as
proposed in the
October 5, 1998 filing, modified as follows:
1. Home Energy Management (HEM) Program. GSEC will
close its
Interruptible Credits program (IC-1 and IC-2),
including the HEM
program, to new customers effective January 1, 1999,
but will
allow existing customers to continue to receive the
credits during
1999. During 1999, GSEC will evaluate the form of the
credits,
e.g., separate credits for transmission/distribution
and
generation portions of service, and assess the
appropriateness of
continuing them beyond 1999. In its filing for the
2000 program
year, GSEC shall propose modifications to the IC-1 and
IC-2
credits that are appropriate as a result of its
evaluation.
Aside from the foregoing modifications, GSEC will
implement the
HEM program in 1999 as set forth in the October 5, 1998
filing,
including the proposed budget level for the HEM
program.
2. Energy Efficiency Working Group Fund --
Residential. GSEC will
withdraw its proposal to set aside $50,000 in its
Residential
program budget to fund initiatives that may be
identified by the
Working Group for implementation in 1999. Withdrawal
of this
funding proposal shall not preclude GSEC from
petitioning the
Commission during the 1999 program year for additional
funding in
order to implement any new residential initiatives
which may be
recommended by the Working Group during 1999.
3. TumbleWash. The Parties and Staff agree that
GSEC's proposal to
implement the TumbleWash program in 1999 as set forth
in the
October 5, 1998 filing, including the proposed budget
level for
that program, should be approved. In addition, the
Parties and
Staff agree that in the event the Commission requires
or approves
additional disclosure requirements relative to the
TumbleWash
promotional materials in Docket DR 98-174, relating to
the 1999
Conservation and Load Management Program of Public
Service Company
of New Hampshire (PSNH), GSEC shall implement a program
to provide
substantially similar disclosure information as is
required for
PSNH in Docket DR 98-174.
Commercial and Industrial Programs
The Commercial and Industrial (C/I) programs shall be
implemented
as proposed in the October 5, 1998 filing, modified as
follows:
4. Small C/I Co-Pay. GSEC will introduce a
twenty-percent (20%) co-
pay in its Small C/I program for the 1999 program year.
The co-
pay will not result in a change in the proposed budget
for the
Small C/I program. With the exception of the
twenty-percent co-
pay, the Small C/I program will be implemented as set
forth in the
October 5, 1998 filing. In the event that introduction
of the 20%
co-pay negatively affects the performance of the Small
C/I program
in 1999, GSEC or any other Party shall be free to
propose
reduction or elimination of the co-pay for subsequent
program
years.
5. Energy Efficiency Working Group Fund -- C/I. GSEC
will withdraw
its proposal to set aside $50,000 in its C/I program
budget to
fund initiatives that may be identified by the Working
Group for
implementation in 1999. Withdrawal of this funding
proposal shall
not preclude GSEC from petitioning the Commission
during the 1999
program year for additional funding in order to
implement any new
C/I initiatives which may be recommended by the Working
Group
during 1999.
6. Cooperative Interruptible Service (CIS) Program.
The Parties and
Staff agree that GSEC may continue to offer its CIS
program to
those currently participating CIS-1 customers that
remain on
transition service during the 1998-1999 CIS program
year.
Specifically, the Parties and Staff agree that GSEC
should base
the 1998-1999 CIS-1 credits upon the schedule of
credits and
charges ultimately approved by the Commission in
connection with
GSEC's 1998-1999 CIS-1 program in Docket DR 98-178; and
the
Parties and Staff further agree that to the extent an
existing
CIS-1 customer leaves transition service, such customer
shall no
longer be eligible for the CIS-1 program. In the event
the
Commission adopts the schedule of credits and charges
previously
approved for the 1997-1998 CIS-1 program for use in the
1998-1999
CIS-1 program, funding for the CIS program shall be as
set forth
in the October 5, 1998 filing. To the extent the
Commission
approves a different schedule of credits and charges
for the CIS-1
program as part of its consideration in Docket DR
98-178, GSEC's
1998-1999 CIS program budget will be revised
accordingly. Nothing
in this Partial Settlement shall be construed to limit
the
position any of the Parties or Staff may take with
respect to the
CIS program in Docket DR 98-178, or for future program
years.
7. Design 2000 and Energy Initiative. The Parties
and Staff agree
that GSEC's proposal to implement the Design 2000 and
Energy
Initiative programs in 1999 as set forth in the October
5, 1998
filing, including the proposed budget levels for those
programs,
should be approved.
Program Budgets and Adjustment Factors
8. Program Budgets. The budgets for the Residential
and C/I programs
agreed upon by the Parties and Staff are $338,700 and
$1,735,000,
respectively, for a total of $2,073,700. GSEC's final
DSM budget
for the 1999 program year will depend upon how the
Commission
decides the contested issues.
9. Adjustment Factors. The Residential and C/I
adjustment factors
shall be designed to collect the amounts necessary to
fund the
1999 DSM programs ultimately approved by the
Commission, as well
as GSEC's 1998 shareholders' incentive, subject to
evaluation and
reconciliation to actual performance. The factors
ultimately
approved by the Commission shall remain in effect
throughout the
1999 program year, subject to adjustment in the event
the
Commission approves any new initiatives recommended by
the Working
Group for implementation during the program year. GSEC
shall not
seek recovery of any expenditures of its 1999 DSM
Program which
exceed the overall budget ultimately approved by the
Commission.
Pursuant to the Commission's authority under
N.H. Admin.
Rules, Puc 201.05, the Parties and Staff request waiver
of Puc
1203.05(a), which requires that rate changes generally
be
implemented on a service-rendered basis, and instead
permit GSEC
to implement the final 1999 DSM adjustment factors on a
bills-
rendered basis consistent with the principles embodied
in Puc
1203.05(b). The Parties and Staff request that the new
adjustment
factors ultimately approved by the Commission become
effective for
bills rendered on and after January 1, 1999.
III. CONTESTED ISSUES
The Parties and Staff were unable to reach
agreement
with respect to certain aspects of GSEC's proposed 1999 DSM
programs and other initiatives identified in the testimony
of the
intervenors and Staff. Specifically, the Parties and Staff
were
unable to achieve consensus with respect to: GSEC's
Residential
Lighting Program for 1999; the implementation of enhanced
building codes initiatives; and support for the WasteCap
Resource
Conservation NetWork (ReCon) program administered by the
Business
and Industry Association of New Hampshire (BIA).
A. Granite State Electric Company
GSEC stated at the hearing that if the Commission
would
approve a retail rebate for compact fluorescent light (CFL)
bulbs
at $9.00, the rebate level currently offered by GSEC's
affiliates, then GSEC would continue to offer this aspect of
its
Residential Lighting Program. GSEC said it was not able to
benefit from the economies of scale of a joint utility
effort
with its affiliates because the CFL bulb retail rebate for
1998,
$8.00, was different in New Hampshire.
GSEC proposes to participate in the energy codes
effort
for 1999. For a total of $20,000, GSEC estimates expending
$10,000 to participate in a baseline study of current C/I
building practices, $5,000 to assist through C/I seminars
for
builders, architects and design engineers, and another
$5,000 to
assist with training for the implementation of the new
residential energy code which is to go into effect in March
1999.
GSEC also proposes supporting the WasteCap ReCon
program at a budget of $10,000. GSEC's assistance would be
limited to technical assistance to identify electrical
savings.
GSEC testified that the type of assistance that will be
offered
through the WasteCap ReCon effort is similar to services
already
being provided by existing C/I DSM programs.
B. Governor's Office of Energy and
Community Services
ECS recommends that GSEC continue CFL bulb retail
rebates through its Residential Lighting Program and to
modify
its Starlights Catalog distribution approach from the bill
stuffer approach to the direct mail approach. ECS believes
that
the direct mail approach could improve the market
transformation
potential of the program by stimulating greater consumer
awareness of, knowledge about, and demand for affordable and
attractive energy efficient lighting.
ECS supports GSEC's proposal to support energy
code
activities. In addition to the $10,000 proposed by GSEC for
the
WasteCap ReCon program, ECS requested at the hearing that
GSEC
provide a $2,000 to $3,000 cash contribution to the WasteCap
ReCon program. GSEC agreed to the cash contribution of
ratepayer
funds.
C. Department of Environmental Services
DES submitted prefiled testimony in the proceeding
but
did not offer testimony at the hearing. DES cross-examined
witnesses and requested that the Commission take
administrative
notice of its prefiled testimony.
D. Office of the Consumer Advocate
OCA did not prefile testimony in the proceeding
and did
not offer testimony at the hearing. OCA did cross-examine
witnesses.
E. Conservation Law Foundation
CLF believes that GSEC's budget should consist of
the
following components: all programs included in the Partial
Settlement; continuation of the Residential Lighting Program
with
the CFL bulb retail rebate of $9.00; mailing of the
Starlights
catalog to all residential customers; energy code education
and
implementation efforts; and support for the WasteCap ReCon
program.
F. Commission Staff
Staff recommends that GSEC eliminate its
Residential
Lighting Program. Based partly on GSEC's statement that a
recent
study indicated significant market awareness and substantial
penetration in the market, Staff believes that the CFL
market is
mature and no longer needs subsidies in the form of
ratepayer-
funded lighting programs. Staff states that the program
promotes
a product that by GSEC's own definition has effectively met
the
goal of market transformation.
Staff identified its concern that dollars spent on
the
WasteCap ReCon program may be used to fund efforts beyond
energy
conservation; i.e., waste reduction, pollution prevention
and
water conservation. Although Staff does not question the
value
of the program, Staff questions whether electric ratepayers
should fund non-utility related programs. Additionally,
Staff
testified that any corporate contribution donated directly
to
WasteCap ReCon by GSEC would normally be treated as a
"below-the-
line" expense along with any dollars spent by GSEC on
outside
consultants needed to fulfill the utility's obligations to
the
WasteCap ReCon effort.
Regarding energy codes, it is Staff's opinion that
current funding levels within the Commission's overall
budget are
adequate for code-related training activities and that
additional
funding by ratepayers for this purpose is unwarranted.
IV. COMMISSION ANALYSIS
After careful review of the record in this docket,
we
find that the Offer of Partial Settlement filed by the
Parties
and Staff is reasonable and is in the public good and,
therefore,
we will approve it. The Partial Settlement resolved a
number of
issues in this docket and outlined the issues that the
Parties
and Staff were not able to resolve.
Before addressing the contested issues, the
Commission
notes that it intends to review the continuation of
shareholder
incentives associated with DSM programs. Although no Party
or
Staff contests either the recovery of an incentive or the
particular level, the Commission believes that it is
appropriate
for the Energy Efficiency Working Group, convened in Docket
DR 96-150, to address whether these types of shareholder
incentives continue to be appropriate as New Hampshire moves
forward to a restructured electric environment.
The shareholder incentive has been in place since
the
Commission originally approved it for GSEC in Order No.
19,905
(August 7, 1990). In accordance with its decision on GSEC's
settlement (Order No. 23,041 dated October 7, 1998) and the
establishment of the Energy Efficiency Working Group earlier
this
year, the Commission believes that it is appropriate to
direct
the Working Group, to the extent that they have not already
focused on it, to evaluate shareholder incentive programs
like
the one currently used by GSEC and recommend whether such
incentives continue to be appropriate, and if so, whether
the
specific incentive formula in place for GSEC requires
modification.
Overall, the shareholder incentive is a
significant
portion of GSEC's DSM budget. GSEC projects a shareholder
incentive of approximately $300,000 in relation to the
direct
program budget of $2.28 million. The Commission will allow
recovery of the shareholder incentive for 1998,
preliminarily
estimated to be $255,859, but withhold judgment on the 1999
shareholder incentive until the Working Group has an
opportunity
to review the shareholder incentive issue and to provide a
recommendation to the Commission.
In response to a proposal from ECS, GSEC proposed
to
spend $20,000 for energy codes -- $15,000 for a baseline
study
and training related to C/I building codes and an additional
$5,000 for residential training. Having reviewed the
responsibilities imposed on the Commission by RSA 155-D for
the
implementation of the code and training, the Commission will
approve what has been identified as additional spending for
building codes but specifically direct that any spending be
coordinated with the Commission's Energy Conservation
Coordinator.
GSEC ultimately agreed to continue the CFL bulb
rebates
within its Residential Lighting Program with an incremental
budget of $10,800. GSEC proposed a CFL bulb rebate of $9.00
to
be consistent with the rebate level its affiliates offer in
Rhode
Island and Massachusetts. We will approve the Residential
Lighting Program, as described in GSEC's October 5, 1998
filing,
with the addition of the $9.00 CFL bulb rebate. The rebates
encourage customers to shop for CFL bulbs in existing retail
outlets and promote a market-oriented approach to
expenditures on
energy efficiency products.
Three options were described at the hearing in
relation
to the Starlights Catalog offered through the Residential
Lighting Program: Staff recommended discontinuing it; GSEC
proposed a targeted direct mail to 5,000 customers; and ECS
proposed a direct mail to all of GSEC's residential
customers.
We will approve mailing the catalog to 5,000 customers and,
of
the 5,000, we direct GSEC to target approximately 1,000
catalogs
to each of four different customer groups (rural,
mid-income,
renters and low-income customers) so that the Commission can
examine the impact of the target mailing on the four
different
types of customers.
In response to ECS, GSEC proposed at the hearing
to
spend $10,000 towards the WasteCap ReCon program and provide
an
additional $2,000 cash contribution directly to WasteCap
ReCon.
Overall, the dollars earmarked for this program are
relatively
small. Beyond other services, the program will assist
businesses
in identifying energy efficiency opportunities and will use
a
"business-to-business model, which relies on volunteers from
within the business community to provide assistance to their
peers." We believe that the budget allocated to WasteCap
ReCon
for 1999 is appropriate but we will require GSEC to report
in its
2000 DSM program year filing on the exact amount of funds
expended and the impact on energy savings associated with
the
program. A legitimate concern raised at the hearing was
whether
the funds would actually be spent on energy conservation
matters.
The filing should address this concern. The Commission also
expects GSEC to report on the EPA grant which is part of the
WasteCap ReCon program.
Finally, we waive the application of N.H. Admin.
Rules,
Puc 1203.05(a), which requires generally that rate changes
be
implemented on a service-rendered basis, and will allow GSEC
to
implement its DSM adjustment factors on a bills-rendered
basis.
This waiver, pursuant to Puc 201.05, produces a result in
this
circumstance that is consistent with the principles embodied
in
Puc 1203.05(b), which sets forth exceptions for allowing
rate
changes on a bills-rendered basis, and is in the public
interest
because it eliminates consumer confusion and reduces
administrative costs.
Based upon the foregoing, it is hereby
ORDERED, that the proposed DSM programs, as
amended by
the Offer of Partial Settlement and our deliberations
described
above, are hereby APPROVED; and it is
FURTHER ORDERED, that the following DSM adjustment
factors shall be effective January 1, 1999 on a
bills-rendered
basis: Residential, $0.00165 per kilowatt-hour (kWh) and
C/I,
$0.00389 per kWh; and it is
FURTHER ORDERED, that the motions to intervene by
CLF,
ECS and DES are granted; and it is
FURTHER ORDERED, that GSEC shall file compliance
tariff
pages within ten days of the date of this order.
By order of the Public Utilities Commission of New
Hampshire this fourth day of January, 1999.
Douglas L. Patch Susan S. Geiger Nancy
Brockway
Chairman Commissioner
Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary