Case Background
Enacted in 1980,
Sections 366.80 through 366.83, and 403.519, Florida Statutes (F.S.), known
collectively as the Florida Energy Efficiency and Conservation Act (FEECA),
requires the Florida Public Service Commission (Commission) to adopt
conservation goals to increase the efficiency of energy consumption.
Additionally, FEECA emphasizes reducing the growth rates of weather-sensitive
peak demand, reducing and controlling the growth rates of electricity
consumption, reducing the consumption of expensive resources such as petroleum
fuels, and encouraging demand-side renewable energy resources. The Commission
most recently established conservation goals for Peoples Gas System (PGS or
Utility) by Order No. PSC-2019-0361-PAA-GU, issued
August 26, 2019 (2019 Goalsetting Order).[1]
Pursuant to
Section 366.82(7), F.S., after goals are established, the Commission shall
require each utility subject to FEECA to develop a demand-side management (DSM)
plan to meet the conservation goals. On November 20, 2019, PGS filed a petition
requesting approval of its original DSM Plan. As part of this filing, PGS provided
a cost-effectiveness analysis of the proposed programs pursuant to Rule
25-17.009, Florida Administrative Code (F.A.C.). The cost-effectiveness
analysis includes the Gas Rate Impact Measure (G-RIM) Test and the Participants
Test.
Staff issued
multiple data requests to PGS regarding the original DSM Plan, which featured
individual programs per measure. In June 2020, the Utility informed staff of
its intention to refile its original petition in order to revise its proposed
programs. On February 26, 2021, PGS filed its revised petition, regrouping the
programs included in the original petition to more closely reflect the programs
used to establish the Utility’s conservation goals in the 2019 Goalsetting
Order. As part of its February 2021 filing, PGS provided an updated
cost-effectiveness analysis for the revised programs, and provided the program
administrative standards.
The Commission
has jurisdiction over this matter pursuant to Sections 366.80 through 366.83
and 403.519, F.S.
Discussion
of Issues
Issue 1:
Should the Commission
approve Peoples Gas Systems’ proposed DSM Plan and program standards?
Recommendation:
Yes. The DSM Plan proposed by PGS is projected to
exceed the annual numeric conservation goals approved by the Commission in the
2019 Goalsetting Order. PGS’s proposed DSM Plan is primarily a continuation,
with some minor modifications, of its preliminary DSM portfolio used to
establish the goals approved by the Commission in 2019 Goalsetting Order. The
programs within PGS’s proposed DSM Plan are projected to be cost-effective
based upon both the G-RIM and Participants Tests.
Therefore, staff recommends that the Commission should
allow PGS to file for cost recovery of the programs included in its proposed DSM
Plan in the Natural Gas Conservation Cost Recovery (NGCCR) proceeding. However,
PGS must demonstrate that the expenditures to implement its DSM programs are
reasonable and prudent in order to recover those expenditures.
PGS also submitted its administrative program standards
with its proposed DSM Plan. Staff has reviewed PGS’s
administrative program standards and recommends that they are consistent
with the Utility’s proposed DSM Plan submitted for approval by the Commission. Staff
requests that PGS notify the Commission prior to any changes being made to the
program standards as filed. (Thompson)
Staff Analysis:
The
criteria used to review the appropriateness of the conservation programs are as
follows: (1) whether the
program advances the policy objectives of FEECA and its implementing rules; (2)
whether the program is directly monitorable and yields measurable results; and
(3) whether the program is cost-effective.[2]
Staff has reviewed PGS’s proposed DSM Plan, including its energy savings,
cost-effectiveness, and rate impact. PGS’s proposed DSM Plan exceeds the goals
set in the 2019 Goalsetting Order, and should be approved.
Description of DSM Plan
PGS’s proposed
DSM Plan consists of 11 programs in total, 4 residential and 7 commercial/industrial.
Some of these programs have been renamed, but otherwise, they are essentially
continuations of PGS’s existing programs. As required by Rule 25-17.003,
F.A.C., and as approved in the 2019 Goalsetting Order, PGS’s proposed DSM Plan
now offers energy audits to residential customers, and PGS also now voluntarily
offers audits to commercial/industrial customers. Table 1-1 provides a complete
list of the programs and the program status (modified or new). A description of
each program can be found in Attachment A.
Table
1-1
PGS DSM Plan Program Listing
|
Program
Name
|
Program
Status
|
|
Modified
|
New
|
|
Residential
Programs
|
|
Residential Customer Assisted Energy
Audit
|
|
X
|
|
Residential New Construction
|
X
|
|
|
Residential Retrofit
|
X
|
|
|
Residential Retention
|
X
|
|
|
Commercial/Industrial
Programs
|
|
Commercial Walk-Through Energy Audit
|
|
X
|
|
Commercial New Construction
|
X
|
|
|
Commercial Retrofit
|
X
|
|
|
Commercial Retrofit Combined Heat and Power (CHP)
|
X
|
|
|
Commercial Retrofit Electric Replacement
|
X
|
|
|
Commercial Retention
|
X
|
|
|
Conservation Research and Development (R&D)
|
X
|
|
Source: Document No. 02477-2021
PGS’s
proposed DSM Plan features two audit programs: the Residential Customer
Assisted Energy Audit and the Commercial Walk-Through Energy Audit. PGS
received approval in the 2019 Goalsetting Order to add these programs to ensure
that the full requirements of FEECA are being met.
The primary changes made to the modified programs were
renaming, and updates to the rebate levels available within the programs. Programs
that will be replacing electric systems/equipment with energy-efficient natural
gas systems/equipment will now be referred to as “Retrofit” for clarity as opposed
to “Replacement” as previously named. PGS will continue to use the term
“Retention,” which is the replacement of existing natural gas systems/equipment
with energy efficient natural gas systems/equipment. As an example of a rebate
update, PGS increased the rebate amount for the dryer in the Residential
Retention Program from $100 to $150.
The other changes
made to the modified programs are as follows: (1) Gas Space Conditioning was
added as a measure to the respective residential and commercial retrofit and
retention programs instead of continuing as a singular program; (2) the Oil
Heat Replacement program was eliminated due to low historical participation
totals; (3) the Commercial Retention CHP program was eliminated due to its
failure to achieve cost-effectiveness; and (4) for the Conservation R&D
program, PGS combined its existing
Monitoring and Research program with its Conservation Demonstration and
Development program to become a single Conservation R&D program.
PGS also
submitted its administrative program standards along with its proposed DSM
Plan, which can be found in Attachment B. Staff has reviewed the administrative
program standards and they appear consistent with the Utility’s proposed DSM Plan.
Program
Participation
PGS projects
program participation based on historical program participation trends. The
projected annual program participation for each program in PGS’s proposed DSM Plan
is provided in Table 1-2.
Table 1-2
PGS’s DSM Plan Annual Program Participation
by Program
|
Program Name
|
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
2027
|
2028
|
|
Residential
Programs
|
|
Residential
Customer Assisted Energy Audit
|
4,500
|
4,500
|
4,500
|
4,500
|
4,500
|
4,500
|
4,500
|
4,500
|
|
Residential New Construction
|
8,700
|
8,900
|
9,000
|
9,100
|
9,200
|
9,300
|
9,400
|
9,500
|
|
Residential Retrofit
|
2,420
|
2,514
|
2,558
|
2,641
|
2,699
|
2,767
|
2,825
|
2,910
|
|
Residential Retention
|
16,400
|
16,916
|
17,332
|
17,709
|
18,061
|
18,448
|
18,800
|
19,326
|
|
Commercial
Programs
|
|
Commercial Walk-Through Energy Audit
|
500
|
500
|
500
|
500
|
500
|
500
|
500
|
500
|
|
Commercial New Construction
|
96
|
100
|
103
|
105
|
109
|
112
|
114
|
116
|
|
Commercial Retrofit
|
88
|
90
|
92
|
95
|
96
|
99
|
101
|
104
|
|
Commercial Retrofit CHP
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Commercial Retrofit Electric Replacement
|
1
|
1
|
1
|
1
|
1
|
1
|
1
|
1
|
|
Commercial Retention
|
293
|
300
|
307
|
314
|
321
|
328
|
336
|
345
|
Source:
Document No. 02477-2021
As seen in
Table 1-2, the Commercial Retrofit Combined Heat and Power (CHP) program is
projected to have zero participation. PGS forecasted zero participation for
this DSM program based upon the program’s historical participation rate. PGS
believes that participation will increase in this program as commercial customers
seek technologies to reduce energy costs and greenhouse gas emissions. CHP
technologies improve energy efficiency since the energy is produced at the
point of use, and involves the recovery of thermal energy that would otherwise
be wasted. The Utility modified the Commercial Retrofit CHP program to clarify what
qualifies for the incentive. The Utility also proposed an increase to the
incentive, and added the requirement to offset some amount of gas usages. PGS
believes these modifications will attract participation to this DSM program.
Comparison
of DSM Plan to Goals
As in the 2019 Goalsetting Order, PGS estimated program
savings through a combination of state and national industry sources, current
building code and appliance standards, and a review of historical DSM program
activity. Based on
staff’s review and as shown in Table 1-3, PGS’s proposed DSM Plan will exceed
the Commission’s established annual goals. The annual
energy savings associated with PGS’s proposed DSM Plan and the Commission’s
established goals are summarized in Table 1-3 for the residential and commercial/industrial
sectors.
Table 1-3
Commission’s
Goals vs. PGS’s DSM Plan
|
Year
|
Residential
(Therms)
|
Commercial
(Therms)
|
|
Goal
|
DSM
Plan
|
Goal
|
DSM
Plan
|
|
2021
|
355,569
|
373,753
|
227,968
|
245,612
|
|
2022
|
363,728
|
383,682
|
233,833
|
251,869
|
|
2023
|
371,562
|
389,725
|
239,661
|
258,120
|
|
2024
|
379,045
|
395,866
|
245,457
|
264,386
|
|
2025
|
386,682
|
401,594
|
251,338
|
270,678
|
|
2026
|
394,475
|
407,663
|
257,304
|
277,076
|
|
2027
|
402,429
|
413,392
|
263,357
|
283,612
|
|
2028
|
410,546
|
420,592
|
269,500
|
290,246
|
|
Total
|
3,749,583
|
3,904,732
|
2,426,634
|
2,613,791
|
Source:
Document No. 02477-2021
The values
presented above are projections based upon participation rates which may or may
not occur. PGS will be responsible for monitoring actual participation rates
and seeking Commission action, if necessary, to modify, add, or remove
programs. If PGS is unable to meet the Commission’s goals, the Utility may be
subject to appropriate action by the Commission, up to and including financial
penalties.
Section
366.82(10), F.S., requires the Commission to provide an annual report to the
Governor and Legislature on the progress of each utility toward meeting the
established goals. PGS will continue to submit to the Commission an annual
report no later than March 1 of each year, summarizing the achievements of its
DSM Plan. Staff will continue to monitor and report the actual amount of DSM
savings each year, on an annual and cumulative basis, as part of the FEECA
Report.
Cost-Effectiveness Review
As required by Rule 25-17.009, F.A.C., PGS provided a cost-effectiveness
analysis of the proposed programs using the G-RIM and the Participants Tests.
Below, staff addresses PGS’s results of its cost-effectiveness analysis.
Cost-Effectiveness Test Results
All of PGS’s proposed programs pass both the G-RIM and
Participants Tests. These tests consist of the program benefits divided by the
program costs so that programs are determined to be cost-effective if the
result of the test is a ratio greater than 1.00. The data PGS used to develop the
costs associated with the cost-effectiveness tests was obtained from PGS’s
current costs in facilitating existing programs, and from costs currently
incurred by the Utility and customers for energy efficient natural gas
equipment and infrastructure. The cost-effectiveness test results for each
program are provided in Table 1-4.
Table 1-4
PGS’s DSM Plan Cost-Effectiveness Test
Results by Program
|
Program Name
|
G-RIM
Test
|
Participants
Test
|
|
Residential
Programs
|
|
Residential New Construction
|
1.502
|
1.041
|
|
Residential Retrofit
|
1.321
|
1.103
|
|
Residential Retention
|
1.412
|
1.579
|
|
Commercial
Programs
|
|
Commercial New Construction
|
2.871
|
1.098
|
|
Commercial Retrofit
|
3.326
|
1.316
|
|
Commercial Retrofit CHP
|
2.225
|
1.846
|
|
Commercial Retrofit Electric Replacement
|
4.404
|
1.218
|
|
Commercial Retention
|
1.009
|
4.094
|
Source: Document No. 02477-2021
Rate Impact
Staff reviewed the projected
program costs for PGS’s proposed DSM Plan. Table 1-5 shows the total projected
program costs for each program in PGS’s proposed DSM Plan. PGS projects that
the total cost for its proposed DSM Plan will be approximately $190 million.
Table 1-5
Total Program Costs of PGS’s DSM Plan
|
Program
Name
|
Program
Costs
|
|
Residential
Programs
|
|
Residential
Customer Assisted Energy Audit
|
$1,725,000
|
|
Residential New Construction
|
$100,928,500
|
|
Residential Retrofit
|
$10,153,221
|
|
Residential Retention
|
$62,804,741
|
|
Commercial/Industrial
Programs
|
|
Commercial Walk-Through Energy Audit
|
$720,000
|
|
Commercial New Construction
|
$1,990,514
|
|
Commercial Retrofit
|
$4,450,111
|
|
Commercial Retrofit CHP
|
$0
|
|
Commercial Retrofit Electric Replacement
|
$80,000
|
|
Commercial Retention
|
$6,060,429
|
|
Conservation R&D
|
$1,000,000
|
Source: Document No. 03066-2021
As shown in Table 1-5, PGS
projects zero program costs for the Commercial Retrofit CHP program due the
zero projected program participation previously discussed. However, staff
recommends that PGS should update the Commission on program costs and all other
relevant program information should program participation be achieved.
If approved, the cost to
implement PGS’s proposed DSM Plan would flow through to the ratepayers through
the NGCCR proceeding. In the NGCCR proceeding, PGS would file annually for
recovery of incentives, and equipment and administrative costs. The NGCCR amounts
represent a monthly bill impact to customers as part of the non-fuel cost of
energy charges on their bills. Much like investments in generation,
transmission, and distribution, investments in energy efficiency have an
immediate rate impact, but may produce savings over time.
Table 1-6
is an estimate of the monthly bill impact on a typical residential and
commercial customer for PGS’s proposed DSM Plan. The estimated NGCCR
factors are based upon the participation rates and administrative costs used in
the cost-effectiveness analysis discussed above and are not final.
Table 1-6
PGS’s
Estimated Monthly Bill Impact of Proposed DSM Plan
|
Year
|
Residential
Customer
20
Therms/mo
|
Commercial
Customer
1,500
Therms/mo
|
|
Monthly
Bill Impact ($)
|
|
2021
|
1.81
|
28.73
|
|
2022
|
2.03
|
32.24
|
|
2023
|
2.01
|
31.85
|
|
2024
|
1.98
|
31.42
|
|
2025
|
1.95
|
30.99
|
|
2026
|
1.93
|
30.57
|
|
2027
|
1.90
|
30.13
|
|
2028
|
1.88
|
29.78
|
Source:
Document No. 03066-2021
Conclusion
The DSM Plan proposed by PGS is projected to exceed the
annual numeric conservation goals approved by the Commission in the 2019
Goalsetting Order. PGS’s proposed DSM Plan is primarily a continuation, with
some minor modifications, of its preliminary DSM portfolio used to establish the
goals approved by the Commission in 2019 Goalsetting Order. The programs within
PGS’s proposed DSM Plan are projected to be cost-effective based upon both the G-RIM
and Participants Tests.
Therefore, staff recommends that the Commission should
allow PGS to file for cost recovery of the programs included in its proposed DSM
Plan in the NGCCR proceeding. However, PGS must demonstrate that the expenditures
to implement its DSM programs are reasonable and prudent in order to recover
those expenditures.
PGS also submitted its administrative program standards
with its proposed DSM Plan. Staff has reviewed PGS’s administrative program
standards and recommends that they are consistent with the Utility’s proposed DSM
Plan submitted for approval by the Commission. Staff requests that PGS notify
the Commission prior to any changes being made to the program standards as filed.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no person whose
substantial interests are affected by the proposed agency action files a
protest within 21 days of the issuance of the order, this docket should be
closed upon the issuance of a consummating order. (Weisenfeld)
Staff Analysis:
If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, this docket should be closed upon the issuance of a
consummating order.
Peoples Gas System
Residential
Programs
Residential Customer-Assisted Energy Audit
The Residential Customer-Assisted
Energy Audit Program allows for residential customers to engage in an online
energy audit.
Residential
New Construction
The Residential
New Construction Program offers rebates to builders and developers who construct new single family and
multi-family homes with the installation of energy efficient natural gas
appliances.
|
Natural Gas
Appliance/System
|
Incentive/Appliance
Installation
|
|
Dryer
|
$200
|
|
Range/Cooktop
|
$300
|
|
Tank Water Heater
|
$550
|
|
ENERGY STAR Tank
Water Heater
|
$650
|
|
Tankless Water
Heater
|
$700
|
|
Central Heating
|
$725
|
Residential
Retrofit
The Residential
Retrofit Program offers rebates to current and new natural
gas customers who replace electric equipment with new, energy efficient natural
gas equipment.
|
Natural Gas
Appliance/System
|
Incentive/Appliance
Installation
|
|
Dryer
|
$200
|
|
Range/Cooktop
|
$300
|
|
Tank Water Heater
|
$550
|
|
ENERGY STAR Tank
Water Heater
|
$650
|
|
Tankless Water
Heater
|
$700
|
|
Central Heating
|
$725
|
|
Space Heater
|
$65
|
|
Space Conditioner
|
$500/ton
|
Residential
Retention
The Residential
Retention Program offers rebates to current natural
gas customers who replace less efficient natural gas equipment with new, energy
efficient natural gas equipment.
|
Natural Gas Appliance/System
|
Incentive/Appliance Installation
|
|
Range/Cooktop
|
$100
|
|
Dryer
|
$150
|
|
Tank Water Heater
|
$350
|
|
ENERGY STAR Tank Water Heater
|
$400
|
|
Central Heating
|
$500
|
|
Tankless Water Heater
|
$550
|
|
Space Conditioner
|
$150/ton
|
Commercial
Programs
Commercial
Walk-Through Energy Audit
In the Commercial
Walk-Through Energy Audit Program, an audit is conducted by a trained
commercial energy analyst who will provide tailored recommendations to encourage
the customer to implement cost-effective measures.
Commercial New Construction
The Commercial
New Construction Program offers rebates to builders and developers who construct
commercial and industrial facilities with the installation of energy efficient
natural gas appliances.
|
Natural Gas
Appliance/System
|
Incentive/Appliance
Installation
|
|
Range/Cooktop
|
$2,000
|
|
Dryer
|
$2,500
|
|
ENERGY STAR Tank
Water Heater
|
$2,500
|
|
Fryer
|
$3,500
|
|
Tankless Water
Heater
|
$3,500
|
Commercial
Retrofit
The Commercial
Retrofit Program offers rebates to current and new natural gas customers who
replace electric equipment with new, energy efficient natural gas equipment.
|
Natural Gas
Appliance/System
|
Incentive/Appliance
Installation
|
|
Range/Cooktop
|
$2,000
|
|
Dryer
|
$2,500
|
|
Tank Water Heater
|
$2,500
|
|
Fryer
|
$3,500
|
|
Tankless Water
Heater
|
$3,500
|
|
Space Conditioner
|
$500/ton
|
Commercial
Retrofit Combined Heat and Power
The Commercial
Retrofit Combined Heat and Power Program offers customer rebates for installing
new, energy-efficient natural gas combined heat and power equipment to utilize
waste heat to displace portions of natural gas usage for on-site heating, cooling,
and water heating.
·
Maximum Incentive: $300/kW of actual electric
demand reduced of installed combined heat and power equipment
Commercial
Retrofit Electric Replacement
The Commercial
Retrofit Electric Replacement Program offers rebates to current and new natural gas customers who install new, energy efficient
natural gas equipment.
·
Maximum Incentive: $100/kW reduction for
qualifying natural gas equipment
Commercial
Retention
The Commercial
Retention Program offers rebates to current natural
gas customers who replace less efficient natural gas equipment with new, energy
efficient natural gas equipment.
|
Natural Gas
Appliance/System
|
Incentive/Appliance
Installation
|
|
Range/Cooktop
|
$1,500
|
|
Tank Water Heater
|
$1,500
|
|
Dryer
|
$2,000
|
|
Tankless Water
Heater
|
$2,000
|
|
Fryer
|
$3,000
|
|
Space Conditioner
|
$150/ton
|
Research and Development
Conservation
Research and Development (R&D)
The Conservation R&D Program allows PGS
to explore DSM measures that have insufficient data on cost-effectiveness, and
the impact on PGS and its ratepayers. Program costs are estimated at
$125,000 per year for a five-year period; however, the total program cost shall
not exceed $500,000 for the five-year period.
[1]Order No. PSC-2019-0361-PAA-GU, issued August 26,
2019, in Docket No. 20180186-GU, In re:
Petition for approval of demand side management goals and residential customer
assisted and commercial walk-through energy audit programs, by Peoples Gas
System.
[2]PSC Order No. 22176, issued November 14, 1989, in
Docket No. 19890737-PU, In re: Implementation
of Section 366.80-.85, F.S., Conservation Activities of Electric and Natural
Gas Utilities.
