Order 15633 - Blackstone Valley & Newport Elec.: Conservation & Load Mgmt Adjustment

 

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS

PUBLIC UTILITIES COMMISSION

REPORT AND ORDER

On November 24, 1997, the Blackstone Valley Electric Company ("BVE") and the Newport Electric Corporation ("Newport") (jointly, "the Companies") filed with the Public Utilities Commission ("Commission") a stipulation executed by the members of the Rhode Island Collaborative ("Collaborative")  [1 The Collaborative consists of representatives of the Companies, the Division of Public Utilities and Carriers ("Division"), the Conservation Law Foundation ("CLF"), and the Energy Council-Rhode Island ("TEC-RI"). It met regularly throughout 1997 to discuss and evaluate the Companies' C&LM programs.]  resolving all issues amongst themselves and describing their joint proposal for the Company's 1998 Conservation and Load Management ("C&LM") Program. On February 17, 1998, the Commission issued Order No. 15542 and Order No. 15543, approving the Stipulation, as modified by the Commission during open meeting. However, the Commission observed that several programs or budget items required future approval before implementation. These included:

- Renewables: specific program spending for the proposed $550,827 budget, other than for the photovoltaic and wind projects approved following the December hearing

- Residential Programs: Efficient Appliances Program

- Incentives: Threshold levels.

To facilitate the decision-making process, a technical conference was scheduled on February 11, 1998. Several presentations on the utilities' residential appliance programs were made. Excellent supplementary information was made available as to what was being proposed and why.

During an open meeting conducted on February 25, 1998, the commissioners agreed that the efficient clothes washer ("ECW") program offers environmental benefits, particularly water savings, but at a significant cost. There was a concern that the ECW would provide a rebate to affluent customers, who might well elect to purchase such a high-end machine simply on the strength of its environmental benefits -- much as certain customers in neighboring jurisdictions have been willing to pay a premium for so-called "Green Power".

While one of the commissioners was willing to allocate some money to the ECW program, her preference was to spend more for programs, such as energy efficient windows and doors, which provide a benefit across the socioeconomic spectrum. The other commissioners disagreed, noting that the major ECW manufacturer had raised its prices to take advantage of market demand. A decision to authorize ECW rebates might simply contribute to that manufacturer's excess profits. Moreover, the subsidy would be an attempt by government to influence corporate business decisions. Given these concerns, the Commission voted to disallow the ECW program.

A further open meeting was conducted on March 17, 1998. It was noted that the Efficient Appliance Program is funded by the United States Department of Energy and the United States Environmental Protection Agency. Significant federal funds are being expended for this program across the nation. The Commission expressed some concern about spending ratepayer money for a program that is already in place. The existing program includes an advertising and promotion effort. Although the proponents argued that local funding is necessary to augment the federal program, the Commission determined that energy conservation spending could be better utilized elsewhere. Therefore, utility spending for the Efficient Appliance Program was denied.

The Commission deferred further action on funding for renewables, pending a further technical session during which the prospective projects could be addressed in detail.

On May 11, 1998, the Companies filed a letter indicating their compliance with the Commission's directives regarding renewables and modification of the shareholder incentives. The target incentive for BVE in 1998 is capped at $136,358; for Newport, the incentive is capped at $61,460. A threshold of performance below which the Companies will earn no incentive is set at 45% of the target energy savings. Incentives are earned in a linear fashion for each kWh saved over the threshold until the cap is reached.  [2 There are two circumstances which would necessitate the recalculation of the threshold and the incentive rate for a particular program. First, if money is transferred from one program budget to another, the threshold and incentive rate for both programs would be readjusted, as would each of the caps. Second, an adjustment will be made at the end of the year in both Large C&I Retrofit and C&I Construction to adjust the threshold and incentive rate by any change in the ratio of spending budgets to commitments budgets from those filed in the original stipulation. The Companies will not receive an incentive for commitments.]

They also proposed certain revisions to their 1998 budgets, based on the Commission's open meeting decision not to approve the Efficient Appliance Program proposed for 1998. The Companies opted to reallocate the money budgeted for the program to two other residential programs, the Residential Efficiency Service Program and the Residential Efficient Lighting Program. At an open meeting conducted on May 26, 1998, the Commission approved these budget reallocations.

Accordingly, it is

(15633) ORDERED:

1. No Conservation & Load Management funds may be allocated to the Efficient Appliance Program.

2. Funding for renewables projects, other than those previously approved in Order No. 15542 and Order No. 15543, shall continue to be held in escrow pending further order of the Commission.

3. The funds which were to be devoted to the Efficient Appliances Program are reallocated to the Residential Efficiency Service Program and the Residential Efficient Lighting Programs.

4. The Compliance Letter filed by the Companies on May 11, 1998, is hereby accepted.

EFFECTIVE AT PROVIDENCE PURSUANT TO OPEN MEETING DECISIONS ON FEBRUARY 25, MARCH 17, AND MAY 26, 1998. WRITTEN ORDER ISSUED JULY 9, 1998.

PUBLIC UTILITIES COMMISSION