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 GAS DISTRIBUTION, LLC 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 Gas Distribution, LLC ( BHGD-CO 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 factors ( G-Bonus Application ). 1 The G-DSMCA factors proposed in this Combined Application have been calculated to include the requested G-DSM Bonus; and 3. If approved, this filing will, from July 1, 2018 through June 30, 2019, increase an average residential customer s monthly bill by an estimated $0.80, or 0.95% in Base Rate Area 1; and by an estimated $0.87, or 1.56% in Base Rate Area 2. An average Small Commercial customer is estimated to see a monthly bill increase of $2.99, or 2.00% in Base Rate Area 1; and 1 The G-DSMCA Application and the G-Bonus Application will be referred to, collectively, as the Combined Application.

2 an increase of $2.02, or 2.00% in Base Rate Area 2. 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. 13A-0458G and this DSM Plan was approved by the Commission in Decision No. C This DSM Plan was extended by the Commission through 2017 pursuant to Decision No. C , issued in Proceeding No. 16A-0253G. In Proceeding No. 16A-0253G, BHGD-CO requested a one-year variance from the requirement in Rule 4752(c) that BHGD-CO file a DSM plan application by May 1, 2016 and applied for an extension of the DSM Plan for one additional year, or until December 31, 2017, using plan year 2016 as the DSM plan for These requests were granted by the Commission in the Decision No. C As a result, for the 2017 plan year, BHGD-CO adopted the goals, budgets and programs as described in the DSM Plan for As reflected in the 2017 DSM Annual Report filed in Proceeding No. 13A-0458G contemporaneously herewith (the 2017 DSM Annual Report ), 4 the DSM Plan performed well during calendar year 2017, which was the fourth year under the DSM Plan. In 2017, the DSM Plan expended 105% of its budget, had an overall Modified Total Resource Cost Test ( mtrc ) 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... 3 The DSM Plan, as extended to December 31, 2017, is referred to herein as the DSM Plan. 4 The Company is also filing a Notice in Proceeding No. 16A-0253G of the filing of the 2017 DSM Annual Report in Proceeding No. 13A-0458G. 2

3 result of 1.49 with the Low-Income Program and a mtrc result of 1.45 excluding the Low- Income Program. The DSM Plan, in 2017, also achieved 17,437 Dth savings (which was 82% of goal). II. G-DSMCA Application 6. The G-DSMCA Application constitutes BHGD-CO s filing to revise the annual G-DSMCA factors to take effect on July 1, 2018, for a period of 12 months. In order to provide for the continued funding of BHGD-CO s gas DSM programs, the revised annual G-DSMCA factors seek to recover: (a) BHGD-CO s prudently incurred costs of gas DSM programs within the DSM Plan s expenditure target and 125% budget flexibility permitted by Rule 4753(k); 5 (b) under- or over-recovered G-DSMCA costs, as applicable for each rate area; (c) the calculated lost revenue amount; and (d) the requested G-DSM Bonus of $4,743. The Company s 2018 budget of $2,275,200 under the new Combined DSM Plan, as approved by Decision No. R issued into 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 factors, rather than through filing a rate case to set new base rates for that purpose. 8. In support of the revised annual G-DSMCA factors, 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 5 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. 3

4 calculations. 6 The following Schedules are attached hereto and filed with the Commission as part of this Combined Application: 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 and Interest subsection of Rule Calculation Schedule 3 Summary of Estimated Rule 4758(b)(II): A detailed schedule showing 2018 Expenditures the computation of interest, as applicable, to Schedule 4 Summary of Actual deferred amounts. Schedule Expenditures Forecasted Billing Determinants Rule 4758(b)(IV): A schedule detailing the allocation of costs to each customer class. Schedule 6 Schedule 7 Lost Revenue and DSM Bonus Allocations Impact of Proposed Rates Rule 4760: The collection of any G-DSM Bonus awarded will be apportioned between residential and nonresidential customers based on the proportion of residential and nonresidential net economic benefits used to calculate the G-DSM bonus. Rule 4758(b)(III): The absolute and percentage 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 detailing rate impact and effective date. Redlined Redlined Tariff Sheets Rule 4758(b)(VI): Proposed tariff implementing Schedule 9 the proposed G-DSMCA. Schedule 9 Tariff Sheets (Clean) 9. Pursuant to 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 6 Rule 4758(b)(VII) is not applicable since BHGD-CO does not propose to recover any gas DSM costs by rate base treatment. 4

5 in preparing its application. These workpapers are contained in Schedules 1 through 7 referenced above. 10. 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 factors, calculated separately for residential and non-residential customers, pursuant to Rule 4757(m), as well as for Base Rate Area 1 and Base Rate Area 2. Using the dollar per therm lost revenue values, as approved by the Commission in Decision No. C , and the annualized therms saved, the Company developed a lost revenue amount for inclusion in the annual G-DSMCA factors (Schedule 6). The Company also calculated interest on over- or under-recovery, pursuant to Rule 4757(l) (Schedule 2). A comparison of the current G-DSMCA factors compared to the proposed G- DSMCA factors (Schedule 1) is shown in the table below: Current G-DSMCA Factors Proposed G-DSMCA Factors Rate Schedule Base Rate Area 1 R-1 Residential 2.49% 5.12% SC-1 Small Commercial 3.26% 9.12% LC-1 Large Commercial 3.26% 9.12% ICD-1 Irrigation, Crop Drying or Seasonal 3.26% 9.12% Base Rate Area 2 R-2 Residential 0.24% 4.03% SC-2 Small Commercial -2.53% 2.92% LC-2 Large Commercial -2.53% 2.92% ICD-2 Irrigation, Crop Drying or Seasonal -2.53% 2.92% 5

6 The average monthly impact for customers by rate class and by Base Rate Area, is projected to be as follows: Rate Schedule Average Monthly Bill Impact Monthly Bill Percent Change Rate Area 1 R-1 Residential $ % SC-1 Small Commercial $ % LC-1 Large Commercial $ % ICD-1 Irrigation, Crop Drying or Seasonal $ % Rate Area 2 R-2 Residential $ % SC-2 Small Commercial $ % LC-2 Large Commercial $ % ICD-2 Irrigation, Crop Drying or Seasonal $ % 12. BHGD-CO requests that the annual G-DSMCA factors (which are inclusive of the requested $4,743 G-DSM Bonus and $34,885 Lost Revenue calculation requested in this Combined Application) be increased as requested herein. BHGD-CO also requests that the resulting G-DSMCA and revised Total rates shown on the tariff sheets in Schedule 9 be approved by the Commission. III. G-DSM Bonus Application 13. The G-DSM Bonus Application constitutes BHGD-CO 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 factors. 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 Nos. C and C issued in Proceeding Nos. 13A-0458G and 16A-0253G, respectively, the Commission approved the DSM Plan. Page ES-ii of Schedule 7 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. 6

7 10 reflects the approved 2017 budget of $783,726 which was greater than the 2% of noncommodity revenues required by Rule 4753(h)(I). 8 Actual 2017 expenditures of $826,041 exceeded the budget. 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, BHGD-CO relies upon: attached Schedules 1 through 10; the contemporaneously filed 2017 DSM Annual Report, which is incorporated by reference, including all attachments; and Schedule 11, 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. There was no evaluation of the DSM programs in 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 11, in 2017, the Company realized an energy factor of 1.12% and a savings factor of 78.03%, resulting in a bonus percentage of %. As reflected in the attached Schedule 11, the portfolio net economic benefits were $541,474. These net economic benefits multiplied by the requested bonus percentage of results in a requested bonus amount of $4,743. This amount is less than both the 20 percent of 8 See the DSM Plan at page 60, where it states: As required by the Commission Rules, SourceGas Distribution s program budget represents over 2% of base rate revenues (exclusive of commodity costs) and 0.5% of its total revenues. (filed in Proceeding No. 13A-0458G). 7

8 the net economic benefits and 25 percent of expenditure thresholds described in Rule See Schedule 11 to this Combined Application for more detail on the bonus calculation. 17. 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 18. 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 BHGD-CO: (i) a Customer Notice attached thereto as Appendix 1 (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) 19. Name and Address of Applicant. The Applicant is Black Hills Gas Distribution, LLC 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 Rule 4760 reads, The utility may request a G-DSM bonus not to 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

9 20. 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. 21. Agreement to Comply with 4002(b)(IV)-(VI). BHGD-CO has read, and agrees to abide by, the provisions of Rule 4002(b)(IV)-(VI). 22. 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 23. Description of Existing Operations and General Colorado Service Area. BHGD-CO provides natural gas service to approximately 97,000 retail customers in numerous areas throughout the State of Colorado. Of these, approximately 84,000 retail customers are residential class. BHGD-CO has operations that are divided into two Base Rate Areas in Colorado. A full listing of the Company s existing operations and service areas are set forth in BHGD-CO s tariffs on file with the Commission. 24. 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. 25. Acknowledgment. The Company has read and agrees to abide by the provisions of Rule 4002(b)(XI)(A)-(C). 9

10 26. 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. 27. Information Required by Rules 1310(a) and 4002(c). BHGD-CO 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 BHGD-CO 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, BHGD-CO 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). Date: March 30, 2018 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 Gas Distribution, LLC d/b/a Black Hills Energy 10

11 Applicant s address: Black Hills Gas Distribution, LLC d/b/a Black Hills Energy 7060 Alegre Street Fountain, CO

12 CERTIFICATE OF SERVICE I hereby certify that on this 30 th day of March 2018 the foregoing VERIFIED COMBINED APPLICATION was E-filed and served though the Commission E-filings System. /s/ Elaine Hegler 12