BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO PROCEEDING NO. 18A - G IN THE MATTER OF THE VERIFIED COMBINED APPLICATION OF BLACK HILLS/COLORADO GAS UTILITY COMPANY, LP D/B/A BLACK HILLS ENERGY FOR (1) APPROVAL OF ITS ANNUAL GAS DEMAND SIDE MANAGEMENT COST ADJUSTMENT TO TAKE EFFECT ON JULY 1, 2018 AND (2) APPROVAL OF ITS 2017 GAS DEMAND SIDE MANAGEMENT BONUS TO TAKE EFFECT ON JULY 1, VERIFIED COMBINED APPLICATION Black Hills/Colorado Gas Utility Company, LP ( BHCOG or Company ), by its undersigned attorney, respectfully requests: 1. Pursuant to Rules 4002(b), 4752(b), 4757 and 4758, approval of the Company s revised annual Gas Demand Side Management Cost Adjustment ( G-DSMCA ) to take effect on July 1, 2018 for a period of 12 months ( G-DSMCA Application ). 2. Pursuant to Rules 4002(b), 4752(b), 4754(f) through (j), and 4760, approval of the Company s 2017 Gas Demand Side Management Bonus ( G-DSM Bonus ) to take effect on July 1, 2018, for a period of 12 months, as part of the G-DSMCA factor ( G-Bonus Application ). 1 The G-DSMCA factor proposed in this Combined Application has been calculated to include the requested G-DSM Bonus. 3. If approved, this filing will, from July 1, 2018 through June 30, 2019, increase the G-DSMCA factor for the Company s residential customers from 8.77% to 11.41% and decrease 1 The G-DSMCA Application and the G-Bonus Application will be referred to, collectively, as the Combined Application.

2 the G-DSMCA factor for the Company s non-residential customers from 27.35% to 20.04%. 2 In support of this Combined Application, the Company states as follows: I. Background 4. The Company filed its Gas Demand Side Management ( DSM ) Application in Proceeding No. 14A-0488G on May 15, On June 12, 2014, the Colorado Energy Office ( CEO ) filed a Notice of Intervention by Right. CEO did not request a hearing and cited its statutory duty to administer the State s Low Income Energy Assistance Fund. Since the Application was uncontested, the Gas DSM Plan was approved by the Public Utilities Commission of the State of Colorado ( Commission ) through Decision No. C , mailed on July 2, As reflected in the 2017 DSM Annual Report filed in Proceeding No. 14A-0488G contemporaneously herewith (the 2017 DSM Annual Report ), the DSM Plan performed well during calendar year 2017, which was the third year under the DSM Plan. In 2017, the DSM Plan expended 123% of its budget, had an overall Modified Total Resource Cost Test ( mtrc ) result of 1.10 with the Low-Income Program and a mtrc result of 1.11 excluding the Low- Income Program. The DSM Plan, in 2017, also achieved 80,242 Dth savings (which was 142% of goal). 2 Pursuant to Rule 4752(b), both the G-DSMCA Application and the G-Bonus Application are required to be filed on April 1 st of each year. In addition, pursuant to Rule 4760(c), the Commission is to render a decision approving or disapproving the request for bonus within three months after receiving the G-DSM bonus filing. Thus, pursuant to the Commission s Rules, the G-DSMCA Application and the G-Bonus Application are subject to the same time schedule, which allows the G-DSMCA factor that goes into effect on July 1 to include within its calculation an approved bonus. Note, however that Rule 4760 appears to be inconsistent with Rule 4752(b)(I), which states that [t]he DSMCA shall take effect July 1 of each year... Rule 4760, in its introductory paragraph, states that, with respect to a gas DSM bonus application, the Commission s determination shall be made within 120 days after receiving the G-DSM bonus application [and] [a]ny such bonus shall be authorized as a supplement to the DSMCA cost adjustment mechanism... 2

3 II. G-DSMCA Application 6. The G-DSMCA Application constitutes BHCOG s filing to revise the annual G-DSMCA factor to take effect on July 1, 2018 for a period of 12 months. In order to provide for the continued funding of BHCOG s gas DSM programs, the revised annual G-DSMCA factor seeks to recover: (a) BHCOG s prudently incurred costs of gas DSM programs within the DSM Plan s expenditure target and 125% budget flexibility permitted by Rule 4753(k); 3 (b) unrecovered deferred G-DSMCA costs; (c) the calculated lost revenue amount; and (d) the requested G-DSM Bonus of $54,807. The Company s 2018 budget of $2,241,700 under the new Combined DSM Plan, as approved by Decision No. R issued in Proceeding No. 17A-0272G, is also incorporated into the DSMCA calculation. 7. The Company wishes to continue to recover the costs of its gas DSM programs through the annual G-DSMCA factor, rather than through filing a rate case to set new base rates for that purpose. 8. In support of the revised annual G-DSMCA factor, the Company has attached schedules to this Combined Application that include the information required by Rule 4758 in sufficient detail to permit the Commission to determine the accuracy of the G-DSMCA calculations. 4 The following Schedules are attached hereto and filed with the Commission as part of this Combined Application: 3 Rule 4753(k) provides in part: A utility may spend more than the annual expenditure target established by the Commission up to twenty-five percent over the target, without being required to submit a proposed DSM plan amendment. 4 Rule 4758(b)(VII) is not applicable since BHCOG does not propose to recover any gas DSM costs by rate base treatment. 3

4 Schedule Description Applicable Rule Schedule 1 Calculation of the G- Rule 4758(b)(I): The detailed calculation of the DSMCA G-DSMCA for each customer class based on the Schedule 2 Summary of Cost & general formula and requirements set forth in this Recovery subsection of Rule Schedule 3 Summary of Estimated 2018 Expenditures Rule 4758(b)(IV): A schedule detailing the Schedule 4 Summary of Actual allocation of costs to each customer class Expenditures Schedule 5 Colorado G-DSMCA Recoveries Schedule 6 Interest Calculation Rule 4758(b)(II): A detailed schedule showing the computation of interest, as applicable, to deferred amounts. Schedule 7 Impact of Proposed Rule 4758(b)(III): The absolute and percentage Rates impact of the proposed rate on the base rates and on the total monthly bills of typical customers in each customer class. Schedule 8 Customer Notice Rule 4758(b)(V): Proposed customer notice Redlined Schedule 9 Schedule 9 Redlined Tariff Sheets Tariff Sheets (Clean) detailing rate impact and effective date. Rule 4758(b)(VI): Proposed tariff implementing the proposed G-DSMCA. Schedule 10 Work papers Rule 4758(a)(II): As part of its application for approval of its G-DSMCA, the applicant shall file a complete set of work papers and all other documents relied on in preparing its application. The 2017 DSM Annual Report, including its attachments, contains additional information in support of the G-DSMCA as well as the requested G-DSM Bonus. The 2017 DSM Annual Report and its attachments are incorporated herein by reference, but the Executive Summary portion of the 2017 DSM Annual Report is attached hereto as Schedule In the G-DSMCA Application and the attached tariff sheets contained in Schedule 9, the Company proposes a change in the annual G-DSMCA factor, calculated separately for residential and non-residential customers, pursuant to Rule 4757(m). Using the dollar per therm 4

5 lost revenue values, as approved by the Commission in Decision No. C , 5 and the annualized therms saved, the Company developed a lost revenue amount for inclusion in the annual G-DSMCA factor (Schedule 2). The Company also calculated interest on over- or underrecovery, pursuant to Rule 4757(l) (Schedule 6). 10. BHCOG requests that the annual G-DSMCA factor (which is inclusive of the requested $54,807 G-DSM Bonus requested in this Combined Application) be increased from 8.77% to 11.41% for residential customers and decreased from 27.35% to 20.04% for nonresidential Sales Service customers (Schedules 1 and 9), and that the resulting G-DSMCA $/month and G-DSMCA $/therm rates shown on Sheet 5 in Schedule 9, as well as the G- DSMCA factors shown on Sheet 68 in Schedule 9, be approved by the Commission. 11. The average monthly impact for customers by rate class is projected to be as follows: Rate Schedule Average Monthly Bill Impact Percent Change Residential $ % Sm Commercial ($2.43) (2.47%) Sm Volume Firm ($14.35) (1.98%) Sm Volume Interruptible ($16.74) (2.28%) Large Volume Firm ($78.98) (1.49%) Large Volume Interruptible ($78.89) (1.86%) 12. Pursuant to Rule 4758(a)(II), a complete set of work papers relied upon in preparing the G-DSMCA factor is being filed electronically as part of this Combined Application (Schedule 10). 5 See the DSM Plan, Appendix D, which is entitled Lost Revenue Proposed Dollar per Therm Value. 5

6 III. G-DSM Bonus Application 13. The G-DSM Bonus Application constitutes BHCOG s filing for approval of its 2017 G-DSM Bonus to take effect on July 1, 2018 for a period of 12 months as part of the G- DSMCA factor. Rule 4754(g)(II) states that in order to earn a G-DSM Bonus, as a threshold matter, the utility must expend at least the minimum amount set forth in subparagraph 4753(g)(I), except during a phase-in period as set forth in subparagraph 4753(g)(III) In Decision No. C issued in Proceeding No. 14A-0488G, the Commission approved the DSM Plan. Page ES-3 of Schedule 11 reflects the approved 2017 budget of $1,953,400 which was greater than the 2% of non-commodity revenues required by Rule 4753(h)(I). 7 Actual 2017 expenditures of $2,405,285 exceeded the 2017 budget amount. Thus, the Company has met the threshold and expended in excess of the statutory minimum 2017 gas DSM expenditure target. 15. In support of the requested G-DSM Bonus, and to provide additional information in compliance with Rule 4760, BHCOG relies upon: attached Schedules 1 through 11; the contemporaneously filed 2017 DSM Annual Report, which is incorporated by reference, including all attachments; and Schedule 12, which contains the calculation of the requested Gas DSM Bonus for the 2017 program year. 16. The Schedules and the 2017 DSM Annual Report provide documented 2017 DSM program expenditures, 2017 gas (Dth) savings resulting from 2017 DSM Plan performance, estimated cost-effectiveness based on the mtrc, and application of approved net-to-gross ( NTG ) factors. The 2017 Evaluation Report conducted on several components of the DSM 6 The reference to subparagraph 4753(g)(I) and (III) should be to subparagraphs 4753(h)(I) and (III) as subparagraph 4753(g) contains no subsections. 7 See Verified Application filed in Proceeding No. 14A-0488G at paragraph 8. 6

7 Plan is attached to the 2017 DSM Annual Report as Appendix C. The programs evaluated included: Nonresidential Prescriptive Program Nonresidential Custom Program Commercial Direct Install Program The 2017 Evaluation Report contains recommendations for implementation in plan year The verified savings identified in the prior 2016 Evaluation Report were applied to the plan year The 2016 Evaluation Report evaluated four programs, including the Residential Evaluation Program (savings were adjusted from the planned 5.5 Dth per on-line kit to 1.3 Dth per on-line kit and from the planned 8.1 Dth per in-home kit to 1.42 Dth per in-home kit) and the Residential Prescriptive Program (savings for furnaces were adjusted from 0.42 therms/mbtuh to 1.33 therms/mbtuh and for boilers from 0.66 therms/mbtuh to 0.99 therms/mbtuh). The 2016 Evaluation Report did not recommend any changes to the Residential Behavior Change Program savings nor the Low-Income Affordable Housing savings. 17. Pursuant to Rule 4760(a), a G-DSM bonus cannot exceed the lower of 25 percent of the expenditures or 20 percent of the net economic benefits of the DSM programs, applying the bonus calculation procedure set forth in Rule As reflected on Schedule 12, in 2017 (based on the original DSM Plan Budget), the Company realized an energy factor of 31.0% and a savings factor of 1.15, resulting in a bonus percentage of 35.82%. Because the maximum allowed bonus is 20% of net economic benefits or 25% of expenditures, whichever is less, BHCOG requests a bonus percentage of 20% of net economic benefits. As reflected in the attached Schedules, the portfolio net economic benefits (excluding the Low Income Program) were $274,033 and the expenditures were $2,419,129. Twenty percent of the $274,033 in net 7

8 economic benefits, exclusive of low-income, is $54,807 which is the requested bonus amount. Twenty-five percent of expenditures is $604,782, which is greater than the 20% of net economic benefits calculation. See Schedule 12 to this Combined Application for more detail on the bonus calculation. 18. As mentioned above, included within the proposed tariffs in G-DSMCA Schedule 9 attached to this Combined Application, are the rates to collect the Gas DSM Bonus over twelve months. IV. Notice of Combined Application 19. Concurrently with this filing, the Company is filing a Motion for Approval of an Alternative Form of Notice ( Notice Motion ). As more fully set forth therein, the Notice Motion requests authorization to use an alternative form of notice, including (a) filing with the Commission, and keeping open for inspection, this Combined Application; (b) posting on the website for BHCOG: (i) a Customer Notice attached thereto (which is also attached hereto as Schedule 8) and (ii) this Combined Application and its accompanying Schedules; (c) a bill message on each applicable customer s bill providing the website URL for the aforementioned website posting and a toll-free phone number for assistance; and (d) publication of the Customer Notice in a newspaper of general circulation covering the Company s service territory. V. Information Required By Rules 4002(b) and (c) 20. Name and Address of Applicant. The Applicant is Black Hills/Colorado Gas Utility Company, LP d/b/a Black Hills Energy. The Company s principal office for natural gas operations in Colorado is located at 7060 Alegre Street, Fountain, CO

9 21. Name Under Which Applicant Is, or Will Be Providing Service in Colorado. Applicant provides service under Black Hills Energy. Black Hills Energy is its trade name on file with the Colorado Secretary of State s office. 22. Agreement to Comply with 4002(b)(IV)-(VI). BHCOG has read, and agrees to abide by, the provisions of Rule 4002(b)(IV)-(VI). 23. Representatives to Whom Inquiries Concerning the Application Should Be Made. Copies of all notices, other correspondence, and all inquiries concerning this application should be sent to the undersigned and to: Fredric C. Stoffel Director, Regulatory Black Hills Corporation 1515 Wynkoop, Suite 500 Denver, CO (303) fred.stoffel@blackhillscorp.com Eric Gillen Manager, Regulatory Black Hills Corporation 1515 Wynkoop, Suite 500 Denver, CO (303) eric.gillen@blackhillscorp.com 24. Description of Existing Operations and General Colorado Service Area. The Company provides natural gas public utility services in numerous areas throughout the State of Colorado. The Company has approximately 81,166 residential customers and 3,956 commercial or other nonresidential customers in its Colorado service area. A listing of the Company s existing operations and service area is set forth in the Company s tariffs on file with the Commission. 25. Location of Hearing. If a hearing is held on this application, the Company prefers that the hearing be held at the Commission s offices in Denver, Colorado. 26. Acknowledgment. The Company has read and agrees to abide by the provisions of Rule 4002(b)(XI)(A)-(C). 9

10 27. Statement Under Oath. An affidavit signed by an agent of the Company verifying that the contents of the application are true, accurate, and correct is attached hereto. The Verification contains the name, title, and the complete address of the affiant, as required by Commission rules. 28. Information Required by Rules 1310(a) and 4002(c). BHCOG filed the required regulated entity information with the Commission in Miscellaneous Docket No. 06M- 525EG and the information on file in that proceeding is correct as of the date of this application. The regulated entity information maintained by BHCOG in Miscellaneous Docket No. 06M- 525EG is incorporated by reference into this Combined Application. WHEREFORE, for the reasons set forth in this Combined Application and supported by the attached Schedules, BHCOG respectfully requests that the Commission grant this Combined Application, and approve its requested Gas DSM Bonus as well as the requested G-DSMCA and factors, to take effect on July 1, 2018 for a period of 12 months. If the Commission grants this Combined Application, the Company requests authority to file the approved tariffs on not less than one business days notice pursuant to Rule 4109(b)(III). 10

11 Date: April 2, 2018 Applicant s address: Black Hills/Colorado Gas Utility Company, LP d/b/a Black Hills Energy 7060 Alegre Street Fountain, CO Respectfully submitted, /s/ Tana K. Simard-Pacheco Tana K. Simard-Pacheco #17051 Associate General Counsel Black Hills Corporation 1515 Wynkoop Street, Suite 500 Denver, CO Telephone: tana.simard-pacheco@blackhillscorp.com Attorney for Black Hills/Colorado Gas Utility Company, LP d/b/a Black Hills Energy 11

12 CERTIFICATE OF SERVICE I hereby certify that on this 2nd day of April 2018 the foregoing VERIFIED COMBINED APPLICATION was E-filed and served though the Commission E-filings System. /s/ Elaine Hegler 12