natural gas tracker filing - northwestern …2015, unless natural gas prices move dramatically in...

NATURAL GAS TRACKER FILING

Docket No. 2014.7.59

In the Matter of the Application of NorthWestern Energy's:

(1) Unreflected Gas Supply Cost Account Balance for the 12-Month Period

Ending June 30, 2015 and Projected Gas Cost Tracking for the 12-Month

Period Ending June 30, 2016;

(2) Gas Transportation Adjustment Clause (GTAC) Balance as of April 30, 2015.

Whitney Annual Gas Tracker Letter June 5, 2015 Page 2 of 4

Reflect the projected load, supply, and related natural gas costs for the 12-month tracker period July 1, 2015 through June 30, 2016; and

Request approval to continue to collect the costs of its interest in Bear Paw and Devon natural gas production and gathering assets on an interim basis as part of future tracker filings until such time that a revenue requirement filing is processed before the Commission.

The projected natural gas supply rate for the 12-month period starting July 1, 2015 is $0.34001 per therm, compared with the rate for the 12-month period starting July 1, 2014 of $0.49645 per therm, a decrease of $0.15644 per therm. It should be noted that the ultimate rates will be a function of hurricane activity, weather, demand, and other fundamental and technical factors. The Prefiled Direct Testimony and Exhibits of John M. Smith provide detailed information pertaining to current market conditions and forecasted prices. In this filing, NorthWestern also requests approval to extinguish the current deferred UGCA Balance approved in Interim Order No. 7282b in Consolidated Docket Nos. D2013.5.34 and D2014.5.47 and to reflect the deferred UGCA Balance of $(1,763,882) for the 12-month period ending June 30, 2015 in rates. Also, NorthWestern requests that the remaining deferred UGCA balance of $(711,416) approved in Interim Order No. 7282b be included in the UGCA balance. Thus, the estimated deferred Total UGCA Balance at the end of June 2015 is an over-collection of $(2,475,298). This proposed Total UGCA Balance lowers the natural gas supply rate. NorthWestern proposes to set the related deferred rate at zero until actuals are recorded for the months of May and June 2015. NorthWestern will then review the account balance and determine if the final amount of the UGCA merits a separate deferred rate adjustment proposal. Any proposed deferred rate adjustment will be included in the August or September 2015 monthly tracker filing. NorthWestern further requests approval to extinguish the current GTAC Balance Amortization approved in Order No. 7282b and to reflect the GTAC Balance as of April 30, 2015 in natural gas supply rates. The proposed GTAC balance for this filing is an over-collection of $(451,860) which is the sum of the GTAC booked balance for the period ending April 30, 2015 of $(477,622) and the current balance of the amortization approved in Order 7282b of $25,761. This balance will be reflected in rates over the 12-month period ending June 30, 2016. Appendix A to this Application presents a summary of the current tariff rates and the proposed rates in this filing, as well as the resulting dollar and percentage changes. The difference between the June 1, 2015 approved rates and the July 1, 2015

Whitney Annual Gas Tracker Letter June 5, 2015 Page 3 of 4

proposed rates is an increase for a typical residential customer using 100 therms per month of $1.66 per month or $19.92 per year. This results in an overall increase of 2.14% on the total bill. The actual increase will depend on each customer’s type and usage. The typical bill computations are included in Appendix B. Other documents submitted with this filing are:

1. Application for Interim and Final Natural Gas Rate Adjustment, including Appendices A and B;

2. Notice of Interim Rate Adjustment Request and accompanying media

certificate of service; and

3. Prefiled Testimony, Exhibits and Work Papers of John M. Smith, and the Prefiled Testimony and Exhibits of Patrick J. DiFronzo, and Danie L. Williams.

In accordance with Order No. 5667a, NorthWestern requests approval to continue to reflect accounting treatment, through the GTAC mechanism, for certain expansions that generate Interruptible Transportation revenues or Interruptible and Firm Transportation revenues. The rationale for this treatment remains viable, since a disincentive would exist for the Natural Gas Utility to invest in new plant if there is no mechanism by which costs related to these investments can be recovered until the next general rate case. Three copies of this letter and documents submitted herewith are being delivered to the Montana Consumer Counsel. NorthWestern’s next monthly tracking filing will be for rates effective August 1, 2015, unless natural gas prices move dramatically in either direction prior to June 15, 2015. If this occurs, NorthWestern will file an amended monthly natural gas cost tracking filing for a July 1, 2015 monthly rate adjustment. The NorthWestern employee responsible for answering questions concerning this rate change request or for inquiries to the appropriate members of the Utility Staff is: Joe Schwartzenberger Regulatory Affairs Department NorthWestern Energy 40 East Broadway Butte, MT 59701 (406) 497-3362 [email protected]

Whitney Annual Gas Tracker LetterJune 5,2015Page 4 of 4

NorthWestern's attorneys in this rnatter are:

Sarah NorcottNorthWestern Energy208 N. Montana, Suite 205Helena, Montana 59601Tel. (406) [email protected]

John AlkeNorthWestern Energy208 N. Montana, Suite 205Helena, Montana 59601Tel. (406) [email protected]

Along with Joe Schwartzenberger, Sarah Norcott and John Alke, please addConnie Moran to the official service list in this docket to receive copies of alldocuments. NorthWestern also requests that all electronic correspondencerelated to this filing be sent to [email protected].

If there are any questions in this regard, I can be reached at (406) 497-3362.

Sincerely,

2::'~Director of Regulatory Affairs

Enclosurescc: Montana Consumer Counsel

1

SARAH NORCOTT

NorthWestern Energy

208 N. Montana, Suite 205

Helena, Montana 59601

Tel. (406) 443-8996

[email protected]

JOHN ALKE

NorthWestern Energy

208 N. Montana, Suite 205

Helena, Montana 59601

Tel. (406) 444-6183

[email protected]

Attorneys for NorthWestern Energy

DEPARTMENT OF PUBLIC SERVICE REGULATION

BEFORE THE PUBLIC SERVICE COMMISSION

OF THE STATE OF MONTANA

IN THE MATTER OF NorthWestern Energy’s ) Regulatory Division

Application For: (1) Unreflected Gas Cost Account )

Balance and Projected Gas Cost; and (2) Gas ) Docket No. D2014.7.59

Transportation Adjustment Clause Balance )

APPLICATION FOR INTERIM AND FINAL

NATURAL GAS RATE ADJUSTMENT

NorthWestern Corporation d/b/a NorthWestern Energy (“NorthWestern” or

“Applicant”), by and through its undersigned counsel, respectfully submits this Application

for Unreflected Gas Cost Account Balance (“UGCA”); Projected Gas Cost; and Gas

Transportation Adjustment Clause (“GTAC”) Rate Adjustment (“Application”) to the

Montana Public Service Commission (“Commission”) in the above-captioned docket. In

support thereof, NorthWestern states as follows:

I.

Applicant’s full name and address are:

NorthWestern Energy

40 East Broadway

Butte, MT 59701

mailto:[email protected]

mailto:[email protected]

2

II.

Applicant is a Delaware corporation doing business as NorthWestern Energy in the

states of Montana, South Dakota, and Nebraska as a public utility.

III.

The following described tariff sheets are the only natural gas sheets impacted by the

proposals in this submittal that are presently in effect in the State of Montana and on file

with the Commission. All other natural gas tariff sheets remain as previously approved by

the Commission:

Schedule Description Sheet No.

D-RG-1 Residential Natural Gas Service 10.1

D-GSG-1 General Service Natural Gas 20.1

D-RGCA-1 Residential Natural Gas Aggregation 11.1

D-GSGCA-1 General Service Natural Gas Aggregation 21.1

T-FUGC-1 Firm Utility Gas Contract 30.1

D-FTG-1 Firm Transportation Natural Gas – DBU 25.1

T-FTG-1 Firm Transportation Natural Gas – TBU 80.1

T-ITG-1 Interrupt. Trans. Natural Gas – TBU 85.1

T-FSG-1 Firm Storage Natural Gas – TBU 90.1

The applicable rates for these tariff sheets are summarized and contained in Appendix A

(attached hereto).

IV.

Applicant will submit new tariff sheets for natural gas service upon approval of the

proposed rates contained in Appendix A. The proposed new rates will replace the present

tariff sheets as follows:

Schedule Description Sheet No.

D-RG-1 Residential Natural Gas Service 10.1

D-GSG-1 General Service Natural Gas 20.1

D-RGCA-1 Residential Natural Gas Aggregation 11.1

3

D-GSGCA-1 General Service Natural Gas Aggregation 21.1

T-FUGC-1 Firm Utility Gas Contract 30.1

D-FTG-1 Firm Transportation Natural Gas – DBU 25.1

T-FTG-1 Firm Transportation Natural Gas – TBU 80.1

T-ITG-1 Interrupt. Trans. Natural Gas – TBU 85.1

T-FSG-1 Firm Storage Natural Gas – TBU 90.1

V.

In accordance with the Deferred Accounting Gas Rate Schedule approved by the

Commission in Order No. 7282b in Consolidated Docket Nos. D2013.5.34 and D2014.5.47,

the balance in Account No. 191, Unreflected Gas Costs, for the 12-month period ending

June 30, 2015 is an over-collection of $(1,763,882). NorthWestern proposes to include this

balance, together with an adjustment for the actual deferred Unreflected Gas Cost Account

Balance (“UGCA”) of $(711,416) that resulted from cessation of the amount approved for

amortization in Order No. 7282b, as part of the natural gas supply rate proposed in this

filing. The total proposed UGCA balance to be included in the natural gas supply rate is an

over-collection of $(2,475,298). This proposed net UGCA balance lowers the natural gas

supply rate. NorthWestern proposes to set the related deferred rate at zero until actuals are

recorded for the months of May and June 2015. NorthWestern will then review the account

balance and determine if the final amount of the UGCA merits filing a separate deferred rate

adjustment proposal.

NorthWestern requests adjustment of natural gas supply rates. NorthWestern’s

existing natural gas supply rates do not reflect the current cost of natural gas, and rates

should, therefore, be adjusted as described herein to reflect current natural gas cost levels.

The proposed natural gas rate of $0.34001 per therm is comprised of: 1) the purchased gas

supply rate component of $0.21639 per therm, including gas already procured as well as

estimates of additional purchases needed for the forecast period through June 2016; 2) the

Battle Creek revenue requirement rate component of $0.01237 per therm; 3) the Bear Paw

revenue requirement rate component of $0.01817 per therm; and 4) the Devon revenue

requirement rate component of $0.09308 per therm. Costs associated with Bear Paw and

4

Devon natural gas production and gathering assets are included in the tracker on an interim

basis until the Commission issues a final order regarding treatment of these assets in a

separate filing.

In addition, NorthWestern proposes to continue to use the monthly tracking

methodology in which a forecast of 12 months is used in this annual filing for the period

July 1 through June 30 of the tracking year. However, the subsequent monthly calculation is

based on the balance of the tracking year forecasts instead of a rolling 12-month forecast.

NorthWestern believes this method has helped decrease the over- or under-collection during

the tracking period.

VI.

Pursuant to Final Order No. 5474c in Docket No. 90.1.1, NorthWestern is filing for

treatment of the GTAC Balance. For the period ending April 30, 2015, the GTAC Balance

is $(477,622). NorthWestern proposes to amortize this balance, adjusted for the actual

GTAC balance from Order No. 7282b in Consolidated Docket Nos. D2013.5.34 and

D2014.5.47 of $25,761. The resulting GTAC Balance proposed in this filing is an over-

collection of $(451,860).

VII.

Pursuant to Order No. 5667a in Docket No. 92.11.64, NorthWestern requests

approval to continue to reflect accounting treatment, through the GTAC mechanism, for

certain expansions that generate interruptible transportation revenues and/or firm

transportation revenues. As of June 30, 2015, there are no offsets for capital investments

being reflected in the calculation of the GTAC Net Balance because all of the investments

previously reflected in the calculation have been included in rate base as a result of general

rate case proceedings. However, if this accounting treatment is not extended, the

disincentive still exists for the Natural Gas Utility to invest in new plant if there is no

mechanism by which costs related to the investments can be recovered until the next general

rate case. Therefore, Applicant requests that this accounting treatment be extended and

continue in effect for as long as the GTAC mechanism continues in effect.

5

VIII.

The proposed new rates contained in Appendix A reflect:

1. The deferred UGCA Balance described in Section V;

2. The projected monthly market supply and gas cost, including NorthWestern’s

interest in Battle Creek as described in Section V;

3. Costs associated with NorthWestern’s interest in Bear Paw and Devon

natural gas production and gathering assets, which are included on an interim

basis and are described in Section V; and

4. The amortization of the GTAC Balance described in Section VI.

IX.

Attached hereto are the following documents that are by this reference made a part

hereof:

- Appendix A - Current and proposed rates;

- Appendix B - Typical residential bill computation;

- Notice of Interim Rate Adjustment Request and the Certificate of Service of said

notice to the media; and

- Prefiled Direct Testimony, Exhibits and supporting Work Papers of John M.

Smith, Patrick J. DiFronzo, and Danie L. Williams.

This Application is made in accordance with the provisions of § 69-3-101, MCA, et

seq., and the rules, regulations and orders of the Commission.

WHEREFORE, Applicant respectfully requests that the Commission:

1. Grant final approval of the rates that have been in effect on an interim basis in

Consolidated Docket Nos. D2013.5.34 and D2014.5.47 for the July 1, 2014

through June 30, 2015 tracker period, less the costs associated with Applicant’s

interest in Bear Paw and Devon, which are in effect on an interim basis during

that time period, and which will be trued-up in a Commission Order at a later

date;

~ Grant interim appro val of the proposed rates. included as Ap pendix A. to be

effe ctive on a monthly basis fo r service on and after July 1,2015;

3. Approve extension of the accounting treatment for certain expansion projects

handled through the GTAC mechanism;

4. Approve the continued collection of the cos ts associated with Applicant's interest

in Bear Paw and Devon, on an interim basis. until such time as a se parate rate

docket is processed and a final order is issued by the Commission; and

5. Gra nt such other and addi tional relief as the Commission shall dee m just and

prope r.

RESPECTFULLY SUBMITT ED this 5th day of June 2015.

NORTHWES T ERN ENERGY

k Sa~1ouATd=Sarah NorcottJohn AlkeAttorney s for NorthWestem Energy

6

Docket No. D2014.7.59Appendix APage 1 of 3

06/01/15 Rate PercentageCurrent Proposed Change Change

Core:D-RG-1 Rate ScheduleResidentialMonthly Service Charge per Meter 7.30$ 7.30$ -$ 0.00%

Commodity Charges ($/Therm) Distribution Charge 0.2103401$ 0.2103401$ -$ 0.00% Transmission Charge 0.1245549$ 0.1245549$ -$ 0.00% Storage Charge 0.0379078$ 0.0379078$ -$ 0.00% Gas Supply Charge 0.3236200$ 0.3400100$ 0.0163900$ 5.07% Deferred Gas Cost Amortization -$ -$ -$ 0.00% DBU GTAC Amortization 0.0000288$ 0.0000117$ (0.0000171)$ -59.38% TBU GTAC Amortization (0.0017570)$ (0.0015698)$ 0.0001872$ 10.66% Storage GTAC Amortization (0.0000076)$ -$ 0.0000076$ 100.00%

Total Commodity 0.6946870$ 0.7112547$ 0.0165677$ 2.39%

D-RGCA-1 Rate ScheduleResidential Gas Core AggregationMonthly Service Charge per Meter 7.30$ 7.30$ -$ 0.00%

Commodity Charges ($/Therm) Distribution Charge 0.2103401$ 0.2103401$ -$ 0.00% Transmission Charge 0.1245549$ 0.1245549$ -$ 0.00% Storage Charge 0.0379078$ 0.0379078$ -$ 0.00% DBU GTAC Amortization 0.0000288$ 0.0000117$ (0.0000171)$ -59.38% TBU GTAC Amortization (0.0017570)$ (0.0015698)$ 0.0001872$ 10.66% Storage GTAC Amortization (0.0000076)$ -$ 0.0000076$ 100.00%

Total Commodity 0.3710670$ 0.3712447$ 0.0001777$ 0.05%

D-GSG-1 Rate ScheduleGeneral Natural Gas ServiceMonthly Service Charge per Meter 0 to 300 19.00$ 19.00$ -$ 0.00% 301 to 1,000 25.05$ 25.05$ -$ 0.00% 1,001 to 2,000 40.35$ 40.35$ -$ 0.00% 2,001 to 5,000 67.75$ 67.75$ -$ 0.00% 5,001 to 10,000 83.25$ 83.25$ -$ 0.00% 10,001 to 30,000 131.55$ 131.55$ -$ 0.00% > 30,000 159.85$ 159.85$ -$ 0.00%


Total Commodity 0.6821771$ 0.6987252$ 0.0165481$ 2.43%

NorthWestern EnergyNatural Gas Utility

Unit Rate Adjustments/Proposed RatesJuly 1, 2015





D-GSGCA-1 Rate ScheduleGeneral Natural Gas Service Core AggregationMonthly Service Charge per Meter 0 to 300 19.00$ 19.00$ -$ 0.00% 301 to 1,000 25.05$ 25.05$ -$ 0.00% 1,001 to 2,000 40.35$ 40.35$ -$ 0.00% 2,001 to 5,000 67.75$ 67.75$ -$ 0.00% 5,001 to 10,000 83.25$ 83.25$ -$ 0.00% 10,001 to 30,000 131.55$ 131.55$ -$ 0.00% > 30,000 159.85$ 159.85$ -$ 0.00%


Total Commodity 0.3585571$ 0.3587152$ 0.0001581$ 0.04%

T-FUGC-1 Rate ScheduleFirm Utility Gas Contract ServiceMonthly Service Charge per Meter 10,001 to 30,000 128.05$ 128.05$ -$ 0.00% > 30,000 330.10$ 330.10$ -$ 0.00%

Transmission Charges: Reservation Rate (MDDQ) 0.6233741$ 0.6233741$ -$ 0.00% Transmission Commodity Rate (Therm) 0.0074304$ 0.0074304$ -$ 0.00% GTAC Amortization (Therm) (0.0019689)$ (0.0016777)$ 0.0002912$ 14.79%

Storage Charges: Reservation Rate (MDDQ) 0.4957783$ 0.4957783$ -$ 0.00% Storage Commodity Rate (Therm) 0.0017934$ 0.0017934$ -$ 0.00% GTAC Amortization (MDDQ) (0.0001050)$ -$ 0.0001050$ 100.00%

Gas Supply Charge (Therm) 0.3236200$ 0.3400100$ 0.0163900$ 5.07%Deferred Gas Cost Amortization (Therm) -$ -$ -$ 0.00%





Non-CoreDistribution Business UnitD-FTG-1 Rate ScheduleFirm Transportation Natural Gas Service Monthly Service Charge per Meter 2,000 to 5,000 122.60$ 122.60$ -$ 0.00% 5,000 to 10,000 140.10$ 140.10$ -$ 0.00% 10,001 to 30,000 192.60$ 192.60$ -$ 0.00% > 30,000 223.70$ 223.70$ -$ 0.00%

Distribution Charge: (MDDQ) Reservation Rate 0.7756431$ 0.7756431$ -$ 0.00% GTAC Amortization 0.0002139$ 0.0000845$ (0.0001294)$ -60.51%

D-ITG-1 Rate ScheduleInterruptible Transportation Natural Gas ServiceMonthly Service Charge per Meter 2,000 to 5,000 122.60$ 122.60$ -$ 0.00% 5,000 to 10,000 140.10$ 140.10$ -$ 0.00% 10,001 to 30,000 192.60$ 192.60$ -$ 0.00% > 30,000 223.70$ 223.70$ -$ 0.00%

Distribution Charge: (Therm) Distribution Commodity Rate 0.0255036$ 0.0255036$ -$ 0.00%

Transportation Business UnitT-FTG-1 Rate ScheduleFirm Transportation Natural Gas Service Monthly Service Charge per Meter 5,001 to 10,000 119.95$ 119.95$ -$ 0.00% 10,001 to 30,000 172.45$ 172.45$ -$ 0.00% > 30,000 382.65$ 382.65$ -$ 0.00%

Transmission Reservation Rate (MDDQ) 0.9805387$ 0.9805387$ -$ 0.00%Transmission Commodity Rate (Therm) Maximum 0.0074304$ 0.0074304$ -$ 0.00% GTAC Amortization (0.0009972)$ (0.0008111)$ 0.0001861$ 18.66%

T-ITG-1 Rate ScheduleInterruptible Transportation Natural Gas Service Monthly Service Charge per Meter 5,001 to 10,000 119.95$ 119.95$ -$ 0.00% 10,001 to 30,000 172.45$ 172.45$ -$ 0.00% > 30,000 382.65$ 382.65$ -$ 0.00%

Transmission Commodity Rate (Therm) Maximum 0.0386666$ 0.0388527$ 0.0001861$ 0.48%

T-FSG-1 Rate ScheduleFirm Storage Natural Gas ServiceMonthly Rate: Withdrawal Reservation Rate: 0.4686762$ 0.4686762$ -$ 0.00% Injection Commodity Rate: 0.0024220$ 0.0024220$ -$ 0.00% Withdrawal Commodity Rate: 0.0024220$ 0.0024220$ -$ 0.00% Storage Capacity Rate: 0.0023010$ 0.0023010$ -$ 0.00% GTAC Amortization (0.0001051)$ -$ 0.0001051$ 100.00%

Docket No. D2014.7.59Appendix BPage 1 of 1

J:\5. Appendix B

Residential Services - Typical Bill Amount

Usage in therms 100 Total Bill Total Bill Bill PercentageRate Amount Rate Amount Change Change

Monthly Service Charge per Meter 7.30$ 7.30$ 7.30$ 7.30$ -$ 0.00%

Commodity Charges: (Monthly $/Therm) Distribution Charge 0.2103401$ 21.03$ 0.2103401$ 21.03$ -$ 0.00% Transmission Charge 0.1245549$ 12.46$ 0.1245549$ 12.46$ -$ 0.00% Storage Charge 0.0379078$ 3.79$ 0.0379078$ 3.79$ -$ 0.00% Gas Supply Charge 0.3236200$ 32.36$ 0.3400100$ 34.00$ 1.64$ 5.07% Deferred Gas Cost Amortization -$ -$ -$ -$ -$ 0.00% DBU GTAC Amortization 0.0000288$ -$ 0.0000117$ -$ -$ 0.00% TBU GTAC Amortization (0.0017570)$ (0.18)$ (0.0015698)$ (0.16)$ 0.02$ 11.11% Storage GTAC Amortization (0.0000076)$ -$ -$ -$ -$ 0.00% USBC 0.0078577$ 0.79$ 0.0078577$ 0.79$ -$ 0.00%

Total Commodity 0.7025447$ 70.25$ 0.7191124$ 71.91$ 1.66$ 2.36%

Total Bill (Price per therm Incl. Service Charge) 0.775500$ 77.55$ 0.792100$ 79.21$ 1.66$ 2.14%

Current as of June 1, 2015 Proposed

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of NorthWestern Energy’s Annual Natural

Gas Tracker Filing in Docket No. D2014.7.59 has been hand delivered to the Montana

Public Service Commission and Montana Consumer Counsel and also e-filed with the

Montana Public Service Commission. It has also been served upon the following persons

by postage prepaid via first class mail as follows:

Robert Nelson

Montana Consumer Counsel

PO Box 201703

Helena Mt 59620-1703

Connie Moran

NorthWestern Energy

40 East Broadway

Butte MT 59701

Joe Schwartzenberger

NorthWestern Energy

40 East Broadway

Butte MT 59701

Kate Whitney

Public Service Commission

1701 Prospect Ave

PO Box 202601

Helena MT 59620-2601

John Alke

NorthWestern Energy

208 N Montana Ave Suite 205

Helena MT 59601

Sarah Norcott

NorthWestern Energy

208 N Montana Ave Suite 205

Helena MT 59601

DATED this 5th day of June 2015.

1

DEPARTMENT OF PUBLIC SERVICE REGULATION

BEFORE THE PUBLIC SERVICE COMMISSION


IN THE MATTER OF NorthWestern Energy’s )

Application For: (1) Unreflected Gas Cost Account ) Docket No. D2014.7.59

Balance and Projected Gas Cost; and (2) Gas )

Transportation Adjustment Clause Balance )

NOTICE OF INTERIM RATE ADJUSTMENT REQUEST

NorthWestern Energy (“NorthWestern”) serves notice pursuant to ARM 38.5.503

that it has filed with the Montana Public Service Commission (“Commission”), via its

Application, a request for an interim rate increase for core customers in natural gas rates

in this Docket to reflect Forecast Gas Costs and the Unreflected Gas Cost Account

(“UGCA”) Balance and an interim rate increase for core customers and core aggregation

customers to reflect the Gas Transportation Adjustment Clause (“GTAC”) Balance. This

request also includes an interim rate decrease for non-core Distribution Business Unit

distribution transportation service, an increase for non-core Transmission Business Unit

transportation firm service, and an increase for storage service customers relating to the

GTAC adjustment. This interim request includes the use of monthly gas cost adjustments

going forward. NorthWestern requests that the proposed rates and monthly cost

adjustments become effective for service on an interim basis on and after July 1, 2015

pending a final decision on its Application.

The rate adjustments are required to: 1) reflect an increase in the projected gas

costs; 2) account for the deferred UGCA Balance for the 12-month period ending June

30, 2015; 3) amortize the GTAC Balance as of April 30, 2015; 4) extinguish the unit

amortizations in the current rates; and 5) continue to reflect the costs of NorthWestern’s

2

interest in the Bear Paw and Devon natural gas production and gathering assets in rates

on an interim basis.

The net adjustments proposed in this filing result in the following:

An increase in natural gas supply rates from the current $0.32362

per therm to $0.34001 per therm.

The deferred UGCA Balance for the 12-month period ending June

30, 2015 was $(1,763,882). NorthWestern requests that the

remaining UGCA balance of $(711,416) approved in Interim Order

No. 7282b in Consolidated Docket Nos. D2013.5.34 and

D2014.5.47 be added to the UGCA balance. The estimated Total

UGCA Balance at the end of June 2015 is an over-collection of

$(2,475,298). NorthWestern proposes to set the related deferred

rate at zero until actuals are recorded for the months of May and

June 2015. NorthWestern will then review the account balance

and determine if the final amount of the UGCA merits filing a

separate deferred rate adjustment proposal.

GTAC balance for this filing is an over-collection of $(451,860),

which is the sum of the GTAC booked balance for the period

ending April 30, 2015 of $(477,622) and the current balance of the

amortization approved in Order 7282b of $25,761 and will be

refunded to customers over the 12-month period ending June 30,

2016.

The interim request and supporting documents can be examined at

NorthWestern’s General Office, 40 East Broadway, Butte, Montana; at the office of the

Montana Consumer Counsel (“MCC”), 111 North Last Chance Gulch, Suite 1B, Helena,

Montana; or at the office of the Commission, 1701 Prospect Avenue, Helena, Montana.

The MCC is available to assist in the representation of consumer interests in this matter,

and its phone number is 406-444-2771.

Any response which any person wishes to have the Commission take into

consideration in its decision on this interim rate relief matter should be delivered to the

3

Commission at the above address as soon as possible or mailed to the MPSC at P.O. Box

202601, Helena, MT 59620-2601.

Any portion of the interim adjustment approved by the Commission pending

hearing and final decision would, pursuant to § 69-3-304, MCA, be subject to rebate or

surcharge if the final decision in this docket is to approve a final rate which is different

than the interim rate.

DATED: June 5, 2015

KTVQ and KULRKXLFKECI and KPAXKFBB and KRTVKTVMKTVH

DEPARTMENT OF PUBLIC SERVICE REGULATIONBEFORE THE PUBLIC SERVICE COMMISSION


In the Matter of NorthWestern Energy's Application For: )(I) Unreflected Gas Cost Account Balance and ) Docket No. D2014.7.59Projected Gas Cost; and (2) Gas Transportation )Adjustment Clause Balance )

CERTIFICATE OF SERVICEOF NOTICE OF INTERIM RATE ADJUSTMENT REQUEST

FOR NATURAL GAS SUPPLY RATES

The undersigned certifies that a Notice of Interim Rate Adjustment Request was this day

served by mail upon the following:

Daily NewspapersMontana Standard Helena Independent RecordMissoulian Billings GazetteGreat Falls Tribune Livingston EnterpriseBozeman Chronicle Ravalli RepublicDaily Inter Lake Havre Daily News

Associated Press Print and Broadcast Services

Television StationsBillingsButteMissoulaGreat FallsBozemanHelena

DATED: June 5, 2015

NorthWestern Energy

I dia Rapkoch40 ast BroadwayButte, Montana 59701

JMS-1

Department of Public Service Regulation 1

Montana Public Service Commission 2

Docket No. D2014.7.59 3

Annual Natural Gas Supply Tracker Filing 4

NorthWestern Energy 5

6

7

PREFILED DIRECT TESTIMONY 8

OF JOHN M. SMITH 9

ON BEHALF OF NORTHWESTERN ENERGY 10

11

TABLE OF CONTENTS 12

Description Starting Page No. 13

Witness Information 2 14

Purpose of Testimony 3 15

Actual 10 Months Plus 2 Months Est. Ended June 30, 2015 4 16

NorthWestern Energy Owned Production Update 7 17

2015–2016 Expected Natural Gas Market, Supply and Cost 8 18

19

Exhibits 20

10-Mos. Actual & 2-Mos. Est. vs. Docket No. D2014.5.47 Exhibit__(JMS-1) 21

and Associated Work Papers 22

2015–2016 Expected Natural Gas Market, Supply and Cost Exhibit__(JMS-2) 23

and Associated Work Papers 24

25

JMS-2

Witness Information 1

Q. Please state your name and business address. 2

A. I am John M. Smith and my business address is 40 East Broadway, Butte, 3

Montana 59701. 4

5

Q. By whom and in what capacity are you employed? 6

A. I am employed by NorthWestern Energy (“NorthWestern”) as Manager, 7

Montana Gas Supply, in the Energy Supply Department. 8

9

Q. Please state your educational background and experience. 10

A. I attended Montana State University, graduating in 1979 with a Bachelor of 11

Science degree in Business Management. Upon graduation, I went to 12

work for The Montana Power Company (“MPC”) in the Revenue 13

Requirements Department. I have worked in various capacities in the 14

Electric and Gas Utilities and assumed the positions of Director of Gas 15

Supply in May of 1988, Director of Resource Acquisition in May of 1996, 16

and Manager of Strategic Sourcing in April 1998. I worked on the 17

ConnectMPC project from April 1999 to April 2000, when I returned to the 18

Energy Supply Division of MPC. In July 2002, after the acquisition of MPC 19

by NorthWestern, my title was changed to Manager, Energy Supply. In 20

August 2011, my title was changed to Manager, Montana Gas Operations 21

as part of a reorganization of NorthWestern’s Energy Supply Department. 22

In late 2013, my title was changed to Manager, Montana Gas Supply. 23

JMS-3

Q. What are your responsibilities as Manager, Montana Gas Supply? 1

A. In this capacity, I am responsible for short- and long-term natural gas 2

supply planning and day-to-day natural gas portfolio management. These 3

responsibilities encompass NorthWestern's natural gas purchase contract 4

negotiations and administration in Montana. I also supervise the 5

development of required data on these topics for presentation to the 6

Montana Public Service Commission (“Commission”). My position 7

requires significant coordination with natural gas suppliers and 8

transportation services providers, as well as other departments of 9

NorthWestern, in relation to budget planning, natural gas purchase 10

contracts, operations and reliability, and other gas supply issues. 11

12

Q. Have you previously filed testimony before this Commission? 13

A. Yes. I have presented testimony addressing natural gas market and 14

supply matters in numerous natural gas cost tracking filings. 15

16

Purpose of Testimony 17

Q. What specific topics do you address in your testimony in this 18

proceeding? 19

A. I address the following topics in my testimony: 20

1. An explanation of the 10-months actual and 2-months estimated 21

natural gas market, supply, and cost for the 12 months ended June 30, 22

2015; 23

JMS-4

2. An update regarding delivery of natural gas from NorthWestern Owned 1

Production from the Bear Paw and Devon acquisitions to Loomis; and 2

3. A description of the forecast natural gas market, supply, and cost for 3

the 12-month period, July 1, 2015 through June 30, 2016. 4

5

Actual 10 Months Plus 2 Months Estimated Ended June 30, 2015 6

Q. Do you sponsor an exhibit which summarizes the actual operations 7

during the 12 months ended June 30, 2015, with the last two months 8

based on estimated data? 9

A. Yes. Exhibit__(JMS-1) compares the market requirements, supply, and 10

cost as projected in the 2014/2015 Annual Natural Gas Supply Tracker 11

(Docket No. D2014.5.47) with the actual 2014/2015 market requirements, 12

supply, and costs. The June 30, 2015 figures include 10 months of actual 13

data and 2 months of estimated data. 14

15

Q. Please compare the 10-month actual and 2-month estimated natural 16

gas cost which NorthWestern experienced on behalf of core 17

customers from July 1, 2014 through June 30, 2015 with the natural 18

gas cost estimated by NorthWestern for this period in Docket No. 19

D2014.5.47. 20

A. At the time of this filing, the total net natural gas cost on Exhibit__(JMS-1), 21

line 61 is estimated to be $21,063,000 lower than projected by 22

NorthWestern in Docket No. D2014.5.47. 23

JMS-5

Q. Did this lower total net natural gas cost result in a lower unit cost per 1

dekatherm (“Dkt”)? 2

A. Yes. The 12-month cost per Dkt of $3.7283 was initially calculated for 3

core customer rates prior to the revenue requirement rate component 4

addition for owned production (Battle Creek, Bear Paw, and Devon). The 5

corresponding 10-month actual cost plus 2-month estimated cost per Dkt 6

is $2.7909. These costs are presented on Exhibit__(JMS-1) on line 67. 7

8

Q. What is the current estimated balance in the deferred account at the 9

end of the tracking year on June 30, 2015? 10

A. The estimated balance in the deferred account as of June 30, 2015, is an 11

over-collection (revenues > expenses) of $(2,475,298). This dollar value 12

is also discussed in the Prefiled Direct Testimony of Patrick J. DiFronzo 13

(“DiFronzo Direct Testimony”). 14

15

Q. How does NorthWestern manage the deferred account? 16

A. As part of its monthly tracker filings, NorthWestern progressively balances 17

the remaining estimated months’ deferred account to be as close to zero 18

as practical at the end of the tracking year. After actual data is available 19

for May and June, the balance will be different from the amount currently 20

estimated, and the final result may be either an under- or over-collection. 21

22

JMS-6

Q. Is NorthWestern proposing a rate component for a prior-year true-up 1

of this estimated deferred account balance? 2

A. No. NorthWestern does not propose to establish a specific rate 3

amortization based on the estimated deferred account balance of 4

$(2,475,298) at this time. Once the actual data for May and June 2015 5

are known and an actual deferred account balance is quantified, 6

NorthWestern will determine whether a deferred account balance true-up 7

is needed and, if necessary, will request the appropriate rate amortization. 8

This rate adjustment will be an increase if the deferred account is under-9

collected or a decrease if the deferred account is over-collected. 10

NorthWestern would implement any such rate adjustment in August or 11

September of 2015 through the associated monthly tracker filing. The 12

deferred account balance will be divided by the projected sales for the 13

remaining months of the tracker year to calculate the rate adjustment. 14

15

Q. Are there any other issues to discuss pertaining to the 2014/2015 16

10-month actual plus 2-month estimated natural gas cost? 17

A. Yes. Lost Revenues for natural gas distribution, transmission, and 18

storage (“D, T, & S”) are included in this filing. The D, T, & S total lost 19

revenue is normally reported as negative revenue. On page 2, line 15 of 20

the Exhibit__(JMS-1) Work Papers, the D, T, & S total lost revenue 21

amount of $(286,622) is shown. Battle Creek Lost Revenue is reported 22

on page 2, line 14 of the Exhibit__(JMS-2) Work Papers. The total Battle 23

JMS-7

Creek Lost Revenue amount of $(12,371) is also reported as negative 1

revenue. The derivation of these amounts is included in the Prefiled 2

Direct Testimony of Danie L. Williams (“Williams Direct Testimony”). 3

4

NorthWestern Energy Owned Production Update 5

Q. Did NorthWestern make changes to the operation of the 6

NorthWestern Owned Production during the 2014/2015 Tracking 7

Year? 8

A. Yes. In the Consolidated Docket Nos. D2013.5.34/D2014.5.47, 9

NorthWestern filed supplemental testimony and exhibits related to a 10

production allocation issue caused by the off-system delivery of physical 11

volumes to the Loomis delivery point on the Montana/Canadian border. 12

13

Q. Is NorthWestern continuing to deliver physical volumes of natural 14

gas north to Canada at Loomis? 15

A. No. The physical delivery of volumes to Loomis stopped in early 16

November 2014. 17

18

Q. Are NorthWestern’s customers receiving the benefit of 100% of the 19

production properties that NorthWestern has purchased? 20

A. Yes. All of the NorthWestern Owned Production, including the gas 21

produced by NorthWestern’s third-party partners in the various producing 22

fields related to the recent acquisitions, is currently being delivered to 23

NorthWestern’s gas transmission system. 24

JMS-8

2015-2016 Expected Natural Gas Market, Supply and Cost 1

Q. Do you sponsor an exhibit that sets forth NorthWestern’s expected 2

natural gas market and supply balance for the July 1, 2015 through 3

June 30, 2016 12-month tracker period? 4

A. Yes. Exhibit__(JMS-2) sets forth the projected market and natural gas 5

supply. 6

7

Q. What natural gas cost ($/Dkt) does NorthWestern project for the Core 8

and Firm Utility Gas Contract (“FUGC”) customers during the 9

upcoming 12-month tracker year? 10

A. The projected natural gas cost for Core and FUGC sales is $2.16390/Dkt 11

as shown on line 45 of Exhibit__(JMS-2) and also on line 7, page 2 of the 12

Exhibit__(JMS-2) Work Papers. The Therm rate is $0.216390 as shown 13

on line 46 of Exhibit__(JMS-2). 14

15

Q. Are there any adjustments to the Core and FUGC rate? 16

A. Yes. There are additional fixed cost revenue requirement rate 17

components for Battle Creek, Bear Paw, and Devon production. The 18

Battle Creek fixed cost revenue requirement rate component is 19

$0.12370/Dkt (line 48, Exhibit__(JMS-2)). The Bear Paw fixed cost 20

revenue requirement rate component is $0.18170/Dkt (line 51, 21

Exhibit__(JMS-2)). The Devon fixed cost revenue requirement rate 22

component is $0.93080/Dkt (line 54, Exhibit__(JMS-2)). These amounts 23

JMS-9

have been added to the $2.16390/Dkt, resulting in a Total Combined Rate 1

of $3.40010/Dkt or $0.340010/Therm. These amounts are found 2

respectively on lines 57 and 58 of Exhibit__(JMS-2). 3

4

Q. Are there other costs associated with Battle Creek, Bear Paw, and 5

Devon production in the 2015/2016 natural gas tracker filing? If so, 6

please identify where these costs are included. 7

A. Yes. Production-related taxes and royalty payments are variable costs 8

that change with the amount of production and the index price of natural 9

gas. Since these costs vary over time, it is appropriate that they are 10

included in the natural gas tracker filing. The annual cost for these items 11

is shown on line 24 of Exhibit__(JMS-2), labeled “NW Energy Owned 12

Production.” The monthly detail is on page 2, line 24 of the 13

Exhibit__(JMS-2) Work Papers. 14

15

Q. How does the Total Combined Rate of $3.40010/Dkt compare to the 16

rate in last year’s annual natural gas cost tracker filing? 17

A. The Total Combined Rate requested last year in Docket No. D2014.5.47 18

was $4.96450/Dkt. This year’s requested Total Combined Rate of 19

$3.40010/Dkt is a decrease of $1.56440/Dkt. 20

21

Q. Do you propose any further adjustments to the projected 22

$3.40010/Dkt Total Combined Rate? 23

JMS-10

A. No. NorthWestern proposes $3.40010/Dkt ($0.340010/Therm) as the rate 1

to become effective on an interim basis as of July 1, 2015. The next 2

monthly tracker filing will be for an August 1, 2015 rate change. If natural 3

gas prices move dramatically in either direction prior to June 15, 2015, 4

NorthWestern will file an amended monthly natural gas cost tracker filing 5

for a July 1, 2015 monthly rate adjustment. 6

7

Q. Are there any other items to discuss pertaining to the 2015/2016 8

estimated gas cost? 9

A. Yes. Lost Revenues for D, T, & S are also included in the 2015/2016 12-10

month tracker period. On page 2, line 15, of the Exhibit__(JMS-2) Work 11

Papers, the lost revenue amount of $(423,616) is reported as negative 12

revenue. The Battle Creek Lost Revenue amount of $(16,958) is 13

separately reported on page 2, line 14 of the Exhibit__(JMS-2) Work 14

Papers. The derivation of these amounts is included in the Williams Direct 15

Testimony. 16

17

Q. Are the Lost Revenues reported on Exhibit__(JMS-1) and 18

Exhibit__(JMS-2) as well? 19

A. Yes. The D, T, & S and Battle Creek Lost Revenues for 2014-2015 are 20

reported on Exhibit__(JMS-1) on lines 62 and 63 (rounded), and for 2015-21

2016 on Exhibit__(JMS-2) on lines 41 and 42 (rounded). On both exhibits, 22

the Lost Revenues are reported as an additional cost rather than as 23

negative revenue. Since both exhibits include only costs, reporting the 24

JMS-11

“Lost Revenues” as a cost was the only way to make both exhibits work 1

mathematically. 2

3

Q. Does this conclude your testimony? 4

A. Yes, it does. 5

Docket No. 2014.7.59 EXHIBIT__(JMS-1) Page 1 of 1

ACTUAL OPERATIONS 10 MONTHS ACTUAL & 2 MONTHS ESTIMATE ENDING June 30, 2015 VERSUS DOCKET No. 2014.5.47

-----------------------------------------------------------------------------------------Docket No. 10 ACT/2 EST OVER/(UNDER)2014.5.47 12 MO.END. Docket No. OVER/(UNDER)

CITY GATE REQUIREMENTS Dkt (000) as filed 05/29/14 06/30/15 2014.5.47 %------------------------ ----------- -------------- --------------- -------------------

1 GAS COST SALES2 DBU SALES - BILLED 19,782 18,419 (1,363) (6.9)34 DBU SALES - CITY GATE DELIVERIES 19,782 18,419 (1,363) (6.9)5 FUGC 219 212 (7) (3.2)6 ----------- ----------- ----------- -----------7 TOTAL CITY GATE REQUIREMENTS 20,001 18,631 (1,370) (6.8)89 Cycle Billing Adj. 0 35 35

10 CORE FUEL U & UAF 492 459 (33) (6.7)1112 ----------- ----------- ----------- -----------13 TOTAL GAS SUPPLY REQUIREMENTS 20,493 19,125 (1,368) (6.7)1415 GAS SUPPLY Dkt (000)16 ----------------------17 CANADIAN PIPELINE 7,100 6,090 (1,010)1819 HAVRE PIPELINE 2,452 2,044 (408) (16.6)2021 ENCANA PIPELINE 4,263 4,175 (88) (2.1)2223 COLORADO INTERSTATE PIPELINE 0 0 02425 INTRA - MONTANA PURCHASES 825 840 15 1.826 NW ENERGY OWNED PRODUCTION 5,960 6,188 228 3.82728 STORAGE NET (-Inj. / +With.) (13) (23) (10)2930 STORAGE FUEL USE (94) (62) 3231 ----------- ----------- ----------- -----------32 TOTAL GAS SUPPLY 20,493 19,252 (1,241) (6.1)3334 COST $(000)35 ----------------------36 NOVA CAPACITY 2,835$ 1,487$ (1,348)$ 37 TRANS CANADIAN PIPELINE 27,649$ 21,113$ (6,536)$ 3839 HAVRE PIPELINE 9,723$ 5,216$ (4,507)$ (46.4)4041 ENCANA PIPELINE 16,881$ 12,233$ (4,648)$ (27.5)4243 COLORADO INTERSTATE PIPELINE -$ -$ -$ 4445 INTRA - MONTANA PURCHASES 3,425$ 2,464$ (961)$ (28.1)46 NW ENERGY OWNED PRODUCTION 5,095$ 3,651$ 4748 STORAGE 3,835$ 3,505$ (330)$ 4950 TOTAL GAS SUPPLY COST 69,443$ 49,669$ (19,774)$ (28.5)5152 ----------- ----------- ----------- -----------53 NET GAS COSTS TO MT MKT 69,443$ 49,669$ (19,774)$ (28.5)5455 WORKING GAS REVENUE REQUIREMENT 1,621$ 1,406$ (215)$ (13.3)5657 DEFERRED ACCOUNT INTEREST 334$ (65)$ 5859 ADMINISTRATIVE COSTS 1,364$ 689$ 60 ----------- ----------- ----------- -----------61 TOTAL NET GAS COSTS (INCL. W.G. REV REQ) 72,762$ 51,699$ (21,063)$ (28.9)62 Lost Revenues (D,T,& S) 494$ 287$ 63 Battle Creek Lost Revenues 19$ 12$ 64 TOTAL GAS COST (Incl Lost Rev) 73,275$ 51,998$ (21,277)$ (29.0)65 UNIT NET GAS COSTS ($/DKT)6667 CORE RATE ($/Dkt) 3.7283$ 2.7909$ (0.9373)$ (25.1)

Docket No. D2014.7.59EXHIBIT__(JMS-1) Work Papers

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1 Natural Gas Default Supply Tracking Mechanism2 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimate Estimate3 Volume Balancing Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Total45 Billed Market (Dekatherms)6 Residential 293,054 224,871 323,126 457,028 983,429 1,797,902 2,113,639 1,548,422 1,472,950 979,657 863,092 510,893 11,568,064 7 LIEAP 15,961 10,213 14,243 19,563 39,651 73,581 90,265 70,067 70,469 49,235 49,350 30,019 532,616 8 Employee 848 499 829 1,232 2,255 4,257 4,800 3,667 3,509 2,427 2,556 1,573 28,453 9 Commercial 190,316 165,439 195,553 234,757 507,430 910,142 1,089,313 790,690 743,454 498,741 430,056 269,339 6,025,230

10 Firm Industrial 5,960 6,562 4,614 5,258 11,913 17,287 24,100 30,172 19,731 11,309 7,967 5,230 150,103 11 Governmental 1,464 939 2,079 2,654 6,009 7,588 11,066 5,337 6,837 4,816 4,382 3,155 56,324 12 Inter-Department 1,871 1,299 1,993 2,430 4,434 8,706 10,098 7,226 6,941 5,349 4,756 3,120 58,222 13 CNG Vehicles - - - - - - - - - - - - - 14 Total Distribution Sales 509,473 409,823 542,436 722,921 1,555,121 2,819,463 3,343,281 2,455,582 2,323,891 1,551,534 1,362,157 823,328 18,419,011 1516 Cycle Billing Adjustment -49,825 66,307 90,242 416,100 632,171 261,909 -443,849 -65,845 -386,178 -94,689 -269,415 -122,534 34,394 1718 Distribution City Gate Deliveries 459,648 476,130 632,679 1,139,021 2,187,292 3,081,372 2,899,431 2,389,736 1,937,713 1,456,846 1,092,743 700,795 18,453,405 1920 Firm Utility Gas Sales (Dekatherms)21 Cut Bank 3,656 1,718 2,267 5,426 9,281 27,119 28,447 30,192 23,869 17,881 14,898 6,779 171,533 22 Kevin 296 51 66 163 799 2,608 2,793 2,939 2,438 1,895 1,026 330 15,404 23 Sunburst 552 226 300 615 1,184 4,072 4,348 4,618 3,687 2,471 2,285 781 25,138 24 Total Utility Sales 4,504 1,995 2,633 6,204 11,264 33,799 35,588 37,749 29,994 22,247 18,209 7,889 212,075 2526 Total City Gate Deliveries 464,152 478,125 635,312 1,145,225 2,198,556 3,115,171 2,935,019 2,427,485 1,967,707 1,479,093 1,110,952 708,684 18,665,480 2728 Transmission U&UAF 11,418 11,762 15,629 28,173 54,084 76,633 72,201 59,716 48,406 36,386 27,329 17,434 459,171 2930 Total Supply Requirements 475,570 489,887 650,941 1,173,398 2,252,640 3,191,804 3,007,220 2,487,201 2,016,113 1,515,479 1,138,281 726,118 19,124,651 3132 Gas Supply (Dekatherms)33 Nova Capacity - - - - - - - - - - - - - 34 Canada Pipeline 620,000 310,000 300,000 310,000 34,500 650,000 620,000 560,000 620,000 795,000 650,000 620,000 6,089,500 35 Havre Pipeline 185,434 183,364 183,166 73,886 176,493 167,829 178,526 156,128 167,532 161,811 208,268 201,550 2,043,987 36 EnCana Pipeline 374,758 378,137 352,460 371,632 340,961 331,475 351,415 306,441 334,621 320,788 362,000 350,500 4,175,188 37 Colorado Interstate Pipeline - - - - - - - - - - - - - 38 NW Energy Owned Production 528,867 534,703 504,512 616,291 507,431 526,236 508,829 454,056 514,704 497,430 502,456 492,465 6,187,980 39 Intra-Montana Purchases 66,820 74,605 67,073 69,114 69,454 84,968 69,710 73,753 80,856 61,984 60,675 60,675 839,687 4041 Total Purchases 1,775,879 1,480,809 1,407,211 1,440,923 1,128,839 1,760,508 1,728,480 1,550,378 1,717,713 1,837,013 1,783,399 1,725,190 19,336,342 4243 - - - - - - - - - - - - - 4445 Storage Activity46 Storage Supply Activity 1,373,701 1,112,997 732,522 295,589 (1,762,659) (1,300,491) (1,401,539) (880,714) (52,720) 324,342 645,118 999,072 85,218 47 Storage U&UAF (injection only) 15,484 12,545 8,257 3,332 - - - - - 3,656 7,271 11,261 61,806 48 Metered Storage Activity 1,358,217 1,100,452 724,265 292,257 (1,762,659) (1,300,491) (1,401,539) (880,714) (52,720) 320,686 637,847 987,811 23,412 4950 Net Difference (delivered vs. supply) 73,392 122,075 (23,748) 28,064 (638,858) 130,805 (122,799) 56,109 245,680 2,808 (0) (0) 5152 05/12/15


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1 Natural Gas Default Supply Tracking Mechanism2 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimate Estimate3 Supply Revenue/Cost Calculations Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Total45 Total Sales6 Dekatherms 513,977 411,818 545,069 729,125 1,566,385 2,853,262 3,378,869 2,493,331 2,353,885 1,573,781 1,380,366 831,218 18,631,086 7 Current Year Supply Cost 3.7283$ 3.2646$ 3.0992$ 3.0920$ 3.0899$ 3.0339$ 3.0097$ 2.5747$ 2.3142$ 2.2868$ 2.0000$ 2.0000$ 8 Prior Year(s) Deferred Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 9 Current Year Deferred Adjust. -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

1011 Gas Cost Revenues12 Current Year Gas Cost 2,407,505$ 1,465,009$ 1,737,858$ 2,256,453$ 4,839,583$ 8,753,375$ 10,215,535$ 7,081,402$ 5,796,011$ 3,631,534$ 2,760,733$ 1,662,435$ 52,607,432$ 13 Prior Year(s) Defered Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 14 Battle Creek Lost Revenue (1,603)$ (1,603)$ (1,603)$ (1,603)$ (1,603)$ (1,603)$ (1,603)$ (1,603)$ (1,603)$ (1,603)$ 1,830$ 1,829$ (12,371)$ 15 Lost Revenue (D, T, & S.) (41,176)$ (41,176)$ (41,176)$ (41,176)$ (41,176)$ (41,176)$ (41,176)$ (41,176)$ (41,176)$ (41,176)$ 62,569$ 62,569$ (286,622)$ 16 Total Revenue 2,364,726$ 1,422,230$ 1,695,079$ 2,213,674$ 4,796,804$ 8,710,596$ 10,172,756$ 7,038,623$ 5,753,232$ 3,588,755$ 2,825,132$ 1,726,833$ 52,308,439$ 1718 Natural Gas Expenses19 NOVA Capacity 98,528$ 96,029$ 95,850$ 93,949$ 92,553$ 92,731$ 87,888$ 115,944$ 125,534$ 115,587$ 236,264$ 236,264$ 1,487,119$ 20 Canada Pipeline 2,559,315$ 1,247,371$ 1,025,245$ 1,124,296$ 118,335$ 2,724,475$ 2,648,950$ 2,392,600$ 2,648,950$ 1,726,881$ 1,426,490$ 1,470,020$ 21,112,928$ 21 Havre Pipeline 591,006$ 502,091$ 484,575$ 359,367$ 534,725$ 511,822$ 405,766$ 307,871$ 346,972$ 315,830$ 415,411$ 440,786$ 5,216,223$ 22 EnCana Pipeline 1,562,951$ 1,353,266$ 1,270,841$ 1,303,976$ 1,118,193$ 1,169,746$ 956,604$ 644,657$ 702,266$ 655,327$ 728,245$ 766,936$ 12,233,007$ 23 Colorado Interstate Pipeline -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 24 NW Energy Owned Production 368,968$ 340,415$ 336,102$ 397,123$ 310,375$ 285,720$ 231,358$ 159,032$ 193,600$ 176,550$ 432,744$ 418,784$ 3,650,770$ 25 Intra-Montana Purchases 269,010$ 267,216$ 239,310$ 230,849$ 232,818$ 301,354$ 196,076$ 165,892$ 183,458$ 125,020$ 121,024$ 131,726$ 2,463,754$ 26 Storage Injection/Withdrawal (4,168,066)$ (3,499,594)$ (1,105,733)$ (711,831)$ 5,459,581$ 4,028,083$ 4,341,064$ 2,727,884$ 163,293$ (543,817)$ (1,201,794)$ (1,983,716)$ 3,505,354$ 27 Total Natural Gas Expenses 1,281,712$ 306,793$ 2,346,190$ 2,797,729$ 7,866,580$ 9,113,930$ 8,867,705$ 6,513,880$ 4,364,072$ 2,571,378$ 2,158,384$ 1,480,800$ 49,669,154$ 2829 Administrative Expenses30 MCC Tax Collection 3,329$ 2,164$ 2,643$ 3,147$ 6,757$ 12,222$ 14,255$ 10,019$ (9,880)$ 3,538$ 2,392$ 1,308$ 51,896$ 31 MPSC Tax Collection 12,589$ 8,223$ 10,042$ 6,241$ 13,416$ 24,152$ 28,206$ 19,717$ (23,175)$ 6,974$ 4,712$ 2,585$ 113,680$ 32 Labor & Benefits -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 33 DSM Expense 55,853$ 45,958$ 1,759$ 20,147$ 99,849$ 20,553$ 2,161$ 6,617$ 53,773$ 64,192$ 36,966$ 36,966$ 444,795$ 34 Computer Expense & Support 7,294$ 2,524$ 2,524$ 2,524$ 2,524$ 2,524$ 4,137$ 2,622$ 85,529$ 2,637$ -$ -$ 114,838$ 35 Travel/Education Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 36 Legal Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 37 Basin Creek Storage Rebate (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (36,000)$ 38 Total Administrative Expenses 76,065$ 55,869$ 13,968$ 29,059$ 119,546$ 56,451$ 45,759$ 35,975$ 103,247$ 74,341$ 41,070$ 37,859$ 689,208$ 3940 Rate Base Expenses41 Storage Working Gas 153,063$ 193,033$ 193,398$ 199,633$ 151,816$ 116,537$ 78,516$ 54,625$ 53,194$ 57,957$ 68,483$ 85,857$ 1,406,114$ 42 Deferred Expense (9,818)$ (21,940)$ (10,068)$ (5,033)$ 8,648$ 12,318$ 4,988$ 2,297$ (5,421)$ (11,007)$ (14,571)$ (15,429)$ (65,037)$ 43 Total Rate Base Expense 143,245$ 171,093$ 183,330$ 194,600$ 160,464$ 128,854$ 83,505$ 56,921$ 47,773$ 46,951$ 53,912$ 70,428$ 1,341,077$ 4445 Total Expenses 1,501,022$ 533,754$ 2,543,488$ 3,021,388$ 8,146,591$ 9,299,236$ 8,996,969$ 6,606,776$ 4,515,092$ 2,692,670$ 2,253,366$ 1,589,086$ 51,699,439$ 4647 Deferred Cost Amortization -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 4849 Monthly Deferred Cost 863,704$ 888,476$ (848,410)$ (807,714)$ (3,349,787)$ (588,640)$ 1,175,787$ 431,848$ 1,238,140$ 896,085$ 571,765$ 137,747$ 609,000$ 50 Cumulative Deferred Cost 863,704$ 1,752,179$ 903,769$ 96,055$ (3,253,731)$ (3,842,372)$ (2,666,585)$ (2,234,737)$ (996,597)$ (100,512)$ 471,253$ 609,000$ 5152535455 05/12/15


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1 Natural Gas Default Supply Tracking Mechanism2 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimate Estimate3 Total Supply Cost Calculations Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-1545 Rate Base Storage6 Beginning Inventory 3,883,824 5,242,041 6,342,493 7,066,758 7,359,015 5,596,356 4,295,865 2,894,326 2,013,612 1,960,892 2,281,578 2,919,425 7 Net Storage Activity 1,358,217 1,100,452 724,265 292,257 (1,762,659) (1,300,491) (1,401,539) (880,714) (52,720) 320,686 637,847 987,811 8 Ending Inventory 5,242,041 6,342,493 7,066,758 7,359,015 5,596,356 4,295,865 2,894,326 2,013,612 1,960,892 2,281,578 2,919,425 3,907,236 9

10 Beginning Rate Base $ 13,308,260$ 17,476,326$ 20,305,014$ 22,081,654$ 22,793,485$ 17,333,903$ 13,305,820$ 8,964,756$ 6,236,872$ 6,073,579$ 6,617,397$ 7,819,191$ 11 Net Storage Activity $ 4,168,066$ 2,828,687$ 1,776,640$ 711,831$ (5,459,581)$ (4,028,083)$ (4,341,064)$ (2,727,884)$ (163,293)$ 543,817$ 1,201,794$ 1,983,716$ 12 Ending Rate Base $ 17,476,326$ 20,305,014$ 22,081,654$ 22,793,485$ 17,333,903$ 13,305,820$ 8,964,756$ 6,236,872$ 6,073,579$ 6,617,397$ 7,819,191$ 9,802,907$ 1314 Beginning Unit Cost 3.4266$ 3.3339$ 3.2014$ 3.1247$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 2.9004$ 2.6783$ 15 Activity Unit Cost 3.0688$ 2.5705$ 2.4530$ 2.4356$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 1.6958$ 1.8841$ 2.0082$ 16 Ending Unit Cost 3.3339$ 3.2014$ 3.1247$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 3.0974$ 2.9004$ 2.6783$ 2.5089$ 171819 Deferred Supply Cost Expense20 Beginning Balance (711,417)$ (1,575,121)$ (2,463,596)$ (1,615,186)$ (807,472)$ 1,387,433$ 1,976,074$ 800,287$ 368,439$ (869,701)$ (1,765,786)$ (2,337,551)$ 21 Monthly Activity (863,704)$ (888,476)$ 848,410$ 807,714$ 2,194,906$ 588,640$ (1,175,787)$ (431,848)$ (1,238,140)$ (896,085)$ (571,765)$ (137,747)$ 22 Ending Balance (1,575,121)$ (2,463,596)$ (1,615,186)$ (807,472)$ 1,387,433$ 1,976,074$ 800,287$ 368,439$ (869,701)$ (1,765,786)$ (2,337,551)$ (2,475,298)$ 232425 Oct 1,201426 Interest Interest Rate27 Working Gas 10.51% 10.51%28 Deferred Account 7.48% 7.48%29 $3,349,787 November Monthly Deferred Account Activity (Ties to Line #49 on "Total Supply Cost" tab)30 ($1,154,881) Deferred Account Adjustment Pursuant to Supplemental Filing (12/05/14)31 Regulatory Taxes Oct.1,2013 Oct.1,2014 $2,194,906 November Adjusted Deferred Account Activity (Ties to Line #21 on this page)32 MCC Rate 0.11% 0.10%33 MPSC Rate 0.420% 0.200%3435363738394041424344454647484950 05/12/15

Docket No. D2014.7.59Exhibit__(JMS-2)

Page 1 of 1

NorthWestern Energy 2015/2016 TRACKING CASE

GAS MARKET/SUPPLY/COST SUMMARY

1 CITY GATE REQUIREMENTS Dkt (000) $/Dkt $ (000)2 DBU Sales Billed 19,8313 FUGC 2244 Subtotal Sales Volumes 20,0555 Core Fuel U&UAF 49367 Grand Total HER 20,54889

1011 GAS SUPPLY121314 NOVA 24,090 0.125$ 3,019$ 1516 Trans Canadian Pipeline 7,790 2.270$ 17,681$ 1718 Havre Pipeline 1,963 2.317$ 4,549$ 1920 EnCana Pipeline 4,220 2.346$ 9,902$ 2122 Colorado Interstate Pipeline 0 -$ -$ 2324 NW Energy Owned Production 5,860 0.766$ 4,490$ 2526 Intra-Montana Purchases 742 2.367$ 1,756$ 272829 Storage Net Withdrawal 72 NA 2,429$ 30 Storage Fuel Use (99) NA NA3132 Total Gas Supply & Cost 20,548 43,826$ 3334 Incremental Peaking Expense 0 -$ -$ 3536 Working Gas Rate Base 1,062$ 37 Deferred Account Interest 19$ 38 Administrative Costs 523$ 3940 TOTAL GAS COST 45,430$ 41 Battle Creek Lost Revenue (negative revenue reported here as a cost) 17$ 42 Lost Revenue (D,T, & S) (negative revenue reported here as a cost) 424$ 43 TOTAL GAS COST (Including Lost Revenue) 45,871$ 4445 July 2015 CORE Unit Gas Cost ($/Dkt) $2.1639046 Thermal Unit Rate ($/Therm) $0.2163904748 Battle Creek Revenue Requirement ($/Dkt) $0.1237049 Battle Creek Revenue Requirement ($/Therm) $0.0123705051 Bear Paw Revenue Requirement ($/Dkt) $0.1817052 Bear Paw Revenue Requirement ($/Therm) $0.0181705354 Devon Revenue Requirement ($/Dkt) $0.9308055 Devon Revenue Requirement ($/Therm) $0.0930805657 Total Combined Rate ($/Dkt) $3.4001058 Total Combined Rate ($/Therm) $0.340010


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1 Natural Gas Default Supply Tracking Mechanism2 Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate3 Volume Balancing Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Total45 Billed Market (Dekatherms)6 Residential 297,812 227,120 323,877 513,424 1,016,105 1,796,935 2,229,229 1,702,664 1,781,046 1,275,656 875,810 440,021 12,479,699 7 LIEAP 16,275 10,315 14,283 21,845 40,934 73,554 95,171 77,043 85,338 69,344 48,214 24,295 576,611 8 Employee 857 499 821 1,393 2,308 4,212 5,013 3,996 4,210 3,136 2,341 1,271 30,057 9 Commercial 191,931 166,266 195,775 251,329 520,214 905,768 1,140,732 859,869 882,364 659,392 439,497 245,136 6,458,273

10 Firm Industrial 5,995 6,931 4,614 5,401 12,131 17,136 25,065 32,825 23,250 13,494 9,127 8,239 164,208 11 Governmental 1,478 939 2,050 3,033 6,160 7,509 11,568 5,794 8,210 6,898 4,375 2,698 60,712 12 Inter-Department 1,886 1,299 1,975 2,679 4,527 8,618 10,534 7,842 8,253 6,299 4,636 2,727 61,275 13 CNG Vehicles - - - - - - - - - - - - - 14 Total Distribution Sales 516,234 413,369 543,395 799,104 1,602,379 2,813,732 3,517,312 2,690,033 2,792,671 2,034,219 1,384,000 724,387 19,830,835 1516 Cycle Billing Adjustment -51,433 65,013 127,855 401,638 605,677 351,790 -413,640 51,319 -379,226 -325,110 -329,807 -104,077 - 1718 Distribution City Gate Deliveries 464,802 478,382 671,250 1,200,742 2,208,056 3,165,522 3,103,673 2,741,352 2,413,445 1,709,110 1,054,194 620,311 19,830,835 1920 Firm Utility Gas Sales (Dekatherms)21 Cut Bank 3,439 1,718 2,174 5,193 12,831 22,026 31,123 29,193 26,075 24,252 15,480 7,775 181,278 22 Kevin 269 51 63 156 1,150 2,095 2,688 2,588 2,151 1,933 1,514 794 15,452 23 Sunburst 515 226 287 591 1,634 3,301 4,935 4,422 4,111 3,657 2,048 1,105 26,832 24 Total Utility Sales 4,223 1,995 2,525 5,940 15,615 27,422 38,746 36,203 32,336 29,841 19,042 9,675 223,563 2526 Total City Gate Deliveries 469,024 480,377 673,775 1,206,681 2,223,671 3,192,944 3,142,418 2,777,555 2,445,781 1,738,951 1,073,236 629,985 20,054,398 2728 Transmission U&UAF 11,538 11,817 16,575 29,684 54,702 78,546 77,303 68,328 60,166 42,778 26,402 15,498 493,337 2930 Total Supply Requirements 480,562 492,194 690,350 1,236,365 2,278,373 3,271,490 3,219,721 2,845,883 2,505,947 1,781,729 1,099,638 645,483 20,547,735 3132 Gas Supply (Dekatherms)33 Nova Capacity - - - - - - - - - - - - - 34 Canada Pipeline 930,000 930,000 900,000 930,000 - - - - - 1,350,000 1,400,000 1,350,000 7,790,000 35 Havre Pipeline 163,600 163,600 163,600 163,600 163,600 163,600 163,600 163,600 163,600 163,600 163,600 163,600 1,963,200 36 EnCana Pipeline 358,300 358,300 346,800 358,300 348,068 357,836 357,606 327,377 357,149 346,922 356,697 346,472 4,219,827 37 Colorado Interstate Pipeline - - - - - - - - - - - - - 38 NW Energy Owned Production 512,327 509,604 490,545 504,205 485,349 498,865 496,219 445,819 490,967 472,611 485,777 467,615 5,859,903 39 Intra-Montana Purchases 53,787 53,787 53,787 53,787 53,787 78,587 78,587 76,187 78,587 53,787 53,787 53,787 742,244 4041 Total Purchases 2,018,014 2,015,291 1,954,732 2,009,892 1,050,804 1,098,888 1,096,012 1,012,983 1,090,303 2,386,920 2,459,861 2,381,474 20,575,174 4243 - - - - - - - - - - - - - 4445 Storage Activity46 Storage Supply Activity 1,537,452 1,523,097 1,264,382 773,527 (1,227,569) (2,172,602) (2,123,709) (1,832,900) (1,415,644) 605,191 1,360,223 1,735,991 27,439 47 Storage U&UAF (injection only) 17,329 17,168 14,251 8,719 - - - - - 6,821 15,332 19,567 99,187 48 Metered Storage Activity 1,520,122 1,505,929 1,250,131 764,808 (1,227,569) (2,172,602) (2,123,709) (1,832,900) (1,415,644) 598,370 1,344,891 1,716,424 (71,749) 4950 Net Difference (delivered vs. supply) (0) 0 (0) 0 - - - - - (0) 0 (0) 5152 05/12/15


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1 Natural Gas Default Supply Tracking Mechanism2 Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate3 Supply Revenue/Cost Calculations Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Total45 Total Sales6 Dekatherms 520,457 415,364 545,920 805,044 1,617,994 2,841,154 3,556,058 2,726,236 2,825,007 2,064,060 1,403,042 734,062 20,054,398 7 Current Year Supply Cost 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 2.1639$ 8 Prior Year(s) Deferred Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 9 Current Year Deferred Adjust. -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

1011 Gas Cost Revenues12 Current Year Gas Cost 1,126,216$ 898,806$ 1,181,316$ 1,742,035$ 3,501,178$ 6,147,973$ 7,694,953$ 5,899,302$ 6,113,033$ 4,466,420$ 3,036,044$ 1,588,436$ 43,395,712$ 13 Prior Year(s) Defered Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 14 Battle Creek Lost Revenue (1,413)$ (1,413)$ (1,413)$ (1,413)$ (1,413)$ (1,413)$ (1,413)$ (1,413)$ (1,413)$ (1,413)$ (1,414)$ (1,414)$ (16,958)$ 15 Lost Revenue (D, T, & S.) (35,301)$ (35,301)$ (35,301)$ (35,301)$ (35,301)$ (35,301)$ (35,301)$ (35,301)$ (35,302)$ (35,302)$ (35,302)$ (35,302)$ (423,616)$ 16 Total Revenue 1,089,502$ 862,092$ 1,144,602$ 1,705,321$ 3,464,464$ 6,111,259$ 7,658,239$ 5,862,588$ 6,076,318$ 4,429,705$ 2,999,328$ 1,551,720$ 42,955,138$ 1718 Natural Gas Expenses19 NOVA Capacity 245,520$ 245,520$ 237,600$ 245,520$ 237,600$ 245,520$ 265,980$ 248,820$ 265,980$ 257,400$ 265,980$ 257,400$ 3,018,840$ 20 Canada Pipeline 2,020,890$ 2,033,352$ 1,973,160$ 2,093,802$ -$ -$ -$ -$ -$ 3,154,950$ 3,246,460$ 3,158,190$ 17,680,804$ 21 Havre Pipeline 371,862$ 371,698$ 358,382$ 377,468$ 382,370$ 405,411$ 415,311$ 370,929$ 399,386$ 364,561$ 371,574$ 360,366$ 4,549,318$ 22 EnCana Pipeline 778,586$ 783,388$ 763,613$ 806,677$ 827,321$ 879,383$ 907,068$ 826,135$ 881,266$ 810,758$ 827,144$ 810,537$ 9,901,875$ 23 Colorado Interstate Pipeline -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 24 NW Energy Owned Production 392,588$ 390,489$ 375,875$ 386,328$ 371,869$ 382,213$ 380,174$ 341,551$ 376,128$ 362,053$ 372,128$ 358,204$ 4,489,600$ 25 Intra-Montana Purchases 116,882$ 117,602$ 117,923$ 121,098$ 127,849$ 193,129$ 199,338$ 192,260$ 193,915$ 125,703$ 124,729$ 125,832$ 1,756,260$ 26 Storage Injection/Withdrawal (2,957,610)$ (3,499,594)$ (1,105,733)$ (1,533,843)$ 2,700,817$ 4,780,015$ 4,672,445$ 4,032,626$ 3,114,607$ (1,272,343)$ (2,847,402)$ (3,654,533)$ 2,429,451$ 27 Total Natural Gas Expenses 968,718$ 442,455$ 2,720,820$ 2,497,050$ 4,647,826$ 6,885,671$ 6,840,316$ 6,012,322$ 5,231,282$ 3,803,081$ 2,360,613$ 1,415,996$ 43,826,148$ 2829 Administrative Expenses30 MCC Tax Collection 697$ 472$ 769$ 1,319$ 3,093$ 5,729$ 7,278$ 5,521$ 5,700$ 4,068$ 2,627$ 1,194$ 38,466$ 31 MPSC Tax Collection 1,376$ 935$ 1,527$ 2,612$ 6,118$ 11,339$ 14,388$ 10,885$ 11,260$ 8,006$ 5,172$ 2,345$ 75,964$ 32 Labor & Benefits -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 33 DSM Expense 55,853$ 45,958$ 1,759$ 20,147$ 99,849$ 20,553$ 2,161$ 6,617$ 53,773$ 64,192$ 36,966$ 36,966$ 444,795$ 34 Computer Expense & Support -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 35 Travel/Education Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 36 Legal Expense -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 37 Basin Creek Storage Rebate (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (3,000)$ (36,000)$ 38 Total Administrative Expenses 54,926$ 44,364$ 1,054$ 21,078$ 106,059$ 34,621$ 20,828$ 20,023$ 67,734$ 73,266$ 41,765$ 37,505$ 523,224$ 3940 Rate Base Expenses41 Storage Working Gas 111,761$ 137,560$ 158,994$ 172,428$ 148,773$ 106,908$ 65,985$ 30,666$ 3,388$ 14,531$ 39,470$ 71,477$ 1,061,942$ 42 Deferred Expense (15,238)$ (16,825)$ (6,040)$ 102$ 9,124$ 14,926$ 10,434$ 11,757$ 6,976$ 3,640$ 166$ (1)$ 19,021$ 43 Total Rate Base Expense 96,523$ 120,735$ 152,954$ 172,530$ 157,897$ 121,835$ 76,419$ 42,423$ 10,364$ 18,171$ 39,636$ 71,477$ 1,080,964$ 4445 Total Expenses 1,120,166$ 607,554$ 2,874,828$ 2,690,659$ 4,911,783$ 7,042,127$ 6,937,563$ 6,074,768$ 5,309,379$ 3,894,518$ 2,442,014$ 1,524,977$ 45,430,336$ 4647 Deferred Cost Amortization -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 4849 Monthly Deferred Cost (30,664)$ 254,538$ (1,730,226)$ (985,338)$ (1,447,319)$ (930,868)$ 720,676$ (212,180)$ 766,939$ 535,187$ 557,314$ 26,743$ (2,475,198)$ 50 Cumulative Deferred Cost (30,664)$ 223,874$ (1,506,351)$ (2,491,690)$ (3,939,009)$ (4,869,877)$ (4,149,201)$ (4,361,380)$ (3,594,441)$ (3,059,254)$ (2,501,941)$ (2,475,198)$ 5152535455 05/12/15


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1 Natural Gas Default Supply Tracking Mechanism2 Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate3 Total Supply Cost Calculations Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-1645 Rate Base Storage6 Beginning Inventory 3,907,236 5,427,358 6,933,288 8,183,419 8,948,227 7,720,657 5,548,056 3,424,347 1,591,447 175,802 774,172 2,119,063 7 Net Storage Activity 1,520,122 1,505,929 1,250,131 764,808 (1,227,569) (2,172,602) (2,123,709) (1,832,900) (1,415,644) 598,370 1,344,891 1,716,424 8 Ending Inventory 5,427,358 6,933,288 8,183,419 8,948,227 7,720,657 5,548,056 3,424,347 1,591,447 175,802 774,172 2,119,063 3,835,487 9

10 Beginning Rate Base $ 9,802,907$ 12,760,517$ 15,706,219$ 18,153,456$ 19,687,299$ 16,986,482$ 12,206,467$ 7,534,022$ 3,501,396$ 386,789$ 1,659,132$ 4,506,534$ 11 Net Storage Activity $ 2,957,610$ 2,945,702$ 2,447,237$ 1,533,843$ (2,700,817)$ (4,780,015)$ (4,672,445)$ (4,032,626)$ (3,114,607)$ 1,272,343$ 2,847,402$ 3,654,533$ 12 Ending Rate Base $ 12,760,517$ 15,706,219$ 18,153,456$ 19,687,299$ 16,986,482$ 12,206,467$ 7,534,022$ 3,501,396$ 386,789$ 1,659,132$ 4,506,534$ 8,161,068$ 1314 Beginning Unit Cost 2.5089$ 2.3511$ 2.2653$ 2.2183$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.1431$ 2.1267$ 15 Activity Unit Cost 1.9456$ 1.9561$ 1.9576$ 2.0055$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.1263$ 2.1172$ 2.1292$ 16 Ending Unit Cost 2.3511$ 2.2653$ 2.2183$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.2001$ 2.1431$ 2.1267$ 2.1278$ 171819 Deferred Supply Cost Expense20 Beginning Balance (2,475,298)$ (2,444,634)$ (2,699,172)$ (968,947)$ 16,392$ 1,463,711$ 2,394,579$ 1,673,903$ 1,886,082$ 1,119,143$ 583,956$ 26,643$ 21 Monthly Activity 30,664$ (254,538)$ 1,730,226$ 985,338$ 1,447,319$ 930,868$ (720,676)$ 212,180$ (766,939)$ (535,187)$ (557,314)$ (26,743)$ 22 Ending Balance (2,444,634)$ (2,699,172)$ (968,947)$ 16,392$ 1,463,711$ 2,394,579$ 1,673,903$ 1,886,082$ 1,119,143$ 583,956$ 26,643$ (100)$ 23242526 Interest Interest Rate27 Working Gas 10.51%28 Deferred Account 7.48%293031 Regulatory Taxes Oct.1,201432 MCC Rate 0.10%33 MPSC Rate 0.200%3435363738394041424344454647484950 05/12/15

PJD-1



Docket No. D2014.7.59 3



6

7


OF PATRICK J. DIFRONZO 9


11

12

13


15




Unreflected Gas Cost Account 4 19

Gas Transportation Adjustment Clause (GTAC) 7 20

Unit Rate Adjustments/Proposed Rates 11 21

22

Exhibits 23

Unreflected Gas Cost Account Balance Exhibit__(PJD-1) 24

GTAC Allocation and Rate Calculations Exhibit__(PJD-2) 25

Maximum IT TBU Commodity Rate Exhibit__(PJD-3) 26

Unit Rate Adjustments/Proposed Rates Exhibit__(PJD-4) 27

PJD-2



A. My name is Patrick J. DiFronzo. I work at 40 East Broadway, Butte, Montana 3

59701. 4

5

Q. By whom are you employed and in what capacity? 6

A. I am NorthWestern Energy’s (“NorthWestern”) Manager of Regulatory Affairs. 7

8

Q. Please summarize your education and employment experience. 9

A. I graduated from Montana State University with a Bachelor of Science degree 10

in Accounting in 1981. In August 1983, I completed the requirements to 11

become a Certified Public Accountant. I have also attended several rate-12

related courses since beginning my employment at Montana Power Company 13

(“MPC”), NorthWestern’s predecessor, in July 1984. The first position I held 14

was Accountant in the Income Tax Department from 1984 through 1989. 15

During this time, I worked on several Montana Public Service Commission 16

(“MPSC” or “Commission”) and Federal Energy Regulatory Commission 17

(“FERC”) rate filings by preparing tax statements and exhibits. I then spent a 18

year in the Regulatory Affairs Department as part of a cross-training program 19

learning more about cost of service and other regulatory matters. After this, I 20

transferred into Internal Auditing where I spent the next six years working on 21

various financial and information system control audits. In 1996, I transferred 22

into the Financial Resources Department as a Senior Analyst. In the 23

PJD-3

Financial Resources Department, I prepared annual and forecasted business 1

plans for MPC and performed various financial analyses. In May of 1999, I 2

was promoted to Manager of Treasury Services. In the Treasury Department, 3

I worked on several MPSC and FERC rate filings by preparing cost of capital 4

statements and exhibits. In October of 2000, I accepted a position in the 5

Regulatory Affairs Department as a Senior Analyst. In December of 2003, I 6

was promoted to Manager of Regulatory Affairs. 7

8

Q. What are your responsibilities as Manager of Regulatory Affairs? 9

A. I am the manager in charge of state and federal regulatory activities for 10

NorthWestern in Montana. In my present role, among other things, I 11

participate in the preparation and/or consideration of the testimony, exhibits, 12

and work papers in NorthWestern’s proceedings before the MPSC and 13

FERC. 14

15


Q. What is the purpose of your testimony? 17

A. I testify to the following: 18

1. The natural gas cost revenues and natural gas cost expenses for the 19

period July 1, 2014 to June 30, 2015, including the computation of the 20

deferred Unreflected Gas Cost Account (“UGCA”) balance, also 21

referred to as the deferred account balance. The information is actual 22

through April 2015 and estimated for May and June 2015; 23

PJD-4

2. The proposed amortization of the Gas Transportation Adjustment 1

Clause (“GTAC”) balance as of April 30, 2015; 2

3. An explanation of the prior period UGCA and GTAC balance 3

amortizations; and 4

4. The proposed rates resulting from the natural gas cost and 5

amortization adjustments proposed in this filing. 6

7

Unreflected Gas Cost Account Balance 8

Q. What is the net deferred UGCA balance for the 12-month period ending 9

June 2015? 10

A. The net deferred UGCA balance for the 12-month period ending June 2015 is 11

an over-collection of $(2,475,298) as presented on page 1, line 54 of 12

Exhibit__(PJD-1). This amount includes the prior period balance for the 13

2013-2014 tracking period and the current period balance for the 2014-2015 14

tracking period as discussed below. 15

16

Q. Describe the status of the deferred UGCA balance associated with the 17

2013-2014 tracking period. 18

A. The present balance of the 2013-2014 period deferred account is an over-19

collection of $(711,416). The deferred account balance approved in Docket 20

Nos. D2013.5.34 and D2014.5.47 (“Consolidated Dockets”), Interim Order 21

No. 7282b, was an under-collection of $1,294,582, as shown on 22

Exhibit__(PJD-1) page 1, line 9, which included estimates for the months of 23

PJD-5

May and June 2014. The estimates have been trued-up to actual collections, 1

revenues and expenses, as shown in Exhibit__(PJD-1) page 1, lines 11 2

through 30. The true-up resulted in an over-collection of $(2,005,998), 3

leaving an actual over-collected balance of $(711,416), as shown In 4

Exhibit__(PJD-1), page 1, line 31. This amount is the actual deferred account 5

beginning balance for the 2014-2015 tracking period. 6

7

Q. Describe the deferred UGCA balance associated with the 2014-2015 8

tracking period. 9

A. Exhibit__(PJD-1), page 2 presents a summary of the monthly actual natural 10

gas cost revenues and corresponding natural gas cost expenses recorded on 11

NorthWestern’s books for the current period commencing July 1, 2014 and 12

ending June 30, 2015. The difference between revenues and expenses for 13

each month and the total for the 12-month period ending June 2015 are 14

reported in the column titled “Deferred Gas Cost.” This table reflects the 15

amounts recorded in the UGCA (Account No. 191) for this period and is a 16

summary of the totals taken from the individual monthly natural gas cost 17

revenue and natural gas cost expense reports NorthWestern files with the 18

Commission. The current period deferred UGCA balance for the 12-month 19

period ending June 2015 is an over-collection of $(1,763,882) shown on 20

Exhibit__(PJD-1), page 2, line 32. 21

22

PJD-6

Q. What is the source of natural gas cost revenues and natural gas cost 1

expenses? 2

A. Natural gas cost revenues are the portion of the booked natural gas revenues 3

associated with natural gas costs. Each month, the recorded consumption 4

provides the source data to which the appropriate unit natural gas cost rate 5

component (as approved in respective rate orders) is applied. The product of 6

this computation is the Total Gas Cost Revenue. The natural gas cost 7

expenses are based on the actual costs recorded on the books and records 8

of NorthWestern. 9

10

Q. What is the current estimated UGCA balance in this filing? 11

A. The current net UGCA over-collected total is $(2,475,298), as shown on 12

Exhibit__(PJD-1), page 1. This amount includes the prior period deferred 13

account balance of $(711,416), plus the current period deferred account 14

balance of $(1,763,882), as described previously and summarized below. 15

Total UGCA Balance 16

Remaining 2013-2014 Prior Period UGCA Balance1 $ (711,416)

Plus: 2014-2015 Current Period UGCA Balance 2 (1,763,882)

$ (2,475,298)

Q. Does the UGCA balance require additional money to be collected from 17

customers? 18

1 Exhibit__(PJD-1), page 1


PJD-7

A. No. The proposed net UGCA balance results in a refund to customers. 1

2

Q. Is NorthWestern proposing to adjust the deferred natural gas supply 3

rate at this time? 4

A. No, but this refund amount is included as part of proposed natural gas supply 5

rate. The $(2,475,298) balance is the starting amount for the 2015 6

amortization of the deferred account balance as shown on Exhibit__(JMS-2) 7

Work Papers, page 3, line 20, attached to the Prefiled Direct Testimony of 8

John M. Smith (“Smith Direct Testimony”) and discussed in his testimony. 9

NorthWestern proposes to set the rate at zero until actuals are recorded for 10

the months of May and June 2015. After the actual amounts for May and 11

June are known, NorthWestern will review the account balance and 12

determine if the final amount merits filing a rate adjustment proposal. 13

14

Gas Transportation Adjustment Clause 15

Q. Please briefly describe the purpose of the GTAC mechanism. 16

A. The purpose of the GTAC mechanism is to track the difference between the 17

actual Interruptible and Off-system transportation sales revenue received and 18

the amount of sales revenue established in the most current general rate 19

filing. The Interruptible and Off-system sales from the latest natural gas 20

general rate filing are basically treated as revenue credits in establishing 21

Montana jurisdiction rates. If actual Interruptible and Off-system revenues 22

exceed the amounts established in the general rate filing, then customers are 23

PJD-8

given an additional credit through the GTAC rates, and if actual revenues are 1

less than the amounts established the credit is reduced accordingly. The 2

GTAC mechanism was implemented pursuant to MPSC Order No. 5474c in 3

Docket No. 90.1.1. NorthWestern files for treatment of the GTAC Balance 4

annually, in conjunction with its Annual Natural Gas Tracker filing. 5

6

In addition, pursuant to Order No. 6197c in Docket No. D99.8.176, 7

NorthWestern has the flexibility to discount its transmission, storage, and/or 8

distribution rates to avoid uneconomic bypass and, where approved by the 9

MPSC, recover the discounted amounts from its other customers. The 10

discounted amounts are flowed through to customers using the GTAC. 11

12

Q. Has NorthWestern used the most current approved Interruptible and 13

Off-system sales revenue data in calculating the GTAC rate? 14

A. Yes. NorthWestern used the Interruptible and Off-system transportation sales 15

revenue data for the months of May 2014 through April 2015 from Docket No. 16

D2012.9.94, Final Order No. 7249e.3 17

18

3 Effective date of Final Order No. 7249e was June 1, 2013, which included the Cost Allocation and Rate

Design Stipulation.

PJD-9

Q. What are the Interruptible and Off-system transportation sales revenues 1

that were approved in NorthWestern’s filing in Docket No. D2012.9.94, 2

Final Order No. 7249e? 3

A. Below are the sales revenues reflected in Statement H for the Natural Gas 4

Utility: 5

DBU Interruptible Transportation $ 34,062 6

TBU Interruptible Transportation $ 1,884,259 7

Off-System Interruptible Transportation $ 12,103 8

Canadian Montana Pipeline $ 104,077 9

Total $ 2,034,501 10

11

Q. What is the prior period GTAC balance currently being amortized 12

pursuant to Interim Order No. 7282b in the Consolidated Dockets? 13

A. The present balance of the prior period GTAC is $25,761 as shown on 14

Exhibit__(PJD-2), page 1, line 45. Exhibit__(PJD-2), pages 2 through 4 show 15

the calculation of the remaining GTAC balance by business function as of 16

April 30, 2015, currently being amortized for the 2013-2014 tracker period 17

GTAC adjustment, per Interim Order No. 7282b. The prior period balance of 18

the Storage GTAC is $(396). The prior period balance for the DBU is $2,113 19

and $24,044 for the TBU. 20

21

Q. What is the current period GTAC balance? 22

PJD-10

A. The current period GTAC balance reflected on NorthWestern’s books and 1

records as of April 30, 2015 is $(477,622) as shown on Exhibit__(PJD-2), 2

page 5. This amount is comprised of actual Interruptible and Off-system 3

transportation revenues for May 2014 through April 2015 of $2,512,913, less 4

the previously ordered revenues of $2,034,501 less the Interruptible DBU rate 5

discount impact of $790. 6

7

Q. What is the GTAC net balance being proposed for amortization in this 8

filing? 9

A. NorthWestern proposes a net GTAC balance of $(451,860) for amortization in 10

rates during the May 2015 through April 2016 tracker year. The proposed 11

balance includes the prior period GTAC balance of $25,761, plus the current 12

period GTAC balance of $(477,622) as described previously and summarized 13

below. 14

Total GTAC Balance 15

Remaining 2013-2014 Prior Period GTAC Balance4 $ 25,761

Plus: 2014-2015 Current Period GTAC Balance 5 (477,622)

$ (451,860)

Q. Please explain the derivation of the GTAC rates. 16

A. The amortization is related to three functions on the natural gas system: 17

storage, distribution, and transmission. The amortization is first separated 18


5 Exhibit__(PJD-2), pages 1 and 5

PJD-11

into the appropriate functions and then allocated among the different 1

customer classes that utilize each function. The customer class balances 2

within each function are then divided by each of the customer class billing 3

determinants to develop the customer class unit rates. This calculation is 4

provided on Exhibit__(PJD-2), page 1. 5

6

Unit Rate Adjustments/Proposed Rates 7

Q. Have you prepared an exhibit for the proposed maximum Interruptible 8

Transmission commodity rate at transmission level? 9

A. Yes, Exhibit__(PJD-3) reflects the calculation of the proposed maximum 10

Interruptible TBU commodity rate. Pursuant to NorthWestern’s approved 11

maximum Interruptible TBU rate design (initially approved in Docket No. 12

90.1.1), the maximum Interruptible TBU commodity rate is based on the 13

100% load factor Firm TBU commodity rate. Therefore, it is necessary to 14

recalculate the maximum Interruptible TBU rate after deriving the new Firm 15

TBU commodity rate. 16

17

Q. Have you provided a summary of the unit rate adjustments and resulting 18

rates proposed in this filing? 19

A. Yes, Exhibit__(PJD-4) includes a table that reflects the rates that result from 20

the adjustments included in this filing. The exhibit reflects the current tariff 21

rates, the proposed rates, and the resulting change. 22

23

PJD-12

Q. What is NorthWestern’s proposal for rate implementation? 1

A. NorthWestern proposes an interim rate effective date for its proposed rate 2

adjustments and implementation of monthly natural gas cost adjustments for 3

service on and after July 1, 2015. 4

5

Q. Does this conclude your testimony? 6

A. Yes, it does. 7

Docket No. D2014.7.59Exhibit__(PJD-1)

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B C D E

Estimates / True-upActuals Variance Balance

Jul13 - Jun14 (Over)/Under-Collected Balance filed in D2014.5.47 1,294,582$

True-up of D2014.5.47 Prior Period Deferred UGCA BalanceMay14: Estimated Collection - D2014.5.47 -$ May14: Actual Collection -$ -$

Jun14: Estimated Collection - D2014.5.47 -$ Jun14: Actual Collection -$ -$

True-up of D2014.5.47 Current Period Deferred UGCA BalanceMay14: Estimated Revenue - D2014.5.47 6,454,282$ May14: Estimated Expense - D2014.5.47 4,017,818$ 2,436,464$

May14: Actual Revenue 6,640,580$ May14: Actual Expense 2,302,675$ 4,337,906$ (1,901,442)$

Jun14: Estimated Revenue - D2014.5.47 4,725,278$ Jun14: Estimated Expense - D2014.5.47 2,911,907$ 1,813,371$

Jun14: Actual Revenue 3,826,097$ Jun14: Actual Expense 1,908,170$ 1,917,927$ (104,556)$

Jul13 - Jun14 (Over)/Under-Collected Balance with True-up (711,416)$

Monthly Collection RemainingJul14 - Jun15 Monthly Activity Collection to-date BalanceBeginning Balance (711,416)$ July-14 -$ -$ (711,416)$ August-14 -$ -$ (711,416)$ September-14 -$ -$ (711,416)$ October-14 -$ -$ (711,416)$ November-14 -$ -$ (711,416)$ December-14 -$ -$ (711,416)$ January-15 -$ -$ (711,416)$ February-15 -$ -$ (711,416)$ March-15 -$ -$ (711,416)$ April-15 -$ -$ (711,416)$ May-15 (Estimated) -$ -$ (711,416)$ June-15 (Estimated) -$ -$ (711,416)$

Prior Period Deferred UGCA Balance (711,416)$

Current Deferred UGCA Balance (1,763,882)$

Total Deferred UGCA Balance (Initial balance for Jul14 - Jun15 Tracker) (2,475,298)$

NorthWestern EnergyUnreflected Gas Cost Account

Docket Nos. D2013.5.34 and D2014.5.47, Interim Order No. 7282bPrior Period Deferred Balance (07/01/13 - 06/30/14) & 2015 Amortizations


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A B C D

Gas Cost Gas Cost Deferred Month Revenues Expense Gas Cost

July-14 2,364,726$ 1,501,022$ (863,704)$

August-14 1,422,230$ 533,754$ (888,476)$

September-14 1,695,079$ 2,543,488$ 848,409$

October-14 2,213,674$ 3,021,388$ 807,714$

November-14 4,796,804$ 6,998,952$ 2,202,149$

December-14 8,710,596$ 9,291,994$ 581,398$

January-15 10,172,756$ 8,996,968$ (1,175,788)$

February-15 7,038,623$ 6,606,776$ (431,847)$

March-15 5,753,232$ 4,515,092$ (1,238,140)$

April-15 3,588,755$ 2,692,670$ (896,085)$

May-15 (Estimated) 2,825,132$ 2,253,366$ (571,766)$

June-15 (Estimated) 1,726,833$ 1,589,086$ (137,747)$ (Over)/Under Collected 52,308,440$ 50,544,557$ (1,763,882)$

NorthWestern EnergyCurrent Period Unreflected Gas Cost Account Balance

July 2014 - June 2015


Page 1 of 5

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A B C D E F G H I

Current Section 311 $0.00Prior Period Balance ($395.50)

($395.50)GTAC Proposed Current

MDDQ Allocators Allocation Rate Rate ChangeCore 118,487 0.70304 ($278.05) 19,830,835 Dkt/yr $0.0000000 ($0.0000076) $0.0000076Firm Utility 1,513 0.00898 ($3.55) 1,513 MDDQ/mnth $0.0000000 ($0.0001050) $0.0001050Transportation 48,535 0.28798 ($113.90) 48,535 MDDQ/mnth $0.0000000 ($0.0001051) $0.0001051

168,535 1.00000 ($395.50)

Current Section 311 $454.32Prior Period Balance $2,112.60

$2,566.93GTAC Proposed Current

MDDQ Allocators Allocation Rate Rate ChangeResidential 150,675 0.59499 $1,527.29 13,086,367 Dkt/yr $0.0000117 $0.0000288 ($0.0000171)General Service 81,133 0.32038 $822.39 6,744,468 Dkt/yr $0.0000122 $0.0000296 ($0.0000174)DBU Transportation 21,433 0.08463 $217.25 21,433 MDDQ/mnth $0.0000845 $0.0002139 ($0.0001294)

253,241 1.00000 $2,566.93

Current Section 311 ($478,075.97)Prior Period Balance $24,044.05

($454,031.92)GTAC Proposed Current

MDDQ Allocators Allocation Rate Rate ChangeResidential 150,675 0.45245 ($205,427.15) 13,086,367 Dkt/yr ($0.0015698) ($0.0017570) $0.0001872General Service 81,133 0.24363 ($110,614.62) 6,744,468 Dkt/yr ($0.0016401) ($0.0018080) $0.0001679Firm Utility 2,751 0.00826 ($3,750.67) 223,563 Dkt/yr ($0.0016777) ($0.0019689) $0.0002912TBU Transportation 98,461 0.29566 ($134,239.49) 16,550,000 Dkt/yr ($0.0008111) ($0.0009972) $0.0001861

333,020 1.00000 ($454,031.93)

Current Section 311 ($477,621.65)Prior Period Balance $25,761.16

($451,860.49)

Total

Storage

DBU IT

TBU IT

---------- $ / therm ----------

---------- $ / therm ----------

---------- $ / therm ----------

July - JuneBilling

Determinant

July - JuneBilling

Determinant

July - JuneBilling

Determinant

NorthWestern EnergyGTAC Allocation and Rate Calculation

2015 Tracker Filing Estimate


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A B C D E F

Monthly Collection /Collection / Giveback Balance

Month Giveback to-date Remaining

Balance (2,126)$

May-14 -$ -$ (2,126)$

June-14 -$ -$ (2,126)$

July-14 (39)$ (39)$ (2,087)$

August-14 (84)$ (123)$ (2,003)$

September-14 (95)$ (218)$ (1,908)$

October-14 (109)$ (327)$ (1,800)$

November-14 (173)$ (500)$ (1,627)$

December-14 (271)$ (771)$ (1,356)$

January-15 (312)$ (1,082)$ (1,044)$

February-15 (243)$ (1,325)$ (801)$

March-15 (233)$ (1,558)$ (569)$

April-15 (173)$ (1,731)$ (396)$

NorthWestern EnergyStorage GTAC Amortization

Prior Period Deferred Balance (07/01/13 - 06/30/14) & 2015 AmortizationsDocket Nos. D2013.5.34 and D2014.5.47, Interim Order No. 7282b

Docket No. D2014.7.59Exhibit_(PJD-2)

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A B C D E F



Balance 6,304$

May-14 (615)$ (615)$ 6,918$

June-14 (358)$ (972)$ 7,276$

July-14 87$ (885)$ 7,189$

August-14 168$ (717)$ 7,021$

September-14 207$ (510)$ 6,814$

October-14 261$ (249)$ 6,553$

November-14 506$ 257$ 6,047$

December-14 881$ 1,138$ 5,165$

January-15 1,037$ 2,176$ 4,128$

February-15 774$ 2,950$ 3,354$

March-15 734$ 3,685$ 2,619$

April-15 507$ 4,191$ 2,113$

NorthWestern Energy

Prior Period Deferred Balance (07/01/13 - 06/30/14) & 2015 AmortizationsDBU GTAC Amortization

Docket Nos. D2013.5.34 and D2014.5.47, Interim Order No. 7282b


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A B C D E F



Balance (509,318)$

May-14 (50,419)$ (50,419)$ (458,899)$

June-14 (32,230)$ (82,649)$ (426,669)$

July-14 (21,362)$ (104,011)$ (405,307)$

August-14 (16,528)$ (120,539)$ (388,779)$

September-14 (19,105)$ (139,644)$ (369,674)$

October-14 (23,329)$ (162,973)$ (346,345)$

November-14 (40,166)$ (203,138)$ (306,180)$

December-14 (69,711)$ (272,850)$ (236,469)$

January-15 (81,217)$ (354,066)$ (155,252)$

February-15 (65,499)$ (419,565)$ (89,753)$

March-15 (64,436)$ (484,001)$ (25,317)$

April-15 (49,361)$ (533,362)$ 24,044$

NorthWestern EnergyTBU GTAC Amortization

Prior Period Deferred Balance (07/01/13 - 06/30/14) & 2015 AmortizationsDocket Nos. D2013.5.34 and D2014.5.47, Interim Order No. 7282b


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A B C D

May 2014 throughMonthly GTAC Revenues April 2015DBU IT 34,398$ TBU On-System IT 2,312,323$ TBU Off-System IT 7,628$ Off-System Storage -$ CMPL IT 158,564$ Total GTAC Revenues 2,512,913$

Less Offsets (per Order No.s 7249e): Off-System IT Rev. 12,103$ Off-System IS Rev. -$ DBU On-System IT Rev. 34,062$ TBU On-System IT Rev. 1,884,259$ CMPL Trans. Rev. 104,077$

2,034,501$ FT Rate Discount Shortfall:TBU FT Discount Rev. Impact -$ DBU FT Discount Rev. Impact 790$

790$

Total Offsets 2,035,291$

NET GTAC Revenues (477,622)$

Storage -$ Distribution 454$ Transmission (478,076)$ NET GTAC Revenues (477,622)$

As Of April 30, 2015

NorthWestern EnergyGTAC Balance


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A B C D I

Firm TBU Transportation Reservation Rate 0.9805387$

Average number of days per month 30.42

Reservation rate per day (Reservation rate / days) 0.0322334$

plus: Firm TBU Transportation Commodity Rate1 0.0066193$

Interruptible TBU Transportation Commodity Rate 0.0388527$ per Therm

1The TBU commodity rate amount includes the TBU GTAC rate proposed in this filing.

TBU Transportation Commodity Rate 0.0074304$ GTAC Amortization Rate (0.0008111)$ Net Rate 0.0066193$

NorthWestern EnergyMaximum IT TBU Commodity Rate Calculation

Docket No. D2014.7.59Exhibit __(PJD-4)

Page 1 of 3


Core:D-RG-1 Rate ScheduleResidentialMonthly Service Charge per Meter 7.30$ 7.30$ -$ 0.00%


Total Commodity 0.6946870$ 0.7112547$ 0.0165677$ 2.39%

D-RGCA-1 Rate ScheduleResidential Gas Core AggregationMonthly Service Charge per Meter 7.30$ 7.30$ -$ 0.00%


Total Commodity 0.3710670$ 0.3712447$ 0.0001777$ 0.05%

D-GSG-1 Rate ScheduleGeneral Natural Gas ServiceMonthly Service Charge per Meter 0 to 300 19.00$ 19.00$ -$ 0.00% 301 to 1,000 25.05$ 25.05$ -$ 0.00% 1,001 to 2,000 40.35$ 40.35$ -$ 0.00% 2,001 to 5,000 67.75$ 67.75$ -$ 0.00% 5,001 to 10,000 83.25$ 83.25$ -$ 0.00% 10,001 to 30,000 131.55$ 131.55$ -$ 0.00% > 30,000 159.85$ 159.85$ -$ 0.00%


Total Commodity 0.6821771$ 0.6987252$ 0.0165481$ 2.43%




Page 2 of 3




D-GSGCA-1 Rate ScheduleGeneral Natural Gas Service Core AggregationMonthly Service Charge per Meter 0 to 300 19.00$ 19.00$ -$ 0.00% 301 to 1,000 25.05$ 25.05$ -$ 0.00% 1,001 to 2,000 40.35$ 40.35$ -$ 0.00% 2,001 to 5,000 67.75$ 67.75$ -$ 0.00% 5,001 to 10,000 83.25$ 83.25$ -$ 0.00% 10,001 to 30,000 131.55$ 131.55$ -$ 0.00% > 30,000 159.85$ 159.85$ -$ 0.00%


Total Commodity 0.3585571$ 0.3587152$ 0.0001581$ 0.04%

T-FUGC-1 Rate ScheduleFirm Utility Gas Contract ServiceMonthly Service Charge per Meter 10,001 to 30,000 128.05$ 128.05$ -$ 0.00% > 30,000 330.10$ 330.10$ -$ 0.00%

Transmission Charges: Reservation Rate (MDDQ) 0.6233741$ 0.6233741$ -$ 0.00% Transmission Commodity Rate (Therm) 0.0074304$ 0.0074304$ -$ 0.00% GTAC Amortization (Therm) (0.0019689)$ (0.0016777)$ 0.0002912$ 14.79%

Storage Charges: Reservation Rate (MDDQ) 0.4957783$ 0.4957783$ -$ 0.00% Storage Commodity Rate (Therm) 0.0017934$ 0.0017934$ -$ 0.00% GTAC Amortization (MDDQ) (0.0001050)$ -$ 0.0001050$ 100.00%

Gas Supply Charge (Therm) 0.3236200$ 0.3400100$ 0.0163900$ 5.07%Deferred Gas Cost Amortization (Therm) -$ -$ -$ 0.00%


Page 3 of 3




Non-CoreDistribution Business UnitD-FTG-1 Rate ScheduleFirm Transportation Natural Gas Service Monthly Service Charge per Meter 2,000 to 5,000 122.60$ 122.60$ -$ 0.00% 5,000 to 10,000 140.10$ 140.10$ -$ 0.00% 10,001 to 30,000 192.60$ 192.60$ -$ 0.00% > 30,000 223.70$ 223.70$ -$ 0.00%

Distribution Charge: (MDDQ) Reservation Rate 0.7756431$ 0.7756431$ -$ 0.00% GTAC Amortization 0.0002139$ 0.0000845$ (0.0001294)$ -60.51%

D-ITG-1 Rate ScheduleInterruptible Transportation Natural Gas ServiceMonthly Service Charge per Meter 2,000 to 5,000 122.60$ 122.60$ -$ 0.00% 5,000 to 10,000 140.10$ 140.10$ -$ 0.00% 10,001 to 30,000 192.60$ 192.60$ -$ 0.00% > 30,000 223.70$ 223.70$ -$ 0.00%

Distribution Charge: (Therm) Distribution Commodity Rate 0.0255036$ 0.0255036$ -$ 0.00%

Transportation Business UnitT-FTG-1 Rate ScheduleFirm Transportation Natural Gas Service Monthly Service Charge per Meter 5,001 to 10,000 119.95$ 119.95$ -$ 0.00% 10,001 to 30,000 172.45$ 172.45$ -$ 0.00% > 30,000 382.65$ 382.65$ -$ 0.00%

Transmission Reservation Rate (MDDQ) 0.9805387$ 0.9805387$ -$ 0.00%Transmission Commodity Rate (Therm) Maximum 0.0074304$ 0.0074304$ -$ 0.00% GTAC Amortization (0.0009972)$ (0.0008111)$ 0.0001861$ 18.66%

T-ITG-1 Rate ScheduleInterruptible Transportation Natural Gas Service Monthly Service Charge per Meter 5,001 to 10,000 119.95$ 119.95$ -$ 0.00% 10,001 to 30,000 172.45$ 172.45$ -$ 0.00% > 30,000 382.65$ 382.65$ -$ 0.00%

Transmission Commodity Rate (Therm) Maximum 0.0386666$ 0.0388527$ 0.0001861$ 0.48%

T-FSG-1 Rate ScheduleFirm Storage Natural Gas ServiceMonthly Rate: Withdrawal Reservation Rate: 0.4686762$ 0.4686762$ -$ 0.00% Injection Commodity Rate: 0.0024220$ 0.0024220$ -$ 0.00% Withdrawal Commodity Rate: 0.0024220$ 0.0024220$ -$ 0.00% Storage Capacity Rate: 0.0023010$ 0.0023010$ -$ 0.00% GTAC Amortization (0.0001051)$ -$ 0.0001051$ 100.00%

DLW-1



Docket No. D2014.7.59 3



6

7

8


OF DANIE L. WILLIAMS 10


12





2014-2015 Natural Gas E+ Program Results 3 17

Natural Gas Energy Efficiency Market Potential Study 7 18

DSM/USB Program Status Report 9 19

DSM/USB Program Activities for 2015-2016 22 20

Recovery of DSM Program Costs and Lost Revenues 23 21

22

Exhibits 23

Natural Gas DSM + USB Reported Savings 2014-2015 Exhibit__(DLW-1) 24

Natural Gas DSM Spending and Budget Exhibit__(DLW-2) 25

Natural Gas Lost Revenues 2008-2015 Exhibit__(DLW-3) 26

Natural Gas Energy Efficiency Market Potential Study Exhibit__(DLW-4) 27

DSM/USB Communications Plan Exhibit__(DLW-5a) 28

DSM/USB Communications Plan Calendar Exhibit__(DLW-5b) 29

DLW-2



A. My name is Danie L. Williams and my business address is 40 East 3

Broadway, Butte, Montana 59701. 4

5

Q. By whom and in what capacity are you employed? 6

A. I am employed by NorthWestern Energy (“NorthWestern”) as Manager of 7

Regulatory Support Services in the Regulatory Affairs and Support 8

Services Department. 9

10

Q. Please state your educational background, experience and 11

responsibilities. 12

A. I graduated from Montana Tech of the University of Montana with 13

Bachelor of Science degrees in Mathematical Sciences and General 14

Engineering. I joined NorthWestern in March 2009 in the capacity of 15

Demand Side Management (“DSM”) Engineer and assumed my present 16

position as Manager of Regulatory Support Services in March 2015. In 17

addition to other departmental activities related to support of regulatory 18

filings and proceedings, I am responsible for providing overall coordination 19

and direction on development, implementation and promotion/education of 20

DSM and related Universal System Benefits (“USB”) programs. My duties 21

also include preparing the information supporting NorthWestern’s energy 22

efficiency-related activities and proposals in this filing. 23

DLW-3


Q. What is the purpose of your testimony? 2

A. I testify to the following: 3

1. Results from Natural Gas Supply DSM and USB energy efficiency 4

programs conducted by NorthWestern for Tracker Year 2014-2015 5

and a description of the status of and plans for DSM and USB 6

programs and related activities in the forthcoming tracker period; 7

2. Updated numbers for Tracker Year 2014-2015 and forecasted 8

numbers for Tracker Year 2015-2016 for DSM program costs and the 9

lost revenues associated with DSM and USB program activities; and 10

3. The results of the Natural Gas Energy Efficiency Market Potential 11

Study completed in June 2014. 12

13

2014-2015 Natural Gas E+ Program Results 14

Q. What was NorthWestern’s natural gas savings target for the 2014-15

2015 tracker period? 16

A. The savings target for the 2014-2015 tracker period was 210,000 Dkt. 17

This target was based on results from the Natural Gas Energy-Efficiency 18

Potential Study completed by KEMA in mid-2008, which estimated that a 19

total of 2,100,000 Dkt of cumulative installed annual cost effective energy 20

savings capability could be acquired over a 10-year period (2009-2018). 21

This resulted in establishment of annual natural gas savings targets equal 22

to one-tenth of that total amount, or 210,000 Dkt/year. 23

DLW-4

Q. Please describe the activity and overall results of NorthWestern’s 1

Efficiency Plus (E+) Natural Gas Programs during the 2014-2015 2

natural gas supply tracking period. 3

A. The E+ Natural Gas Programs, introduced in October 2005, have 4

continued throughout the 2014-2015 tracker period. NorthWestern plans 5

to renew its contract with DNV GL (formerly known as KEMA Services, 6

Inc. (“KEMA”)) to provide most services needed to operate these 7

programs during the 2015-2016 tracker period. Reported natural gas 8

savings from operation of the Natural Gas DSM Programs for the 2014-9

2015 tracker period total 19,632 Dekatherms (“Dkt”)/year. This amount 10

represents annualized natural gas savings that would result if all of the 11

program measures were installed and in operation for a full year. 12

13

Q. Are there other programs that produce natural gas savings that 14

affect Lost Revenue calculations? 15

A. Yes. NorthWestern operates other energy efficiency programs – the E+ 16

Free Weatherization Program, the E+ Energy Audit for the Home or 17

Business Program, and the Building Operator Certification Program – that 18

are funded through USB and produce natural gas savings. The total 19

amount of energy savings from these programs is 26,781 Dkt/year for the 20

2014-2015 tracker year. Although the expenses associated with operation 21

of these USB programs are not included in the Natural Gas Supply 22

Tracker, the savings produced contribute to Lost Revenues and are 23

DLW-5

included in the total natural gas savings used to calculate Lost Revenues. 1

Exhibit__(DLW-1) presents individual program detail on the amount of 2

natural gas energy savings capability produced by the USB programs 3

(26,781 Dkt/year), and the DSM programs (19,632 Dkt/year) for the 2014-4

2015 tracker year. Total savings for natural gas energy efficiency 5

programs equals 46,413 Dkt/year. This amount, based on 9 months of 6

actual (July 2014 through March 2015) and 3 months of estimated energy 7

savings (April 2015 through June 2015), is used as an input to the 8

calculation of Lost Revenues for the 2014-2015 tracker period. 9

10

Q. Please provide details on the costs associated with NorthWestern’s 11

2014-2015 Natural Gas DSM Program. 12

A. Natural Gas DSM expenses fall into two categories. The first category is 13

program costs for operation of the specific Natural Gas DSM Programs: 14

1. E+ Residential Existing Construction Program 15

2. E+ Residential New Construction Program 16

3. E+ Business Partners Program 17

4. E+ Commercial Existing Construction Program 18

5. E+ Commercial New Construction Program 19

This category includes contractor labor and expenses, equipment and 20

building rental, materials for community events, advertising and promotion, 21

and rebates paid to customers. The total cost for this category for the 22

2014-2015 tracker period is $430,256. 23

24

DLW-6

The second category is General Expenses in the amount of $14,539 for all 1

Natural Gas DSM programs. These expenses are incurred for travel, 2

general promotional activities, staff training, and meetings involving the 3

entire portfolio of natural gas supply DSM programs. 4

5

The total cost for the 2014-2015 tracker period is $444,795. This amount 6

does not include NorthWestern labor. Exhibit__(DLW-2) presents monthly 7

spending associated with the Natural Gas Supply DSM programs. The 8

figures include 10 months (July 2014 through April 2015) of actual 9

recorded expenses and 2 months (May and June 2015) of estimated 10

expenses. This is the amount included in the Natural Gas Supply Tracker 11

for DSM program costs. See Exhibit__(JMS-1) work papers attached to 12

the Prefiled Direct Testimony of John M. Smith (“Smith Direct Testimony”). 13

14

The annual Dkt targets and reported savings are comprised of amounts of 15

installed annual energy savings capability contributed from measures and 16

actions implemented under both USB Programs and Natural Gas DSM 17

Programs. Although energy savings produced by USB Programs is 18

counted toward the overall annual Dkt target, USB Programs are funded 19

through a separate charge and USB spending is not reported or included 20

in Exhibit__(DLW-2). 21

22

DLW-7

Natural Gas Energy Efficiency Market Potential Study 1

Q. What action has NorthWestern taken to better define the amount of 2

natural gas energy savings potential remaining on the NorthWestern 3

natural gas system? 4

A. NorthWestern conducted a competitive bidding process for an outside 5

contractor to update the existing Natural Gas Energy Efficiency 6

Assessment that was completed in 2008 and selected Nexant, Inc. 7

(“Nexant”) as the winning bidder. In 2013 NorthWestern and Nexant 8

entered into a contract to perform research and analysis needed to 9

complete the natural gas energy efficiency assessment and provide 10

NorthWestern with updated estimates of remaining cost effective natural 11

gas energy efficiency potential. In June 2014, NorthWestern received the 12

final quantitative results of the study of technical, economical, and 13

achievable cost effective natural gas energy efficiency potential that is 14

available on its Montana distribution system. 15

16

Q. What were the major findings from the natural gas potential study 17

and what are the implications for NorthWestern’s natural gas energy 18

efficiency portfolio? 19

A. At a 20-year levelized avoided cost of $5.23 per Dkt, the natural gas 20

potential study estimated 20-year (2014-2033) achievable cost effective 21

natural gas conservation potential in NorthWestern’s Montana service 22

territory at approximately 1,550,000 Dkt based on an average incentive 23

DLW-8

level of 33% of the incremental conservation measure cost, 1,880,000 Dkt 1

at an average incentive level of 50% of the incremental measure cost, and 2

2,300,000 Dkt at an average incentive level of 75% of the incremental 3

measure cost. At a 33% incentive level the estimated average annual 4

achievable cost effective natural gas conservation potential is 5

approximately 78,000 Dkt/year over the 20-year period. The study points 6

out that the savings actually delivered by programs (the program potential) 7

is often less than achievable potential due to real-world constraints. The 8

study did not attempt to quantify program potential. 9

10

Q. How has NorthWestern used the results of the Nexant study? 11

A. NorthWestern used the study results to update its list of qualified program 12

measures. In addition, based on the Nexant study and informed by recent 13

energy savings results produced by NorthWestern’s natural gas energy 14

efficiency programs, NorthWestern is targeting 65,000 Dkt of natural gas 15

savings for the 2015-2016 tracker period. 16

17

NorthWestern is in the process of developing its 2015 Electricity Supply 18

Resource Procurement Plan which will include updated natural gas 19

avoided cost information. These updated avoided costs are a critical 20

piece of information that NorthWestern will use to develop natural gas 21

savings targets beyond the 2015-2016 period. The Nexant study is 22

provided as Exhibit__(DLW-4). 23

DLW-9

DSM/USB Program Status Report 1

Q. What is the current status of natural gas DSM/USB Programs and 2

what actions are planned for the 2015-2016 tracker year? 3

A. As discussed above, Exhibit__(DLW-2) presents DSM spending by 4

program for 2014-2015 (actual through April 2015, estimates for May-June 5

2015) and estimated spending for Tracker Year 2015-2016. The following 6

is an update of E+ Program activity and future plans: 7

8

E+ Residential Rebate Programs (existing and new construction): 9

NorthWestern offers cash rebates as a primary technique to encourage its 10

customers to install approved energy efficiency measures. NorthWestern 11

maintains a list of Preferred Contractors who enter into an agreement with 12

NorthWestern to meet certain requirements1. Different levels of rebates 13

are paid depending on whether or not customers use Preferred 14

Contractors to install qualifying measures. 15

16

Participating customers are responsible for purchasing and installing 17

approved natural gas conservation measures and applying to 18

NorthWestern for incentives or rebates. Interested customers are 19

provided program information, application forms, a schedule of rebate 20

amounts for various measures, and step-by-step instructions on how to 21

participate in the program process. To receive a rebate, customers are 22

1 The list of Preferred Contractors can be found on the NorthWestern Energy website at

http://www.northwesternenergy.com/docs/default-source/documents/E-Programs/InsulationContractors.pdf and http://www.northwesternenergy.com/docs/default-source/documents/E-Programs/EquipmentContractors.pdf

DLW-10

required to submit proof-of-purchase (receipts and paid invoices). 1

NorthWestern, or its agent DNV GL, verifies installations by performing 2

site inspections on a randomly selected sample of projects. 3

4

E+ Commercial DSM Programs and Contractors: NorthWestern has taken 5

additional steps to increase its capability to acquire commercial sector 6

energy efficiency by contracting with firms to provide services in support of 7

the E+ Commercial Natural Gas Programs. There are currently five firms 8

concentrating on the commercial and small industrial sectors: 9

CTA Architects Engineers 10

Energy Resource Management, Inc. 11

McKinstry Essention 12

CLEAResult Consulting, Inc. (formerly Portland Energy 13

Conservation, Inc.) 14

National Center for Appropriate Technology (“NCAT”) 15

16

NorthWestern compensates these contractors on a performance basis, 17

with payment based on a percentage of the energy conservation resource 18

value of each individual project that is completed with the contractor’s 19

involvement. 20

21

These contractors are supported by a two to three member team of DNV 22

GL employees who have responsibility for direct contact, face-to-face 23

marketing of E+ programs to commercial/small industrial customers in an 24

effort to identify, qualify, and cultivate energy saving projects for follow-up 25

by the contractors listed above. Services provided by these contractors 26

DLW-11

include marketing to architect/engineering firms and trade/industry 1

associations in Montana, direct contact with candidate businesses with 2

energy savings potential, surveys and assessments of buildings and 3

facilities, technical assistance for building owners, assistance with 4

required engineering analysis and modeling, and assistance to customers 5

with forms, contracts, and other paperwork used in and necessary for 6

participation in these programs. 7

8

Northwest Energy Efficiency Alliance (“NEEA”): NEEA is a regional non-9

profit organization supported by electric utilities, public benefits 10

administrators, state governments, public interest groups, and energy 11

efficiency industry representatives. Through regional leveraging, NEEA 12

encourages “market transformation” or the development and adoption of 13

energy efficient products and services in Montana, Washington, Idaho, 14

and Oregon. NEEA’s regional market transformation activities target the 15

residential, commercial, industrial, and agricultural sectors. NorthWestern 16

funding for NEEA comes from electric supply DSM. No natural gas supply 17

DSM funding is used for NEEA, but some natural gas savings have 18

resulted from NEEA initiatives (e.g. see cell C9 on Exhibit__(DLW-1). 19

20

Q. Does NorthWestern conduct other supporting activities to build 21

customer interest and participation in its E+ programs? 22

DLW-12

A. Yes. Following is a comprehensive report on activities that promoted 1

NorthWestern’s full portfolio of E+ programs (both natural gas and electric). 2

NorthWestern staff and contractors sponsor many training seminars during 3

the year to increase awareness of energy conservation and energy 4

efficiency opportunities in buildings and facilities. The objectives are to 5

educate and inform building operators, designers, builders, and trade allies 6

about using energy-consuming equipment efficiently and to promote the E+ 7

programs, services, information resources, and incentives. Where practical 8

or appropriate, Continuing Education Units (“CEUs”) are offered. A blend of 9

USB and DSM funds covers the cost of these activities. The following is a 10

list of DSM and USB program-related training seminars that NorthWestern 11

sponsored during 2014-2015: 12

13

1. Preferred Contractor Training – This training was offered August 11-21, 14

2014 in Billings, Bozeman, Butte, Great Falls, Havre, Helena, Kalispell, 15

and Missoula. In order to encourage participation, a live online webinar 16

was also offered. Each year NorthWestern provides training to various 17

contractors that install energy saving measures in the homes of 18

consumers who participate in its E+ programs. 19

20

2. Building Operator Certification – This is targeted at public schools, 21

non-profit hospitals, and state and local government; funding is 22

provided for tuition and travel. Two Level I training classes were 23

DLW-13

completed in the tracker period and a third Level I class is scheduled 1

for June 2015. The first three-session class (8 days) was held in 2

Bozeman (August 18-20, September 17-19, and October 6 & 7, 2014) 3

with 10 attendees, and the second two-session class (8 days) was held 4

in Great Falls (November 18-21 and December 16-19, 2014) with 9 5

attendees. One Level II training class was completed in the tracker 6

period. The two-session class (7 days) was held in Missoula (January 7

13-16 and February 24-26, 2015) with 13 attendees. 8

9

3. Montana Code Training – In November of 2014, Montana adopted the 10

2012 International Energy Conservation Code (“IECC”). In advance of 11

the code adoption and continuing forward, NorthWestern, in 12

partnership with NEEA, has provided training on the provisions of the 13

updated residential and commercial codes. As an additional resource 14

to guide the residential construction community, the “Montana 15

Residential Energy Code Handbook—2012 International Energy 16

Conservation Code (as amended)” was compiled by NCAT with input 17

from the Montana Department of Labor and Industry and the Montana 18

Department of Environmental Quality. Printing of this handbook was 19

funded with USB and the handbook is being distributed at training and 20

other venues as requested to further the adoption of the updated 21

residential code. Training on the updated Montana Energy Code has 22

been provided at trade association conferences targeting architects 23

DLW-14

and engineers; at the state code conference; through special sessions 1

with local building departments; and through the local homebuilding 2

industry associations. Sessions were approved for CEUs by the 3

Montana Society of Engineers, American Institute of Architects, and 4

the International Codes Council. Additional training is planned for the 5

2015-2016 tracker period. 6

7

4. Blower Door Testing Training – The updated Montana Energy Code 8

requires blower door testing to measure the air exchanges of a home 9

as part of the residential code requirements. Through NEEA, blower 10

doors have been provided to local homebuilding industry associations. 11

During the tracker period, training sessions on the proper use of the 12

blower door have been provided to the associations and local code 13

officials. 14

15

5. Performance Testing Training – This training was offered to local 16

homebuilding and industry associations and was provided where 17

requested. The training focused on the importance of tightness testing 18

for building envelope and ducts and implications for mechanical 19

ventilation. 20

21

6. ENERGY STAR® Home and Rating Certification Stipend Pilot Project – 22

The objectives of the project were: 1) to encourage builders to obtain 23

DLW-15

either an ENERGY STAR® certification or a Home Energy Rating 1

System rating for their homes, 2) to encourage builders to take 2

advantage of NorthWestern’s new construction rebates, and 3) to 3

encourage third-party energy inspections of homes built outside of 4

local energy code jurisdictions. Twenty-nine certification stipends were 5

submitted and paid in 2014, all for ENERGY STAR® homes. This was 6

a continuation of a pilot started in 2013. 7

8

7. Efficiency of Chilled Water Systems and Cooling Towers – NEEA 9

sponsored this training in Missoula on August 27, 2014. This course 10

focuses on cooling for industrial and commercial facilities. The Cooling 11

Tower course addresses efficiency measures and water treatment, 12

water conservation, and maintenance. This training equips attendees 13

with the knowledge and tools needed to reduce energy usage and 14

operating costs and improve the reliability of cooling systems. 15

16

8. Energy Efficiency for Air Cooled Refrigeration Systems – 17

NorthWestern sponsored this NEEA facilitated training on November 18

19, 2014 in Billings. The course emphasis is on air-cooled split 19

refrigeration systems. Attendees developed the skills and knowledge 20

to reduce the energy use and operating costs of their refrigeration 21

systems while improving reliability. The training also addressed non-22

ammonia based refrigeration systems. 23

DLW-16

9. NorthWestern Energy Lighting Trade Ally Network – This activity was 1

focused on commercial lighting and the trade allies supporting this key 2

energy efficiency opportunity. Activities are focused on training 3

regarding lighting design and technology, appropriate product 4

promotion, and also review of NorthWestern’s E+ program offerings. 5

Meetings held in August of 2014 in Missoula focused on emerging 6

lighting technologies and controls. Trade Allies receive a quarterly 7

electronic newsletter with updates on technologies and case studies of 8

NorthWestern customer projects. The Lighting Trade Allies are listed 9

on the NorthWestern website. NorthWestern includes other resources 10

for lighting professionals and trade allies associated with 11

NorthWestern’s E+ programs in the e-newsletter. 12

13

10. Commercial Lighting Training – October 21-24, 2014 in Billings, 14

Bozeman, Helena, and Great Falls. NorthWestern partnered with 15

Crescent Electric to focus on emerging lighting technologies and 16

controls and information about NorthWestern’s E+ programs. 17

18

11. Green Motors Management Training – Scheduled for June 1-5, 2015 in 19

Billings, Bozeman, Great Falls, Butte, and Missoula. These one-day 20

seminars are for commercial customers, facilities managers, 21

electricians, and motor service shops to learn how to estimate 22

operating costs for electric motor systems and to identify improvement 23

DLW-17

in motors management practice to increase system reliability and 1

reduce operating costs. This training is conducted by the Green 2

Motors Management Group and sponsored by NorthWestern. 3

4

12. Webinars – To make training more accessible to commercial and 5

industrial customers and trade allies, multiple energy management 6

topic webinars sponsored by NEEA are posted on NorthWestern’s 7

website and promoted in the electronic newsletter to commercial and 8

industrial customers. These webinars are free to customers. 9

10

Q. Did NorthWestern make additional efforts during the 2014-2015 11

tracker period to promote its E+ programs? 12

A. Yes. Again, the following includes efforts that promoted NorthWestern’s 13

full portfolio of E+ programs (both natural gas and electric). To 14

communicate information about NorthWestern’s programs to its 15

customers, NorthWestern sustains a presence in Montana communities 16

through media, events, appearances, meetings, speaking engagements, 17

booth sponsorships, trade fairs and shows, conferences, and other special 18

events. NorthWestern maintains networks of retailers, distributors, and 19

other trade allies and provides a steady stream of information about its E+ 20

programs through print, radio, television, distribution literature, and 21

personal contact. As with the training seminars described above, a mix of 22

USB and DSM funding is used. The following list provides examples of 23

DLW-18

the many activities NorthWestern performed during 2014-2015 to market 1

its programs: 2

3

1. Trade Shows – In Fall 2014 and Spring 2015, NorthWestern staffed 4

exhibits and educational display booths at eight home improvement 5

trade shows around Montana providing educational materials and 6

distributed four free CFLs each to eligible residential electric 7

customers. 8

a. Fall 2014 – Billings. 9

b. Spring 2015 – Missoula (2 shows), Billings, Bozeman, Great 10

Falls, Helena, and Butte. 11

12

2. Montana Lodging and Hospitality Association Conference – 13

NorthWestern hosted a display booth at this October 27-28, 2014 14

conference. 15

16

3. Montana Joint Engineers Conference – November 5-7, 2014 in 17

Helena. NorthWestern provided training on the provisions of the 18

updated Montana Energy Code and a display. 19

20

4. Montana Building Code Education Conference – March 30-April 2, 21

2015 in Bozeman. NorthWestern provided training on the updated 22

DLW-19

residential and commercial Montana Energy Code provisions and 1

staffed a display booth. 2

3

5. Montana Hospital Association Conference – September 24-26, 4

2014 in Billings and March 11-12, 2015 in Bozeman. NorthWestern 5

provided a display booth. 6

7

6. Montana Compete Smart Manufacturer’s Conference – October 9-8

10, 2014 in Billings. NorthWestern provided a sponsorship and 9

display booth. 10

11

7. Montana American Institute of Architects (“AIA”) Conference – 12

September 25-27, 2014 in Helena. NorthWestern provided a 13

display booth and training on the provisions of the updated 14

Montana Energy Code. 15

16

8. Montana Society of Health Care Engineers/ASHRAE2 Conference – 17

May 20-22, 2015 in Great Falls. NorthWestern provided a display 18

booth and a presentation regarding Building Operator Certification 19

training. 20

21

9. E+ Tips television spots – Spot placement during selected events. 22

2 The American Society of Heating, Refrigerating and Air Conditioning Engineers is an international technical society for

all individuals and organizations interested in heating, ventilation, air-conditioning, and refrigeration. See www.ashrae.org.

DLW-20

10. E+ Audit for the Home – Direct mail in summer and winter 2014 and 1

spring of 2015. NorthWestern funded spot placement of television, 2

radio, and online promotion. 3

4

11. Parade of Homes Sponsorships (Fall 2014) – Billings, Bozeman, 5

Missoula, Helena, Kalispell, and Hamilton. These sponsorships are 6

also included newspaper ad promotions. 7

8

12. Other Special Events: 9

a. NorthWestern sponsored Energy Corps members through 10

NCAT who provided energy efficiency presentations, hands-on 11

activities for youth, and supported display booths at events 12

between October of 2014 and April of 2015. The following 13

table summarizes Energy Corps activities associated with 14

NorthWestern’s programs: 15

Event Location

Grade School Classroom Education West and Hillcrest Elementary and Silver Bow Montessori School (Butte)

Service Groups

Sunrise, Big Butte, and Anaconda Kiwanis (Butte and Anaconda)

Middle School Classroom Education East Middle School (Butte)

High School Classroom Education

Butte High, Butte Central and Havre School (Butte and Havre)

DLW-21

Renewable Energy and Energy Efficiency Non Profit

National Center for Appropriate Technology and Alternative Energy Resources Organization (Butte and Red Lodge)

Library Presentations Butte

b. Home air-sealing installation and energy education targeted at 1

customers over 50 years of age and/or low-income customers 2

through direct mail. The Energy Corps members contacted 3

eligible customers who had not received weatherization kits 4

through distribution events or home energy audits prior to July 5

2014 and whose homes were identified as needing air-sealing. 6

They scheduled site visits, installed air infiltration sealing 7

materials, and provided energy efficiency education to 301 8

customers during the 2014-2015 tracker period. 9

10

More details about the techniques, mechanisms, locations, forms of 11

media, and calendar schedule are presented in Exhibit__(DLW-5a) which 12

describes the goals, objectives, audiences, strategies, tactics, methods, 13

and tools of the DSM/USB Communications Plan. Exhibit__(DLW-5b) 14

provides a detailed schedule of specific programs and activities that will be 15

implemented during a typical calendar year period. Together, these 16

exhibits present a clear view of the scope and scale of NorthWestern’s 17

communications activities and sustained efforts to support its E+ 18

programs, gain customer participation, and acquire cost-effective energy 19

DLW-22

saving resources. The DSM/USB Communications Plan serves as a 1

working plan that can and will be changed and adapted as conditions 2

warrant or new knowledge is gained. 3

4

DSM/USB Program Activities for 2015-2016 5

Q. Does NorthWestern plan to offer natural gas E+ programs in the 6

2015-2016 tracker period? 7

A. Yes, the portfolio of E+ Natural Gas Programs will be continued through 8

the 2015-2016 period. The mail-in rebate and custom incentives are 9

expected to continue uninterrupted throughout the tracker period from July 10

1, 2015 through June 30, 2016. The estimated budget for the 2015-2016 11

E+ Natural Gas DSM Program is $444,795. Monthly budget detail is 12

included on Exhibit__(DLW-2). 13

14

NorthWestern will continue its contracts with outside service providers and 15

will maintain its program rebates and incentives at a level approximately 16

equal to 50% of the total resource value. 17

18

A coordinated and comprehensive marketing and communications effort 19

that integrates USB and DSM funding for marketing and outreach has 20

been developed and employed over the past several years, and many of 21

the methods and techniques that have proven effective in the past will be 22

DLW-23

repeated in the future (refer to Exhibit__(DLW-5a) and Exhibit__(DLW-1

5b)). 2

3

Recovery of DSM Program Costs and Lost Revenues 4

Q. What are the DSM program costs for Tracker Year 2015-2016 and 5

how does NorthWestern propose to recover them? 6

A. Exhibit__(DLW-2) presents budget figures for individual natural gas DSM 7

programs that total $444,795 (refer to cell O28) for the 2015-2016 Tracker 8

Year. This amount represents estimated DSM program costs and is 9

included as a line item with other supply expenses in the Smith Direct 10

Testimony. The proposed natural gas supply rates are established to 11

recover all natural gas supply expenses, including $444,795 for 2015-12

2016 Tracker Year DSM program costs. 13

14

Q. Please describe the individual components of the Natural Gas Lost 15

Revenues spreadsheet and the various data inputs used in its 16

calculations. 17

A. The Natural Gas Lost Revenue calculation is performed using a 18

spreadsheet workbook model, included herein as Exhibit__(DLW-3), that 19

is comprised of six separate worksheet tabs (name of tab in bold below). 20

The worksheets compile program budgets, costs, natural gas savings 21

estimates, rates, revenues, and adjustment factors into a series of 22

calculations that result in estimated Natural Gas Lost Revenues. 23

DLW-24

Additional notes and explanations are included on the individual 1

spreadsheet tabs, identified as separate pages of Exhibit__(DLW-3). 2

3

1. LR Summary (Exhibit__(DLW-3), page 1) presents the results of 4

the Lost Revenues computations for the tracker periods starting with 5

January-June 2008, including the calculations for Lost Revenues related 6

to Transmission and Distribution (“T&D”) and Battle Creek that are 7

performed on the subsequent tabs. 8

9

2. Rates (Exhibit__(DLW-3), page 2) details rates in effect for 10

residential and general service customers by line item. The Natural Gas 11

Lost Revenue calculations use T&D rates from this worksheet tab as 12

inputs to Tab 5 Calc Lost Revenues. These rates are updated each time 13

the Natural Gas Lost Revenues exhibit is prepared for the Annual Natural 14

Gas Supply Tracker filing. 15

16

3. Res and GS Gas Savings (Exhibit__(DLW-3), page 3) uses the 17

annual DSM/USB targets or reported amounts and disaggregates them 18

into residential and general service natural gas savings percentage splits. 19

These percentage splits are updated each year as NorthWestern gains 20

experience operating energy efficiency programs, collects program 21

participation data, and observes the proportion of energy savings 22

contributed by each customer segment toward annual DSM/USB targets. 23

The residential and general service natural gas savings are then 24

disaggregated into cumulative annual energy savings using a 50% 25

reduction factor. Use of this factor recognizes that first-year realized 26

savings would be less than subsequent years, because energy efficiency 27

measures are installed throughout the program year and are not in place 28

and operating for a full year. 29

30

4. Adjustment Factors (Exhibit__(DLW-3), page 4) presents factors 31

to be applied to residential and general service program reported energy 32

savings for purposes of calculating Lost Revenues. These factors 33

recognize that actual savings obtained typically differ and are generally 34

less than program savings based solely on engineering calculations. 35

NorthWestern used net adjusted energy savings provided by SBW 36

Consulting, Inc. (“SBW”) for Lost Revenue Calculations covering the 37

period January 1, 2008 through June 30, 2011. As described above, no 38

further adjustment is needed for these energy savings so the Adjustment 39

DLW-25

Factor for the corresponding periods was set to 1.0. For the time period 1

July 1, 2011 forward, NorthWestern used the overall natural gas energy 2

efficiency program portfolio realization rate of 0.67, as determined by 3

SBW, for the Adjustment Factor. 4

5

5. Calc Lost Revenues (Exhibit__(DLW-3), pages 5-12) calculates 6

T&D Lost Revenues based on input from Tabs 2, 3 and 4. Results from 7

this tab are used as inputs to Tab 1. 8

9

6. Battle Creek (Exhibit__(DLW-3), page 13) calculates Lost 10

Revenues that are specific to the portion of the energy supply rate 11

associated with recovery of the fixed cost revenue requirement for Battle 12

Creek service to Montana jurisdictional loads. The same lost revenue 13

calculation methodology used in tabs 2 through 5 is applied, and the time 14

frame for energy savings relevant to the calculation reflects the fact that 15

Battle Creek was placed in commercial service on December 1, 2012. 16

17

Q. How are the Lost Revenues trued up and what amounts are you 18

proposing to include as an adjustment to supply rates to recover 19

Lost Revenues? 20

A. Exhibit__(DLW-3) provides updated calculations of Natural Gas Lost 21

Revenues. A true-up to the Lost Revenue calculations is required each 22

time a new tracker is prepared because NorthWestern prepares and files 23

a new annual tracker before the current tracking period ends. This 24

schedule requires computation of Lost Revenues based on 9 months of 25

actual reported energy savings (July through March) and 3 months of 26

estimated energy savings (April through June) for the concluding (or 27

current) tracking period. Normally, the savings is updated to reflect 12 28

months of actual information in response to discovery or in rebuttal 29

testimony in the current docket. 30

DLW-26

NorthWestern proposes that natural gas supply rates include recovery of 1

the amount of $298,993 for total Natural Gas Lost Revenues for the 2014-2

2015 Tracker Year (refer to cell D22 on page 1 of Exhibit__(DLW-3)). 3

4

The forward-looking total Natural Gas Lost Revenues for the 2015-2016 5

Tracker Year are $440,574 (refer to cell D24 on page 1 of Exhibit__(DLW-6

3)). 7

8

Q. Does this complete your testimony? 9

A. Yes, it does. 10

Docket No. D2014.7.59EXHIBIT__(DLW-1)

Page 1 of 1

18. Exhibit__(DLW-1) 2014-15 Tracker 9+3 NG Save FINAL 051115Exhibit__(DLW-1) 14-15 9+3 Gas

123

456789

101112131415

16

1718192021

22

23242526272829303132333435363738

3940

4142

A B C D E F G H ITable A: Reported Savings From 2014-15 Natural Gas USB and DSM Program Activity

USB Natural Gas Supply DSM Total

dKt dKt dKtE+ Energy Audit for the Home or Business (Natural Gas) 13,911 - 13,911 E+ Business Partners Program - 546 546 Builder Operator Certification 1,279 - 1,279 Northwest Energy Efficiency Alliance (NEEA) - 4,755 4,755 E+ Free Weatherization Program & Fuel Switch 11,591 - 11,591 E+ Residential NC Gas Rebate Program - 321 321 E+ Residential EX Gas Rebate Program - 11,752 11,752 E+ Commercial NC Gas Rebate Program - 1,374 1,374 E+ Commercial EX Gas Rebate Program - 884 884

Totals 26,781 19,632 46,413

Note 1: Annualized energy savings are based on 9 months of actual reported savings (July - March) and 3 months estimated.

USB + DSM savings acquired

in 2014-15 Tracker Period

(dKt): 46,413

Table B: Residential and General Service Natural Gas Savings for Calculation of Lost Revenues

General Default Supply DSM Expenses 0% - 0% - - E+ Energy Audit for the Home or Business (Natural Gas) 95% 13,236 5% 676 13,911 E+ Business Partners Program 0% - 100% 546 546 Builder Operator Certification 0% - 100% 1,279 1,279 Northwest Energy Efficiency Alliance (NEEA) 96% 4,588 4% 167 4,755 E+ Free Weatherization Program & Fuel Switch 100% 11,591 0% - 11,591 E+ Residential NC Gas Rebate Program 100% 321 0% - 321 E+ Residential EX Gas Rebate Program 100% 11,752 0% - 11,752 E+ Commercial NC Gas Rebate Program 0% - 100% 1,374 1,374 E+ Commercial EX Gas Rebate Program 0% - 100% 884 884

41,488 4,926 46,413 89.39% 10.61%

Note 2: Overall Residential and General Service percentages are used in calculation of Lost Revenues in Exhibit__(DLW-3).

41,488 4,926 46,413 89.39% 10.61%Note 3: There were no natural gas savings from NorthWestern Energy facilities for the 2014-15 Tracker Period 9+3, resulting in no reduction of Total dKt and no reduction of the General Service Percentage of Total Savings.

ProgramsAnnualized Energy Savings1

ProgramsUSB + DSM Programs

% Residential dKt % General Service dKt Total dKt

General Service % of

Total2

Residential % of Total2

General Service % of

Total2Subtract NorthWestern Energy Facilities from General Service Totals3 Residential

dKtGeneral

Service dKt Total dKt Residential % of Total2

Docket No. D2014.7.59EXHIBIT__(DLW-2)

Page 1 of 1

19. Exhibit__(DLW-2) 2014-15 10+2 Gas DSM Spend or Budget FINAL 0511152014-15 Tracker 10+2 GDSM Spend

1

2

3

4

5

6

7

8

9

10

1112

1314

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

A B C D E F G H I J K L M N O

Natural Gas DSM Program Order Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15E+ Natural Gas Residential Existing Construction Program 17066 36,641$ 29,932$ 255$ 919$ 61,828$ 14,791$ 182$ 5,875$ 47,476$ 49,346$ 24,724$ 24,724$ 296,693$ General Expenses Related to All Gas DSM Programs 17068 155$ 3,370$ 961$ 814$ 86$ 280$ 1,896$ 682$ 494$ 3,378$ 1,212$ 1,212$ 14,539$ E+ Natural Gas Business Partners Program 17070 2$ 1,679$ 261$ 15,892$ 1,218$ 824$ -$ 30$ 65$ -$ 1,997$ 1,997$ 23,964$ E+ Natural Gas Residential New Construction Program 17071 5,676$ 1,269$ -$ 25$ 10,716$ 597$ -$ -$ 1,892$ 4,446$ 2,462$ 2,462$ 29,546$ E+ Natural Gas Commercial Existing Construction Program 17072 5,111$ 8,531$ 282$ 2,476$ 8,278$ 3,523$ 83$ 30$ 3,138$ 3,648$ 3,510$ 3,510$ 42,120$ E+ Natural Gas Commercial New Construction Program 17073 8,269$ 1,177$ -$ 22$ 17,723$ 338$ -$ -$ 708$ 3,375$ 3,161$ 3,161$ 37,933$ Monthly Total Spending 55,853$ 45,958$ 1,759$ 20,147$ 99,849$ 20,353$ 2,161$ 6,617$ 53,773$ 64,192$ 37,066$ 37,066$ 444,795$

Cumulative Total Spending (for 2014-15 Tracker Year 10+2) 55,853$ 101,811$ 103,570$ 123,717$ 223,567$ 243,920$ 246,081$ 252,698$ 306,470$ 370,663$ 407,729$ 444,795$ 444,795$

Note: Actual Program Expenses through April 30, 2015 as of May 7, 2015

Natural Gas DSM Program Order Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16E+ Natural Gas Residential Existing Construction Program 17066 36,641$ 29,932$ 255$ 919$ 61,828$ 14,791$ 182$ 5,875$ 47,476$ 49,346$ 24,724$ 24,724$ 296,693$ General Expenses Related to All Gas DSM Programs 17068 155$ 3,370$ 961$ 814$ 86$ 280$ 1,896$ 682$ 494$ 3,378$ 1,212$ 1,212$ 14,539$ E+ Natural Gas Business Partners Program 17070 2$ 1,679$ 261$ 15,892$ 1,218$ 824$ -$ 30$ 65$ -$ 1,997$ 1,997$ 23,964$ E+ Natural Gas Residential New Construction Program 17071 5,676$ 1,269$ -$ 25$ 10,716$ 597$ -$ -$ 1,892$ 4,446$ 2,462$ 2,462$ 29,546$ E+ Natural Gas Commercial Existing Construction Program 17072 5,111$ 8,531$ 282$ 2,476$ 8,278$ 3,523$ 83$ 30$ 3,138$ 3,648$ 3,510$ 3,510$ 42,120$

E+ Natural Gas Commercial New Construction Program 17073 8,269$ 1,177$ -$ 22$ 17,723$ 338$ -$ -$ 708$ 3,375$ 3,161$ 3,161$ 37,933$ Monthly Total Spending 55,853$ 45,958$ 1,759$ 20,147$ 99,849$ 20,353$ 2,161$ 6,617$ 53,773$ 64,192$ 37,066$ 37,066$ 444,795$

Estimated Total Spending (for 2015-16 Tracker Year) 55,853$ 101,811$ 103,570$ 123,717$ 223,567$ 243,920$ 246,081$ 252,698$ 306,470$ 370,663$ 407,729$ 444,795$ 444,795$

EstimatedTotal

Natural Gas Supply DSM Program Spending and Budget2014-2015 Tracker Year

Actual Recorded Spending (July through April) - from SAP Records EstimatedTotal

2015-2016 Tracker Year

Docket No. D2014.7.59Exhibit__(DLW-3)

Page 1 of 13

20. Exhibit__(DLW-3) 2014-15 NG Lost Revenues 9+3 FINAL 0511151.LR Summary

1

2

3

4

5

67

8

9

10

1112

13

14

15

16

17

18

19

20

21

22

23

24

252627282930

31323334353637

38

A B C D

Time Period Montana T&D Battle Creek1

Total Lost Revenues

January-June 2008 65,914$ 65,914$ Tracker 2008-09 332,826$ 332,826$ Tracker 2009-10 781,471$ 781,471$

Tracker 2010-11:July-December 2010 127,784$ 127,784$ January-June 2011 264,775$ 264,775$ Total Tracker 2010-2011 392,559$ 392,559$

Tracker 2011-12 504,444$ 504,444$

Tracker 2012-13:July 1, 2012-March 31, 2013 568,281$ 568,281$ April 1, 2013-June 30, 2013 31,595$ 31,595$ Total Tracker 2012-2013 599,876$ 2,494$ 602,371$

Tracker 2013-14 146,303$ 7,694$ 153,998$

Tracker 2014-15 286,622$ 12,371$ 298,993$

Tracker 2015-16 423,616$ 16,958$ 440,574$

Notes:

Tracker Period 2012-2013 based on 12 months actual reported energy savings (excluding NorthWestern Facilities DSM)Tracker Period 2013-2014 based on 12 months actual reported energy savings (excluding NorthWestern Facilities DSM)Tracker Period 2014-2015 based on 9 months of actual and 3 months of estimated energy savings (excluding NorthWestern Facilities DSM)Tracker Period 2015-2016 based on 65,000 Dkt goal

1. Battle Creek began commercial service on December 1, 2012.

Natural Gas Lost Revenues

The starting point for this 'Exhibit__(DLW-3) 2014-15 NG Lost Revenues 9+3 FINAL 051115' in D2014.7.59 was the spreadsheet workbook 'Exhibit__(WMT-3-Corrected)-13-14 Final' and was filed with the Schwartzenberger Supplemental testimony in consolidated Docket Nos. D2013.5.34/D2014.5.47.


Page 2 of 13

20. Exhibit__(DLW-3) 2014-15 NG Lost Revenues 9+3 FINAL 0511152.Rates

12

34

56789

1011121314151617

1819

20

21

222324

2526272829303132333435363738

39

40414243444546474849505152535455

5657585960616263646566676869

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG

Rates as of January 1, 2008 Rates as of January 1, 2008 Rates as of January 1, 2009

Residential: Residential: Residential: Residential: Residential: Residential:Gas Distribution 1.873843$ per dKt Gas Distribution 1.873843$ per dKt Gas Distribution 1.839552$ per dKt Gas Distribution 1.842673 per dKt Gas Distribution 1.890398$ per dKt Gas Distribution 1.890398$ per dKtGas Transmission 1.109614$ per dKt Gas Transmission 1.109614$ per dKt Gas Transmission 1.089308$ per dKt Gas Transmission 1.091156 per dKt Gas Transmission 1.119417$ per dKt Gas Transmission 1.119417$ per dKtGas Storage 0.337708$ per dKt Gas Storage 0.337708$ per dKt Gas Storage 0.331528$ per dKt Gas Storage 0.33209 per dKt Gas Storage 0.340691$ per dKt Gas Storage 0.340691$ per dKt

General Service: General Service: General Service: General Service: General Service: General Service:GS Distribution-Commodity 1.851950$ per dKt Gas Distribution 1.851950$ per dKt Gas Distribution 1.818025$ per dKt Gas Distribution 1.821775 per dKt Gas Distribution 1.868959$ per dKt Gas Distribution 1.868959$ per dKtGS Transmission-Commodity 1.108517$ per dKt Gas Transmission 1.108517$ per dKt Gas Transmission 1.088231$ per dKt Gas Transmission 1.090475 per dKt Gas Transmission 1.118718$ per dKt Gas Transmission 1.118718$ per dKtGS Storage-Commodity 0.336612$ per dKt Gas Storage 0.336612$ per dKt Gas Storage 0.330452$ per dKt Gas Storage 0.331133 per dKt Gas Storage 0.339709$ per dKt Gas Storage 0.339709$ per dKt

Residential: Residential: Residential: Residential: Residential: Residential: Residential:Gas Distribution 1.828771$ per dKt Gas Distribution 1.914723$ per dKt Gas Distribution 1.857003$ Gas Distribution 2.107839$ per dKt Gas Distribution 2.107839$ per dKt Gas Distribution 2.1110010$ Gas Distribution 2.109420$ Gas Transmission 1.082924$ per dKt Gas Transmission 1.133821$ per dKt Gas Transmission 1.099642$ Gas Transmission 1.248177$ per dKt Gas Transmission 1.248177$ per dKt Gas Transmission 1.2500490$ Gas Transmission 1.249113$ Gas Storage 0.329584$ per dKt Gas Storage 0.345074$ per dKt Gas Storage 0.334672$ Gas Storage 0.379878$ per dKt Gas Storage 0.379878$ per dKt Gas Storage 0.3804480$ Gas Storage 0.380163$

General Service: General Service: General Service: General Service: General Service: General Service: General Service:Gas Distribution 1.808031$ per dKt Gas Distribution 1.893008$ per dKt Gas Distribution 1.835943$ Gas Distribution 2.038022$ per dKt Gas Distribution 2.038022$ per dKt Gas Distribution 2.0410790$ Gas Distribution 2.039551$ Gas Transmission 1.082248$ per dKt Gas Transmission 1.133114$ per dKt Gas Transmission 1.098956$ Gas Transmission 1.206612$ per dKt Gas Transmission 1.206612$ per dKt Gas Transmission 1.2084220$ Gas Transmission 1.207517$ Gas Storage 0.328634$ per dKt Gas Storage 0.344080$ per dKt Gas Storage 0.333708$ Gas Storage 0.366399$ per dKt Gas Storage 0.366399$ per dKt Gas Storage 0.3669490$ Gas Storage 0.366674$

# of Days18490

Subtotal 274

91365

Residential: Residential: Residential: Residential:Gas Distribution 2.111001$ per dKt Gas Distribution 2.103401$ per dKt Gas Distribution 2.107201$ per dKt Gas Distribution 2.103401$ per dKtGas Transmission 1.250049$ per dKt Gas Transmission 1.245549$ per dKt Gas Transmission 1.247799$ per dKt Gas Transmission 1.245549$ per dKtGas Storage 0.380448$ per dKt Gas Storage 0.379078$ per dKt Gas Storage 0.379763$ per dKt Gas Storage 0.379078$ per dKt

General Service: General Service: General Service: General Service:Gas Distribution 2.041079$ per dKt Gas Distribution 2.033731$ per dKt Gas Distribution 2.037405$ per dKt Gas Distribution 2.033731$ per dKtGas Transmission 1.208422$ per dKt Gas Transmission 1.204072$ per dKt Gas Transmission 1.206247$ per dKt Gas Transmission 1.204072$ per dKtGas Storage 0.366949$ per dKt Gas Storage 0.365628$ per dKt Gas Storage 0.366289$ per dKt Gas Storage 0.365628$ per dKt

Period July 1, 2015-June 30, 2016Reference Docket No. D2014.12.96 Annual

Tax Tracker Filing

Tracker 2015-16

Period January 1, 2015-June 30, 2015Reference Docket No. D2014.12.96 Annual Tax

Tracker Filing

Tracker 2014-15

Weighted Average Rates for July 1, 2014 - June 30, 2015

Period July 1, 2014-December 31,2014Reference Docket No. D2013.12.83 Annual Tax

Tracker Filing

Period April 1, 2013-June 30, 2013

Factors used to pro-rate the rates for different rate periods during 2012-13

2012-13 Weighting Table for T&D Rates

Period July 1, 2012-Dec 31, 2012Period Jan 1, 2013-March 31, 2013


Reference: Compliance Filing on December 21, 2010 Docket D2009.9.129, Final Order 7046h;

Work-Papers Section “Natural Gas Utility Approved Revenue Requirement ACOS and Derivation of Rates” Page 4 of 5 Column D.

Reference: 2011 Annual Tax Tracker Filing Application December 23. 2010, Docket

D2010.12.116, Final Order 7131a; Appendix A Pages 1 – 4, Column (B) + (E), excluding

rebate in Column (C).

Tracker 2010-11Tracker 2009-10Tracker 2008-09January-June 2008 Tracker 2011-12

Reference: 2011 Annual Tax Tracker Filing Application December 23. 2010, Docket D2010.12.116, Final Order

7131a; Appendix A Pages 1 – 4, Column (B) + (E), excluding rebate in Column (C).

Period July – December 2010 Period January – June 2011

Reference: 2012 Annual Tax Tracker Filing Application December 8, 2011, Docket D2011.12.97., Final Order

7191a; Appendix A Pages 1-4

Reference: 2013 Annual Tax Tracker Filing Application December 11, 2012, Docket

D2012.12.124., By Law; Appendix A Pages 1-4

Reference Docket No. D2012.9.94 Compliance Filing Final Order No. 7249e

(Note Exclude Rebate Rate)

Tracker 2013-14

Weighted Average Rates for July 1, 2013 - June 30, 2014

Period January 1, 2014-June 30, 2014

Reference Docket No. D2013.12.83 Annual Tax Tracker Filing

Tracker 2012 - 2013

Reference Docket No. D2012.9.94 Compliance Filing Final Order No. 7249e (Note Exclude

Rebate Rate)

Period Jan 1, 2012-Dec 31, 2012 Period Jan 1, 2013-March 31, 2013 Period April 1, 2013-June 30, 2013 Period July 1, 2013-December 31, 2014

Weighted Average Rates for July 1, 2012 - March 31, 2013

Tracker Natural Gas Savings Re-set with New T&D Rates

Tracker 2012-13 BEFORE New T&D Rates


Page 3 of 13

20. Exhibit__(DLW-3) 2014-15 NG Lost Revenues 9+3 FINAL 0511153.Res & GS Gas Savings

123

4

56789

101112

131415161718192021222324252627

2829303132333435

36

37

38

394041

424344

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Annual Energy Savings:

1) Gas Savings -- Targets & Reported SavingsTarget Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported

Annual (dKt) 85,469 39,701 175,000 121,258 210,000 158,049 105,000 78,311 105,000 79,857 210,000 136,386 157,644 77,028 52,356 25,582 210,000 67,160 210,000 46,413 65,000 Cumulative (dKt) 85,469 39,701 260,469 160,959 470,469 319,008 105,000 78,311 210,000 158,168 420,000 294,554 577,644 371,582 52,356 25,582 235,582 92,742 302,742 139,156 204,156

2) Percentage split between Residential & General Service:Residential 100% 97.5% 100% 75.2% 75% 87.5% 75% 89.2% 75% 89.2% 75% 81.6% 80% 79.57% 80% 79.57% 80% 81.64% 80% 89.39% 80%General Service 0% 2.5% 0% 24.8% 25% 12.5% 25% 10.8% 25% 10.8% 25% 18.4% 20% 20.43% 20% 20.43% 20% 18.36% 20% 10.61% 20%Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0%

Incremental Res. (dKt) 85,469 38,712 175,000 91,226 157,500 138,342 78,750 69,890 78,750 71,270 157,500 111,291 126,115 61,288 41,885 20,355 168,000 54,831 168,000 41,488 52,000 Cumulative Res. (dKt) 85,469 38,712 213,712 129,938 287,438 268,281 78,750 69,890 148,640 141,161 298,661 252,451 378,567 313,739 41,885 20,355 188,355 75,186 243,186 116,674 168,674 Incremental General Service (dKt) - 988 - 30,032 52,500 19,706 26,250 8,421 26,250 8,587 52,500 25,095 31,529 15,740 10,471 5,228 42,000 12,329 42,000 4,926 13,000 Cumulative General Service (dKt) - 988 988 31,020 83,520 50,727 26,250 8,421 34,671 17,008 69,508 42,103 73,631 57,843 10,471 5,228 47,228 17,556 59,556 22,482 35,482

ck fig OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK

3) Cumulative Annual Gas Savings2 Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target Reported Target ReportedResidential (dKt) 42,735 19,356 126,212 84,325 208,688 199,110 39,375 34,945 74,320 70,580 219,911 196,806 252,569 220,155 20,942 10,177 104,355 47,770 159,186 95,930 142,674General Service (dKt) - 494 988 16,004 57,270 40,874 13,125 4,210 17,335 8,504 43,258 29,555 47,370 39,476 5,236 2,614 26,228 11,392 38,556 20,019 28,982Total 42,735 19,850 127,201 100,330 265,959 239,983 52,500 39,156 91,656 79,084 263,168 226,361 299,939 259,631 26,178 12,791 130,582 59,162 197,742 115,949 171,656 0

# of Days

% of Total 2012-13 Tracker Period

184 50.41%

90 24.66%274 75.07%

91 24.93%365 100.00%

Tracker 2015-16

Tracker 2015-16


1. Different T&D rates were in effect for each 6-month period, so Total Reported Savings was divided between the two periods. New rates went into effect on July 8, 2010, which is one week later than the beginning of the 2010-11 Tracker Period, so Reported Energy Savings has been "de-rated" by 7 days for the July-December 2010 period. DEQ program savings was also divided by the two periods and subtracted from the Total Reported DSM Savings.

January-June 2008 Tracker 2008-09

Tracker 2010-111 Tracker 2012-133

January-June 2008 Tracker 2008-09 Tracker 2009-10 July-December 2010 January-June 2011 Tracker 2011-12Period July 1, 2012-Mar

31, 2013

Tracker 2009-10 July-December 2010 January-June 2011

2. Savings resulting from the "Increment" in any year (take Year 1 for example) is reduced by 50% in that year as associated projects are completed and start generating savings at different times throughout the first year. This

assumption contemplates that beyond, projects completed in the first year generate savings for the entire year so the "Increment" is credited at 100% for the second year and each successive year.

2012-13 Pro-Rate Table

These Targets and Reported Savings (range P23:Q24) have been pro-rated for 9 months (July 1,

2012 - March 30, 2013). This reflects that the cumulative reported energy savings was in place for 9 months (not a full year) before the new T&D

rates became effective.

Factors used to pro-rate energy savings for different rate periods during 2012-13

Period July 1, 2012-Dec 31, 2012

3. Different T&D rates were in effect for three separate intervals during 2012-13. A Weighted average rate was used (refer to Tab 2_ for the July 1, 2012-March 30, 2013 period). Total Reported Savings was pro-rated for the July 1, 2012-March 30, 2013 and the April 1, 2013-June 30, 2013 periods using the 2012-13 Pro-Rate Table. New natural gas T&D rates went into effect on April 1, 2013 so cumulative reported energy savings was reset to a zero starting point as of April 1, 2013.

Period Jan 1, 2013-March 31, 2013

Subtotal

Period April 1, 2013-June 30, 2013

Tracker 2011-12Period July 1, 2012-Mar

31, 2013

Tracker 2014-15 (9+3)

Tracker 2014-15 (9+3)Period April 1, 2013-June

30, 2013 Tracker 2013-14

Period April 1, 2013-June 30, 2013 Tracker 2013-14


Page 4 of 13

20. Exhibit__(DLW-3) 2014-15 NG Lost Revenues 9+3 FINAL 0511154.Adjustment Factors

12

345

678910111213

14

1516171819202122232425

A B C D

Residential Net Savings Adjustment RatioSegmentAll 1.0

General Service Net Savings Adjustment RatioSegmentAll 1.0

Residential Net Savings Adjustment RatioSegmentAll 0.67

General Service Net Savings Adjustment RatioSegmentAll 0.67

For Lost Revenue calculations for the period beginning January 1, 2008 through June 30, 2011, the value of 1.0 is used for this because the actual Net Adjusted Energy Savings from SBW were entered in Tab 3.

For Lost Revenue calculations for the 2011-2012 tracker period forward, these values are used. SBW, Inc. DSM Evalution Study Savings Realization rate for all Natural Gas DSM programs

Natural Gas Lost RevenuesThe Adjustment Factor recognizes that, for a number of reasons, actual program savings is likely to vary from reported savings.


Page 5 of 13

20. Exhibit__(DLW-3) 2014-15 NG Lost Revenues 9+3 FINAL 0511155.Calc Lost Revenues

123456789

101112131415161718192021222324252627282930313233343536373839404142434445

A B C D E F G H I

January-June 2008Gross Estimated

Residential Program Net LostRate Savings Adjustment Savings Revenue

Bill Line Item ($ per dKt) (dKt) Factor (dKt) ($)Gas Distribution 1.873843$ 19,356 1.000 19,356 36,270Gas Transmission 1.109614$ 19,356 1.000 19,356 21,478Gas Storage $ 0.337708 19,356 1.000 19,356 6,537

Sub Total Residential: 19,356 64,285$

Gross EstimatedGeneral Service Program Net Lost

Rate Savings Adjustment Savings RevenueBill Line Item ($ per dKt) (dKt) Factor (dKt) ($)

Gas Distribution 1.851950$ 494 1.000 494 915Gas Transmission 1.108517$ 494 1.000 494 548Gas Storage 0.336612$ 494 1.000 494 166

Sub Total General Service: 494 1,630$

Total January-June 2008 65,914$

Tracker 2008-09Gross Estimated


Bill Line Item ($ per dKt) (dKt) Factor (dKt) ($)Gas Distribution 1.873843$ 84,325 1.000 84,325 158,012Gas Transmission 1.109614$ 84,325 1.000 84,325 93,569Gas Storage 0.337708$ 84,325 1.000 84,325 28,477




Gas Distribution 1.851950$ 16,004 1.000 16,004 29,639Gas Transmission 1.108517$ 16,004 1.000 16,004 17,741Gas Storage 0.336612$ 16,004 1.000 16,004 5,387

Sub Total General Service: 16,004 52,768$

Total Tracker 2008-09 332,826$



Page 6 of 13


46474849505152535455565758596061626364656667

A B C D E F G H I











Page 7 of 13


6869707172737475767778798081828384858687888990919293949596979899100101102103104105106107108109110111

A B C D E F G H I

Tracker 2010-11: July-December 2010Gross Estimated




EstimatedGeneral Service Program Net Lost




Total Tracker 2010-11: July-December 2010 127,784$

Tracker 2010-11: January-June 2011Gross Estimated








Total Tracker 2010-11: January-June 2011 264,775$


Page 8 of 13


112113114115116117118119120121122123124

125126127128129130131132133

A B C D E F G H I











Page 9 of 13


134135136137138139140141142143144145146147148149150151152153154155156157158159160161162163164165166

167168169170171172173174175176177178

A B C D E F G H I

Gross EstimatedResidential Program Net Lost








Total Tracker 2012-13: Period July 1, 2012-March 31, 2013 568,281$







Gas Distribution 2.038022$ 2,614 0.666 1,740 3,546Gas Transmission 1.206612$ 2,614 0.666 1,740 2,100Gas Storage 0.366399$ 2,614 0.666 1,740 638


Total Tracker 2012-13: Period April 1, 2013-June 30, 2013 31,595$

2012-13 Tracker Period: 2 different Rate periods including new T& D rates 4/1/13Tracker 2012-13: Period July 1, 2012-March 31, 2013

Tracker 2012-13: Period April 1, 2013-June 30, 2013


Page 10 of 13


179180181182183184185186187188189190191192193194195196197198199

A B C D E F G H I










Tracker 2013-14


Page 11 of 13


200201202203204205206207208209210211212213214215216217218219220221

A B C D E F G H I










Tracker 2014-15


Page 12 of 13


222223224225226227228229230231232233234235236237238239240241242243244

A B C D E F G H I

TARGETGross Estimated




TARGET EstimatedGeneral Service Program Net Lost





Tracker 2015-16


Page 13 of 13

20. Exhibit__(DLW-3) 2014-15 NG Lost Revenues 9+3 FINAL 0511156.Battle Creek

12345

6789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556575859

A B C D E F G H I J K

Annual Energy Savings:

1) Gas Savings -- Targets & Reported SavingsTarget Reported Target Reported Target Reported Target Reported

Annual (dKt) - 59,856 - 67,160 210,000 46,413 65,000 Cumulative (dKt) - 59,856 - 127,016 210,000 173,430 238,430

Pro-rated for 7 months

2) Cumulative Annual Gas Savings2 Target Reported Target Reported Target Reported Target ReportedTotal - 29,928 59,856 93,436 232,016 150,223 205,930

December 1, 2012 - June 30, 2013

ReportedGross Estimated

Program Net LostRate Savings Adjustment Savings Revenue

Bill Line Item ($ per dKt) (dKt) Factor (dKt) ($)Battle Creek 0.125200$ 29,928 0.67 19,924 2,494

Tracker 2013-14 ReportedGross Estimated






Tracker 2015-16 TARGETGross Estimated



December 1, 2012 - June 30, 2013

0.12520 0.12370 0.12370

December 1, 2012 - June 30, 2013 Tracker 2013-14 Tracker 2014-15

December 1, 2012 - June 30, 2013 Tracker 2013-14 Tracker 2014-15

Docket D2012.7.74 - June 1,2013 Monthly Natural Gas Cost Rate AdjustmentDocket D2012.3.25 - Final Order 7210bRates:

Revenue Requirement related rate ($/Dkt)

Tracker 2013-14 Tracker 2014-15


Tracker 2015-16

Tracker 2015-16

Tracker 2015-16

0.12370

NorthWestern Energy Natural Gas Energy Efficiency Market Potential Study i

NorthWestern Energy Natural Gas Energy Efficiency Market Potential Study

June 3, 2014

Docket No. D2014.7.59

Exhibit__(DLW-4)

Natural Gas Energy Efficiency Market Potential Study ii

CONTENTS

EXECUTIVE SUMMARY .............................................................................................................. 4

OVERVIEW .......................................................................................................................................... 4 SCOPE OF ANALYSIS .............................................................................................................................. 4 RESULTS .............................................................................................................................................. 5

Economic Potential under Alternative Avoided Cost Scenarios ............................................................ 7

1 METHODOLOGY ............................................................................................................... 8

1.1 END-USE MARKET CHARACTERIZATION ........................................................................................ 11 1.2 LOAD DISAGGREGATION AND FORECAST ....................................................................................... 12

1.2.1 Determine Energy Consumption per Customer Class and Segment in Baseline Year ........... 12

1.2.2 End-Use Load Classification .................................................................................................. 13 1.3 TECHNOLOGIES CLASSIFICATION AND MEASURE LIST RESEARCH ....................................................... 13 1.4 ESTIMATE ENERGY SAVINGS POTENTIAL AND DETERMINE MARKET POTENTIAL ................................... 15

1.4.1 Estimate Technical Potential ................................................................................................ 16 1.4.1.1 Equipment Measures........................................................................................................... 16 1.4.1.2 Non-Equipment Measures ................................................................................................... 16 1.4.1.3 Interactive Effects ................................................................................................................ 18

1.4.2 Estimate Economic Potential ................................................................................................ 18 1.4.2.1 Calculate Cost Effectiveness ................................................................................................ 18

1.5 ESTIMATE ACHIEVABLE POTENTIAL .............................................................................................. 19

1.5.1 Benchmarking....................................................................................................................... 20

1.5.2 Adoption Curves ................................................................................................................... 21

2 MARKET CHARACTERIZATION ........................................................................................ 23

2.1 NATURAL GAS MARKET OVERVIEW ............................................................................................. 23 2.2 RESIDENTIAL SECTOR OVERVIEW ................................................................................................. 26 2.3 COMMERCIAL SECTOR OVERVIEW ............................................................................................... 28 2.4 INDUSTRIAL SECTOR OVERVIEW .................................................................................................. 30

3 TECHNICAL POTENTIAL .................................................................................................. 31

3.1 SUMMARY OF RESULTS .............................................................................................................. 31

4 ECONOMIC & ACHIEVABLE POTENTIAL: TRC ................................................................. 33

4.1 SUMMARY OF RESULTS .............................................................................................................. 33 4.2 SECTOR-LEVEL FINDINGS ............................................................................................................ 36

4.2.1 Residential Sector Potential .................................................................................................. 36

4.2.3 Commercial Sector Potential ................................................................................................ 40

4.2.5 Industrial .............................................................................................................................. 43


Exhibit__(DLW-4)

Natural Gas Energy Efficiency Market Potential Study iii

5 ECONOMIC & ACHIEVABLE POTENTIAL: UCT ................................................................ 45

5.1 SUMMARY OF RESULTS .............................................................................................................. 45 5.2 SECTOR-LEVEL FINDINGS ............................................................................................................ 48

5.2.1 Residential Sector Potential .................................................................................................. 48

5.2.3 Commercial Sector Potential ................................................................................................ 51

5.2.5 Industrial Sector Potential .................................................................................................... 54

APPENDIX A MEASURE DESCRIPTIONS ............................................................................ A-1

A.1 RESIDENTIAL MEASURES .......................................................................................................... A-1 A.2 COMMERCIAL ......................................................................................................................... A-6 A.3 INDUSTRIAL ......................................................................................................................... A-12

APPENDIX B COST-EFFECTIVE MEASURES ....................................................................... 5-1

APPENDIX C TOP MEASURES BY SAVINGS POTENTIAL.................................................... C-1

APPENDIX D E+ PROGRAM TRADE ALLY SURVEY ............................................................ D-1

D.1 SUMMARY OF FINDINGS: ......................................................................................................... D-1


Exhibit__(DLW-4)


EXECUTIVE SUMMARY

OVERVIEW This report identifies and characterizes the remaining, achievable, cost-effective natural gas energy efficiency potential in NorthWestern Energy’s (NorthWestern’s) Montana natural gas supply territory for the period 2014-2033.

This study builds upon previous assessments completed in 2003 and 2009 while incorporating enhancements with respect to both the scope of analysis and the methodology used for modeling potential energy savings.

SCOPE OF ANALYSIS The energy efficiency potential in the NorthWestern’s territory can be characterized by levels of opportunity. The ceiling or theoretical maximum is based on commercialized and emerging technologies and behavior measures, whereas the realistic savings that may be achieved through demand-side management (DSM) programs reflects real world market constraints such as utility budgets, customer perspectives and energy efficiency policy. This analysis defines these levels of energy efficiency potential according to the Environmental Protection Agency’s (EPA) National Action Plan for Energy Efficiency (NAPEE) as illustrated in Figure E.1.1

Figure E.1: Energy Efficiency Potential

1 The EPA National Action Plan for Energy Efficiency: http://www.epa.gov/cleanenergy/documents/suca/napee_report.pdf


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http://www.epa.gov/cleanenergy/documents/suca/napee_report.pdf�

SECTION 0 0BExecutive Summary


Technical Potential is the theoretical maximum amount of energy and capacity that could be displaced by efficiency, regardless of cost and other barriers that may prevent the installation or adoption of an energy-efficiency measure. Technical potential is only constrained by factors such as technical feasibility and applicability of measures.

Economic Potential is the amount of energy and capacity that could be reduced by efficiency measures that pass a cost-effectiveness test. The Total Resource Cost (TRC) Test estimates the measure costs to both the utility and customer, while the Utility Cost Test (UCT) estimates the measure costs to just the utility.

Achievable Potential is the energy savings that can feasibly be achieved through program and policy interventions.

Program Potential reflects the realistic quantity of energy savings the utility can realize through DSM programs during the horizon defined in the study. Potential delivered by programs is often less achievable potential, due to real-world constraints, such as program utility program budgets, effectiveness of outreach, and market delays.

This study explores technical, economic, and achievable energy efficiency potential (program potential is not included in this assessment). The quantification of these four levels of energy efficiency potential is an iterative process reflecting assumptions on cost effectiveness that drill down the opportunity from the theoretical maximum to realistic program savings. The California Standard Practice Manual (SPM) provides the methodology for estimating cost effectiveness of energy efficiency measures, bundles, programs or portfolios based on a series of tests representing the perspectives of the utility, customers, and societal stakeholders.1

RESULTS

In this potential study, individual measures were screened for cost-effectiveness using the total resource cost (TRC) and program administrator cost test, more commonly known as the utility cost test (UCT) from the Standard Practice Manual.

Summary tables and figures in this section reflect the results of cost-effectiveness screening using the Total Resource Cost (TRC) test. Section 5 includes results of screening using the Utility Cost Test (UCT).

The natural gas energy efficiency potential identified in this study is shown in Figure E.2 and summarized in Tables E.1 and E.2.

1 California Standard Practice Manual: http://www.energy.ca.gov/greenbuilding/documents/background/07-J_CPUC_STANDARD_PRACTICE_MANUAL.PDF


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http://www.energy.ca.gov/greenbuilding/documents/background/07-J_CPUC_STANDARD_PRACTICE_MANUAL.PDF�




Figure E.2: Projected 2033 Potential by Sector (TRC)

Table E.1: Forecast Sales and Tech/Econ Potential in 2033 (TRC) (Dth)

Baseline Sales

(2033) Technical Economic

Savings Potential

% of Sales

Savings Potential

% of Sales

Res 15,135,480 9,624,426 63.6% 2,921,386 19.3%

Com 6,436,457 2,231,985 34.7% 620,212 9.6%

Ind 126,471 11,209 8.9% 6,838 5.4%

Total 21,698,408 11,867,620 54.7% 3,548,437 16.4%


Exhibit__(DLW-4)



Table E.2: Forecast Sales and Achievable Potential in 2033 (TRC) (Dth)

Baseline Sales

(2033) Ach. Low (33%) Ach. Mid (50%) Ach. High (75%)

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Res 15,135,480 1,285,235 8.5% 1,556,341 10.3% 1,908,929 12.6%

Com 6,436,457 265,313 4.1% 322,519 5.0% 393,454 6.1%

Ind 126,471 2,850 2.3% 3,468 2.7% 4,230 3.3%

Total 21,698,408 1,553,398 7.2% 1,882,329 8.7% 2,306,613 10.6%

Economic Potential under Alternative Avoided Cost Scenarios To provide additional perspective on future availability of energy efficiency resources while taking into account uncertainties in future natural gas costs, economic potential was analyzed under three avoided cost assumptions:

Base Case: Base avoided costs (actual 2014)

Low Cost: 50% of base avoided costs

High Cost: 200% of base avoided costs

The base 20 year levelized cost of $5.23/Dth is based on natural gas resource value assumptions received from NorthWestern Energy. The low and high scenarios are predicated on adjustments to the base case avoided costs (50% and 200% respectively). The impacts of the three avoided cost assumptions are shown in Table E.3.

Table E.3: Economic Potential under Alternative Avoided Cost Scenarios: TRC (2033) (Dth)

Base Case

Low Cost (50% of Base)

High Cost (200% of Base)

Res 2,921,386 1,174,685 3,763,510

Com 620,212 202,312 1,012,773

Ind 6,838 6,234 6,871

Total 3,548,437 1,383,231 4,783,154


Exhibit__(DLW-4)

SECTION 1 1BMethodology


1 METHODOLOGY

Energy efficiency potential studies involve a number of analytical steps to produce estimates of each type of energy efficiency potential: technical, economic, and achievable. This study utilized Nexant’s Microsoft Excel-based modeling tool, TEA-POT (Technical/Economic/Achievable Potential). This modeling tool is built on a platform that provides the ability to calculate multiple scenarios and recalculate potential savings based on variable inputs such as sales/load forecasts, natural gas prices, discount rates, and actual program savings. This model provides NorthWestern with the transparency into the assumptions and calculations for estimating market potential. TEA-POT has been consistently refined over the past several years with industry best practices, with the most recent upgrade occurring in 2013.The methodology for the energy efficiency potential assessment is based generally on a hybrid “top-down/bottom-up” approach. As illustrated in Figure 1.1, the assessment begins with the current load forecast, then decomposes it into its constituent customer-class and end-use components, and examines the effect of the range of energy efficiency measures and practices on each end use, taking into account fuel shares, current market saturations, technical feasibility, and costs. These unique impacts are then aggregated to produce estimates of potential at the end-use, customer-class, and system levels.


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Figure 1.1: Approach to Energy Efficiency Potential Modeling

The energy efficiency potential in the NorthWestern’s territory can be characterized by levels of opportunity. The ceiling or theoretical maximum is based on commercialized and emerging technologies and behavior measures, whereas the realistic savings that may be achieved through DSM programs reflects real world market constraints such as utility budgets, customer perspectives and energy efficiency policy. This analysis defines these levels of energy efficiency potential according to the Environmental Protection Agency’s (EPA) National Action Plan for Energy Efficiency (NAPEE) as illustrated in Figure 1.2.1

1 The EPA National Action Plan for Energy Efficiency:

http://www.epa.gov/cleanenergy/documents/suca/napee_report.pdf


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Figure 1.2: Energy Efficiency Potential

Technical Potential is the theoretical maximum amount of energy and capacity that could be displaced by efficiency, regardless of cost and other barriers that may prevent the installation or adoption of an energy-efficiency measure. Technical potential is only constrained by factors such as technical feasibility and applicability of measures.

Economic Potential is the amount of energy and capacity that could be reduced by efficiency measures that pass a cost-effectiveness test. The Total Resource Cost (TRC) Test estimates the measure costs to both the utility and customer, while the Utility Cost Test (UCT) estimates the measure costs to just the utility.

Achievable Potential is the energy savings that can feasibly be achieved through program and policy interventions.

Program Potential reflects the realistic quantity of energy savings the utility can realize through DSM programs during the horizon defined in the study. Potential delivered by programs is often less achievable potential, due to real-world constraints, such as program utility program budgets, effectiveness of outreach, and market delays.

This study explores technical, economic, and achievable energy efficiency potential (program potential is not included in this assessment). The quantification of these four levels of energy efficiency potential is an iterative process reflecting assumptions on cost effectiveness that drill down the opportunity from the theoretical maximum to realistic program savings. The California Standard Practice Manual (SPM) provides the methodology for estimating cost effectiveness of energy efficiency measures, bundles, programs or portfolios based on a series of tests representing the perspectives of the utility, customers, and societal stakeholders.1

1 California Standard Practice Manual:

In this potential study, individual measures were screened for cost-effectiveness using the total resource cost (TRC) and

http://www.energy.ca.gov/greenbuilding/documents/background/07-J_CPUC_STANDARD_PRACTICE_MANUAL.PDF


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program administrator cost test—more commonly known as the utility cost test (UCT)—from the Standard Practice Manual.

Naturally occurring conservation1

1.1 END-USE MARKET CHARACTERIZATION

is captured by this analysis in the load forecast. Effects of energy codes and equipment standards are taken into account by explicitly incorporating changes to codes and standards and marginal efficiency shares in the development of the base-case forecasts. In this study, it is assumed that new buildings will comply with Montana’s building codes – the 2012 International Energy Conservation Code (IECC). This study also considered pending Department of Energy appliance standard efficiency manufacturing requirements and study included pending natural gas storage and instantaneous water heater technologies scheduled to become effective in April 2015.

A critical first step in estimating energy efficiency potential is establishing a realistic energy use baseline and end-use saturation characterization from which a 20-year “business as usual” forecast can be developed. For this study, Nexant utilized a compiled database of information on utility loads and sales forecasts, market data (fuel shares, energy system saturations, and structural characteristics), end-uses (unit energy consumption (UEC), energy use intensities (EUI) and load shapes), technology shares, and measure characteristics (technologies, costs, life, and savings) from existing primary and secondary data sources. Whenever possible, data specific to NWE’s Montana customers were used. This collected data fed directly into calibration of the energy efficiency potential model and provided valuable measure-level information on current saturation and applicability. The approach described below outlines this process and is followed by a discussion of the approach to defining the existing energy savings baseline for energy-efficiency measures.

Primary data sources included previous NorthWestern studies (including the 2009 End-Use and Load Profile Study and 2012 DSM Program Evaluation), and a Trade Ally Survey developed by Nexant and administered via a secured website.

Nexant fielded a survey focused on the buying and selling habits of space and water heating equipment in NorthWestern Energy’s service territory. Trade Allies working in the distribution, sales and/or installation of space and water heating equipment provided information on the labor and non-labor costs for various high efficient and standard efficient equipment types. The trade allies also provided information on the demand for high versus standard efficiency systems, frequency with which they recommend high efficiency options, and perceptions on the benefits and costs of high efficiency equipment.

1 Naturally occurring conservation refers to gains in energy efficiency that occur as a result of normal market forces such as technological change, energy prices, market transformation efforts, and improved energy codes and standards.


Exhibit__(DLW-4)



Secondary data sources included:

Northwest Energy Efficiency Alliance (NEEA) Residential Building Stock Assessment (RBSA)

NEEA Commercial Building Stock Assessment (CBSA)

- Residential Energy Consumption Survey (RECS, with household characteristics data tables)

- Commercial Buildings Energy Consumption Survey (CBECS)

- Manufacturing Energy Consumption Study (MECS)

Energy market characterization and energy-efficiency potential assessments conducted for other natural gas utilities, including:

- Department of Energy - Energy Star™

- Ontario Energy Board 2009 Measures and Assumptions for DSM Planning

- California Database for Energy Efficient Resources (DEER)

- Illinois Statewide Technical Reference Manual 2013

1.2 LOAD DISAGGREGATION AND FORECAST After the collection of applicable secondary data sources, the next step is to disaggregate the most recent year of completed sales (2012) into a baseline year. In this study, the team disaggregated end-use loads and technologies and applied them across the study horizon by:

Determining energy consumption per customer class and segment in baseline year.

Disaggregating customer class loads into end-use loads, such as space heating.

Segmenting end-uses loads into technologies, such as furnaces.

Analyzing and calibrating data to 2012.

Forecasting the 20-year end-use energy consumption through 2033.

1.2.1 Determine Energy Consumption per Customer Class and Segment in Baseline Year

The first step in the forecast disaggregation is to analyze energy loads for the residential, commercial and industrial customer classes. Separate models were developed for the residential, commercial and industrial sector. Segmentation was developed per market segment as follows:

Residential: Base and Low-Income customers with single-family home, multi-family home, and manufactured home.

Commercial: Education, Grocery, Healthcare, Office, Lodging, Restaurant, Retail, Warehouse, Misc.


Exhibit__(DLW-4)



Industrial

1.2.2 End-Use Load Classification The next step in the forecast disaggregation analysis is to establish the end-use loads within the residential, commercial and industrial market segments. A sample of the types of end-use loads to be analyzed is found in Table 1.1.

Table 1.1: End-Use Loads by Sector

Residential Commercial Industrial

Space Heating Space Heating Space Heating

Water Heating Water Heating Water Heating

Cooking Cooking Process Heating Room Heating (Natural Gas

Fireplace / Hearth) Other Other

Clothes Drying

Other

1.3 TECHNOLOGIES CLASSIFICATION AND MEASURE LIST RESEARCH Once the baseline forecast is disaggregated, the next step to assessing market potential is to accurately detail the universe of efficiency measures and their end use – applied savings, costs and lifetimes. Measures that are currently implemented in NorthWestern Energy’s gas programs, as well as those measures found in other adjacent utility DSM programs, received careful consideration since these measures have a historical record and vendors have proven processes for implementation. Additionally the Nexant team, through its previous assignments, compiled all measures available from technical reference manuals (TRMs), like those used for the State of Illinois, Wisconsin and the province of Ontario, as well as other measures the Nexant team has characterized in similar studies. From these regionally relevant databases, Nexant selected measures that are commonly available, based on well-understood technology, and applicable to the buildings and end uses in NorthWestern Energy’s service territory. Consideration was also given to measures that show promise for future viability but have not yet gained a foothold in the market. The list of measures can be found within Appendix A.

Energy efficiency potential in the stock of premises can be captured over time through three principal processes:

1. Turnover: As equipment replacements are made normally in the market when a piece of equipment is at the end of its effective useful life (also referred to as “replace-on-burnout”)

2. Retrofit: At any time in the life of the equipment or building (referred to as “early-retirement”). 3. New: When a new home or building is constructed.


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Upon finalization of the energy efficiency measure list, data on energy savings, costs, lifetime, and applicability is collected to determine potential measure impacts. This work is performed through a four-step process.

Step 1: Define market classes for application of measures

In line with the disaggregated load forecast, the team defined the applicability of the appropriate fuel type, sectors, market segments, vintages, and end-uses to each of the measures. These classes are defined as follows:

Customer Sectors: Residential, commercial and industrial.

Market Segments:

- Residential: Base and Low-Income customers with single-family home, multi-family home, and manufactured home.

- Commercial: Education, Grocery, Healthcare, Office, Lodging, Restaurant, Retail, Warehouse, Misc.

- Industrial

Measure Type: Equipment, Non-equipment 1

Vintages:

- Equipment – Turnover, Retrofit, New

- Non-equipment – Existing, New

Table 1.2: Measures Included in Potential Modeling

Unique Measures

Measure Permutations

Residential 72 378

Commercial 76 1,197

Industrial 26 58

Total 176 1,651

1 Equipment measures are units that actually consume energy, such as a furnace. Non-equipment measures do not consume energy, such as windows or insulation.


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Step 2: Screen sectors, segments, and end-uses for eligibility

The Nexant team screened market segments and end-uses for applicability of specific energy efficient strategies. For example, certain commercial end-uses, such as cooking loads, may not be appropriate for segments such as offices and warehouses, and were analyzed only in limited market sectors.

Step 3: Develop base case impacts and costs

For each of the energy efficiency measures on the final list, base case equipment and practices were determined. A description of all base case equipment and practices was documented, along with a description of why that particular base case was the best representation. All base case assumptions and data, such as state of Montana state building codes (the 2012 International Energy Conservation Code (IECC) and federal standards, were included. Base case assumptions included projected future shifts in the base, such as upcoming Federal Standards1

Step 4: Develop energy efficiency measure impacts and costs

through the end of 2015.

A description of all energy efficiency (or “change case”) measure equipment and practices were also developed. All measure energy savings assumptions and calculation parameters, such as equivalent full load hours (EFLH), were provided and documented for transparency. For each measure, energy savings were estimated as a percentage of base equipment and/or end-use consumption.

In addition to energy savings, incremental measure costs, pertinent to NorthWestern Energy’s Montana service territory, were collected from the trade ally survey, internet retailer research, RSMeans (a construction cost database) or limited calls to local contractors, when appropriate. Research was also performed to determine the measure life for each energy efficiency measure based on available datasets.

Limited non-energy benefits were also assessed as part of the study in the context of both incremental costs and savings. Other measures, such as clothes washers and pre-rinse spray valves, offer water savings in addition to energy savings.

1.4 ESTIMATE ENERGY SAVINGS POTENTIAL AND DETERMINE MARKET POTENTIAL Drawing on the previous data compilation, organization, and market analysis tasks, the estimation of market potential is conceptually a straightforward exercise.

1 http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&sid=4244256deb6e3f16076e5cb34c6b93d9&rgn=div8&view=text&node=10:3.0.1.4.18.3.9.2&idno=10


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Develop Baseline Forecast

The baseline forecast is created by combining all of the inputs compiled in prior tasks to obtain average consumption estimates by customer segment, construction vintage and end use, and summing these up to the sector level. The disaggregated forecast data provides the foundation. For example, in the residential sector, the general equation for the DSM baseline forecast is:

Equation 1-1: ∑ ××=tji

tjitjitiBL UECEUSHHForecast,,

,,,,,

Where: HHi,t = the number of households of type i in year t

EUSi,j,t = the saturation of end use type j in household type i in year t

UECi,j,t = the unit energy consumption of end use j in household type i in year t

1.4.1 Estimate Technical Potential The measure-level inputs were used to estimate technical potential over the planning horizon. This is accomplished by creating an alternate forecast where consumption is reduced by the installation of all technically feasible measures.

1.4.1.1 Equipment Measures

For technical potential, which represents substitution of all technically feasible technical measures at the end use level (and following the residential example above), the general equation is:

Equation 1-2: tjitji

tjitiTP UECEUSHHForecast ,',,,

,,,∑ ××=



UECi,j′,t = the unit energy consumption of end use j’ (the most efficient end use technology configuration) in household type i in year t

The technical potential for equipment measures is simply the difference between Equation 1-1 and Equation 1-2.

1.4.1.2 Non-Equipment Measures

Estimating the potential for non-equipment (or “retrofit”) measures required assessing the collective impacts of many measures with interactive effects. For each segment and end-use combination, the analysis objective sought to estimate cumulative effects of the group of eligible measures, incorporating


Exhibit__(DLW-4)



those impacts into the end-use model as a percentage adjustment to baseline end-use consumption. In other words, the approach estimated the percentage reduction in end-use consumption that could be saved in a “typical” structure (e.g., office buildings, retail building) by installing all available measures. This approach began by characterizing individual measure savings in terms of their percentage of end-use consumption, rather than their absolute energy savings. The following basic relationship estimated savings for each individual, non-equipment measure:

SAVEijm = EUIije* PCTSAVijem* APPijem

where:

SAVEijm = annual energy savings for measure m for end use j in customer segment i.

EUIije = calibrated annual end-use energy consumption for the equipment e for end use j and customer segment i.

PCTSAVijem = the percentage savings of measure m relative to base usage for the end-use configuration ije, taking into account interactions among measures.

APPijem = measure applicability, a fraction representing a combination of technical feasibility, existing measure saturation, and adjustments to account for competing measures.

A measure’s savings can be appropriately viewed in terms of its savings as a percentage of baseline end-use consumption, given its overall applicability. For example, if wall insulation had overall applicability of only 50%, 10% savings in space heating consumption would yield a final 5% savings for this end use. This value would represent the percentage of baseline consumption the measure would save in an average commercial building.

However, capturing all applicable measures required examining many instances where multiple measures affected a single end use. To avoid overestimating total savings, assessment of cumulative impacts accounted for interaction among various measures, a treatment known as “measure stacking.” Stacking effects can be accounted for primarily by establishing a rolling, reduced baseline, applied sequentially to measures in the stack, as shown in the equations below, which apply measures 1, 2, and 3 to the same end use:

SAVEij1 = EUIije* PCTSAVije1*APPije1

SAVEij2 = (EUIije - SAVEij1) * PCTSAVije2 * APPije2

SAVEij3 = (EUIije - SAVEij1 - SAVEij2) * PCTSAVije3 * APPije3

Measures can be stacked using different criteria, such as total savings or cost-effectiveness. For this study, the total savings determined the stacking order for measures within each end use for the


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Technical scenario. For Economic and Achievable scenarios, the stacking order is based on measure benefit-cost ratios for the cost-effectiveness test selected.

1.4.1.3 Interactive Effects

Further, the approach accounted for the following interactive effects:

Equipment and non-equipment measures: Installing high-efficiency equipment, such as a furnace, could reduce energy savings in absolute terms (therms) associated with non-equipment measures, such as wall insulation. For example, installing a high-efficiency furnace reducing space heating consumption by 15% would reduce the baseline against which insulation would be applied, thus reducing savings associated with installing insulation.

Equipment measure interactions: This interaction occurred when two or more measures “competed” for the same end use. For example, an 80% AFUE furnace could be replaced with a 90% AFUE or 95% AFUE furnace.

1.4.2 Estimate Economic Potential The next step is to create an alternative forecast of “economic” DSM potential (i.e., considering the most efficient measures that pass economic screening tests), specifically the Total Resource Cost (TRC) and Utility Cost Test (UCT)1

Equation 1-3:

were utilized to screen individual measures. Again following the residential example, the general equation is:

tjitji

tjitiEP UECEUSHHForecast ,'',,,

,,,∑ ××=



UECi,j″,t = the unit energy consumption of end use j″ (the most efficient end use technology configuration that is also economic) in household type i in year t

Similar to the calculation of technical potential, the economic potential for DSM is the difference between Equation 1-1 and Equation 1-3.

1.4.2.1 Calculate Cost Effectiveness

Nexant determined measure cost-effectiveness using accepted industry-standard cost-effectiveness tests, described below, to gauge the economic merits of the portfolio. Each test compares the benefits

1 Utility Cost Test is also known as Program Administrator Cost (PAC) Test per the California Standard Practice Manual


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of the energy efficiency measures to their costs using its own unique perspectives and definitions in terms of net present value of future cash flows. The two standard tests are:

Total Resource Cost test (TRC). The benefits in this test are the lifetime avoided energy costs. The costs in this test are the incremental measure costs.

Equation 1-4: 𝑇𝑅𝐶 𝑅𝑎𝑡𝑖𝑜 = 𝐴𝑣𝑜𝑖𝑑𝑒𝑑 𝐸𝑛𝑒𝑟𝑔𝑦 𝐶𝑜𝑠𝑡𝑠 𝐼𝑛𝑐𝑟𝑒𝑚𝑒𝑛𝑡𝑎𝑙 𝑀𝑒𝑎𝑠𝑢𝑟𝑒 𝐶𝑜𝑠𝑡𝑠⁄

Utility Cost Test (UCT). The benefits in this test are the lifetime avoided energy costs. The costs in this test are the utility cost of incentive.

Equation 1-5: 𝑈𝐶𝑇 𝑅𝑎𝑡𝑖𝑜 = 𝐴𝑣𝑜𝑖𝑑𝑒𝑑 𝐸𝑛𝑒𝑟𝑔𝑦 𝐶𝑜𝑠𝑡𝑠 (𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒𝑠 + 𝑃𝑟𝑜𝑔𝑟𝑎𝑚 𝐴𝑑𝑚𝑖𝑛.𝐶𝑜𝑠𝑡𝑠)⁄

The research team utilized a cost-effectiveness screen of 0.90 to account for a 10% environmental benefit adder as is the general practice in the Pacific Northwest.

Nexant then produced estimates of levelized cost-of-conserved-energy (CCE) for each measure by integrating resource data (per-unit costs, savings, and measure life) with baseline building stock data (base-case fuel and end-use saturations, measure applicability factors, and current measure saturations) and baseline energy usage data. NorthWestern-specific data on avoided costs, distribution losses, discount rates, and inflation rates were incorporated to perform a full cost-benefit analysis for every rate class, sector, customer segment, vintage, end use, and measure combination.

1.5 ESTIMATE ACHIEVABLE POTENTIAL The assessment of realistically achievable energy efficiency potential requires estimating, among other parameters, the rate at which cost-effective measures can be adopted over time. Because program implementation scenarios have a direct influence over such market penetration rates, calculating achievable potential typically incorporates individually developed sets of market penetration curves corresponding to implementation scenarios. These scenarios may be correlated to differing levels of urgency in program implementation, tolerance for rate impacts, macroeconomic conditions, or other situations.

There are important components in the determination of achievable potential:

Customers’ willingness to participate. The likelihood that customers will participate in energy efficiency programs is a function of several factors, most notably incentive level. Achievable potential was estimated for three different incentive-level scenarios (30%, 50%, and 75%) to examine the variance in expected savings.

Uncertainty. Filing and planning requirements often necessitate a point-estimate of potential; however, this is not an accurate reflection of the reality of DSM programs. It is preferred to think of achievable potential as a range, or probability distribution, where the point-estimate is the most likely outcome. This distribution defines the lower and upper bounds of expected savings, as well as the most likely value.


Exhibit__(DLW-4)



Benchmarking. The amount of savings expected to be achievable through DSM programs will be informed by the experience of utilities across the region and nation.

1.5.1 Benchmarking The study team researched and analyzed the performance of eight utility sponsored natural gas demand-side management programs in the Pacific Northwest and Rocky Mountain regions from 2008-2012. The purpose of the analysis was to establish a benchmark from the results of actual natural gas program performance to act as a comparison for NorthWestern Energy’s natural gas program performance. Performance benchmarking of this type of program is challenging, because the identification of an equivalent peer is impractical due to possible significant differences in characteristics, including:

Service territory size

- Physical square miles

- Number of sector diversity customers (residential vs. commercial)

Premise construction characteristics

- Presence of specific technologies and efficiency shares

- Construction age and vintage

Customer decision making and cultural support for energy-efficiency

Presence of utility and/or regulatory performance goals

Program delivery

- Incentive structure for each measure

- Delivery methods, including direct install vs. customer install

- Investment in non-incentive program spending, such as marketing

Aggregate findings across the review period of 2008 to 2012 are found in Figure 1.3 with NorthWestern Energy out-performing the average of the benchmark with respect to program savings as a share of utility consumption sales.


Exhibit__(DLW-4)



Figure 1.3: Comparison of NorthWestern Energy against Similar Utilities Nat Gas Program Performance (2008-2012)

1.5.2 Adoption Curves The last test step in determining realistic, achievable energy efficiency potential is to develop an adoption rate forecasting the expected share of eligible program participants within a year. Table 1.3 and Figure 1.4 summarize the modeling scenarios utilized and examples of the market adoption curves for equipment and non-equipment measures.

Table 1.3: Potential Modeling Scenarios

Incentive Rate

Adoption Rate

Technical 100% Most aggressive

Economic 100% Most aggressive

Achievable Low 33% Low

Achievable Mid 50% Moderate

Achievable High 75% High


Exhibit__(DLW-4)



Figure 1.4: Example Market Adoption Curves

Market adoption curves are assigned to each measure permutation according to best estimates of how the market will adopt that measure over time. As shown in the figure above, market adoption can be as high as 100% (for equipment turnover measures in the Technical and Economic scenarios, for instance), and as low as 1.7% (for nonequipment measures in the Achievable Low scenario, for instance). While the Achievable adoption curves shown above are intended to represent gradual maturation of programs followed by an eventual plateau as the market reaches saturation, the Retrofit curves mimic the steady transformation of the market over a given period, in this case, 30 to 60 years. Market adoption curves are assigned to measures according to their type, vintage, and scenario.


Exhibit__(DLW-4)

SECTION 2 2BMARKET CHARACTERIZATION


2 MARKET CHARACTERIZATION

This section provides a brief characterization of NorthWestern’s Montana natural gas market. Baseline natural gas usage characteristics are largely based on the results of the Energy End Use and Load Profile Study completed in December 2009 by Nexant on behalf of NorthWestern Energy. Additional resolution on the methodology and findings of sales and load shapes by end use and segment can be found in that report. For this potential analysis, usage characteristics have been slightly revised where appropriate to calibrate to the overall gas sales forecast or include more accurate data.

In contrast with prior profiles of natural gas sales and potential in NorthWestern’s territory, transport, or “choice” gas customers are considered ineligible for demand-side management (DSM) intervention, and are therefore excluded from this study.

2.1 NATURAL GAS MARKET OVERVIEW Table 2.1: Overall Natural Gas Consumption by Sector

Baseline Sales (Dth)

Share (%)

Residential 12,533,229 66.1%

Commercial 6,302,411 33.2%

Industrial 126,471 0.7%

Total 18,962,111 100%


Exhibit__(DLW-4)



Figure 2.1: Overall Natural Gas Consumption by Sector

Table 2.2: Overall Natural Gas Consumption by End Use


Share (%)

Space Heating 14,035,897 74.0%

Process Heating 112,315 0.6%

Water Heating 3,541,413 18.7%

Dryers 28,008 0.1%

Cooking 595,598 3.1%

Other 648,879 3.4%

Total 18,962,111 100%


Exhibit__(DLW-4)



Figure 2.2: Overall Natural Gas Consumption by End Use


Exhibit__(DLW-4)



2.2 RESIDENTIAL SECTOR OVERVIEW

Table 2.3: Residential Natural Gas Consumption by Segment


Share (%)

Single Family 9,295,748 74.2%

Multifamily 1,078,012 8.6%

Mfg Homes 1,541,584 12.3%

Single Family Low Income 421,107 3.4%

Multifamily Low Income 80,225 0.6%

Mfg Low Income 116,553 0.9%

Total 12,533,229 100%

Figure 2.3: Residential Natural Gas Consumption by Segment


Exhibit__(DLW-4)



Table 2.4: Residential Natural Gas Consumption by End Use


Share (%)


Room Heating 602,127 4.8%

Water Heating 2,606,094 20.8%

Cooking 106,948 0.9%

Dryers 28,008 0.2%

Other 463,180 3.7%

Total 12,533,229 100%

Figure 2.4: Residential Natural Gas Consumption by End Use


Exhibit__(DLW-4)



2.3 COMMERCIAL SECTOR OVERVIEW

Table 2.5: Commercial Natural Gas Consumption by Segment


Share (%)

Education 592,147 9.4%

Grocery 285,879 4.5%

Healthcare 221,949 3.5%

Lodging 417,415 6.6%

Misc. 1,486,173 23.6%

Office 1,675,964 26.6%

Restaurant 594,595 9.4%

Retail 648,191 10.3%

Warehouse 380,097 6.0%

Total 6,302,411 100%

Figure 2.5: Commercial Natural Gas Consumption by Segment


Exhibit__(DLW-4)



Table 2.6: Commercial Natural Gas Consumption by End Use


Share (%)


Water Heating 935,123 14.8%

Cooking 488,650 7.8%

Other 185,064 2.9%

Total 6,302,411 100%

Figure 2.6: Commercial Natural Gas Consumption by End Use


Exhibit__(DLW-4)



2.4 INDUSTRIAL SECTOR OVERVIEW

Table 2.7: Industrial Natural Gas Consumption by End Use


Share (%)


Space Heating 13,325 10.5%

Domestic Hot Water 196 0.2%

Other 635 0.5%

Total 126,471 100%

Figure 2.7: Industrial Natural Gas Consumption by End Use


Exhibit__(DLW-4)

SECTION 3 3BTECHNICAL POTENTIAL


3 TECHNICAL POTENTIAL

This section presents the results of the technical potential analysis. The methodology for the estimation of technical potential is described in detail in Section 1.

3.1 SUMMARY OF RESULTS Table 3.1 shows baseline natural gas sales and cumulative technical potential by sector for 2033. The results indicate that nearly 11.9 million Dekatherms of technically feasible natural gas energy efficiency potential will be available by the end of the 20-year study period. Technical potential amounts to a 54.7% reduction in 2033 forecasted non-choice natural gas sales.

Table 3.1: Forecast Sales and Technical Potential in 2033

Baseline Sales Technical

Potential (Dth) % of Sales

Res 15,135,480 9,624,426 63.6%

Com 6,436,457 2,231,985 34.7%

Ind 126,471 11,209 8.9%

Total 21,698,408 11,867,620 54.7%


Exhibit__(DLW-4)

SECTION 3 3BTECHNICAL POTENTIAL


The supply curve shown in Figure 3.1 illustrates the relationship between technical potential and the cost of avoided energy. For technical potential, this curve shows the tradeoff for every Dekatherm of technically feasible potential, regardless of acquisition cost. Note that the majority of technical potential exists far beyond the threshold for cost-effective energy efficiency savings. The eventual steep incline in the curve is indicative of sharply declining savings per dollar invested in energy efficiency after around $20.00/Dth.

Figure 3.1: Supply Curve - Technical Potential


Exhibit__(DLW-4)

SECTION 4 4BECONOMIC & Achievable Potential: TRC


4 ECONOMIC & ACHIEVABLE POTENTIAL: TRC

This section presents the results of the economic and achievable potential analysis using the Total Resource Cost (TRC) test for screening the cost-effectiveness of measures. As explained in Section 1, benefit-cost ratios are also employed to rank and apply measures in order of cost effectiveness. Section 5 details the same results presented here, using the Program Administrator Cost (PAC) test instead.

4.1 SUMMARY OF RESULTS Table 4.1 and Table 4.2 below summarize baseline natural gas sales and cumulative technical, economic, and achievable potential by sector for 2033. The results indicate that nearly 3.6 million Dth of economic potential—equivalent to 16.4% of baseline sales—will be available during the 20-year study period. The Achievable Low, Mid, and High scenarios show cost-effective savings potential as it varies according to incentive rate and the corresponding market adoption rates. When employing the TRC test, where the incentive is considered a net zero cost/benefit, portfolio-wide Achievable Mid potential is about 1.88 million Dth, or 8.7% of baseline sales.

Table 4.1: Forecast Sales and Tech/Econ Potential in 2033 (TRC) (Dth)

Baseline Sales

(2033) Technical Economic

Savings Potential

% of Sales

Savings Potential

% of Sales

Res 15,135,480 9,624,426 63.6% 2,921,386 19.3%

Com 6,436,457 2,231,985 34.7% 620,212 9.6%

Ind 126,471 11,209 8.9% 6,838 5.4%

Total 21,698,408 11,867,620 54.7% 3,548,437 16.4%


Exhibit__(DLW-4)



Table 4.2: Forecast Sales and Achievable Potential in 2033 (TRC) (Dth)

Baseline Sales


Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Res 15,135,480 1,285,235 8.5% 1,556,341 10.3% 1,908,929 12.6%

Com 6,436,457 265,313 4.1% 322,519 5.0% 393,454 6.1%

Ind 126,471 2,850 2.3% 3,468 2.7% 4,230 3.3%

Total 21,698,408 1,553,398 7.2% 1,882,329 8.7% 2,306,613 10.6%

As the tables above indicate, most of the cost-effective savings potential (around 80%) exists within the residential sector. This is slightly higher than the proportion of sales attributable to residential premises (67%). Economic potential within the industrial sector is minimal when considered from a portfolio-wide perspective, accounting for only 0.02% of total potential cost-effective gas savings.

Table 4.3 below shows the estimated impacts of variations in avoided energy costs on potential savings. The base case is equivalent to overall economic potential. The low and high cost results shown below are results from modeling potential at 50% and 200% of base avoided costs, respectively. Total available cost-effective potential in the low cost and high cost scenarios is approximately 40% and 140% of base case economic potential, respectively.

Table 4.3: Economic Potential under Alternative Avoided Cost Scenarios (TRC)

Base Case



Res 2,921,386 1,174,685 3,763,510

Com 620,212 202,312 1,012,773

Ind 6,838 6,234 6,871

Total 3,548,437 1,383,231 4,783,154

The supply curve shown in Figure 4.1 illustrates the relationship between economic potential and the cost of avoided energy. Note that this curve only occupies a small portion of the total cost range per Dth of energy savings (y-axis) when compared with the technical potential supply curve in the previous section. Overall, the curve is relatively linear, only representing a modest increase in cost per Dekatherm of energy efficiency until around $6.00 per Dekatherm, where there is a notable decline in incremental savings potential per additional dollar spent.


Exhibit__(DLW-4)



Figure 4.1: Supply Curve: Economic Potential (TRC)


Exhibit__(DLW-4)



Figure 4.2 shows achievable potential under the three incentive scenarios. Note that achievable potential under the base-case 2014 avoided costs maxes out at the dotted green line intended to represent the levelized 20-year cost threshold.

Figure 4.2: Supply Curve: Achievable Potential (TRC)

4.2 SECTOR-LEVEL FINDINGS 4.2.1 Residential Sector Potential Residential customers in NorthWestern’s Montana service territory are expected to account for roughly 70% of non-choice natural gas sales in 2033. The single family, multifamily, and manufactured homes that comprise the residential sector present a variety of savings opportunities, including equipment efficiency upgrades (e.g., furnaces, water heaters), building shell improvements (e.g., insulation, windows), and other non-equipment efficiency improvements such as faucet aerators and low-flow showerheads that reduce water heating consumption. Detailed measure descriptions and assumptions are provided in Appendices A and B.

As shown in Table 4.4, single family homes represent around 72% of total economic potential in the residential sector. Multifamily, manufactured, and low income dwellings represent the remaining share of economic residential savings potential. A quick comparison with Figure 2.3 in the Market Characterization section reveals that economic savings potential by segment is generally aligned with


Exhibit__(DLW-4)



each segment’s proportion of baseline sales, with manufactured homes accounting for a slightly higher portion of savings potential than sales.

Table 4.4: Residential Economic Potential by Segment (TRC)

2033 Economic Potential

(Dth)

Share (%)


Multifamily 158,180 5.4%

Mfg Homes 535,094 18.3%




Total 2,921,386 100%

Figure 4.3: Residential Economic Potential by Segment (TRC)


Exhibit__(DLW-4)



Table 4.5 shows residential economic potential by end use. Space heating and water heating end uses represent nearly all (99%) of economic potential. Cooking and “Other” end uses generated almost negligible savings of around 3,000 Dth, equivalent to 0.1% of residential economic potential. No room heating or dryer measures passed cost effectiveness screening, resulting in zero economic potential within those end uses.

Table 4.5: Residential Economic Potential by End Use (TRC)


(Dth)

Share (%)


Room Heating - -


Cooking 2,875 0.1%

Dryers - -

Other 188 0.0%

Total 2,921,386 100%

Figure 4.4: Residential Economic Potential by End Use (TRC)


Exhibit__(DLW-4)



Table 4.6 shows estimated residential energy potential available in each economic scenario. The primary cause of fluctuation in the achievable results screened using the TRC test is due to variation in program adoption rates according to the incentive being offered.

Table 4.6: Residential Baseline Sales and Potential Details (2033) (TRC)

2033 Baseline

Sales (Dth) Economic Ach. Low (33%) Ach. Mid (50%) Ach. High (75%)

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Space Heat 10,802,198 2,314,626 21.4% 938,784 9.1% 1,194,213 11.1% 1,459,565 13.5%

Room Heat 738,484 - - - - - - - -

Water Heat 2,894,317 603,698 20.9% 300,275 10.4% 360,674 12.5% 447,696 15.5%

Cooking 132,829 2,875 2.2% 1,120 0.8% 1,384 1.0% 1,587 1.2%

Dryers 29,067 - - - - - - - -

Other 538,585 188 0.0% 56 0.0% 70 0.0% 81 0.0%

Total 15,135,480 2,921,386 19.3% 1,285,235 8.5% 1,556,341 10.3% 1,908,929 12.6%


Exhibit__(DLW-4)



4.2.3 Commercial Sector Potential Economic natural gas efficiency potential in the commercial sector is expected to be around 600 thousand Dth over the 20-year study period, equivalent to around 10% of forecast commercial natural gas sales in 2033. Total economic potential available in the commercial sector is about one quarter of estimated residential economic potential.

As shown in Table 4.7 and Figure 4.5, office buildings represent the largest component (40%) of commercial potential, with miscellaneous commercial buildings and educational facilities accounting for another 33 percent combined.

Table 4.7: Commercial Economic Potential by Segment (TRC)

2033 Economic Potential (Dth)

Share (%)

Education 102,239 16.5%

Grocery 6,083 1.0%


Lodging 53,067 8.6%

Misc. 104,112 16.8%

Office 246,149 39.7%


Retail 7,280 1.2%


Total 620,212 100%


Exhibit__(DLW-4)



Figure 4.5: Commercial Economic Potential by Segment (TRC)

As in the residential sector, space heating represents the majority of economic potential (70%), followed by water heating (27%). Commercial potential by end use is roughly aligned with consumption by end use, with water heating accounting for slightly more than its share. No measures within the “other” end use category passed cost effectiveness screening, resulting in zero economic savings potential outside of space heating, water heating, and cooking.

Table 4.8: Commercial Economic Potential by End Use (TRC)


Share (%)



Cooking 19,739 3.2%

Other - -

Total 620,212 100%


Exhibit__(DLW-4)



Figure 4.6: Commercial Economic Potential by End Use (TRC)

Table 4.9 below shows commercial potential available in each of the economic scenarios.

Table 4.9: Commercial Baseline Sales and Potential Details (2033) (TRC)

2033 Baseline


Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Space Heat 4,793,402 435,286 9.1% 184,825 3.9% 224,568 4.7% 274,761 5.7%

Water Heat 955,012 165,187 17.3% 72,845 7.6% 88,487 9.3% 107,866 11.3%

Cooking 499,043 19,739 4.0% 7,643 1.5% 9,464 1.9% 10,827 2.2%

Other 189,000 - - - - - - - -

Total 6,436,457 620,212 9.6% 265,313 4.1% 322,519 5.0% 393,454 6.1%


Exhibit__(DLW-4)



4.2.5 Industrial NorthWestern Energy’s industrial segment includes manufacturing facilities and other accounts that supply mining, irrigation, and agriculture operations, along with others. As explained in Section 2, transport, or “choice” gas customers are excluded from DSM eligibility, effectively removing the majority of industrial natural gas sales from the pool of available savings potential. Most of the economic savings potential in the industrial sector (76%) exists within the process heating end use.

Table 4.10: Industrial Economic Potential by End Use (TRC)


(Dth)

Share (%)



Domestic Hot Water - -

Other - -

Total 6,838 5.4%

Figure 4.7: Industrial Economic Potential by End Use


Exhibit__(DLW-4)



Table 4.11: Industrial Baseline Sales and Potential Details (2033) (TRC)

2033 Baseline


Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Process Heat 11,233 5,228 4.7% 2,281 2.0% 2,766 2.5% 3,396 3.0%

Space Heat 1,333 1,610 12.1% 568 4.3% 702 5.3% 834 6.3%

Water Heat 19 - - - - - - - -

Other 62 - - - - - - - -

Total 126,471 6,838 5.4% 2,850 2.3% 3,468 2.7% 4,230 3.3%


Exhibit__(DLW-4)

SECTION 5 5BECONOMIC & Achievable Potential: UCT


5 ECONOMIC & ACHIEVABLE POTENTIAL: UCT

This section presents the results of the economic and achievable potential analysis using the Utility Cost Test (UCT) for screening the cost-effectiveness of measures. As explained in Section 1, benefit-cost ratios are also employed to rank and apply measures in order of cost effectiveness.

5.1 SUMMARY OF RESULTS Figure 5.1 and Figure 5.2 show the estimated savings potential when utilizing the UCT cost-effectiveness test to screen efficiency measures. Results of the Economic scenario are somewhat abstract when screened using UCT, as this represents potential energy savings when 100 percent of the incremental measure cost is incentivized. Despite the unlikelihood of this scenario, parameters are held identical to those used in the TRC modeling for comparison purposes.

Notably, the effect of the low/mid/high incentive rates on the UCT results is inversely proportional to the rates themselves- as the incentive rate increases, savings potential decreases. This is due to the higher cost burden assumed by the utility as the incentive increases, and the resultant decrease in the number of cost-effective measures.

Additionally, the Economic scenario assumes 100 percent adoption of energy efficiency measures at each opportunity, resulting in total Economic potential that lies between the Achievable Low and Achievable Mid scenarios. The rapid market adoption almost entirely offsets the scarcity of cost-effective measures at the 100 percent incentive rate.


Exhibit__(DLW-4)



Figure 5.1: Forecast Sales and Technical/Economic Potential (2033) (UCT)

Baseline Sales

(2033) Technical Economic (100%)

Savings Potential

% of Sales

Savings Potential

% of Sales

Res 15,135,480 9,624,426 63.6% 2,914,120 19.3%

Com 6,436,457 2,231,985 34.7% 620,212 9.6%

Ind 126,471 11,209 8.9% 6,833 5.4%

Total 21,698,408 11,867,620 54.7% 3,541,165 16.3%

Figure 5.2: Forecast Sales and Achievable Potential (2033) (UCT)

Baseline Sales


Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Res 15,135,480 1,913,349 12.6% 2,211,228 14.6% 2,154,836 14.2%

Com 6,436,457 443,340 6.9% 532,892 8.3% 485,849 7.5%

Ind 126,471 2,859 2.3% 3,480 2.8% 4,244 3.4%

Total 21,698,408 2,359,548 10.9% 2,747,600 12.7% 2,644,929 12.2%


Exhibit__(DLW-4)



Table 5.1: Economic Potential under Alternative Avoided Cost Scenarios (UCT)

Base Case



Res 2,914,120 978,682 3,726,467

Com 620,212 202,312 1,012,773

Ind 6,833 6,833 6,871

Total 3,541,165 1,187,227 4,746,110

Figure 5.3: Supply Curve: Economic Potential (UCT)


Exhibit__(DLW-4)



5.2 SECTOR-LEVEL FINDINGS 5.2.1 Residential Sector Potential

Table 5.2: Residential Economic Potential by Segment (UCT)


Share (%)


Multifamily 151,385 5.2%

Mfg Homes 535,095 18.4%




Total 2,914,120 100%

Figure 5.4: Residential Economic Potential by Segment (UCT)


Exhibit__(DLW-4)



Table 5.3: Residential Economic Potential by End Use (UCT)


Share (%)


Room Heating - -


Cooking 2,875 0.1%

Dryers - -

Other 188 0.0%

Total 2,914,120 100%

Figure 5.5: Residential Economic Potential by End Use (UCT)


Exhibit__(DLW-4)



Table 5.4: Residential Baseline Sales and Potential Details (2033) (UCT)

2033 Baseline Sales (Dth) Economic Ach. Low (33%) Ach. Mid (50%) Ach. High (75%)

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Space Heat 10,802,198 2,308,918 21.4% 3,629,315 24.3% 2,065,679 19.1% 1,642,824 15.2%

Room Heat 738,484 - - - - - - - -

Water Heat 2,894,317 602,140 20.8% 434,918 15.0% 421,054 14.5% 511,284 17.7%

Cooking 132,829 2,875 2.2% 1,124 0.8% 1,384 1.0% 1,587 1.2%

Dryers 29,067 - - - - - - - -

Other 538,585 188 0.0% 56 0.0% 70 0.0% 81 0.0%

Total 15,135,480 2,914,120 19.3% 3,065,413 20.3% 2,488,188 16.4% 2,155,776 14.2%


Exhibit__(DLW-4)



5.2.3 Commercial Sector Potential

Table 5.5: Commercial Economic Potential by Segment (UCT)


(Dth)

Share (%)

Education 102,239 16.5%

Grocery 6,083 1.0%


Lodging 53,067 8.6%

Misc. 104,112 16.8%

Office 246,149 39.7%


Retail 7,280 1.2%


Total 620,212 100%

Figure 5.6: Commercial Economic Potential by Segment (UCT)


Exhibit__(DLW-4)



Table 5.6: Commercial Economic Potential by End Use (UCT)


(Dth)

Share (%)



Cooking 19,739 3.2%

Other - -

Total 620,212 100%

Figure 5.7: Commercial Economic Potential by End Use (UCT)


Exhibit__(DLW-4)



Table 5.7: Commercial Baseline Sales and Potential Details (2033) (UCT)


Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Space Heat 4,793,402 435,286 288,967 7.5% 351,453 7.3% 329,384 6.9%

Water Heat 955,012 165,187 146,726 17.1% 171,970 18.0% 145,633 15.2%

Cooking 499,043 19,739 7,647 1.5% 9,469 1.9% 10,833 2.2%

Other 189,000 - - - - - - - -

Total 6,436,457 620,212 443,340 8.2% 532,892 8.3% 485,849 7.5%


Exhibit__(DLW-4)



5.2.5 Industrial Sector Potential

Table 5.8: Industrial Economic Potential by End Use (UCT)


(Dth)

Share (%)



Domestic Hot Water - -

Other - -

Total 6,833 100%

Figure 5.8: Industrial Economic Potential by End Use (UCT)


Exhibit__(DLW-4)



Table 5.9: Industrial Baseline Sales and Potential Details (2033) (UCT)


Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Savings Potential

% of Sales

Process Heat 11,233 5,228 4.7% 2,682 2.4% 2,766 2.5% 3,396 3.0%

Space Heat 1,333 1,605 12.0% 858 6.4% 714 5.4% 848 6.4%

Water Heat 19 - - - - - - - -

Other 62 - - - - - - - -

Total 126,471 6,833 5.4% 3,540 2.8% 3,480 2.8% 4,244 3.4%


Exhibit__(DLW-4)

APPENDIX A MEASURE DESCRIPTIONS

Natural Gas Energy Efficiency Market Potential Study A-1

Appendix A MEASURE DESCRIPTIONS

This appendix includes descriptions of the measures analyzed in the energy efficiency potential assessment. Measures are organized by sector, type, and major end use category.

A.1 Residential Measures

i. Space Heating

Air sealing: This measure seals thermal shell air leaks through strategic use and location of air-tight materials which prevent heat loss.

Attic/ceiling insulation: Insulation is added to the attic/ceiling boundary. This measure requires a member of the implementation staff evaluating the pre and post R-values and measure surface areas. The efficiency of the heating and cooling equipment in the home should also be evaluated if possible. Properly insulating the attic includes appropriate air sealing, and reduces the rate of heat transfer. The following iterations were included in this analysis: R-0 to R-49 assumed no prior attic/ceiling insulation. R-11 to R-49 assumed an existing R-11 level of insulation. R-19 to R-49 assumed the prior insulated condition to be R-19. R-38 to R-49 range is calculated as well.

Basement Floor insulation & Crawlspace insulation: Addition of R-19, R-30, R-38 insulation to baseline insulation of R-0 and R-19

Boiler controls: Boiler reset controls capable of resetting boiler supply water temp in an inverse linear fashion with outdoor air temperature.

Boiler repair/maintenance: This measure relates to boiler diagnostic testing, repair, and tune-up which ensures the boiler will run smoothly and efficiently.

Condensing Boiler: This measure relates to the installation of a condensing boiler that has a high efficiency (typically greater than 90%) which is achieved by using the waste heat in the flue gases to pre-heat the cold water entering the boiler.

Duct Sealing: This measure associated with performing duct sealing using mastic sealant or metal tape to the distribution system of homes with either central air conditioning or a ducted heating system. This measure prevents heat loss through leaky duct work into non-conditioned areas.

Entryway door: Installation of an entryway door that has a lower U-value than the Montana Code stipulation. Lower U-value correlates with better insulation capabilities which prevent wasted heat capacity.

Furnace repair/maintenance: Repair or replace any deteriorating components to ensure furnace runs efficiently.


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Heat recovery ventilator: Installation of an Energy Star qualified air to air heat recovery ventilator which counter-flow which provides improved climate control, while also saving energy by reducing heating (and cooling) requirements via pre-conditioning outbound air temperature with inbound air temperature.

High Efficiency Boiler: This measure involves installation of a high efficiency boiler that improves efficiency by utilizing a more efficient burner assembly.

High efficiency Combination Domestic Hot Water and Hydronic Space Heating System using pre-approved Tankless Water Heater: Hydronic systems that transfer the majority of their heat by thermal radiation reduce air temperature stratification, and thus reduce heat loss through ceilings.

High efficiency furnace 90%+ AFUE: High efficiency furnace features may include improved heat exchangers and modulating multi-stage burners. Baseline efficiencies are AFUE 80 for equipment that meets code, and 76 AFUE for stock equipment. Two measure iterations were run in this analysis: a 90% efficiency furnace and a 95% efficient furnace.

High Efficiency Pool/Spa heating boilers: Installation of a high efficiency or condensing boiler that improves efficiency by recovering “waste heat” that usually exits the facility from the flue of a conventional boiler. These boilers function by condensing the water vapor that’s produced in the combustion process and using the heat from this condensation.

Insulation, basement side wall: Add R-19 insulation to the basement or crawlspace side wall.

Programmable Thermostat: This measure characterizes the household energy savings from the installation of a new or reprogramming of an existing programmable thermostat for reduced heating energy consumption through temperature set-back (while unoccupied or during reduced demand times).

Slab insulation R-0 to R-5 (4 ft): Installing R-5 insulation value of a depth of 4 ft to an existing slab with no additional insulation.

Window upgrade: Upgrading windows resulting in a U-value less than or equal to 0.3 or a code 0.33 U value. The baseline U values are 0.45 and 0.4. For the measure value that is U<0.3, the baseline is code U value of 0.33.This measure reduces the heat transfer between conditioned space and non-conditioned via the windows.

Greenfan Controller: Installation of an Efficient Fan Controller (EFC) to recover additional heating capacity and operate HVAC equipment at higher efficiency

Window Glazing: Window glazing with SHGC 0.41 compared to a baseline window with SHGC of 0.6.

Natural Gas Heat Pump: This measure provides space heating and cooling using an advanced natural gas engine in place of an electric motor. Variable –speed engine controls allow the GHP to closely follow


Exhibit__(DLW-4)



the load and maintain efficiency. Heat recovery from engine cooling jacket and exhaust supplements the GHP output during heating mode.

Storm Window Upgrade: This measure encompasses storm window installation to a single pane or a double pane window. The storm window is either installed on the interior or the exterior of the existing single pane or double pane window.

Single Pane Window Replacement: This measure involves replacing an existing single pane window and frame assembly with a double pane window and frame.

Wall Insulation: Improvement of residential wall insulation to code R-21 value from a baseline of R-11 and R-13.

Boiler Pipe Insulation: Insulate Boiler Pipes, to R-3 insulation or better. Savings compared to a standard un-insulated boiler pipe.

Boiler Vent Stack Damper: A damper is installed in the boiler vent pipe, closing during boiler standby to prevent residual heat and room heat from being drawn up the warm vent.

Steam Boiler Upgrade: This measure evaluates the savings associated with upgrading a stock steam boiler to a more efficient steam boiler with 83% efficiency.

Steam Boiler to Hot Water Boiler Upgrade: This measure evaluates the savings from upgrading a steam to a hot water boiler for both space heating and water heating end uses.

OPOWER-type behavioral savings: Opower type behavioral savings are evaluated. For example, behavioral demand reposes, energy consumption monitoring, etc.

Slope and Vaulted Ceiling Upgrade: Added insulation to vaulted ceiling with foam glass. Savings were evaluated for R-0 to R-30, R-11 to R-30, and R-11 to R-38.

Weather stripping: installation of foam or rubber weather stripping to limit air leakage/outside air penetration around exterior doors and windows.

Door Sweeps: installation of vinyl or plastic door-bottom sweeps to limit air leakage/outside air penetration.

Outlet Gaskets: installation of foam gaskets between outlet cover plates and drywall/plaster to limit air leakage/outside air penetration.

Foam Sealant: spray foam sealant professionally applied to areas where air leakage occurs, including but not limited to rim joists, sill plates, recessed light fixtures, basement window perimeters, and plumbing and electrical penetrations to limit air leakage/outside air penetration.


Exhibit__(DLW-4)



Window Film: application of insulating window film to exterior windows in order to decrease window U values and solar heat gain coefficients.

ii. Water Heating

Condensing Domestic Hot Water: Unlike a regular gas water heater, a condensing DHW unit captures the combustion gas and utilizes it to heat the water in the storage tank. A gas condensing water heater is designed with greater surface area flue. The heat and combustion gases have much farther to travel before they exit the water tank, so more heat is transferred to the water in the tank. EF typically > 0.80. Measure replaces stock EF 0.54 water heater or EF 0.62 water heater that meets code.

Condensing High Efficiency Natural Gas Tankless Water Heater: This unit achieves savings by eliminating the standby losses that occur in stand-alone or tank-type water heaters and by being more efficient than the baseline storage hot water heater. Measure replaces stock EF 0.54 water heater or EF 0.62 water heater that meets code.

Conventional High Efficiency Natural Gas Water Heater: This measure characterizes the purchase and installation of a new efficient gas-fired water heater, in place of a code or existing residential unit. Natural gas savings are generated from the higher efficiency (EF>0.62) water heater. Measure replaces stock EF 0.54 water heater or code EF 0.62 water heater.

Drain water heat recovery: 80%–90% of the energy used to heat water in a home goes down the drain with used hot water. Drain-water heat recovery systems reduce the amount of energy needed for water heating by capturing heat from the used water to preheat cold water entering the water heater or going to other water fixtures.

ENERGY STAR dishwasher: An Energy Star certified dishwasher utilizes less gallons of water per cycle which correlates to therms saved per year through reduced water heat.

Hot water pipe insulation: Adding insulation to both the hot and cold domestic hot water pipes from the water heater to the first elbow. Insulating this length therefore helps reduce standby losses. Default savings are provided per 3ft length and are appropriate up to 6ft of the hot water pipe and 3ft of the cold. Existing pipes are assumed to be un-insulated (R-0).

Hot water temperature setback: The thermostat setting of a hot water tank is lowered to 120 degrees. The baseline condition is a hot water tank with a thermostat setting that is higher than 120 degrees, typically systems with settings of 130 degrees or higher.

Low Flow Faucet aerators: Installation of a low flow faucet aerator in a household kitchen or bath faucet fixture. Gas savings are generated from a maximum flow rate of 1.5 compared to a standard 2.2 gpm faucet.


Exhibit__(DLW-4)



Low Flow Showerheads: Installation of a low flow showerhead in a single or multi-family household. Gas savings are generated from a maximum flow rate of 2.0 gpm compared to a standard 2.5 gpm showerhead

Solar Hot Water Heater: This measure assumes that a gas water heater is replaced with a solar water heater with backup, reducing the water heating load by about 60%. Solar water heating system includes a storage tank and solar collector. Replaces stock EF 0.54 water heater.

Water Heater Tank Insulation: Installation of a water heater tank blanket that is R-10. Baseline is a bare water heater tank with no added insulation.

Heat Pump Water Heater: A heat pump water heater takes heat from the surrounding air and moves it to the water in your hot water heater tank, making it more efficient than a traditional storage type water heater.

Non-Condensing High Efficiency Natural Gas Tankless Water Heater: This unit achieves savings by eliminating the standby losses that occur in stand-alone or tank-type water heaters and by being more efficient than the baseline storage hot water heater.

iii. Room Heating

High efficiency Natural Gas Hearth +80% AFUE: Efficient alternative to a masonry fireplace via reduced air infiltration by removing the fireplace, and adding heat. Both of these factors reduce the space heating load.

High Efficiency Gas Room Heater: Installation of a high efficiency room heater with 90 AFUE to replace an existing direct vent room heater.

Room Heater Tune Up: Room heater diagnostic testing, repair, and tune up. Baseline equipment does not have the above procedures performed on the room heater.

iv. Clothes Drying

High efficiency clothes washer: Efficient clothes washers reduce clothing drying time by reducing the water content of washed clothes.

High Efficiency Clothes Dryer: This measure involves an Energy Star Qualified clothes dryer. This would replace a stock dryer with MEF of 1.26

v. Others

Energy Star Certified Home + U.30 Window Glazing: A home can earn an Energy Star certificate by having the following: a complete thermal enclosure system, a complete high efficiency heating and cooling system, a complete water management system energy-efficient lighting and appliances. Window


Exhibit__(DLW-4)



glazing with a low U value translates to good insulation capabilities which prevent heat transfer through windows.

Energy Star Plus Certified Home (Gas with or without AC): Residential Energy Star with the following added efficiency alternates: R-44 Ceiling Insulation, 92 AFUE furnace, 0.62 EF water heater, 0.46 ACH.

Convection Oven: Installation of an energy star convection oven to replace a natural gas convection oven that is not ENERGY STAR certified.

A.2 Commercial

i. Space Heating

Boiler Economizer: Economizers are heat exchange devices that heat fluids, usually water, up to but not normally beyond the boiling point of that fluid. Economizers are so named because they can make use of the enthalpy in fluid streams that are hot, but not hot enough to be used in a boiler, thereby recovering more useful enthalpy and improving the boiler's efficiency.

Boiler pipe insulation: Insulate Boiler Pipes, 2" diameter with 1" R-4 insulation or better. Savings compared to a standard un-insulated boiler pipe.

Boiler repair/maintenance: This measure relates to boiler diagnostic testing, repair, and tune-up to improve boiler operational efficiency.

Boiler Steam Trap - min. 300 kBtu in, pressure of 7 psig: Replacement of a leaking stream trap. A proper working trap keeps steam lines free of condensate. Condensate can cause damage to valves, piping, and equipment, reducing operational efficiency and equipment life.

Boiler vent damper - min. 1000 kBtu input: A vent damper prevents conditioned air from being pulled into the flue (exiting the building) when the heating appliance is not running. When there's a demand for heat and the furnace or boiler starts to run, the damper opens to improve draw.

Demand-controlled ventilation: Installation of a demand controlled ventilation system to adjust outside air quantities in response to measured CO2 levels. Conventional ventilation supply ventilated air based on assumed, rather than actual, occupancy. This often results in over-ventilation, wasting both money and energy. Demand-controlled ventilation monitors conditions in every zone, and then delivers the required ventilation where it is needed.

Direct fired radiant heating: This measure involves the installation of a low intensity gas fired radiant heater. It is more efficient than baseboard heating and usually more efficient than forced-air heating because it eliminates duct losses.

Duct sealing & insulation: This measure prevents air leaks through duct work via duct sealing, either using a sealant such as mastic or metal tape, or replacing the air distribution with a new system entirely.


Exhibit__(DLW-4)



This applies only to facilities with a ducted heating system where the duct is routed through non-conditioned spaces.

Energy management system optimization or installation: Energy management system optimization involves using system appropriate automation hardware and software to detect and identify opportunities for savings and implement catered solutions. If EMS is absent, this measure involves installation of an EMS for the building.

Floor Insulation: R-30 insulation is added to the basement or crawlspace floor. Assumed a base-case minimum of R-4.94.

Heat Exchanger: Traditional systems that condition the air only once, then exhaust it. Much of this energy can be recovered by installing heat-recovery coils in the exhaust air handlers. This heat exchanger can precondition the outside air coming into the building, recovering energy without risking contamination.

High efficiency condensing boiler - min. 90% AFUE.: Installing a new high efficiency, gas-fired condensing boiler (steam or hot water)in a commercial location. Gas savings achieved through the utilization of a sealed combustion chamber and multiple heat exchangers that remove a significant portion of the waste heat from flue gasses. Because multiple heat exchangers are used to remove waste heat from the escaping flue gasses, some of the flue gasses condense and must be drained.

High efficiency condensing furnace - min. 91% AFUE: The installation of a new high efficiency, gas-fired condensing furnace in a commercial location. Savings achieved through the utilization of a sealed, super insulated combustion chamber, more efficient burners, and multiple heat exchangers that remove a significant portion of waste heat from flue gasses. Produces condensate which must be drained. The base case is a standard furnace with AFUE of 78.

High efficiency condensing unit heater - min 92% AFUE: This measure applies to a gas fired condensing unit heater installed in a commercial application. A heat exchanger is attached to the condensing unit heater to capture heat and vapor from the exhaust gases. That heat, instead of being flushed outside, is turned back into useable heat circulating inside the heated space. Baseline equipment is a new unit heater meeting 2012 IECC energy code minimum efficiency.

High efficiency non-condensing unit heater - min 86% AFUE: This measure applies to a gas fired non-condensing unit heater installed in a commercial application. Hot gases generated from combustion of hydrogen are directly vented to the outside. There is no condensate. Baseline equipment is a new unit heater meeting 2012 IECC energy code minimum efficiency.

HVAC controls: The installation of the following: Programmable Thermostats, EMS or DDS systems. These options enable more efficient control of the HVAC system.


Exhibit__(DLW-4)



HVAC system commissioning: HVAC System Commissioning is a systematic, documented process that includes inspection and testing conducted to confirm that a buildings systems are capable of being operated and maintained in conformance with the design intent. Buildings that are not properly commissioned can suffer from high energy costs, poor indoor air quality, poor system control, and many other mechanical problems.

Power Burner: This measure involves a condensing, integrated water heater/boiler with an AFUE of>=90%, with Power Burner. Baseline equipment is condensing, integrated water heater/boiler with a standard atmospheric burner.

Roof insulation (retrofit only) - Tier 1: Min R-30: Addition of roof insulation to minimum R-30 to to replace existing insulation that is less than R-11.

Roof insulation (retrofit only) - Tier 2: Min R-45: Addition of roof insulation to minimum R-45 to to replace existing insulation that is less than R-11.

Solar Wall: Installation of solar wall which captures solar heat to pre-warm air for space heating. The solar heat cuts down on the amount of natural gas needed for space heating.

Steam System Efficiency Improvements: This measure includes assessing and adding or replacing main line air vents. Assess and replace radiator vents. Upgrade boiler control system to averaging system with indoor and outdoor sensors.

Variable Volume Air System: A mechanical HVAC system responsible for serving multiple zones which control the temperature in a zone by regulating the quantity of warm or cooled air supplied. The fan capacity has variable-speed drives, which reduces energy consumption versus constant volume systems.

Wall insulation (retrofit only) - Tier 2: Min R-19: Installation of exterior wall Insulation that is greater than R-21 to replace existing insulation that is less than R-4.

Waste Water Heat Exchanger: A waste water heat exchanger recovers waste heat by pre-warming incoming water with the waste water in a separately contained unit which prohibits contamination while allowing heat transfer.

Air Side Heat Recovery: Installation of air side heat recovery system to improve space heating efficiency in a commercial setting.

Window upgrade: Upgrading windows resulting in a U-value less than or equal to 0.3 or a code 0.33 U value. The baseline U values are 0.45 and 0.4. For the measure value that is U<0.3, the baseline is code U value of 0.33.This measure reduces the heat transfer between conditioned space and non-conditioned via the windows.


Exhibit__(DLW-4)



Storm Window Upgrade: This measure encompasses storm window installation to a single pane or a double pane window. The storm window is either installed on the interior or the exterior of the existing single pane or double pane window.

Natural Gas Heat Pump: This measure provides space heating and cooling using an advanced natural gas engine in place of an electric motor. Variable –speed engine controls allow the GHP to closely follow the load and maintain efficiency. Heat recovery from engine cooling jacket and exhaust supplements the GHP output during heating mode.

Single Pane Window Replacement: This measure involves replacing an existing single pane window and frame with a double pane window and frame.

Window Treatments: Window treatments, not including the window assembly, consist of adding draperies, blinds, shades to windows in a commercial setting.

Air conditioning system heat recovery to space heating system: Installation of Heat Recovery System which will recover the waste heat from air conditioning which can be used to heat water. The pre-heated water would be used for the hot boiler system which in turn would increase the boiler of AFUE of the system.

Programmable Thermostat: This measure characterizes the household energy savings from the installation of a new or reprogramming of an existing programmable thermostat for reduced heating energy consumption through temperature set-back (while unoccupied or during reduced demand times).

Heat Recovery Wheel: The wheel uses the process of exchanging the energy contained in normally exhausted building or space air and using it to treat (precondition) the incoming outdoor ventilation air in residential and commercial HVAC systems

Modulating Gas Valve: Installation of a modulating gas valve which will control the amount of gas input that is needed by a furnace based on demand.

Steam Boiler Upgrade: This measure evaluates the savings associated with upgrading a stock steam boiler to a more efficient steam boiler with 83% efficiency.

Steam Boiler to Hot Water Boiler Upgrade: This measure evaluates the savings from upgrading a steam to a hot water boiler for both space heating and water heating end uses.

ii. Water Heating

Combination HVAC/hot water delivery: new high efficiency condensing boiler for water and space heating to replace existing standard boiler with thermal efficiency 75% for existing, plus >75,000 BTU gas water heater EF 0.80.


Exhibit__(DLW-4)



Domestic hot water - condensing tank - min 91% eff: Unlike a regular gas water heater, the condensing DHW captures the combustion gas and utilize the captured gas to heat the water in the storage tank. A gas condensing water heater has its flue designed with greater surface area. The heat and combustion gases have much farther to travel before they exit the water tank, so more heat is transferred to the water in the tank. Typically EF > 0.80. Measure replaces stock EF 0.54 water heater or code EF 0.62 water heater.

Domestic hot water tankless water heater Energy Star .82 eff: This measure achieves savings by eliminating the standby losses that occur in stand-alone or tank-type water heaters. Efficiency for the Tankless Water Heater is generally EF>0.80. Measure replaces stock EF 0.54 water heater or code EF 0.62 water.

Drainwater heat recovery: Drain-water heat recovery systems reduce the amount of energy needed for water heating by capturing the heat from used drainwater and using it to preheat cold water entering the water heater or going to other water fixtures.

Energy Star Door Type Dishwasher Low Temp Gas: Replace a standard door-type energy star dishwasher with a low temperature door-type single tank energy star dishwasher. Saves energy via reduced water heating. Water use for the efficient equipment is 1.18 gallons/rack compared to a conventional 2.1 gallons/rack.

Faucet aerators: Install low flow faucet aerators. New installation flow rate assumptions are< 1.5 gpm for bathrooms, and < 2.2 GPM for kitchens. Stock equipment flow rate assumption is 3.0 gpm.

High efficiency commercial gas clothes washer 1.8 MEF: Installation of high efficiency commercial gas clothes washer, 2.2 MEF, and 3.3-4.3 cubic feet capacity. Measure replaces standard commercial gas clothes washer 1.6 MEF.

High efficiency water heater: This measure characterizes the purchase and installation of a new efficient gas-fired water heater, in place of an existing commercial unit. Natural gas savings are generated from the higher efficiency (EF>0.62) water heater. Measure replaces stock EF 0.54 water heater or code EF 0.62 water heater.

Hot water pipe insulation: This measure describes adding insulation to un-insulated hot and cold domestic hot water pipes (R-0) from the water heater to the first elbow. Insulating this length reduces standby losses. Default savings are provided per 3ft length and are appropriate for up to 6ft of the hot water pipe and 3ft of the cold.

Hot water temperature reset: The thermostat setting of a hot water tank is lowered to 120 degrees. The baseline condition is a hot water tank with a thermostat setting that is higher than 120 degrees, typically systems with settings of 130 degrees or higher.


Exhibit__(DLW-4)



Low-flow Pre-Rinse Spray Valve: Installation of low flow pre rinse spray valve, < 1.06 gpm, clean ability performance of <26 seconds per plate. The baseline equipment efficiency value for code is 1.6 gpm, stock is 1.9 gpm.

Low-flow showerheads: Installation of a low flow showerhead < 2.0 gpm in a commercial setting. Replaces stock showerhead with 3.0 gpm flow rate.

Motion Faucet Controls: Installation of a motion controlled faucet with an average assumed flow duration of 12 seconds versus a standard faucet with an assumed average flow duration of 15 seconds.

Multi-Tank Conveyor Low Temp Dishwasher: Installation of a low-temperature multi-tank conveyor dishwasher to replace a standard multi-tank conveyor dishwasher. Water use for the efficient equipment is 0.54 gallons/rack compared to a conventional 1.04 gallons/rack.

Ozone injection laundry systems: Installation of washing machine with ozone injection system, allowing use of cold water. Baseline equipment is a standard washing machine without ozone injection. This measure saves the amount of energy required to heat water for a standard laundry system.

Pool cover: This measure involves a standard thermal pool cover which should have a minimum insulation value of R-12 to meet code requirement. Baseline equipment is a pool without cover. This measure reduces wasted heat when the pool is not occupied.

Pool/Spa solar heat: This measure assumes that a gas water heater is replaced with a solar water heater with backup. Solar water heating system includes a solar collector, the pool or spa is the storage. Measure replaces stock EF 0.54 water heater or code EF 0.62 water heater.

Solar Hot Water Heater: This measure assumes that a gas water heater is replaced with a solar water heater with backup. Solar water heating system includes a storage tank and solar collector. Measure replaces stock EF 0.54 water heater or code EF 0.62 water heater.

Storage Water Heater: Installation of a water heater with heating capacity > 75,000 Btuh, thermal efficiency (TE) > 88% to replace baseline equipment with TE>80%.

Refrigeration system superheat recovery DHW: Desuperheater installed on refrigeration system, providing free DHW.

Recirculation Controls: Timeclock control added to existing DHW circulation pump.

Water Heater Tank Insulation: Installaing of a water heater tank blanket that is R-10. Baseline is a bare water heater tank with no added insulation.

Air conditioning system heat recovery to DHW system: The installation of the heat recovery system will utilize waste heat from air conditioners to preheat water going into the DHW system.


Exhibit__(DLW-4)



iii. Cooking

Combination Oven: Installation of combination convection with steam oven with cooking efficiency ≥ 38% and a convection mode cooking efficiency ≥ 44% to replace a standard combination convection and steam oven. Baseline model has a gas cooking energy efficiency of 35%.

Conveyor Oven: Installation of natural gas conveyor oven with a tested baking energy efficiency > 42% to replace existing deck oven.

ENERGY STAR Convection Oven: Installation of an energy star convection oven to replace a natural gas convection oven that is not ENERGY STAR certified.

ENERGY STAR Gas Fryer: Installation of a natural gas fired ENERGY STAR fryer with cooking energy efficiency of 50% to replace a natural gas fryer that is not ENERGY STAR certified. Baseline efficiencies are 35% for equipment that meets code, and 30% for stock equipment.

ENERGY STAR Griddle: Installation of a natural gas fired ENERGY STAR griddle with cooking energy efficiency of 38% to replace a natural gas fryer that is not ENERGY STAR certified with 32% efficiency.

High efficiency steam cooker: Installation of an ENERGY STAR® qualified gas steam cooker with 38% minimum cooking energy efficiency at heavy load (potato) cooking capacity to replace non-ENERGY STAR® commercial steamer. Baseline efficiencies are 18% for equipment that meets code, and 15% for stock equipment.

A.3 Industrial

i. Process Heating

Efficient Boiler: Upgrading boiler to higher efficiency model of AFUE >=90%, Standard boiler has no upgrades.

Efficient Burners: The boiler burner combines fuel and air in proper proportions for combustion and enables the fuel-air mixture to burn stably to give a specified flame size and shape. Efficient burners are designed to maximize combustion efficiency while minimizing the release of emissions.

Efficient Process Furnace: An industrial process furnace provides heat for a process, or can serve as a reactor to provide the heat of a reaction. Efficient process heaters reduce the energy consumption required to complete these results via 1) controlling the air-fuel ratio, 2) enhancing heat transfer within the furnace, 3) containing heat within the furnace by reducing leakage, 4) recovering waste heat, and 5) using sensors and controls to optimize the four previous process areas.

Improved process heating control: Improved process heating control measures improve the fuel/air mixture for optimum combustion of input fuels. Baseline equipment is standard process heating controls.


Exhibit__(DLW-4)



Process Heating O&M: Improve efficiency through maintaining optimum flame temperatures, monitoring levels of oxygen in flue gas, etc. Base-case involves no operations and maintenance measures.

ii. Space Heating

Boiler Steam Trap -: Replacement of a leaking stream trap. A proper working trap keeps steam lines free of condensate. Condensate can cause damage to valves, piping, and equipment, reducing efficiency and equipment life.

Boiler vent damper -: Installation of a vent damper to a boiler or furnace is an easy way to cut energy losses. The damper prevents conditioned air exfiltration via the flue when the heating appliance is not running.

Demand-controlled ventilation: Installation of a demand controlled ventilation system to adjust outside air quantities in response to measured CO2 levels. Conventional ventilation supply ventilates air based on assumed, rather than actual, occupancy. This often results in over-ventilation. Demand-controlled ventilation monitors conditions in every zone, and then delivers the required ventilation where it is needed.

Direct fired radiant heating: This measure involves the installation of a low intensity gas fired radiant heater. It is more efficient than baseboard heating and usually more efficient than forced-air heating via eliminating duct losses.

Duct sealing: This measure prevents air leaks through duct work via duct sealing, either using a sealant such as mastic or metal tape, or replacing the air distribution with a new system entirely. This applies only to facilities with a ducted heating system in either conditioned or non-conditioned spaces.

Energy management system optimization: Energy management system optimization involves using system appropriate automation hardware and software to detect and identify opportunities for savings and implement catered solutions.

Heat Exchanger: A heat exchanger recovers waste heat by pre-warming incoming medium with the waste exhaust medium in a separately contained unit which prohibits contamination while allowing heat transfer.

High efficiency condensing boiler - Min. 90% therm. Eff. & 300 kBtu input: This measure involves installation of a high efficiency or condensing boiler that improves efficiency by recovering “waste heat” that usually exits from the flue of a conventional boiler. Alternatively, the measure unit re-uses the heat from condensation. Baseline efficiencies are 80% for equipment that meets code, and 75% for stock equipment.


Exhibit__(DLW-4)



High efficiency condensing furnace - min. 91% AFUE: The installation of a new high efficiency, gas-fired condensing furnace in a commercial location. Savings achieved through the utilization of a sealed, super insulated combustion chamber, more efficient burners, and multiple heat exchangers that remove a significant portion of the waste heat from the flue gasses. Because multiple heat exchangers are used to remove waste heat from the escaping flue gasses, some of the flue gasses condense and must be drained. Replaces a standard furnace with AFUE of 78.

High efficiency condensing unit heater - min 92% AFUE: This measure applies to a gas fired condensing unit heater installed in a commercial application. A heat exchanger is attached to the condensing unit heater to capture heat and vapor from the exhaust gases. That heat, instead of being flushed outside, is turned back into useable heat circulating inside the heated space. Baseline equipment is a new unit heater meeting 2012 IECC energy code minimum efficiency.

High efficiency non-condensing unit heater - min 86% AFUE: This measure applies to a gas fired non-condensing unit heater installed in a commercial application. Hot gases generated from combustion of hydrogen are directly vented to the outside. There is no condensate. Baseline equipment is a new unit heater meeting 2012 IECC energy code minimum efficiency.

HVAC controls: The installation of the following: Programmable Thermostats, EMS or DDS systems. These systems enable more efficient control of the HVAC system.

HVAC system commissioning: HVAC System Commissioning is a systematic, documented process that includes inspection and testing conducted to confirm that a buildings system are capable of being operated and maintained in conformance with the design intent. Buildings that are not properly commissioned can suffer from high energy costs, poor indoor air quality, poor system control, and many other mechanical problems.

Refrigeration system superheat recovery HVAC: Heat released from the refrigerant is recovered from the compressor and is used to pre-heat HVAC feeds.

Roof insulation (retrofit only) - Tier 1: Min R-30: Addition of roof insulation to minimum R-30 to replace existing insulation that is less than R-11.

Roof insulation (retrofit only) - Tier 2: Min R-45: Addition of roof insulation to minimum R-45 to replace existing insulation that is less than R-11.

Space Heating O&M: Improve efficiency through maintaining optimum flame temperatures, monitoring levels of oxygen in flue gas, boiler insulation, waste heat recover, burner efficiency improvements, etc. Base case involves no operations and maintenance measures.

Steam System Efficiency Improvements: This measure includes assessing and adding or replacing main line air and radiator vents, and upgrading the boiler control system to averaging system with indoor and outdoor sensors. The damper opens to improve draw.


Exhibit__(DLW-4)



Waste Water Heat Exchanger: A waste water heat exchanger recovers waste heat by pre-warming incoming water with the waste water in a separately contained unit which prohibits contamination while allowing heat transfer.


Exhibit__(DLW-4)

APPENDIX B 46BCOST-EFFECTIVE MEASURES

Appendix B COST-EFFECTIVE MEASURES

# Sector Measure Type Competition Group Measure

Program Delivery Method

12b Res Equipment Hot Water Boiler Condensing Hot Water Boiler 90% Prescriptive

16 Res Equipment Furnace High Efficiency Furnace 90 AFUE Prescriptive

43 Res Equipment Hot Water Boiler High Efficiency Hot Water Boiler Prescriptive

170 Res Equipment Other Other High Efficiency Pool/Spa Heating Boiler Prescriptive 254 Res Equipment Range/Oven ENERGY STAR Convection Oven Prescriptive

4 Res Nonequipment WH Pipe Insulation Residential Water Heater Pipe Insulation Prescriptive

5 Res Nonequipment DHW Tank Insulation Hot Water Tank Insulation Prescriptive

6 Res Nonequipment

Water Savings Measure - Faucet Faucet Prescriptive

7 Res Nonequipment

Water Savings Measure - Showerhead Low Flow Showerhead (2.0 GPM max) Prescriptive

8 Res Nonequipment

Water Savings Measure - Showerhead Low Flow Showerhead (1.5 GPM max) Prescriptive

22 Res Nonequipment HVAC Controls GreenFan Fan Controller Prescriptive

30 Res Nonequipment Floor Insulation

Floor & Crawlspace Insulation R-4.94 to R-30 Prescriptive

32 Res Nonequipment Attic Insulation Attic/Ceiling Insulation R-0 to R-49 Prescriptive

33 Res Nonequipment Attic Insulation Attic/Ceiling Insulation R-11 to R-49 Prescriptive

40 Res Nonequipment Floor Insulation Basement Insulation, Side Wall Prescriptive

41 Res Nonequipment HVAC Controls Programmable Thermostat Prescriptive


Floor & Crawlspace Insulation R-4.94 to R19 Prescriptive


Floor & Crawlspace Insulation R-4.94 to R38 Prescriptive

232 Res Nonequipment Boiler Pipe Insulation Boiler Pipe Insulation Prescriptive

247 Res Nonequipment Whole Home NW Energy Star Mfg Home Prescriptive 290 Res Nonequipment Air Sealing Weather Stripping Prescriptive


Exhibit__(DLW-4)


Natural Gas Energy Efficiency Market Potential Study 5-2



291 Res Nonequipment Air Sealing Door Sweeps Prescriptive 293 Res Nonequipment Air Sealing Foam Sealant Prescriptive

131 Ind Equipment Space Heat Other

High Efficiency Condensing Unit Heater 92 AFUE Custom

129 Ind Equipment Furnace High Efficiency Condensing Furnace Custom

130 Ind Equipment Space Heat Other

High efficiency non-condensing unit heater 86 AFUE Custom

186 Ind Equipment Direct Fire Process Heating: High Efficiency Furnace Custom

132 Ind Equipment Space Heat Other Direct Fired Radiant Heater Custom

119 Ind Nonequipment Process Heat Controls Process Heat Improved Controls Custom

120 Ind Nonequipment Space Heating O&M

Optimized Furnace Operations/Improved O&M Custom

123 Ind Nonequipment Space Heating O&M Space Heating O&M Custom

158 Ind Nonequipment Space Heating Controls

Energy Management System Optimization Custom

48 Com Nonequipment HVAC O&M Boiler Repair/Maintenance Prescriptive 50a Com Equipment Steam Boiler High Eff. Condensing Boiler Steam Prescriptive

50b Com Equipment Hot Water Boiler High Eff. Condensing Boiler Hot Water Prescriptive

51 Com Equipment Furnace High Efficiency Condensing Furnace Prescriptive 84 Com Equipment WH Domestic High Efficiency Water Heater Prescriptive 101 Com Equipment Cooking Other High efficiency steam cooker Prescriptive 106 Com Equipment Range/Oven Conveyor Oven Prescriptive 107 Com Equipment Range/Oven ENERGY STAR Convection Oven Prescriptive 108 Com Equipment Cooking Other ENERGY STAR Fryer Prescriptive 109 Com Equipment Cooking Other ENERGY STAR Griddle Prescriptive

256 Com Equipment Hot Water Boiler

Commercial Steam Boiler to Hot Water Boiler Space Heating &Water Heating Prescriptive

257 Com Equipment Steam Boiler Commercial Steam Boiler to Steam Boiler Space Heat Prescriptive

56 Com Nonequipment Duct Sealing Duct Sealing and Insulation Prescriptive 57b Com Nonequipment HVAC O&M HVAC Controls (Thermostat) Prescriptive

63 Com Nonequipment Boiler Improvements

Boiler Vent Damper- min. 1000 kBtu input Prescriptive

65 Com Nonequipment Roof Insulation

Roof insulation (retrofit only) - Tier 2: Min R-45 Prescriptive

69 Com Nonequipment Wall Insulation Wall insulation - Tier 2: Min R-21 Prescriptive


Exhibit__(DLW-4)


Natural Gas Energy Efficiency Market Potential Study 5-3



85a Com Nonequipment Water Heater Controls Hot Water Temperature Setback Prescriptive

80 Com Nonequipment

Energy Management System

Energy Management System Optimization Prescriptive

81 Com Nonequipment Boiler Improvements Boiler Stack Economizer Prescriptive

88 Com Nonequipment Pipe Insulation – WH Hot Water Pipe Insulation Prescriptive

91 Com Nonequipment Water Heater Controls Recirculation Controls Prescriptive

92 Com Nonequipment

Water Savings Measure – Showerhead Low-Flow Showerhead Prescriptive

93 Com Nonequipment

Water Savings Measure – Aerator Faucet Aerator Prescriptive

97 Com Nonequipment

Water Savings Measure – Dishwashing

Multi-tank Conveyor Energy Star Dishwasher Prescriptive

164 Com Nonequipment

Water Savings Measure – Dishwashing Low-flow Pre-Rinse Spray Valve Prescriptive

177 Com Nonequipment Heat Recovery-WH Drainwater Heat Recovery Prescriptive

178 Com Nonequipment Variable Air Volume Variable Air Volume (VAV) conversion Prescriptive

183 Com Nonequipment Motion Faucet Controls Motion Faucet Controls Prescriptive

230 Com Nonequipment Water Tank Insulation Hot Water Tank Insulation Prescriptive

259 Com Nonequipment Basement Side Wall Insulation 'Exterior Wall Insulation > R19 Prescriptive

261 Com Nonequipment Modulating Gas Valve Modulating Gas Valve Prescriptive


Exhibit__(DLW-4)

APPENDIX C 47BTOP MEASURES by Savings Potential

Appendix C TOP MEASURES BY SAVINGS POTENTIAL

Table 5.10: Top 10 Residential Measures by Economic Savings Potential (TRC)

Rank Measure Name

2033 Cumulative Potential (Dth)

Savings Contribution

1 High Efficiency Furnace 90 AFUE 730,506 25.0% 2 Boiler Pipe Insulation 321,184 11.0% 3 Low Flow Showerhead (1.5 GPM max) 286,161 9.8% 4 Floor & Crawlspace Insulation R-4.94 to R38 269,865 9.2% 5 Floor & Crawlspace Insulation R-4.94 to R-30 266,789 9.1% 6 Programmable Thermostat 198,340 6.8% 7 Low Flow Showerhead (2.0 GPM max) 192,368 6.6% 8 Attic/Ceiling Insulation R-11 to R-49 127,436 4.4% 9 Attic/Ceiling Insulation R-0 to R-49 101,146 3.5% 10 Hot Water Tank Insulation 78,237 2.7% TOTAL 2,572,032 88.0%

Table 5.11: Top 10 Commercial Measures by Economic Savings Potential (TRC)

Rank Measure Name



1 High Efficiency Condensing Furnace 160,894 25.9%

2 Modulating Gas Valve 98,223 15.8%

3 Boiler Stack Economizer 62,245 10.0%

4 Variable Volume Air System 59,885 9.7%

5 High Efficiency Water Heater 58,557 9.4%

6 Multi-Tank Conveyor Energy Star Dishwasher 44,198 7.1%

7 Hot Water Temperature Setback 24,645 4.0%

8 Hot Water Pipe Insulation 23,791 3.8%

9 Hot Water Tank Insulation 21,829 3.5%

10 Energy Star Fryer 13,508 2.2%

TOTAL 567,776 91.5%


Exhibit__(DLW-4)

APPENDIX C 47BTOP MEASURES by Savings Potential

Natural Gas Energy Efficiency Market Potential Study C-2

Table 5.12: Top Industrial Measures by Economic Savings Potential (TRC)

Rank Measure Name



1 Process Heat Improved Controls 3,569 52.2% 2 Process Heating: High Efficiency Furnace 1,659 24.3% 3 High Efficiency Condensing Furnace 1,005 14.7% 4 Space Heating O&M 427 6.2% 5 Direct Fired Radiant Heater 108 1.6% 6 High Efficiency Condensing Unit Heater 92 AFUE 64 0.9% 7 Energy Management System Optimization 5 0.1% TOTAL 6,838 100.0%


Exhibit__(DLW-4)

APPENDIX D 48BE+ PROGRAM Trade Ally Survey

Appendix D E+ PROGRAM TRADE ALLY SURVEY

An email invitation to participate in the online survey was sent to 163 Trade Allies via email addresses provided by NorthWestern Energy (NWE). These installers and distributors received the initial email on December 3rd. Those who had not yet participated received a reminder email on December 9th and the survey was closed on December 17th. Participants who completed the survey were automatically entered into a raffle for an iPad Mini as the incentive for participation. The winner was chosen on December 17th and all participants who completed the survey received a thank you email on December 18th.

The findings presented below represent the responses from 43 participants. Twenty-seven Trade Allies fully completed the survey (17% completion rate) and 16 responded to a portion of the survey. In order to utilize the complete set of data generated by the survey, the partial completes are incorporated into the analysis. Each finding below includes the number of responses used in the analysis to help illustrate the completeness of the results.

Survey Firmographics: The survey participants were asked to share information about their business (distributor vs. installer), their customer base (commercial vs. residential), and typical project characteristics (water heating vs. space heating and retrofits vs. new construction). All participants were required to respond to these questions before moving on to the next section of the survey. The charts below illustrate the sample population that provided market data for this research.

Figure 5.9: Sample Firmographics

(n=43)

D.1 Summary of Findings:

Respondents were asked to share information on their selling habits of standard vs high efficient equipment, their understanding of customer demand and perceptions of energy efficient water and


Exhibit__(DLW-4)


Natural Gas Energy Efficiency Market Potential Study D-2

space heating, as well as pricing information on specific types of equipment. In general, the survey results suggest that customers have higher installation rates and higher demand for energy efficient space heating in comparison to water heating equipment. High efficiency hot water systems, however, do make up the majority of commercial & industrial system sales.

Figures below present the installation rates of standard efficiency vs. high efficiency space and water heating systems for both the residential and commercial and industrial segments.

Figure 5.10: Water Heating System Installation Rates by Efficiency

Figure 5.11: Space Heating System Installation Rates by Efficiency

The Trade Allies were also asked how often their customers request energy efficient systems when choosing a new space or water heating system. As shown in the figure below, the results suggest that residential customers more often request energy efficient equipment when compared against C&I customers, but at least half the time, all customers request the energy efficient option.


Exhibit__(DLW-4)



Figure 5.12: Frequency of Customer Requests for High Efficiency Systems

n=27 n=23

Respondents were also asked, “When you recommend space and/or hot water heating systems to your customers, do you normally recommend a specific efficiency level (i.e. AFUE, EF, etc.) or a range of efficiency options?” The survey found that the approach is varied when it comes to dealing with C&I customers, nearly evenly split between offering a range or specific efficiency level. Trade Allies more often bring a range of options to the table when dealing with residential customers, as illustrated in Figure 5.


Exhibit__(DLW-4)



Figure 5.13: Efficiency Level Recommendations for Space and Water Heating

The trade allies that reported recommending a specific energy efficiency level were then asked to share their typical recommendations for specific space and water heating equipment efficiency levels. While a very small sample shared information on this question, 83% of the recommended levels were for high efficiency equipment.

The survey also gathered data on customer perceptions of energy efficient equipment from an investment perspective. Respondents were asked to choose the most common customer objections to energy efficient system offerings (they could choose all three potential suggestions). Equipment costs were recorded as the biggest hurdle to investment, with skepticism regarding energy savings and the quality of equipment coming in much lower.


Exhibit__(DLW-4)



Figure 5.14: Customer Objections to High Efficiency Equipment

n=32

The survey also gathered information on the Trade Allies’ perception of what customer’s value when it comes to purchasing new space or water heating equipment. The respondents were asked to rank a list of attributes that impact their customers’ investment decisions into three categories; Most Important to Decision, Secondary Influence, or Does Not Impact Decision.

Trade Allies reported that C&I customers rank the following as ‘most important’:

Warranty

Incentives

Equipment Quality

The reported ‘secondary influences’ for C&I customers include:

Environmental Impact/Carbon Footprint

Brand Name

Reducing Utility Bills

Trade Allies reported that residential customers rank the following as ‘most important’:

System Efficiency

Brand Name

Energy Savings


Exhibit__(DLW-4)



The secondary residential influences include:

Environmental Impact/Carbon Footprint

Reducing Utility Bills

Efficiency Rating

Trade allies were then asked to share their perception of the prices of energy efficient space and water heating systems in Montana compared to the rest of the country. Over 80% of respondents perceive the costs to be the same or lower than outside Montana as illustrated below.

Figure 5.15: Trade Ally Perceptions of Energy Efficient Equipment Costs

n=28

:

The trade allies were asked to share the “Book Price” for equipment and labor for standard and high efficiency space and water heating systems. While the survey noted that data will be made anonymous and confidentiality was the priority, there is limited data on this series of questions. The tables below present the Trade Ally reported median values for labor and equipment costs.


Exhibit__(DLW-4)



Table 5.13: Residential Survey Results: Median Space and Water Heating Costs

Equipment Type Labor Cost

Equipment Costs

Total Cost

Standard Efficiency Gas furnace, 80% AFUE & 60 kBtu $925 $1,000 $1,925

High Efficiency Gas Furnace, 90% AFUE & 60 kBtu $1,020 $1,800 $2,820

High Efficiency Gas Furnace, 95% AFUE & 60 kBtu $1,200 $2,050 $3,250

Non-condensing Boiler, 80% efficiency & 60 kBtu $1,065 $2,750 $3,815

Condensing Boiler, 96% efficiency & 60 kBtu $1,800 $3,750 $5,550

Standard Efficiency Natural Gas Water Heater – 40 Gallon 0.59 EF $300 $500 $800

High Efficiency Natural Gas Water Heater – 40 Gallon 0.67 EF $300 $800 $1,100

Natural Gas Tankless Water Heater – 0.82 EF $775 $2,000 $2,775

Programmable Thermostat $75 $70 $145

On average, the survey results suggest that the residential space and water heating equipment costs are approximately one and a half times the preliminary research conducted by Nexant.

Table 5.14: &I Survey Results: Median Space and Water Heating Costs

Equipment Type Labor Costs

Equipment Costs

Total Cost

Standard efficiency gas-fired furnace, 80% CE & 300 kBtu input $500 $1,000 $1,500

High efficiency gas-fired furnace, 91% AFUE & 300 kBtu input $840 $2,100 $2,940 Standard efficiency condensing gas-fired boiler, 80% AFUE & 300 kBtu input $2,501 $6,000 $8,501

High Efficiency condensing gas-fired boiler, 90% TE & 300 kBtu input $2,500 $13,000 $15,500

Standard Efficiency NG Water Heater, 80% TE & 125 kBtu $300 $1,500 $1,800

High Efficiency NG Water Heater, 91% TE & 125 kBtu $1,100 $2,250 $3,350

NG Tankless Water Heater, 0.82 EF $1,130 $2,000 $3,130

Programmable Thermostat $80 $75 $155

On average, the survey results suggest the commercial and industrial prices for water and space heating equipment is approximately 1.3 times the average costs reported in Nexant’s preliminary research.


Exhibit__(DLW-4)

Nexant, Inc. 867 Coal Creek Circle Suite 120 Louisville, CO 80027 www.nexant.com


Exhibit__(DLW-4)

http://www.nexant.com/�

2015 DSM / USB Communications Plan

NorthWestern Energy offers a broad selection of energy efficiency, renewable

energy, and low income programs and services funded by customers through

electric and natural gas supply rates and the electric and natural gas Universal

System Benefits Charges (USBC). The energy savings resulting from these

programs are a key piece of NorthWestern Energy’s supply portfolio.

Lighting in both the commercial and residential sectors continues to contribute a

significant portion of the electric savings as in recent years.

A comprehensive independent evaluation of all NorthWestern Energy Demand

Side Management (DSM) and Universal Systems Benefits (USB) programs was

completed in 2012. The evaluation concluded that NorthWestern Energy’s

programs deliver cost effective natural gas and electric savings, are well-run and

follow more than 50 best practices. The evaluation provided specific

recommendations for program changes, some of which relate to communication,

education, and marketing. Recommendations continue to be incorporated into

the communications plan as appropriate and applicable.

Nationally and locally, there is continued focus on energy efficiency, renewable

energy, and “green” or sustainability efforts.

The energy efficiency targets and the continued awareness of “green” help frame

the need and opportunities set forth in this communications plan. The plan is

intended to be an active, adaptive product--one that establishes the framework

for communications strategies designed to help achieve energy efficiency targets

and can be modified to meet changing needs and opportunities.


Exhibit__(DLW-5a)

Page 1 of 10

The plan is implemented consistent with NorthWestern Energy Efficiency Plus

(E+) graphics and image standards and strategies. The section of NorthWestern

Energy’s website related to E+ Programs continues to be updated as part of

continuing web redesign and to reflect current program offerings.

The plan refines and sustains communication strategies for the residential, low

income, small-scale renewable generation, and commercial/industrial programs.

The following table lists the programs by customer sector addressed in the plan.

Table 1: E+ Programs

ELECTRIC PROGRAMS NATURAL GAS PROGRAMS CUSTOMER SECTOR

E+ Audit for the Home E+ Audit for the Home Residential E+ Free Weatherization/Fuel Switch E+ Free Weatherization Residential E+ Residential Lighting

Residential

E+ Residential Rebates Program—Existing Homes Residential

E+ Residential New Homes Program Residential

E+ Appraisal for Small Business Commercial E+ Commercial Lighting Rebate Commercial/Industrial E+ Business Partners Electric E+ Business Partners Natural Gas Commercial/Industrial E+ Business Partners –Irrigation Agriculture E+ Commercial Savings-New Construction

E+ Commercial Savings-New Construction Commercial /Industrial

E+ Commercial Savings-Existing Facilities

E+ Commercial Savings-Existing Facilities Commercial /Industrial

E+ Green Motor Rewind Instant Rebate

Commercial/Industrial /Agriculture

E+ Renewable Generation All E+ Green Power (Communications, not resource) All Northwest Energy Efficiency Alliance (NEEA)

All

Because the E+ programs are not offered to Large USB Electric Choice

customers or to Natural Gas Choice customers, these customers are not

targeted in the plan. Choice customers are transmission and/or distribution


Exhibit__(DLW-5a)

Page 2 of 10

customers who purchase their supplies of electricity or natural gas in the

wholesale market.

GOAL

Effectively and efficiently market E+ programs to achieve natural gas and electric

resource acquisition results for the supply portfolios through NorthWestern

Energy employees and its program contractors, and by generating increased

public awareness of the programs and the opportunity to save energy.

OBJECTIVES

Engage trade ally community and public entities to incorporate energy

efficiency in their messages and marketing

Engage customers to demand energy efficiency from service providers

Build participation with emphasis on commercial/industrial sector projects

AUDIENCES

NorthWestern Energy employees

NorthWestern Energy program contractors and partner contractors

Residential, commercial and industrial customers eligible for participation

in NorthWestern’s programs (electric and natural gas supply)

Trade Allies: electrical vendors—i.e. Crescent Electric, Grainger, WesCo,

CED; service providers—electricians, refrigeration, HVAC, motors,

architects, engineers, and insulation; distributors— of lighting, equipment;

retailers—of CFLs, building supplies, appliances, air sealing, and water

measures; building contractors and general contractors; HVAC and

insulation contractors; and trade associations—i.e. AIA, ASHRAE,

Montana Hospital Association, Montana Hospitality and Lodging

Association.

Public officials and government departments


Exhibit__(DLW-5a)

Page 3 of 10

Media—mass and trades

Related organizations

IMPLEMENTATION STRATEGIES

NorthWestern Energy will engage its employees, program implementation

representatives, and program/partner contractors to utilize existing and new

methods and tools to cultivate customer participation in the E+ programs.

Implementation tactics are targeted by customer sector and directed at defined

audiences in most cases. Cross-marketing of programs within the customer

sector is incorporated as appropriate. A general calendar of implementation

tactics by quarter, sector, program and audience is provided (see

Exhibit__(DLW-5b)).

TACTICS

Residential Programs

Update program materials/resources (Web and Brochures)

Coordinate display materials for Home Shows (Spring Shows run

February – May; selected Fall Shows run September-October)

Execute natural gas program campaign

Develop updated program-at-a-glance summary

Provide CFL In-Store instant coupon offerings to increase installation of

CFLs, and incorporate educational messages into various residential

lighting communications used for lighting activities (direct mail,

tradeshows, events)

Target direct mail and limited media for E+ Audits for the Home with cross

marketing of Energy Appraisal for Small Businesses

Continue contacts by program contractors/community relations managers

(CRMs)

Update Customer Service Representative (CSR) training for new CSRs


Exhibit__(DLW-5a)

Page 4 of 10

Include energy saving messages in Energy Connections and news

releases

Incorporate energy efficient products into contest offerings for customers

Participate in local events as appropriate

Contact various program trade allies regarding informational updates and

solicit new trade allies (Preferred Contractors, lighting retailers,

homebuilding associations)

Commercial/Industrial Programs

Update existing program materials/resources (Web and Brochures) to

incorporate program additions and changes

Develop new materials (brochure copy, case studies, feature articles, etc.)

and execute new project case studies on commercial/industrial customers

Integrate commercial program messages into tradeshow displays

Continue customer and trade ally contacts through program/partner

contractors and CRMs

Participate in local events where appropriate

Conduct targeted outreach for customer/trade ally training and partnership

opportunities

Review and update trade ally databases

Update program-at-a-glance summary

Update web resources with program changes and additions

METHODS/TOOLS

Residential Sector Residential family of Program Brochures that describe individual programs,

cross-market same sector programs, and highlight resources for more

information by directing customers to website or program contact phone

numbers. GENERAL AUDIENCES


Exhibit__(DLW-5a)

Page 5 of 10

Web/interactive media tools including Efficiency Plus (E+) web section of

www.NorthWesternEnergy.com/EPlus, Facebook, YouTube, Twitter, and Search

Engine Marketing (SEM). GENERAL AUDIENCES

Internal Communications throughout the year such as FYI, TEAM, iConnect,

emails, employee training sessions, etc. to inform all or targeted groups of

employees of programs, featured projects/promotions, training, and events.

EMPLOYEES

Billing messages in the message box of the NorthWestern Energy billing

statement and in Energy Connections to encourage program participation.

RESIDENTIAL CUSTOMERS

Direct Mail to Trade Allies and targeted customers regarding individual program

offerings and related trainings along with cross-marketing of other programs.

TARGETED FOR INDIVIDUAL MAILING One-on-one by program representatives, program contractors, CRMs, CSRs –

communicate residential program offerings based upon opportunity and direct to

appropriate resources. May include interactions during: E+ Audit for the Home,

tradeshow discussions, customer care calls, or normal company interactions with

the customer. OPPORTUNITY DRIVEN

One-to-Many through speakers’ bureau, service organization presentations by

program contractors and CRMs to increase awareness of programs and

opportunities to save energy. COMPANY OR CUSTOMER INITIATED


Exhibit__(DLW-5a)

Page 6 of 10

Home Improvement Shows, Parade of Homes, community events to reach

targeted audiences with information about programs and opportunities and, as

appropriate, distribute CFLs. COMPANY OR ORGANIZATION INITIATED

Trade Association Events, publications, and websites to target

presentations, displays and messages about opportunities for customers to save

energy and the programs that NorthWestern Energy offers. TARGETED TRADE

ALLIES OR CUSTOMER GROUP

Targeted media advertising tied to special campaigns, programs or events.

TARGETED TO ELIGIBLE RESIDENTIAL AUDIENCE

Earned media feature stories on projects and opportunities in trade or mass

media. GENERAL AUDIENCE WITH EMPHASIS ON ELIGIBLE AUDIENCE.

Commercial/Industrial Sector

Commercial/Industrial family of Program Brochures that describe individual

programs, cross-market same sector programs, and highlight resources for more

information by directing customers to website or program contact phone

numbers. GENERAL AUDIENCES Web/interactive media tools including Efficiency Plus (E+) web section of

www.NorthWesternEnergy.com/EPlus, SEM, YouTube, and Twitter as

appropriate. GENERAL AUDIENCES

Internal Communications throughout the year such as FYI, TEAM, iConnect, e-

mails, CSR trainings, etc. to inform all or targeted groups of employees of

programs, featured projects/promotions, training, and events. EMPLOYEES

AND PROGRAM PARTNERS AS APPROPRIATE


Exhibit__(DLW-5a)

Page 7 of 10

Case Studies of E+ Business Partners, E+ Commercial Lighting Rebate

Program, or other E+ Rebate projects to demonstrate various types of customer

participation and customer benefits. TARGETED TRADE ALLIES AND KEY

CONTACTS AND TARGETED CUSTOMERS

Direct Mail to Trade Allies and targeted customers regarding individual program

offerings and related trainings along with cross-marketing of other programs.

TARGETED FOR INDIVIDUAL MAILING

Customer Care E-Newsletter to key customers will include information about

programs, training, and case studies throughout the year. COMMERCIAL

CUSTOMERS AND TRADE ALLIES

One-on-one by program representatives, program contractors, CRMs, and

CSRs – communicate commercial and industrial program offerings based upon

opportunity and direct to appropriate resources. May include interactions during:

E+ Energy Appraisal, informal facility assessment, project completion review,

cold calls, trade ally visits, or normal company interactions with the customer.

OPPORTUNITY DRIVEN

One-to-Many through speakers’ bureau, service organization presentations by

program contractors and CRMs to increase awareness of programs and

opportunities to save energy. COMPANY OR CUSTOMER INITIATED

Vendor breakfast/Brown Bags/After Hour events/Community Events to

reach targeted audiences with information about programs and opportunities. COMPANY OR ORGANIZATION INITIATED

Trade Association Events, publications, and websites to target

presentations, displays and messages about opportunities for customers to save


Exhibit__(DLW-5a)

Page 8 of 10

energy and the programs that NorthWestern Energy offers. Northwestern

Energy Lighting Trade Ally Network is an example of an activity that provides

technical training and cultivates trade ally participation in programs. TARGETED

TRADE ALLY OR CUSTOMER GROUP

Targeted media advertising tied to events, projects, or programs. Continuing

E+ Commercial Lighting Rebate program advertising through television and radio

to promote lighting as a universal way for businesses to save energy.

GENERAL AUDIENCE WITH EMPHASIS ON COMMERCIAL LIGHTING OR

OTHER SPECIFIC PROJECT-RELATED AUDIENCES

Earned media feature stories on projects and opportunities in trade or mass

media. GENERAL AUDIENCE WITH EMPHASIS ON SPECIFIC PROJECT-

RELATED AUDIENCES

Support of commercial program contractors with consistent marketing

materials to describe working relationship with NorthWestern Energy. GENERAL

COMMERCIAL CUSTOMERS AND TRADE ALLIES AS IDENTIFIED BY

PROGRAM CONTRACTORS.

NorthWestern Energy has defined an overall budget for marketing and

communication for the electric and natural gas E+ programs of approximately

$500,000. This includes mass media development and placement as well as all

other marketing expenses.

MEASUREMENT

Program participation compared to resource acquisition targets will be used as

one measure of the effectiveness of this communications plan.


Exhibit__(DLW-5a)

Page 9 of 10

The energy efficiency targets are based on a July 1 – June 30 year. USB

programs operate on Calendar year.

Other measurement effectiveness data will be gathered through existing

customer and employee survey tools and tracking of participation in comparison

to past performance.

Attached is a calendar for 2015 which will also be modified to meet changing

opportunities and needs (see Exhibit__(DLW-5b)).


Exhibit__(DLW-5a)

Page 10 of 10

DSM/USB Communications Plan Docket D2014.7.59 Exhibit__(DLW-5b)

Page 1 of 16

1

2

3

4

5

6

7

8

9

A B C D E F G H I J K L M P

DSM/USB Communications Calendar subject to change based upon need or opportunity

Campaign/initiative MO Implement- ation Dates

E G Audience Message Media Internal (includes employees and key

contractors)

Web Hard Materials

JanR0x Residential

R0x

Tips--Electric (USB/DSM) Spot media and Campaigns

x Residential electric customers

Act to save electricity; check out programs

Television; radio Tips Brochure

R0x

Tips--Natural Gas (USB/DSM) Spot media and Campaigns

x Residential natural gas customers

Act to save natural gas; check out programs

Television; radio Tips Brochure

R1x

Residential Audits On-going x x Residential space or water heating customers whose home has not previously been audit (home 5 yrs old or older), Residential electric baseload customers

Call to Action--Schedule an Audit; follow-up on recommendations

2 Xs /Year Energy Connections--more as needed; news releases as needed; bill statement messages; direct mail to targeted customers

CSR, CRM reminders of qualifications

On-going description, contact, qualifications; Facebook/Twitter outreach

Tradeshow and event handouts/sign-ups/display/brochures of all residential programs/resources in audit packets

R1x

Outreach Targeted Direct Mail Jan May Sep

January May Sep -- more as needed

x Residential natural gas customers who've not previously had an audit

Call to Action--Schedule an Audit; follow-up on recommendations

Direct Mail/ reinforcing press release

Email notice of mailing

Direct Mail

R1x

Electric Baseload Targeted Direct Mail Oct Fall x Residential electric baseload customers

Call to Action--Complete Energy Usage survey; follow-up on recommendations

Direct Mail Email notice of mailing

Direct Mail Non-NWE production

R2x

E+ Home Lighting -- CFLs Campaign Focus on Education--opportunities to save electricity

On-going x Residential electric customers

Call to Action--Install CFLs in High Use Locations (Educate--4L's)

Multiple Xs Energy Connections; Direct Mail, Radio, Newspaper, billboard, micro-web site, web advertising, events, Spot TV

Mail-in offer, education messages, reinforce special offers/events, list participating retailers

Tradeshow Display/Retailer support & POP

R2x

Mail-in Fixture/Sensor Rebate Offer Web, Audits, Energy Connections

On-going x Residential electric customers

Call to Action--Install CFLs in High Use Locations (Educate--4L's) $ off for qualifying CFL fixtures and occupancy wall switch sensors

on-line application Brochure


Page 2 of 16

1





contractors)

Web Hard Materials

Jan

10

11

12

13

14

15

16

R2a

Spring Trade Shows a) CFL distribution (Missoula, Billings,Bozeman, Helena, Great Falls, Butte); Displays; promote all appropriate programs

Feb Feb - May x Residential electric customers


Spot Newspaper/TV Local market Email of event; CSR/CRM notice of mailing

List in events/training/ workshops

Canvas Bags, Brochures/Signage

R2x

E+ Home Lighting -- CFLs Spring Intant Coupon Offer

Direct Mail to residential electric customers for coupon for $1 off on CFLs from Participating Retailers

Apr Apr 22-Jun 14


Call to Action--Buy from participating retailers. Ltd time offer. Install CFLs in High Use Locations (Educate--4L's)

Multiple Xs Energy Connections; Direct Mail, Newspaper, web advertising, events, Retailer POP/Education

Email of mailing and qualifications

Reference, list of participating retailers

see media

R2a

Fall Trade Shows a) Displays, all programs, CFL distribution (Billings)

Sep Sep x Residential electric customers who've not rec'd Free CFLs at event earlier in year


Spot Newspaper local market e-mail List in events/training/ workshops

Canvas Bags, Brochures/Signage

R2x

Regional Buy downs- Simple Steps Review POP/agreements for Regional efforts

Jan Jan- Dec x Residential electric customers

Call to Action for CFLs POP/Retailer ed Info on CFLs and retailers

R2x

E+ Home Lighting -- CFLs Fall Instant Coupon Offer

Direct Mail to residential electric customers for up to $1 off on CFLs from Participating Retailers

Oct Tentative Oct 4 - Nov 15


Call to Action--Buy from participating retailers. Ltd time offer. Install CFLs in High Use Locations (Educate--4L's)

Multiple Xs; Direct Mail, Newspaper, billboard, web advertising, events, Retailer POP/Education

e-mail of mailing and qualifications

Reference, list of participating retailers

see media

R3x

E+ Gas Savings for the Home Promote Rebates for homes with natural gas space or water heat

On-going x Residential natural gas space and water heating customers (New or Existing Homes)

Call to Action--Install qualifying measures for rebates (Insulation, Programmable Thermostats, High Efficiency heating or water Equipment replacements, heating system retrofit upgrades)

2 Xs /Year Energy Connections--more as needed

Description of Rebate offers, forms, preferred contractor lists (Heating Contractors/Insula-tion Contractors)

General Brochure, description, application, preferred installers /Display materials / supporting Preferred Contractor advertising

R3x

Gas Savings Mass Media Campaign 1 Mass Media targeted at residential natural gas customers

Aug Q 3-4 x Residential natural gas space or water heating customers

Call to Action--Install qualifying measures for rebates

spot TV, Radio, Call to Action General description, application, preferred installers, supporting preferred Contractor advertising


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contractors)

Web Hard Materials

Jan

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R3a

Spring Tradeshows a) Program Education in Natural Gas markets

Feb Feb- May x Residential natural gas space or water heating customers


local market e-mail Call to Action Displays/brochures program materials

R3a

Fall Tradeshows a) Program Education in Natural Gas markets

Sep Sep x Residential natural gas space or water heating customers


local market e-mail Call to Action Displays/brochures program materials

R0x

Special Events--CSR Training, Game Days Promote natural gas energy efficiency programs in existing homes, partners with local trade allies

As needed x x Residential natural gas space or water heating customers in existing homes; targeted Events

Call to Action--Participate in programs; prioritize measures; Install qualifying measures for rebates

Spot newspaper; news releases as appropriate

CSR and local e-mails as appropriate

Schedule on site Educational brochures; signage; displays; presentations

R4x

New Homes Promote energy efficiency in new homes, Training/promote high efficiency builders; train on new MT Code

x x Residential customers building new homes and construction trade allies

Energy Connections

E-mail of program qualifications and links; Training

Rebate forms, training events

Guide to new MT Code Publications for Trade Associations

R4x

New Homes Natural Gas Promote energy efficiency in new homes, Training/promote high efficiency builders; train on new MT Code

Sep Sep and as approp.

x Residential natural gas customers building new homes

Call to Action--install high efficiency heating or water heating measures; know the new MT code; explore going beyond code

Special Publication, Newspaper at Parade of Homes

Schedule/homes, link to all high efficiency builders

Brochures/New code handbook/Signage as needed

R4x

New Homes Electric Promote energy efficiency in new homes, Training/promote high efficiency builders; train on new MT Code

Sep Sep and as approp.

x Residential Electric Customers building new homes

Call to Action--install high efficiency heating or water heating measures; know the new MT code; explore going beyond code

Special Publication, Newspaper at Parade of Homes

Schedule/homes, link to all high efficiency builders

Brochures/New code handbook/Signage as needed

R6x

E+ Free Weatherization Supportive advertising for low income energy assistance--

Sep Sep - Apr as needed

x x Income Qualified space or water heating customers for free Audit and installation of qualifying measures (LIEAP qualified) also receive NWE low income discount; may qualify for Energy Share

Call to Action--Apply for LIEAP as soon as possible to receive LIEAP and heating season discounts; and potentially qualify for free weatherization. Income Guidelines have been relaxed.

Energy Connections; Newspaper; radio, Fall news release on NWE programs & funding

Description of program/discount and refer customers to Human Resource Councils to apply.

energy efficiency education materials


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contractors)

Web Hard Materials

Jan

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C0

Commercial * PowerPoint presentation for internal and key contractor use: Messages for Commercial Cust/Trade Allies

C1

E+ Commercial Lighting Rebates Promote rebates energy efficient lighting in commercial facilities

On-going x Commercial and industrial electric customers and the trade allies who serve them

Call to Action--Install high efficiency lighting products

Special Publications (display ads or articles); Case Studies; Lighting trade ally network; Association/ Vendor Events; targeted direct mail; business Solutions E newsletter; solicit features and articles

e-mail to CRMs and key staff

Description of Rebate offers, forms, Lighting Trade Ally lists, case studies; schedule of training events; links to other resources as appropriate

Brochure/Case Studies/Display Signage

C1

NWE Lighting Trade Ally Network Engage Lighting Trade Allies as Partners for program success

On-going x Lighting Trade Allies and key facility operators

Call to Action--technical training (on-line/special events) to improve ability to design, sell, install commercial/industrial energy efficient lighting equipment and to promote NWE Lighting Rebate Program

Qtrly Newsletters, e-mail, Direct Mail, web

e-mail to CRMs and key staff

Schedule of training; Registration information; session description; "Qualified" List of Trade Ally Network Members for customers

Training notices, Program brochure, Newsletter

C2

E+ Energy Appraisal for Business Energy audits for commercial facilities under 300kW with emphasis on electric savings

On-going x Electric Commercial facilities under 300 kW

Call to Action--Schedule Appraisal and follow-up on recommendations

Targeted Direct Mail; Energy Connections; Business Solutions E-newsletter; Event Displays; presentations

Description of offer and contact information

Brochure


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contractors)

Web Hard Materials

Jan

29

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C3

E+ Business Partners Electric Measures

Promote custom incentives for electric cost effective energy efficiency measures in new or existing commercial/industrial facilities

On-going May- Jun & Fall emphasis

x x Commercial and industrial electric customers and the trade allies who serve them

Call to Action--Install energy saving measures

Special Publications (display ads or articles); Case Studies; trade ally events; Association/Vendor Events; targeted direct mail; Business Solutions E-Newsletter, solicit feature articles

Description of program, application, case studies; Schedule of training events; links to other resources as appropriate

Brochure/Case Studies/Display Signage

C3a

E+ Business Partners Natural Gas Measures

Promote commercial natural gas offering custom incentives for new or existing facilities

On-going May- Jun & Fall emphasis

x Commercial and industrial natural gas customers and the trade allies who serve them

Call to Action--Install energy saving measures; explore offer

Special Publications (display ads or articles); Case Studies as they become available; trade ally events; Association/Vendor Events; targeted direct mail; Business Solutions E-Newsletter

Description of program, application, case studies as become available; Schedule of training events; links to other resources as appropriate

Brochure/Case Studies/Display Signage; presentations

C3b

E+ Natural Gas Savings Rebates for Commercial Customers -- Existing Buildings

Promote rebates for qualifying energy efficient equipment and improvements in existing commercial facilities

May-June & Fall emphasis


Call to Action--Install energy saving measures for rebates

Special Publications (display ads or articles); Case Studies as they become available; trade ally events; Association/Vendor Events; targeted direct mail; Business Solutions E-Newsletter, solicit feature articles

Description of program; Add Program contractors; on-line forms; list of events/training; resources

Brochure/Case Studies/Display Signage; presentations


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contractors)

Web Hard Materials

Jan

32

33

34

35

36

C4a

E+ Natural Gas Savings Rebates for Commercial Customers--New Construction

Promote rebates for qualifying energy efficient equipment and improvements in new construction commercial facilities

May-June & Fall emphasis


Call to Action--Install energy saving measures for rebates

Special Publications (display ads or articles); Case Studies as they become available; trade ally events; Association/Vendor Events; targeted direct mail; Business Solutions E-Newsletter, solicit feature articles


Brochure/Case Studies/Display Signage presentations

C4b

E+ Commercial Gas Program Engage natural gas Trade Allies as Partners for program success

On-going x Commercial and industrial natural gas trade allies and key facility operators

Call to Action--Promote NWE natural gas commercial rebate programs to improve trade allies ability to design, sell, install commercial/industrial qualifying energy efficient natural gas measures.

Direct Mail; e-mail; trade ally newsletters

Description of program, application, case studies as become available; Schedule of training events; links to other resources as appropriate

Direct mail, one-on-one, Web

C5

Motor Training Training/education/ CEU

Jun x Commercial and industrial electric customers with motors and the trade allies who serve them

Education on value of effective motor management techniques; information on NWE programs

Direct Mail; e-mail; trade ally newsletters

e-mail to CSRs, CRMs and key staff

Schedule of training events; course description; registration information

Direct Mail flyer and PDF of same; training manuals

C6

E+ Irrigation Promote custom incentives for cost effective electric irrigation measures

Apr Sep x Irrigation customers Call to Action--submit proposal for custom incentives for cost effective electric irrigation system improvements

Bi-annual mailing to irrigation customers through customer care


Description of program, application,

Direct mail and Include in Business Partner brochure

C9

Building Operator Certification Training

Training/education/ certification for facility managers; emphasis on schools, public buildings, non-profit hospitals

Mulitple pts x x Facility managers with interest in reducing energy costs through operations and maintenance and incorporating energy efficiency in purchases and practices

Call to Action--enroll; scholarships for tuition and travel for public schools, public buildings, and non-profit hospitals

Direct Mail, trade ally newsletters, e-mail, event booths


Schedule of training events; course description; registration information

Direct Mail flyer and PDF of same; training manuals


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contractors)

Web Hard Materials

Jan

37

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3940

41

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C10

City of Bozeman Business Energy Project

Promote energy efficiency in existing buildings in partnership with City of Bozeman, L &C, Broadwater, Jefferson Counties

On-going x x Target small businesses to increase adoption of energy efficiency improvements

Call to Action--Appraisal, recommendations, standard rebates (Fed. Grants)

Direct contact with targeted businesses

Description for targeted businesses

C11a

E+ Commercial Electric Rebates -- Existing Buildings

Promote rebates for qualifying energy efficient equipment and improvements in existing commercial facilities

x Promote opportunities to commercial/industrial/irrigation customers --Target audiences as appropriate

Call to Action-- install qualifying measures, add to bottom line

Mix e-mail to CSRs, CRMs and key staff;


Mix

C11b

E+ Commercial Electric Rebates -- New Construction

Promote rebates for qualifying energy efficient equipment and improvements in new commercial facilities

x Promote opportunities to commercial/industrial --Target audiences as appropriate

Call to Action-- install qualifying measures, add to bottom line

Mix e-mail to CSRs, CRMs and key staff;


Mix

Renewables

G1

E+ Renewable Energy Support education and development of small scale renewable generation

x Residential and commercial electric customers and the renewable trade allies who support renewable generation

Educate electric customers on small scale renewables and direct them to resources to develop

Special NWE publications; ltd print ads; energy connections; trade allies & Associations

Description of program; NWE publications; Qualified Installer list; Schedule of training events; List of events where NWE is present with display or speakers; links to other resources as appropriate

NWE publications and Brochures; Signage & presentations

G2

E+ Green Power ** Offer premium service option of green power product to electric customers

On-going x Residential and commercial electric customers who support renewable generation

Call to Action--Opportunity to support renewable generation through premium on electric bill

Energy Connections; Public Radio Sponsorships; other events or sites as appropriate and available; Spot Newspaper

Description of program; on-line enrollment

Brochure; signage


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contractors)

Web Hard Materials

Jan

444546474849

O

Northwest Energy Efficiency Alliance

Promote On-going x Residential, Commercial, Industrial, and agriculture customers and the trade allies and infrastructure that serve them

Varies with initiative NWE supporting materials to NEEA messages

AS APPROPRIATE Training Information; links to other resources

Varies with initiative

*Large Universal System Benefits Choice (USBC) Customers are not eligible for electric programs. Natural gas commercial programs are not offered to natural gas Choice customers.

**E+ Green is not a DSM program but is part of NWE's renewable offerings.


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A B


R0x Residential

R0x

Tips--Electric (USB/DSM)

R0x

Tips--Natural Gas (USB/DSM)

R1x

Residential Audits

R1x

Outreach

R1x

Electric Baseload

R2x

E+ Home Lighting -- CFLs

R2x

Mail-in Fixture/Sensor Rebate Offer

Q R S T U V W X Y Z AA

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


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A B


10

11

12

13

14

15

16

R2a

Spring Trade Shows a)

R2x

E+ Home Lighting -- CFLs Spring Intant Coupon Offer

R2a

Fall Trade Shows a)

R2x

Regional Buy downs- Simple Steps

R2x

E+ Home Lighting -- CFLs Fall Instant Coupon Offer

R3x

E+ Gas Savings for the Home

R3x

Gas Savings Mass Media Campaign 1




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17

18

19

20

21

22

23

R3a

Spring Tradeshows a)

R3a

Fall Tradeshows a)

R0x

Special Events--CSR Training, Game Days

R4x

New Homes

R4x

New Homes Natural Gas

R4x

New Homes Electric

R6x

E+ Free Weatherization




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25

26

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C0

Commercial *

C1

E+ Commercial Lighting Rebates

C1

NWE Lighting Trade Ally Network

C2

E+ Energy Appraisal for Business




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C3

E+ Business Partners Electric Measures

C3a

E+ Business Partners Natural Gas Measures

C3b

E+ Natural Gas Savings Rebates for Commercial Customers -- Existing Buildings




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32

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C4a

E+ Natural Gas Savings Rebates for Commercial Customers--New Construction

C4b

E+ Commercial Gas Program

C5

Motor Training

C6

E+ Irrigation

C9

Building Operator Certification Training




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3940

41

4243

C10

City of Bozeman Business Energy Project

C11a

E+ Commercial Electric Rebates -- Existing Buildings

C11b

E+ Commercial Electric Rebates -- New Construction

Renewables

G1

E+ Renewable Energy

G2

E+ Green Power **




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444546474849

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Northwest Energy Efficiency Alliance

*Large Universal System Benefits Choice (USB gas commercial programs are not offered to na

**E+ Green is not a DSM program but is part of



natural gas tracker filing - northwestern …2015, unless natural gas prices move dramatically in...

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