A R K PUBLIC SERY. CCHH

1 IN THE MATTER OF THE APPLICATION OF OKLAHOMA GAS AND ELECTRIC COMPANY ) FOR AN ORDER OF THE coMmIssroN ) DOCKET NO: 07-075-TF GRANTING RECOVERY OF THX COSTS 1

1 ASSOCIATED WITH THE COMPREHENSIVE ENERGY EFFICIENCY PLAN AND 1

1 AUTHORIZING A RECOVERY RIDER

Direct Testimony

Of

Gary J. Marchbanks

On behaIf of

Oklahoma Gas and Electric Company

JuIy 3 1,2009

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TABLE OF CONTENTS

SUBJECT

SECTION I: Purpose of Testimony

SECTION 11: Conclusion

EXHJBITS:

Attachment “A” Results of Energy Quick Star Programs (2008)

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Attachment “ B Pre-implementation Report on Comprehensive Programs for

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Dircci Tesrinroiiy

PIease state your name, position, by whom you are empIoycd and business address.

My name is Gay J. Marchbanks. I am employed by OkIahoma Gas and Electic

Company (OG&E or Company) and my business address is 321 N. Harvey, Oklahoma

City, Oklahoma 73 102.

What position do you hoId with OG&E?

I hold the position of Manager Demand Side Management.

What are your rcsponsibilties in this position?

I am responsible for implementation of all Demand Side Management programs @e-, all

energy efficiency and demand response programs) in both the Arkansas and OkIahoma

jurisdictions.

Briefly summarize your education and professionaI qualifications.

I have been continuously employed by Oklahoma Gas and Electric for over 35 years. I

graduated from Oklahoma State University with a Bachelor of Science degree in

Industrial Engineering and Management. From 1974 through I98 1 I held the positions of

Commercial Sales Engineer and Power Sales Engineer working with commercia1 and

industrial customers in the Eastern region. During this time I was responsible for the air

conditioner load controI program (Peaks) for the Region. From 1981 through 1987 I was

the Senior Energy Analysis Engineer in Corporate Marketing. I was responsible for the

development of the End Use Model which was used to develop Demand Side

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Management programs. I also developed a computerized commercia1 energy audit

program used company wide. From 1987 to 1994 I worked as a District Sales Supervisor

in the Oklahoma City area and was responsible for staff that performed energy audits.

From 1994 to 3006 I worked as the Major Account Executive-Public Authority. In this

roIe I was responsible for overseeing performance contracting for FederaI facilities. In

2006 I became Manager, CommerciaVIndustrial Accounts. During this time I was a

member of the development team for the Arkansas Demand Side Management program. I

assumed my current position in October 2007. I am a member of the Association of

Energy Engineers.

Are you thc same Gary Marchbanks who filed testimony previoudy in this cause?

Yes.

Are you sponsoring any exhibits rcIcvant to your testimony in this proceeding?

Yes. I sponsor Exhibits noted as Attachment A and Attachment B as required in Order

No. 10 issued by the Arkansas Public Service Commission on July 20,2009. Attachment

A and 8 were prepared by me or under my direction and supervision.

I. PURPOSE OF TESTIMONY

What is thc purpose of your testimony in this proceeding?

The purpose of my testimony is to describe OG&E’s compliance with the requirements

set forth in Order No. IO issued JuIy 20, 2009 by the Arkansas Public Service

Commission for utilities to provide information with supplementary reports on the Quick

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Start programs for 2008 and 2009 and for the Comprehensive DSM 2010 application

including budget projections, cost effectiveness test results, demand and energy savings

goals and other requested information.

Please describe the resuIts of the Quick Start program for 2008 and 2009.

OG&E filed its Quick Start annual report of approved conservation and energy efficiency

programs as required by the Arkansas Public Service Commission on April 1 , 2009.

OG&E provided data on each of the 7 approved measures for the period of October 2007

through December 3 1, 2008. During this period both the savings in energy and demand

and the spending for the Quick Start Program has been sustained at the leveI the company

expected for the program. Thus far in 2009 OG&E has seen stronger participation in

programs and believes that it wiII meet budgets for the year on both demand and energy.

Explain the results in Attachment $‘A’’

First, it is important to mention that the Quick Start measures that are currently in place

can all be considered energy savings programs. AIthough there is recognized and

recorded demand (kW) savings from each of these measures, they should be primarily

considered as energy savings opportunities. Currently OG&E has tariffs in place that

address specifically the demand response component. Time of use rates recently

approved would be considered a demand response program.

Did OG&E utilize the cost effectiveness tests as defined in the California Standard

Practice Manual?

Yes. OG&E calculated the TotaI Resource Cost test (TRC), the Ratepayer Impact test

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(RIM), the Participant test and the Program Administrator Cost test. In addition OG&E

included the Societal cost test results. These tests were conducted using the formulas

provided in the “California Standard Practice Manual: Economic Analysis of Demand

Side Programs and projects, JuIy 2002. These tests were conducted for each measure and

the results made availabk in the Filing Docket number 07-75-TF filed June 33, 2007.

OG&E has updated the tests using the most current numbers ending June 30, 20009 and

the results are provided. OG&E included test resuIts for a11 proposed programs in the

Comprehensive fiIing date July I, 2003.

Are there any issues with the tcsts as conducted on June 30,2009?

Yes. First, the Quick Start program is still active and will continue through December

2009. Therefore the data used to calculate the tests is not complete. It does appear with

21 of 27 months of program activity that the results should provide a reasonable

prediction of the end result. Second, avoided costs can change during this performance

period. By conducting the tests post performance comparisons can be made to the

relative accuracy of forecasts used in the initial calculation of net benefit cost tests. The

results are included in Exhibit A

Is OG&E prepared to discuss program observations regarding Quick Start?

There Eire observations and comments noted in the final column of Attachment A. As a

result of administering Quick Start for 21 months there are modifications that the

company believes will be beneficial and those are incorporated in the June 30

Comprehensive Energy Eficiency Plan. OG&E proposes to administer its own severely

energy inefficient housing program. After compIeting weatherization of over 900 homes

since March of 2009 in Oklahoma utilizing independent contractors, OG&E has proven

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that it can increase the number of homes weatherized and can do the work at cost levels

comparable to or less than using the Arkansas Weatherization Program. Second, each

residential customer in the service territory has been mailed an offer to participate in the

Custom Energy Report (CER) program. With the redesign of the OGE corporate website

the CER program has been placed on line and will be readily accessible 10 all customers

to input data and receive a report online. This will enable customers to receive results

faster and will reduce administrative charges by eliminate postage charges.

Are there further observations?

Yes. OG&E has had very positive response on the Living Wise program and proposes to

offer the program to each sixth grader annually. Further OG&E believes the Energy

Efficiency Arkansas (EEA) has become very effective in creating energy awareness in

the OG&E service area and proposes to continue participation in this program. The

commercial lighting program has been well received and it is proposed to continue the

program unchanged. With upcoming standards in 3,012 federal mandates will phase in

incandescent lamps replacements with Compact Fluorescent lamps. Therefore with

market transformation progressing and With mandates forthcoming the need for

incentives has been eliminated. Finally, OG&E proposes to increase the motor rebate

program to increase the offering of incentives for only a singIe motor of 25 horsepower to

a range of motors from IO to IO0 horsepower. Even though the 25 horsepower motor is a

common motor OG&E receives inquiries for rebates from customers on typical

applications of motors in the 1 0-1 00 hp. Range. Expansion of this program wiII allow

OG&E to help customers improve process eficiency.

Plcase discuss the data included in Exhibit €3.

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OG&E has incIuded required data for each of the measures that are proposed in the filing

dated lune 30,2009. The four California tests have been conducted and the results are

incIuded in the table. From the lessons Iearned as stated above, OG&E believes the

proposed portfolio will further expand its reach to encourage participation in energy

efficiency programs for all customers. The portfoIio is designed in accordance with the

“Rules for Conservation and Energy Efficiency Programs” dated May 35 2007. Even

though there are no provisions for lost revenue recovery or utility incentive OG&E has

increased the proposed budget from an annual expenditure of over $400,000 to $1.3

milIion. The company is committed to actively participate with energy conservation,

demand response, renewables and price response tariffs To reach the OG&E “2030

Vision” of not adding any new fossiI fuel generation to its fleet all of these components

are necessary to achieve the goal.

SECTION 11 CONCLUSION

PIcasc summarize your tcs timony.

OG&E welcomes the opportunity to provide the data requested in attachment A and B

and appreciates the Commission for its commitment to energy efficiency and for

reviewing the current Quick Start programs and providing a holistic study of future

comprehensive. programs. While evaluation of the benefit/ cost results both pre and post

for the portfolios is very beneficial and necessary these numbers alone cannot dictate

program acceptance and success. The Commission is to be commended for seeking all

data and results associated with the programs and for performing concurrent anaIysis of

such results. OG&E is prepared, after approval, to begin implementation of the portfolio

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beginning January 1,20 1 0. OG&E believes the proposed portfolio indicates the strong

commitment to providing our customers with fuel neutral options to help them manage

their electric bills and at the same time increasing the customers’ awareness of the many

energy savings opportunities available to them. Future technology such as smart power,

renewable technology and new price response signals are all components of a successful

Demand Side Management program. Addressing these issues along with proper and

whole cost recovery will allow Arkansas to become a leader in energy efficiency and a

role model for other states.

Does this conclude your testimony?

Yes it does.

2007-08 {Program Year 2008) and Estimatos for Program Year ZOOS . 1 iergy Efflc cy Qulck Start Programs I

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Test Test 1-58 2.14

0.52 0.21

0.47 0.42

0.50 0.44

0.89 0.25

Pre and Post Results

' Test Test ~ Test Test '.E Test, Test Test Test' Test Test , Test Test 9.9s 0.00 9.99 0.00 0.00 0.00 5.30 19.66 0.28 0.29 6.24 o.ao

1.04 0.84 0.49 OA5 0.00 0.00 0.01 0.85 0.37 0.06 1,BO 0.00

6.54 2.69 1.16 3.46 0.UO 0.00 j.74 7.69 0.16 0.05 4.12 0.00

7.07 2.88 1.29 3-66 0.00 0.00 1 . ~ 9 8.58 0.18 0.05 4.24 0.00

6.54 2.69 3-16 1.t3 0.00 0.00 6.82 20.02 0.37 0.06 6.35 0.00

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CERTIFICATE OF SERVICE

I, Larry Chisenhall, do hereby swear that a true and correct copy of the above- pleading was sent to all counsel of record on this 3 Is' day of July via U.S. MaiI, postage prepaid.

Susan D’Auteuil Counsel APSC 1000 Center Street P.O. Box 400 Little Rock, AR 72201

Arkansas Community Action Agencies Association, Inc. JerroId Oppenheim Company Representative 57 MiddIe Street Gloucester, MA 01930

Arkansas Community Action Agencies Association, Inc. Rose Adams Executive Director 300 South Spring Street, Suite 1020 LittIe Rock, AR 72201

Sarah Tacker Office of the Attorney General 323 Center Street, Suite 200 Little Rock, AR 72201