Order 15542 - Newport Elec.: Conservation Cost Adjustment Clause

 

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS

PUBLIC UTILITIES COMMISSION

REPORT AND ORDER

On November 21, 1997, the Newport Electric Corporation ("Newport" or "Company") filed with the Public Utilities Commission ("Commission") a Stipulation jointly submitted by Newport, the Blackstone Valley Electric Company, the Conservation Law Foundation ("CLF"), and the Division of Public Utilities and Carriers ("Division") regarding the EUA companies' 1998 conservation and load management ("C&LM") programs.  [1 The Stipulation, attached and incorporated herein as Appendix A, was admitted as Joint Ex. 1.]  The Stipulation proposes to continue to collect $.0023 per kilowatt-hour ("kWh"), as required by the Utility Restructuring Act of 1996 ("Act").

The Collaborative's 1998 filing budgets $1,401,070  [2 Including performance incentives, the total budget is $1,462,530.] to continue Newport's 1997 C&LM and renewables programs, and proposes to implement three new programs for residential customers: a program to serve low-income customers, a program to encourage customers to purchase energy-efficient appliances, and a computer-based home energy audit pilot program. For renewable energy resources, the Stipulation proposes that Newport continue its work with the Rhode Island Renewables Collaborative,  [3 The Renewables Collaborative includes all of the Collaborative participants, as well as the Narragansett Electric Company ("Narragansett") and the Pascoag Fire District.] which has identified several projects to be pursued in Rhode Island.

Newport reported a 1996 C&LM fund balance of $164,219, as a result of projects which were actually completed below committed levels, or ultimately canceled. The Company proposed to refund this sum to customers. The projected 1997 C&LM fund balance is $213,330. The Stipulation proposed to apply this balance to the 1998 program.

The Commission held a public hearing on December 9, 1997 at 100 Orange Street in Providence. The following appearances were entered:

FOR NEWPORT:                    David A. Fazzone, Esq.

FOR THE DIVISION:             Elizabeth A. Kelleher, Special Assistant Attorney General

FOR CLF:                               Mark E. Bennett, Esq.

FOR THE COMMISSION:     Adrienne G. Southgate, General Counsel

The Stipulation was presented through Carol S. White, Manager of C&LM Services for the EUA Service Corporation, and Dr. Jonathan Raab, the Division's consultant. Ms. White noted that although the Northeast Energy Efficiency Council and TEC-RI were not formal participants in the docket, they were members of the Collaborative and do not oppose the Stipulation.

All of the programs proposed for 1998 are designed to overcome market barriers to energy efficiency. Essentially, they encourage customers to take actions which would not otherwise be undertaken in the absence of the utilities' programs. They also promote market transformation, provide opportunities for efficiency investments in all customer segments, and avoid the potential for lost opportunities.

The continuing C&LM programs include the Large Commercial and Industrial Retrofit Program; the Small and Medium Commercial and Industrial Retrofit Program; the Commercial and Industrial Efficient Construction Program; a program for residential customers (renamed Residential Efficiency Services Program); a Residential Construction Program; and a Residential Efficient Lighting Program.

Dr. Raab pointed out that 1998 will be the first year in which the EUA System Companies would be allowed to earn a C&LM incentive. Although they participated in the Lost Base Revenue program during 1997, prior to that year, they were not compensated in any way for lost sales or for cost-effective conservation. The maximum incentive that Newport may earn in 1998 is $61,460. The incentive cannot exceed 4.75% of the approved C&LM program budget, excluding program evaluation expenses. The threshold has been set at 37.5% of the program energy savings goals, and incentives are earned for each program for each kWh over the threshold up to the cap on incentive earnings.

Dr. Raab explained that the Newport Efficient Appliance Program goes beyond clothes washers to include other appliances such as dishwashers and potentially refrigerators. However, the program has not been fully designed at this time. It is anticipated that it will be ready for launch on Earth Day, 1998, coincident with commencement of the regional initiative of the Northeast Energy Efficiency Partnerships, the Consortium for Energy Efficiency, and the DOE/EPA Energy Star Program.

The Renewables Collaborative projects are to be undertaken jointly with Narragansett, and the bulk of the money is "unflagged" at this time; only two projects have been definitely selected. Newport's portion of the renewables budget is $91,170. The budget allocation has not been finalized, however. It is dependent on the location of the renewable energy project and the relative value of the project for each company, as well as the total available budget. Dr. Raab noted that, for example, a potential fuel cell project is located in EUA's service territory, so more of its costs might be allocated to EUA.

During cross-examination, the issue surfaced that the EUA companies are spending a larger percentage of their C&LM budget on renewables, as compared to Narragansett's C&LM budget. Dr. Raab testified that the total renewables budget for EUA was "still less" than Narragansett's budget; the percentage disparity gives the EUA companies the capability of doing a large project within their service territories. Also, the EUA companies could afford to target more money to renewables.

At an open meeting conducted on December 17, 1997, the docket was discussed at length. The Commission has supported C&LM in Rhode Island for many years, and that support has mitigated capacity problems through implementation of cost-effective programs and resulted in significant savings of energy and dollars for consumers. Indeed, the Collaborative has a proud record of innovative program development. These programs have significant costs. If incentives are included to make C&LM more palatable to the incumbent utility, it is essential to verify the kWh savings. This leads to higher administrative costs.

The Commission noted that the settlement process has produced an "all or nothing" package, which contains many excellent and time-tested C&LM programs. However, some programs may require further development; and in other cases, additional information will be required before funds can be allocated for those programs.

To give the parties as much direction as possible, the Commission identified those programs which it could unequivocally support, anticipating continued discussion and specific feedback early in 1998 so that all constituencies can agree upon the best array of C&LM programs.

In light of the record, the Commission found the proposed C&LM factor of $.0023 to be in compliance with the Act. The commercial and industrial C&LM programs, the previously approved residential programs (including the proposed low-income program), and the photovoltaic and wind renewables projects, all described in the Stipulation, are reasonable, in the best interests of the rate payers, and supported by the evidence. The following programs or budget items require future Commission approval before implementation:

- Renewables: specific program spending for projects other than the residential rooftop photovoltaic project and the wind turbine project

- Residential Programs: Efficient Appliance Program; Computer-based Home Energy Audit Pilot Program

- Incentives: Threshold level.

Accordingly, it is

(15542) ORDERED:

1. The Stipulation of the Parties delineating Newport Electric's 1998 C&LM Programs, as modified by the Commission during open meeting, is hereby approved.

2. The Newport Electric Corporation's proposed Conservation and Load Management Adjustment factor of $.0023 per kilowatt-hour is hereby approved for application in the billing months of January through December, 1998.

3. The Parties shall act in accordance with all other findings and instructions contained within this Report and Order.

EFFECTIVE AT PROVIDENCE ON JANUARY 1, 1998 PURSUANT TO A DECEMBER 17, 1997 OPEN MEETING DECISION. WRITTEN ORDER ISSUED APRIL 1, 1998.

PUBLIC UTILITIES COMMISSION