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Current Power Broker: J. LaMont Keen by Becky Brun NW Current, February 28, 2007

Continuing its series of interviews with the Northwest's leading energy officials, nwcurrent this month talks with J. LaMont Keen, who has served as president and CEO of Idaho Power since July 2006.

Based in Boise, Idaho Power serves over 457,000 customers in southern Idaho and eastern Oregon. The company in 2006 experienced a 3.2 percent increase in its customer base. Idaho Power relies heavily on hydroelectric power to serves its customers, as it owns and operates 17 hydroelectric power plants located on the Snake River and its tributaries.

In Part I of nwcurrent's exclusive interview, Keen discusses Idaho Power's most successful conservation and demand-side management programs; ways the utility is tapping into the unique needs of its service area; and how it is poised to meet its share of the region's conservation goals set by the Fifth Power Plan.

nwc: What programs does Idaho Power administer to help meet the conservation goals set by the Northwest Power and Conservation Council's Fifth Power Plan?

Keen: Generally speaking, we have programs across four major customer segments in three major areas: demand-side management, energy efficiency and market transformation. Most internal programs are targeted at demand-side response and energy efficiency, but we do participate through the [Northwest Energy Efficiency Alliance] in market transformation programs [see "Fifth Power Plan: Idaho Power, nwcurrent, Aug. 2006].

One main demand-side management program is our Irrigation Peak Rewards program, which is designed to have customers turn off irrigation pumps during peak hours to reduce our peak demand. The other main demand-side response program is our residential AC Cool Credit program, which is intended to reduce peak demand during those hot summer days. During peak periods, we cycle their air conditioners on and off to reduce peak demand.

We have a myriad of programs designed to encourage customers to purchase energy-efficient systems initially, or to improve the systems they already have. We have set targets: In our 2004 Integrated Resource Plan (IRP), we targeted 54 megawatts (MW) of peak reduction by 2014 and 41 average megawatts (aMW) energy savings. In our 2006 IRP, or Energy Plan, we targeted an additional 187 MW of peak reduction and 90 aMW energy savings.

nwc: In your service area, what are some of the biggest opportunities for future energy conservation?

Keen: We believe that we have had great success with our demand-side response and energy-efficiency programs. Our industrial efficiency savings increased from 200,000 kilowatt hours (KWh) in 2004 to 31 million kWh in 2006, and we feel that's just the tip of the iceberg. While the industrial sector is a small percentage of our customer base, it represents about 23 percent of the megawatt hours that we sell. There is a lot of opportunity there, and we think there will be even more opportunity in the future. We are unique in the Northwest, in that 12 percent of the megawatt hours that we sell go to irrigation customers. Through our Irrigation Peak Rewards program, we are offering incentives for them.

With regard to residential customers, we are focusing on cooling. Air conditioning represents about half of summer energy usage in our service area.

The next one, from a residential standpoint, is lighting, which is only about 9 percent of residential electricity usage but probably has the largest potential for energy reduction.

nwc: According to the Northwest Power and Conservation Council's latest survey, Idaho Power is currently meeting less than 60 percent of its share of the regional target of 130 aMW of energy savings set by the Fifth Power Plan. In your opinion, is Idaho Power doing all it can to meet the council's goals?

Keen: There are some differences in the way the council counts potential savings. They target the utility's proportionate share of the overall potential regional load. The council's potential savings number is for all conservation measures, not just those associated with our demand-side management program. The council's potential savings are based on regional macroeconomic forecasts, while ours are based on our planning committee process, which we do take very seriously. The demand-side management programs we initiated were peak programs designed to offset the peak growth in demand during the summer months. In 2006, those two programs -- the Irrigation Peak Rewards program and the AC Cool Credit program -- reduced the summer peak demand by 31 MW.

Despite the differences in planning processes and compensation over the long term, the council's goals and ours are very comparable. Over the long term, the direction is very similar. I think it's of the start-up nature of many of our programs that may not have produced results as early as the

nwc: What are some of the biggest barriers Northwest utilities face in implementing conservation programs?

Keen: Certainly one of the biggest barriers in the Northwest is that our customers enjoy some of the lowest rates in the country. Low rates don't offer as much incentive for energy efficiency as do higher rates.

For demand-side management programs to be successful, they require customer education and active participation by customers. At the same time we are promoting energy efficiency, some of our customers are increasing their consumption through the use of high-tech electronics and appliances. And the size of the average home has increased greatly, which includes air conditioning.

There's also the reality that it is a competitive market out there. There are less expensive, less energy-efficient products out there. Also, in our particular case, we are a summer-peaking utility, and we are an electric utility only. We may be unique in the Pacific Northwest in that regard, and we have some unique challenges implementing regional programs. Despite those challenges, our programs are evolving and growing to meet the needs of our customers.

I also want to add that there is an opportunity, in order to help these programs be successful, in a fixed-cost adjustment. Those programs enable us to spend the dollars that we'd like to spend on demand-side management and conservation without incurring an economic penalty for our owners (IdaCorp, Inc.). We have a [fixed cost adjustment] plan pending before the Idaho Public Utilities Commission right now.