Two recent State Corporation Commission rulings on utility-sponsored energy efficiency and demand management programs produced contrary results for the applicants but a consistent theme of SCC skepticism in the absence of hard data and a demand for more data going forward.
The SCC last week approved all eleven new or continued programs proposed by Dominion Energy Virginia, which will cost its customers up to $226 million over five years. That May 2 opinion is here. But an April 30 opinion (here) rejected much of a similar request from Washington Gas and Light, citing a lack of specific results data from that company’s customers.
The Dominion application has been the focus of previous Bacon’s Rebellion stories, including one highlighting an illuminating report generated to answer a judge’s question from the bench about costs and results.
Because of the 2018 Ratepayer Bill Transformation Act, the programs now need to pass only three of the four standard cost-benefit tests listed in the Code of Virginia. The test many stumble on is the Ratepayer Impact Measure (or RIM test), which indicates whether the program is of general benefit to all the utility’s customers, not just those participating. The Commission took judicial notice of the impact:
Senate Bill 966 (“SB 966”), passed during the 2018 Virginia General Assembly regular session, mandates that any energy efficiency program passing three of four specific cost-benefit tests must be found to be “in the public interest” and approved by this Commission, Dominion’s proposed Phase VII programs pass three of the four tests; therefore, the law has pre-determined that these programs are in the public interest and that they shall be approved.
Another hot case issue and focus for Bacon’s Rebellion involved whether and when Dominion can collect compensation for revenue lost to these conservation programs, and the SCC punted that to the Dominion’s expected overall rate review in 2021. The SCC was looking at one Code section dictating lost revenue recovery and but silence on the question in the 2018 bill. “The General Assembly,” it broadly hinted, “will have ample opportunity to clarify its legislative intent” by 2021.
The same three-tests-out-of-four standard is also applied to natural gas conservation programs, covered by a different part of Code. Washington Gas and Light argued its proposals passed three out of four, but in some cases it did so with data from industry data manuals and not results from its own customers.
It sought approval of seven new or continued programs and four were rejected. The costs and customer numbers involved are lower, with $5.2 million approved over three years, but they work the same way as with the electric utilities. All ratepayers are hit with an extra charge on their bill to pay for providing energy efficient equipment or advice to a subset of customers. In the natural gas realm these are referred to as the CARE Plan, for Conservation and Ratemaking Efficiency. Based on their descriptions, they were very similar to Dominion’s proposals.
WGL argued in its final brief (here) that the staff was mistaken to reject industry-wide results in the technical manuals as evidence of future success and noted some of the programs involved are new with few participants so far, not enough for valid measurements yet.
The Commission should not deny the continuation of Washington Gas’s Residential Home Equipment, Commercial Direct Install and Commercial Heating Equipment Programs as the Company needs more time to collect and analyze statistically significant participant data in past program years….There are valid reasons why Washington Gas did not include EM&V results in the savings assumptions of the cost benefit analysis for some of its programs, it wrote.
The reasons were not enumerated in the record, which is far smaller than the paper-monster that the Dominion case became. Only the SCC staff commented on the WGL application. Future cases are likely to remain complex, with the SCC basically setting the same standard for WGL in one case that it set for Dominion in the other. Here is how it summarized the requirement in the WGL decision:
Finally, any subsequent request by WGL to amend the CARE Plan approved herein, or to implement a new CARE Plan, shall: (a) incorporate the results from the annual reports required herein; (b) provide measured and verified evidence of energy savings to support any request to continue or modify programs designed for low-income or elderly customers; and (c) provide measured and verified evidence of energy savings and cost-effectiveness to support any request to continue or modify other programs approved herein and in the currently-approved CARE Plan. For clarification, the third requirement above means the Company shall use independently verified net benefits, including natural gas savings, as inputs in the Company’s cost/benefit analysis….
And for Dominion:
We direct that Dominion shall file, in every future rate adjustment clause proceeding under Code § 56-585.1 A 5, evidence of the actual energy savings achieved as a result of each specific program for which cost recovery is sought, along with revised cost-benefit tests that incorporate actual Virginia energy savings and cost data. We further direct Staff to investigate each such filing, to analyze the program-specific evidence on actual energy savings and the proximate cause thereof, and to report on its findings.
Unless or until, of course, some future General Assembly sets new rules. Plenty of legislators without regard to party have proven quite willing to use Customer A’s money to provide a major benefit to Customer B, with some profit for the utility and the service contractor added in and no evidence required it helped anybody else.
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