Case Background
On August 30, 2020,
the Commission issued an order approving Duke Energy Florida’s (DEF or Utility)
Demand-Side Management (DSM) Plan, and granted staff administrative authority
to approve the associated program participation standards. The DSM Plan included DEF’s Neighborhood
Energy Saver, Home Energy Check, and Residential Load Management programs. On
July 2, 2021, DEF petitioned the Commission for approval to modify these three
DSM programs.
According to
DEF’s petition, these modifications are pursuant to the Memorandum of
Understanding (MOU) that was entered into by DEF, Vote Solar, the Southern
Alliance for Clean Energy, and the CLEO Institute, as an agreement for the
counterparties to forgo their opportunity to petition to intervene in DEF’s limited
proceeding to approve its 2021 settlement agreement. The MOU was filed for informational
purposes only and is non-binding on the Commission.
The Neighborhood
Energy Saver program is a low-income residential program designed to assist
neighborhoods where approximately 50 percent of households have incomes equal
to or less than 200 percent of the poverty level. As part of this program, DEF
or a third-party contractor will install energy conservation measures
identified through an energy assessment of the customers’ homes, and customers
will receive energy education materials. The program conservation measures
include energy efficient lighting, air sealing-infiltration control, water
heater insulation wrap and hot water pipe insulation, water conservation shower
heads and faucet aerators, heating, ventilation, and air conditioning (HVAC)
filters, indoor wall thermometer, ceiling insulation upgrade, HVAC maintenance/tune
up, duct repair, smart power strips, high efficiency heat pumps, high
efficiency room air conditioners, and high efficiency central air conditioning.
DEF is requesting approval to increase the program participation projection by
an incremental 250 customers per year from 2022 to 2024.
The Home Energy
Check program is a residential energy audit program that provides all program
participants with an analysis of their energy consumption, and provides
educational information on how to reduce energy usage to save money. Part of
this program involves a home inspection to identify actions that the customer
might take to reduce their energy consumption, and another part includes the
distribution of energy efficiency kits. These kits include two 17-foot rolls of
adhesive weather strip, a 10-pack of switch and outlet gaskets, a hot water
gauge, a digital refrigerator thermometer, two nine-watt LED light bulbs, two
faucet aerators, and one energy efficient showerhead. DEF is requesting
approval to provide additional “Assistance Kits” to up to 20,000 low-income
program participants per year from 2021 to 2024.
The Residential
Load Management program is a residential demand response program where
customers voluntarily allow DEF to reduce demand by controlling service to
selected electrical equipment in a customer’s home. As part of this program,
customers are provided with a monthly credit that varies depending on the
number of load management devices the customer has installed and their usage.
DEF is requesting approval to provide $30 gift cards to up to 1,000 low-income
program participants, with accounts that are more than 60 days in arrears, each
year from 2021 to 2022.
Staff notes
that, based on DEF’s DSM Annual Report for Calendar Year 2020, DEF surpassed
its combined megawatt (MW) and gigawatt-hour (GWH) goals for 2020. Specifically, DEF exceeded its combined summer
peak, winter peak, and annual energy goals by 168 percent (40 MW), 45 percent
(17 MW), and 395 percent (60 GWH), respectively.
On August 6,
2021, DEF petitioned the Commission for approval of its actual and estimated
conservation cost recovery clause expenditures for 2021 and 2022 in the Energy
Conservation Cost Recovery (ECCR) clause docket (Docket No. 20210002-EI),
including the incremental expenses of the proposed program modifications
described above. The Commission approved ECCR cost recovery
clause factors for DEF on November 17, 2021, including recovery of $955,503 in
estimated incremental costs of these proposed program modifications. These projected costs are subject to
adjustment in the 2022 ECCR docket, and DEF
would be expected to address in its ECCR true-up filings any over- or
under-recovery of the associated costs based on, among other things, the
Commission’s decision in this docket.
The Commission
has jurisdiction over this matter pursuant to Sections 366.80 through 366.83
and 403.519, Florida Statutes (F.S.), collectively known as the Florida Energy
Efficiency and Conservation Act (FEECA).
Discussion
of Issues
Issue 1:
Should the Commission approve, for cost recovery
purposes, the modifications to DEF’s demand-side management plan and
participation standards as requested in its petition?
Recommendation:
No. The modification to the Home Energy Check
program should not be approved for cost recovery purposes because the
modification is not cost-effective. The modification to the Residential Load
Management program should not be approved for cost recovery purposes because
the gift cards do not contribute to demand savings. However, this
recommendation does not preclude DEF from making the modifications requested,
and having the associated costs borne by its shareholders.
The Commission need not take any action at this time regarding
the proposed modification to adjust the forecasted participation in the
Neighborhood Energy Saver program because there is no participation cap on this
program. If DEF chooses to modify this program’s marketing efforts in order to
increase participation in the specified years, it would be more appropriate for
the Commission to review the associated costs in the ECCR Clause proceeding.
(Thompson, Barrett)
Staff Analysis:
Staff notes that the MOU discussed in the case
background is the impetus for DEF’s requested modifications to its Neighborhood
Energy Saver, Home Energy Check, and Residential Load Management programs. The
MOU was filed for informational purposes only and is non-binding on the
Commission. These modifications were brought before the Commission in a
petition to modify DSM programs; as such, the criteria used to review the
appropriateness of DSM programs are: (1) whether the program advances the
policy objectives of FEECA and its implementing rules; (2) whether the program
is directly monitorable and yields measureable results; and (3) whether the
program is cost-effective.[6] Staff has
reviewed DEF’s petition and has evaluated the requested program modifications
based upon these criteria.
Neighborhood Energy Saver Program
DEF requests to modify its low-income Neighborhood Energy
Saver program to increase the projected program participation by an incremental
250 customers per year from 2022 to 2024. This value was determined through
discussions with DEF’s program management team about potential neighborhoods,
and the ability of the field team to handle the additional workload. The
additional program expense for this program modification is $249,253 for 2022.
The request to increase the program participation by an
incremental 250 participants from 2022 through 2024 is not a modification that
requires Commission approval as there is currently no participation cap on this
program. Program participation is voluntary, and utilities are responsible for
marketing and monitoring these participation rates as necessary in order to
meet the goals established by the Commission. This has been discussed in prior
orders approving DSM programs as shown below:
The values presented above are DEF’s projections based
upon participation rates which may or may not occur. DEF will be responsible
for monitoring actual participation rates and seeking our approval, if
necessary, to modify, add, or remove programs. If DEF is unable to meet our
approved goals, the Company may be subject to appropriate action, up to and
including financial penalties.
Therefore, if DEF chooses to modify this program’s
marketing in the specified years, it may do so, and the associated costs would
be more appropriately reviewed in the ECCR Clause proceeding.
Home Energy Check Program
DEF requests to modify its Home Energy Check program to
provide “Assistance Kits” to up to 20,000 low-income customers per year from 2021
to 2024 that complete either an online or walk-through home energy audit. These
kits would be in addition to the kits that are currently provided to program
participants who receive either the walk-through, online, or phone-assisted
audit, and would include measures that have less than a two-year payback. The
measures to be included in the “Assistance Kits” are three nine-watt LED light
bulbs, a smart power strip, and hot water pipe insulation. The additional
program expense for this program modification is $517,000 for 2022. No program
expense has been incurred in 2021. However, if this modification is approved,
DEF intends to extend the implementation of the “Assistance Kits” from 2021
through 2024, to 2022 through 2025.
The additional low-income customer “Assistance Kits”
requested for inclusion in this program might otherwise meet the intent of
FEECA in regard to helping to reduce the growth rate of peak demand and
electricity consumption. However, staff recommends they not be allowed for cost
recovery for two reasons.
First, because energy audits are required to be provided
to all residential customers pursuant to statute, cost-effectiveness
test results were not provided for this requested program modification. However,
in response to Staff’s First Data Request, No. 13, DEF stated, “None of the
measures included in the “Assistance Kit” are cost-effective under the RIM test
but will pass on meaningful bill savings to the recipients.” In
addition, there is no statutory requirement to target a particular class of
customers in the offering of audits. Section 366.82(11), F.S., specifically
states the following regarding the requirement to provide audits:
The commission shall require each utility to offer,
or to contract to offer, energy audits to its residential customers. This
requirement need not be uniform, but may be based on such factors as level of
usage, geographic location, or any other reasonable criterion, so long as all
eligible customers are notified. The commission may extend this requirement to
some or all commercial customers.
Second, DEF currently has a low-income program in place,
the Neighborhood Energy Saver program, in which the additional “Assistance
Kits” may have been more appropriately included. In the Neighborhood Energy
Saver program, DEF or a third-party contractor installs energy conservation
measures identified through an energy assessment of customers’ homes, and
customers receive energy education materials. Although the kits may be more
appropriate for inclusion in the current low-income Neighborhood Energy Saver
program, this does not negate the fact that the kits are not cost-effective. In
addition, the measures proposed for inclusion in the “Assistance Kits” are
already included in either DEF’s Home Energy Check or Neighborhood Energy Saver
program.
Based upon the reasons discussed above, staff does not
recommend that the costs associated with the additional “Assistance Kits” be
approved for cost recovery from the general body of ratepayers as part of DEF’s
Home Energy Check or Neighborhood Energy Saver programs. This does not preclude
DEF from providing these “Assistance Kits” as part of either program at DEF’s
shareholders’ expense.
Residential Load Management Program
DEF requests to modify its Residential Load Management
program to provide $30 gift cards to up to 1,000 low-income program
participants, with accounts that are more than 60 days in arrears, each year
from 2021 to 2022, for a total of up to $60 per customer. DEF states that these
gift cards could help customers pay their energy bills, and allow DEF to
maintain the demand response resources associated with low-income program
participants.The additional program
expense is $30,000 for 2022. No program expense has been incurred in 2021.
However, if this modification is approved, DEF intends to make two annual $30 gift cards available to eligible
customers following approval.
In response to Staff’s First Data Request, DEF indicated
that customers have 21 calendar days to pay their bills. If payment is not
received within this time frame, late notices are generated which provide five
working calendar days to pay before a customer is eligible to be disconnected.
The amount of outstanding liability, length of service, and credit history with
the Utility aid in determining whether a residential cut-out ticket will
automatically be generated. Delinquent accounts that are not automatically
eligible for a cut-out appear on DEF’s Cut List for review. Manual reviews are
done between day one and day five of the account appearing eligible for cut. As
of August 20, 2021, DEF had made a total of 117,661 customer disconnections
since January 7, 2021, or 0.8 percent of DEF’s total number of billed accounts.
As inferred by the above, DEF retains discretion with regard to customer
disconnections.
All participants in the Residential Load Management
program receive a monthly bill credit of up to $14.00 for allowing DEF to
control service to specific electrical equipment during peak hours. The amount
of this credit depends on usage, billing months, and which interruption
schedules customers select. This program specifically serves to allow DEF to
reduce its peak demand.
As noted above, DEF believes providing these gift cards
could help those customers pay their energy bills, and allow DEF to maintain
the demand response resources associated with these participants. However,
staff believes that the offering of gift cards (or a bill credit) in no way advances
the policy objectives of FEECA. Unlike the current credits being offered, for
allowing DEF to control service to specific electrical equipment during peak
hours, the gift card offering does not contribute to demand savings. While DEF
may argue the modification could allow it to maintain demand response resources
with this group of customers, the argument is flawed for several reasons.
First, the gift cards can be used for purposes other than bill relief. Second,
customers may leave the program at any time, including the day after they
receive their gift card. Third, DEF’s customer arrearages average more than
$30.
Therefore, the gift card, even if used toward the customer’s bill, is unlikely
to have a meaningful impact upon the amounts owed in arrears, and will not halt
a disconnection or retain the customer as a program participant. Therefore, the
gift cards would not guarantee continued demand savings from these customer
resources.
Regarding the savings associated with the up to 1,000 existing
program participants that would potentially be retained as a result of the gift
cards, this results in approximately 1.43 MW or 0.36 percent of the program’s
total projected annual summer demand savings, and approximately 2.03 MW or 0.29
percent of the program’s total projected annual winter demand savings, based on
the savings values provided in DEF’s petition. Therefore, if the demand
response resources associated with these participants were lost, this would not
have a large impact on the program’s demand savings.
Due to the reasons discussed above, these gift cards
should be considered charitable contributions, which are not costs that should
be borne by the general body of ratepayers. As with the requested Home Energy
Check program modification, this does not preclude DEF from having the costs
associated with the gift cards borne by its shareholders. Furthermore, there
are other resources for DEF’s customers in need of financial assistance. For
example, DEF’s Energy Neighbor Fund combines donations from DEF’s employees and
customers, and the Duke Energy Foundation matches these donations up to
$500,000, and provides the proceeds to DEF’s Energy Neighbor Fund agency
partners. DEF provides customers in need with agency contact information
through inbound calls to its Customer Care Center, through its website, and
through outbound awareness campaigns. DEF can also reach out to agencies
directly with the customer’s permission, and inform the customer of which
agencies DEF is contacting on their behalf. Resources of this nature would be
proper avenues for providing voluntary financial assistance to customers in
need.
Conclusion
The modification to the Home Energy Check program should
not be approved for cost recovery purposes because the modification is not
cost-effective. The modification to the Residential Load Management program
should not be approved for cost recovery purposes because the gift cards do not
contribute to demand savings. However, this recommendation does not preclude
DEF from making the modifications requested, and having the associated costs
borne by its shareholders.
The Commission need not take any action at this time regarding
the proposed modification to adjust the forecasted participation in the
Neighborhood Energy Saver program because there is no participation cap on this
program. If DEF chooses to modify this program’s marketing efforts in order to
increase participation in the specified years, it would be more appropriate for
the Commission to review the associated costs in the ECCR Clause proceeding.
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 PAA Order, a Consummating Order should be issued and the docket
should be closed. (Trierweiler)
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 PAA Order, a Consummating Order should be issued and the docket
should be closed.
