Discussion
of Issues
Issue 1:
Are the Company’s proposed goals based on an
adequate assessment of the full technical potential of all available
demand-side and supply-side conservation and efficiency measures, including
demand-side renewable energy systems?
Recommendation:
Yes. PGS has analyzed the maximum
system-wide therm savings theoretically possible from implementation of DSM
measures commercially available in Florida. As such,
staff recommends that the updated Technical Potential seen in Table 1-1
is an adequate assessment of the full technical potential, and serves as an acceptable
basis for the Company’s annual therm savings goals. (Wright, Doehling, Wu)
Staff Analysis:
Section 366.82(3), F.S., requires the Commission, in
developing conservation goals, evaluate the technical potential of all
available DSM measures applicable to a utility’s system. To facilitate this
evaluation, PGS has provided an analysis of the maximum system-wide therm
savings theoretically possible from implementation of DSM measures, regardless
of cost and other barriers that may prevent installation or adoption. Staff has
evaluated the development of this therm savings analysis, termed the Technical
Potential, by reviewing each of its four parts: (1) the
identification of the DSM measures to be evaluated; (2)
the calculation of the theoretical per-site therm savings for each DSM measure;
(3) the calculation of the system-wide therm savings for each DSM measure; and (4)
the determination of system-wide therm savings in consideration of measure
interactions.
DSM Measure Identification
PGS identified the DSM measures
for inclusion in the Technical Potential by first compiling a list of
technologies known to the Company to be commercially available in Florida that,
when applied in a residential, commercial, or industrial setting, yield reductions
in the use of natural gas. The Company then compared this list against other
utility, state, and federal technical potential studies and technical reference
manuals to identify any missing measures. Those measures found to be missing
were filtered by commercial availability in Florida before being added to the
list of DSM measures evaluated in PGS’ Technical Potential. Ultimately, 31
residential, 29 commercial, and 22 industrial measures addressing water
heating, cooking, HVAC, laundry, and industrial process use-cases were
evaluated.
Staff recommends that the methodology used to compile the list of DSM measures
evaluated in PGS’ Technical Potential is adequate.
Per-Site DSM Measure Savings
PGS calculated theoretical
per-site therm savings for each DSM measure. Similar to the methodology used by
electric FEECA utilities, only the savings from new, replaced, or retrofitted
measures that surpassed those savings based on minimum appliance energy
efficiencies in the Florida Building Code or the associated Federal Appliance
Efficiency Standards, whichever greater, were counted. Energy consumption
parameters used in savings calculations were derived from a combination of
state and national industry sources, current building code and appliance
standards, and a review of historical DSM program activity. In response to
staff-issued data requests, the Company provided updated theoretical per-site therm
savings. Staff recommends that the methodology used by PGS in the updated
calculations adequately assesses the theoretical per-site therm savings of the
DSM measures evaluated.
System-wide DSM Measure Savings
PGS calculated system-wide
theoretical therm savings on a per-measure basis by applying the per-site therm
savings (which were previously calculated) to modified counts of its
sector-specific customer populations (applicable populations). The Company
utilized the 2019 residential and small-commercial population projections,
discussed in Issue 2, as the basis for both sectors’ applicable population. The
basis of the applicable population for industrial DSM measures, however, was a
simple count of PGS’ 62 industrial and large commercial customers. PGS then
modified the baseline applicable populations for each DSM measure to account
for existing measure prevalence and incompatibility with a customer’s premises,
as indicated by the Company’s recent residential equipment market survey and a
review of the characteristics of its commercial and industrial customer populations.
Staff recommends that the methodology used by PGS to calculate system-wide
theoretical therm savings on a per-measure basis is adequate.
Consideration of Measure Interactions
To arrive at its final determination of the Technical
Potential, PGS took into account measure interactions, overlapping effects, and
potential rebound effects when combining the system-wide therm savings of all evaluated
DSM measures. The Company approached adjustments for measure interactions by selecting
DSM measure input assumptions that would maximize the Technical Potential.
Similarly, PGS addressed overlapping effects by including in the final sum only
those DSM measures that resulted in the maximum Technical Potential. PGS
examined the potential for rebound effects in its development of the Technical
Potential, but did not find any supporting evidence. Staff recommends that PGS
took adequate consideration of measure interaction, overlapping effects, and
potential rebound effects in its final determination of the Technical
Potential. Using the updated therm savings calculations, PGS developed the
Technical Potential seen in Table 1-1.
Table 1-1
2019 Technical Potential
|
Sector
|
Therm Savings
|
|
Residential
|
60,134,211
|
|
Commercial
|
150,064,380
|
|
Industrial
|
246,275,380
|
|
Total
|
456,473,972
|
Source: Document No. 03158-2019
Conclusion
PGS has analyzed the maximum
system-wide therm savings theoretically possible from implementation of DSM
measures commercially available in Florida. As such,
staff recommends that the updated Technical Potential seen in Table 1-1
is an adequate assessment of the full technical potential, and serves as an
acceptable basis for the Company’s annual therm savings goals.
Issue 2:
What residential and
commercial annual therm savings goals should be established for the period
2019-2028?
Recommendation:
Staff recommends that the Commission establish the
annual therm savings seen in Table 2-1 as PGS’ annual conservation goals for
the period 2019-2028. The Company’s proposed conservation goals adequately
address the considerations enumerated in Section 366.82(3), F.S. (Wright,
Doehling, Wooten, Wu)
Staff Analysis:
Section 366.82(2), F.S., requires the Commission to
adopt appropriate conservation goals to promote energy efficiency and the
development of DSM programs. Section 366.82(3), F.S., states that, in
establishing these goals, the Commission shall take into consideration: (1) the
costs and benefits to customers participating in a program; (2) the costs and
benefits to the general body of ratepayers; (3) the need for incentives to
promote both customer-owned and utility-owned energy efficiency and demand-side
renewable energy systems; and (4) the costs imposed by state and federal
regulations on the emission of greenhouse gases.
PGS has proposed annual
conservation goals for the years 2019-2028 which focus on achieving overall
therm usage reductions at residential and small-commercial end-use sites. The
Company has based these goals on achievable therm savings from its portfolio of
current Commission-approved DSM programs. The residential DSM programs
were approved by the Commission in 2010,
and the commercial programs were approved by the Commission in 2014. These programs are comprised of eight residential and ten small-commercial
DSM measures, which each implement use-specific energy-saving technology at
natural gas points-of-use throughout a customer’s property. Because the
Company’s DSM programs serve as the basis for its proposed annual conservation
goals, staff first reviewed these programs, taking into consideration
those factors enumerated in Section 366.82(3), F.S.
Staff then evaluated the development of PGS’ proposed achievable therm savings
by reviewing each of its three parts: (1) the projection of DSM measure
participation over the years 2019-2028; (2) the calculation of achievable
per-site therm savings for each DSM measure; and (3) the projection of
achievable annual therm savings over the 2019-2028 period. Staff notes that PGS
did not propose conservation goals, nor has incorporated any DSM measures, into
its DSM portfolio for large commercial or industrial customers. This is because
these customers are entirely either natural gas fired cogenerators or
interruptible customers and, per Order No. 23576, these two rate classes are
excluded from cost recovery through the ECCR clause.
Benefits and Costs to Participants and the
General Body of Ratepayers
Section 366.82(3)(a), F.S., requires the Commission take
into consideration the costs and benefits to customers participating in a
program. Section 366.82(3)(b), F.S., requires the Commission take into
consideration the costs and benefits to the general body of ratepayers as a
whole, including utility incentives and participant contributions. Per Rule
25-17.009, F.A.C., utilities seeking cost recovery for an existing, new, or
modified demand side management program must file the cost effectiveness test
results of the Participants Test and the Rate Impact Measure Test. The
Participants Test measures the impact of a program on the participating
customers. In 2010 and 2014, all PGS residential and commercial programs passed
the Participants Test with scores above 1.0.,
The Gas Rate Impact Measure (Gas RIM) Test, a modified version of the Rate
Impact Measure Test specific to natural gas utilities, is an indirect measure
of the program impact on customer rates that addresses utility incentives and
participation. In 2010 and 2014, all PGS residential and commercial programs
passed the Gas RIM with scores above 1.0.,
Therefore, staff recommends that both Sections 366.82(3)(a) and (b), F.S., are
adequately addressed by the proposed DSM goals.
Need for Incentives
Section 366.82(3)(c), F.S., requires the Commission take
into consideration the need for incentives to promote both customer-owned and
utility-owned energy efficiency and demand-side renewable energy systems. As
stated previously, the proposed DSM goals are based upon PGS’ current
Commission approved DSM programs. The current residential DSM programs were
approved in 2010, and the Commission found that the cash incentive allowances
were cost-effective and did not impose an undue rate impact on PGS customers’
monthly bills. The current commercial DSM programs were approved in 2014, when
the Commission also found the incentive levels of these programs appropriate.
The design of the incentives for both residential and commercial programs
included consideration of free ridership and, thus, balanced incentive
effectiveness with the ability of these programs to contribute to the defrayal
of the costs associated with the installation of natural gas supply lines,
internal piping, venting and equipment. Therefore, staff recommends that
Section 366.82(3)(c), F.S., is adequately addressed by the proposed DSM goals.
Greenhouse Gas Emissions
Section 366.82(3)(d), F.S., requires the Commission take
into consideration the costs imposed by state and federal regulations on the
emission of greenhouse gases. Currently, there are no costs imposed by state
and federal regulations on the emissions of greenhouse gases. Pursuant to
Section 366.82(6), F.S., the Commission has the authority to change conservation
goals for a reasonable cause. Once compliance costs associated with any
regulations on the emission of greenhouse gases are established, the Commission
may review and, if appropriate, modify goals.
Projection of DSM Measure Participation
PGS began the process of forecasting DSM measure
participation by analyzing customer growth rates. Each of the Company’s 14
divisions maintains both a residential and a small-commercial customer model
developed using Itron’s MetrixND forecasting tool. These models primarily use
population growth as inputs to forecast division-specific customer growth, with
additional variables used to adjust for customer seasonality, unexpected
events, and other variations. PGS combined the customer growth projections of each
of its divisions to derive a total residential and small-commercial customer forecast
for the years 2019-2028. Yearly growth rates were derived from the composite
projections. Residential customers are projected to grow at an average rate of 2.17
percent per year over the 2019-2028 period, while over the same period,
commercial customers are expected to grow at an average yearly rate of 2.48
percent. PGS states that yearly growth rates calculated in this manner have
historically approximated the growth in yearly participation rates of the
Company’s DSM measures. Accordingly, PGS used these customer growth rates to
escalate DSM measure participation through the 2019-2028 period. This method
assumes that as the customer population grows, the number of customers enrolled
in DSM measures will increase proportionally. After reviewing the information
presented, including the major assumptions, key data sources and criteria
utilized to develop and evaluate its customer forecast, staff recommends that
PGS’ forecasting method and the resulting customer forecast is appropriate for
use in DSM goal setting in the instant docket.
Achievable Per-Site
DSM Measure Savings
PGS next calculated achievable per-site therm savings for
each DSM measure currently found in its DSM program portfolio. Similar to the
methodology used in the Technical Potential discussed in Issue 1, only the
savings from measure implementation that exceeded those savings based on minimum
appliance energy efficiencies in the Florida Building Code or the associated
Federal Appliance Efficiency Standards, whichever greater, were counted. Energy
consumption parameters used in DSM measure savings calculations were derived
from a combination of state and national industry sources, responses to customer
surveys, and a review of historical DSM program activity. In response to
staff-issued data requests, the Company provided updated achievable per-site therm
savings. Staff recommends that the methodology used by PGS in the updated
calculations, as well as the incorporation of marketplace forces into the
determination of achievable therm savings, result in per-site savings that
adequately represent those savings likely to come from real-world
implementation of the DSM measures considered.
Achievable Annual Therm
Savings
By
combining projected yearly DSM measure participation with the updated DSM
measure achievable per-site therm savings, PGS derived achievable annual therm
savings over the 2019-2028 period. These savings can be seen in Table 2-1, alongside
a cumulative count of projected savings, and are the Company’s proposed annual conservation
goals for the period 2019-2028. Staff recommends that the Commission establish
the annual therm savings seen in Table 2-1 as PGS’ annual conservation goals
for the period 2019-2028.
Table 2-1
2019-2028 Achievable Therm
Savings For All Current DSM Measures
|
Year
|
Residential
|
Small-commercial
|
Combined
|
|
Yearly
|
Cumulative
|
Yearly
|
Cumulative
|
Yearly
|
Cumulative
|
|
2019
|
338,439
|
338,439
|
216,155
|
216,155
|
554,594
|
554,594
|
|
2020
|
347,108
|
685,548
|
222,062
|
438,217
|
569,170
|
1,123,764
|
|
2021
|
355,569
|
1,041,116
|
227,968
|
666,184
|
583,537
|
1,707,301
|
|
2022
|
363,728
|
1,404,845
|
233,833
|
900,017
|
597,561
|
2,304,862
|
|
2023
|
371,562
|
1,776,406
|
239,661
|
1,139,678
|
611,222
|
2,916,084
|
|
2024
|
379,045
|
2,155,451
|
245,457
|
1,385,135
|
624,502
|
3,540,586
|
|
2025
|
386,682
|
2,542,133
|
251,338
|
1,636,473
|
638,019
|
4,178,605
|
|
2026
|
394,475
|
2,936,608
|
257,304
|
1,893,777
|
651,779
|
4,830,385
|
|
2027
|
402,429
|
3,339,037
|
263,357
|
2,157,134
|
665,786
|
5,496,171
|
|
2028
|
410,546
|
3,749,583
|
269,500
|
2,426,634
|
680,046
|
6,176,217
|
Source: Document No. 03158-2019
Other Matters
PGS has indicated that, because these savings are based
upon current Commission-approved DSM programs, the net effect of establishing
these savings as DSM goals for PGS is zero additional cost to customers,
excluding those costs associated with the new Residential Customer Assisted
Energy Audit and the Commercial Walk-Through Energy Audit, discussed in Issue 3.
The Company intends to review its DSM goals every five years, with the next
review to occur in 2023, to align it with the Commission’s periodic conservation
goals review as required by Section 366.82(6), F.S. Additionally, PGS will
provide annual DSM reports on the achievements of incremental natural gas therm
savings by March 1 of each year.
Staff intends to monitor these annual reports in an effort to refine the
natural gas goal-setting process used in this proceeding.
Conclusion
Staff recommends that the Commission establish the annual
therm savings seen in Table 2-1 as PGS’ annual conservation goals for the
period 2019-2028. The Company’s proposed conservation goals adequately address
the considerations enumerated in Section 366.82(3), F.S.
Issue 3:
Should the Commission approve the Company’s new
residential and commercial audit programs?
Recommendation:
Yes. The scope of both the
Residential Customer Assisted Energy Audit and the Commercial Walk-Through
Energy Audit meet the requirements established by FEECA. Accordingly, PGS
should be allowed recovery of reasonable and prudent expenditures
associated with these programs through the ECCR clause. (Wright, Doehling)
Staff Analysis:
Pursuant to Section
366.82(11), F.S., the Commission requires FEECA utilities to offer energy
audits to its residential customers. The Commission may extend the audit
program requirement to some or all commercial customers. PGS has proposed two new audit programs: (1) the Residential Customer Assisted
Energy Audit (RA), and (2) the Commercial Walk-Through Energy Audit (CA). Staff
has analyzed the scope of these audits and preliminary estimates of their
administrative costs on a per-audit basis.
Audit Scope
Both the RA and CA are designed
to increase customer awareness of natural gas energy use on their premises, and
are offered for free to all existing PGS customers of the appropriate rate
class that are located within PGS’ service area.
The RA is an online energy audit that combines responses to survey questions
with either historical or customer-entered natural gas energy usage to provide
personalized conservation recommendations. The CA is a walk-through energy
audit conducted by a trained commercial energy auditor who inspects the
equipment and systems utilized in a customer’s facility, and recommends a
tailored list of energy conservation programs aimed at increasing the
customer’s overall efficiency. Both audits facilitate customer participation in
PGS’ DSM programs. Program descriptions and standards for both audits can be
found in Attachment A of this recommendation.
Audit Costs
Staff performed a preliminary
analysis of the administrative costs, on a per-audit basis, of both audit
programs and believes them to be reasonably comparable to other utilities’
audit program costs. However, staff notes that the determination of reasonable
and prudent expenditures should occur within ECCR clause proceedings, and that
this preliminary analysis was performed for informational purposes only. PGS
has indicated that, given program approval, audit expenses and participation
will be reported to the Commission through its annual FEECA DSM and ECCR
filings.
Conclusion
The scope of both the RA and the
CA meet the requirements established by FEECA. Accordingly, PGS should be
allowed recovery of reasonable and prudent expenditures associated with
these programs through the ECCR clause.
Issue 4:
Should this docket be closed?
Recommendation:
Yes. If no person whose substantial interests are
affected by the proposed agency action (PAA) files a protest within 21 days of
the issuance of the PAA Order, a Consummating Order should be issued and the docket
should be closed. If the Commission approves the proposed Residential Customer Assisted Energy Audit and the
Commercial Walk-Through Energy Audit programs, those programs should
become effective on the date of the Consummating Order. If a protest is filed
within 21 days of the issuance of the PAA Order, the programs should not be
implemented until after the resolution of the protest. Within 90 days of the
issuance of the final order, PGS should file a demand-side management plan
designed to meet the Utility’s approved goals. (DuVal, Dziechciarz)
Staff Analysis:
If no person whose substantial interests are
affected by the proposed agency action (PAA) files a protest within 21 days of
the issuance of the PAA Order, a Consummating Order should be issued and the
docket should be closed. If the Commission approves the proposed RA and CA programs, those programs should become
effective on the date of the Consummating Order. If a protest is filed within
21 days of the issuance of the PAA Order, the programs should not be
implemented until after the resolution of the protest. Within 90 days of the
issuance of the final order, PGS should file a demand-side management plan
designed to meet the Utility’s approved goals.
