Topic:"Cost Effectiveness" in M07544

- Integrate the review protocol that has been provided in the Excel-based tool. The consolidated calculator will allow EfficiencyOne to better conduct the analysis that supports incentive setting. To support recommendation (1), CLEAResult...

AI summary CLEAResult developed tools and processes for EfficiencyOne to set incentives, including an Excel-based tool and financial simulations for the Instant Savings and Custom programs. Findings suggest reviewing heavy-duty timer and outdoor clothesline incentives due to cost thresholds and market saturation.

Jurisdictional Scans CLEAResult undertook jurisdictional scans of various provincial and state utilities and energy efficiency agencies to: - 1) identify the incentive level setting methodologies and best practices in other jurisdictions;...

AI summary CLEAResult conducted jurisdictional scans to identify incentive-setting methodologies and best practices in energy efficiency programs, focusing on geographical similarity, market maturity, and ACEEE recognition. Research combined secondary data analysis with primary insights to inform ENS's program benchmarks and recommendations.

Program Financial Simulation To test the recommendations, a program financial simulation was conducted for both the Instant Savings and Custom programs. The current incentives were evaluated against multiple criteria, with a recommendation...

AI summary A financial simulation evaluated the Instant Savings and Custom programs' incentives against multiple criteria, assessing their appropriateness. The analysis aimed to test recommendations for these demand-side management initiatives under Nova Scotia's regulatory framework.

RETURN ON INVESTMENT For efficiency programs, return on investment is based on two general considerations: cost effectiveness and budget impact.

AI summary The analysis of return on investment for efficiency programs focuses on two key factors: cost effectiveness and budget impact. These considerations determine the financial viability and feasibility of implementing such programs.

Cost Effectiveness Cost effectiveness is usually determined using a benefit-cost analysis which explicitly or implicitly compares the cost of energy efficiency to other electricity or natural gas supply resources and may include other cons...

AI summary Cost effectiveness is evaluated via benefit-cost analysis, comparing energy efficiency costs to supply resources and considering factors like environmental benefits. Common tests include Total Resource Cost (TRC) and Program Administrator Cost (PAC).

Budget Impact Program administrators are not only affected by cost effectiveness concerns when determining their return on investment. From CLEAResult's experience, in several jurisdictions, the program budget is usually the limiting facto...

AI summary Program administrators face budget constraints that often limit expenditures more than cost-effectiveness. Budget impact must be evaluated alongside cost-effectiveness, considering per-unit, per-participant, and total impacts. Incentives may be cost-effective but may not fit within program budgets, necessitating ROI criteria that set ceilings but often result in lower incentive values.

SIZE, STRUCTURE AND CLIMATE Vermont, Maine and National Grid in Massachusetts all serve a similar population to ENS's programs. In terms of budget magnitudes, stock and sales data, and electricity savings targets, their similarity in size...

AI summary Nova Scotia's energy efficiency programs are compared to jurisdictions like Vermont, Maine, and Massachusetts due to similar population sizes, climates, and market structures. Other regions with distinct systems (e.g., BC Hydro, NYSERDA) were included for diverse perspectives, while Union Gas provided a natural gas-focused analysis.

Incentive Setting Best Practices Methodology Research and Engagement Customer Technology Supply Chain Consolidation of Findings Incentive Thresholds Other Considerations Data Analysis Participation Forecasts Cost-Effectiveness Testing Mode...

AI summary The document outlines best practices for incentive setting in energy efficiency, focusing on data analysis, cost-effectiveness testing, and implementation. Key organizations involved include the Nova Scotia Utility and Review Board (UARB) and the DSM Advisory Group (DSMAG), with methodologies informed by ACEEE and CEEA.

Table 3: Research Engagement Phase Research and Engagement Phase Cost Effectiveness Testing The cost effectiveness of measures, programs and portfolios should be tested to determine whether a modification in incentive or administration exp...

AI summary The document discusses the need to test the cost effectiveness of energy efficiency measures, programs, and portfolios to ensure they meet regulatory standards. It notes that all studied jurisdictions perform such testing, and some do it at specific stages.

COST EFFECTIVENESS AND AVOIDED COSTS At the portfolio level, cost effectiveness is guaranteed since the combination of savings targets and budget is lower than the cost effectiveness threshold (provided that the persistence of the energy s...

AI summary The document discusses cost effectiveness and avoided costs in Nova Scotia's Demand Side Management (DSM) programs. It outlines a Technology Research Cost (TRC) threshold of 1.0 for program measures, inclusion of program administration costs in TRC screening, and references strategies used in other jurisdictions like Energy Trust of Oregon. A study by Navigant Consulting is cited for DSM potential analysis.

SUMMARY OF RECOMMENDATIONS - 1. It is recommended that EfficiencyOne consider all of the general principles for incorporation into an incentive setting process. - CLEAResult has provided a documented, incentive setting process (that incorp...

AI summary The document recommends that EfficiencyOne adopt a documented incentive-setting process, update technology assumptions through research, implement TRM for cost-effectiveness metrics, develop a consolidated calculator for analysis, and evaluate current incentive levels via financial simulation. CLEAResult's methodology and tools are suggested for implementation.

6. What is the proposed incentive, forecasted participation and forecasted incentive expenditure? Ideally, the proposed incentive is supported by the customer and technology research, and is within the incentive screening thresholds identi...

AI summary The proposed incentive must align with customer and technology research, adhering to screening thresholds. Forecasted participation and expenditure are compared to current incentives, with historical performance influencing participation forecasts. Cost effectiveness screening is not explicitly recommended for financial impact analysis beyond quantifying PAC cost effectiveness.

Understand Financial Impacts EfficiencyOne conducts cost effectiveness testing using the TRC test. The TRC is calculated at the measure level to qualify measures, though some measures are included that do not pass the TRC test for strategi...

AI summary EfficiencyOne uses the TRC test for cost-effectiveness screening at both measure and program levels, though some measures are included despite not passing the TRC test for strategic reasons. The organization tracks financial impacts through program management and is implementing new software for better data tracking. Recommendations include improving granularity in tracking frequency and determining appropriate incentive screening thresholds.

updated, consistent with the recommendations in the General Principles section. Understand Supply Chain and Service Provider Considerations For the Custom Program, EfficiencyOne gains an understanding of the supply chain and service provid...

AI summary The document discusses how EfficiencyOne gains understanding of supply chain and service provider considerations through program management and evaluation. It also outlines how financial impacts are assessed through project screening, program management, and evaluation. CLEAResult recommends continuing current activities and implementing General Principles to support the program.

Program Evaluation During the program evaluation process, the energy savings assumptions and net-togross ratios are reviewed, and if required, they are updated. These inputs affect the cost effectiveness impact. Table 18: Business Energy R...

AI summary The program evaluation process involves reviewing and updating energy savings assumptions and net-to-gross ratios, which influence cost-effectiveness impacts. Table 18 outlines recommendations for the Business Energy Rebates Program.

Other Considerations for Business Energy Rebates Program From reviewing program operations, the Business Energy Rebates program tracks retail pricing through the application process. This allows program managers to understand if incentive...

AI summary The Business Energy Rebates program uses retail pricing tracking and cost-based incentive thresholds to ensure cost-effectiveness. Program managers emphasize ongoing monitoring of budgets and prices to maintain effectiveness. Challenges include difficulty aligning Instant Rebates with local avoided costs due to limited customer data availability.

For the Home Energy Assessment program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities During the program evaluation process, the energy savings assumptions and net-to-gross ratios...

AI summary CLEAResult recommends updating energy savings assumptions and net-to-gross ratios during the program evaluation process for the Home Energy Assessment program to ensure accurate cost effectiveness impact assessments.

Other Considerations for the Home Energy Assessment Program The Home Energy Assessment program recently introduced an updated incentive structure, which featured an increased incentive for the initial audit, and premiums associated with bu...

AI summary The Home Energy Assessment Program updated its incentive structure with higher initial audit incentives and bundled incentives to boost participation and savings. CLEAResult data suggests increased savings and lower unit costs, though effects of bundling are mixed with concurrent audit changes. Bundling mirrors retail strategies, potentially offsetting higher unit costs via increased savings. Personal energy planning services also enhanced savings, with potential for localized incentive zones tied to avoided costs.

Measure PAC of Current Incentive Level (including Program Administration Costs) Is PAC of Current Incentive Greater than Cost Effectiveness Incentive Level Threshold (including Program Administration Costs) ENERGY STAR® LED A Lamp 506.49 Y...

AI summary The table presents the Program Administration Cost (PAC) of current incentive levels and compares them to the cost effectiveness incentive level threshold for various energy efficiency measures. It indicates that none of the measures breach the threshold, implying that the incentives are cost-effective.

CUSTOM PROGRAM FINANCIAL SIMULATION For the Custom Program Retrofit track, the program financial simulation analysis included the following steps: - 1. Identify the average project parameters for the analysis; - 2. Determine an appropriate...

AI summary The Custom Program Retrofit track's financial simulation analysis involves five steps: identifying project parameters, setting thresholds for customer incentives, program budget, and cost effectiveness, and comparing current incentives to these thresholds to determine if adjustments are needed.

Measure Program Budget Incentive Threshold Current Program Budget Incentive Custom Project Retrofit Track $25,475 $24,106 Table 29: Program Budget Incentive Level Threshold for Average Project in Custom Retrofit Cost Effectiveness Incentiv...

AI summary The document presents a table outlining the Program Budget Incentive Threshold and Current Program Budget Incentive for the Custom Project Retrofit Track, with values of $25,475 and $24,106 respectively. It also references Table 29, which discusses the Cost Effectiveness Incentive Level Threshold for Average Project in Custom Retrofit.

Measure Energy Savings Persistence Cost Effectiveness Threshold Custom Project Retrofit Track 10 3.14 Custom Project Retrofit Track 15 4.50 Custom Project Retrofit Track 20 5.69 Table 30: Cost Effectiveness Incentive Level Threshold for Av...

AI summary The table and analysis discuss the cost effectiveness incentive level thresholds for the Custom Project Retrofit Track, noting that the Program Administration Cost (PAC) exceeds 4.9 for measures with energy savings persistence over 15 years. The break-even point is between 16-17 years of energy savings persistence, and EfficiencyOne is advised to consider this when evaluating individual project incentives.

Cost Effectiveness Testing In their conservation (CDM) plans, LDCs need to show portfolio cost effectiveness (TRC and PAC) if they are offering province-wide programs. If LDCs are offering local programs (only for their territory), those p...

AI summary LDCs must demonstrate cost effectiveness (TRC and PAC) for province-wide programs, while local programs require program-level effectiveness. The low-income sector exception allows a TRC of 0.7. The IESO oversees cost effectiveness for all programs.

Avoided Costs For electricity, the major categories of benefit are: - Avoided Capacity Costs - Avoided Energy Costs - Transmission and Distribution Costs - 15% Adder for additional societal benefits - o Environmental benefits - o Employmen...

AI summary The document outlines four major categories of benefits from avoided electricity costs: avoided capacity costs, avoided energy costs, transmission and distribution costs, and a 15% adder for societal benefits, including environmental, employment, and other societal advantages.

Costs Under the TRC-plus test include: - Costs incurred by program participants (incremental costs) - Costs of running the energy efficiency programs (delivery and administration costs)

AI summary The TRC-plus test encompasses incremental costs for program participants and delivery/administration costs for energy efficiency programs.

1. Market Research The process starts by performing both primary and secondary market research in order to determine the measure performance metrics and costs. The objective is to determine awareness, barriers and purchase decisions. Marke...

AI summary The process involves primary and secondary market research to assess measure performance metrics, costs, awareness, barriers, and purchase decisions. Factors like market penetration and technology age (e.g., new vs. widespread solutions) are evaluated.

3. Benchmarking Union Gas also reviews other jurisdictions and evaluates their measures and incentives relative to what is offered in other territories. The goal is to be relatively similar to other territories in their incentives. Other f...

AI summary Union Gas evaluates measures and incentives from other jurisdictions to align with similar territories, considering factors like incremental costs in their benchmarking process.

6. Benchmarking BC Hydro reviews other jurisdictions and evaluates their measures and incentives relative to what is offered in other territories. Other factors such as incremental costs are investigated. Benchmarking is usually performed...

AI summary BC Hydro evaluates measures and incentives from other jurisdictions through benchmarking, considering factors like incremental costs. The process involves direct contact with utilities to compare programs across territories.

COST EFFECTIVENESS REQUIREMENTS Total Resource Cost (TRC) is used by BC Hydro and the BCUC at the program level to evaluate performance. Programs must have a TRC of 1.0 or greater. There is an expectation of low-income programs. Internally...

AI summary BC Hydro and BCUC use Total Resource Cost (TRC) to evaluate programs, requiring a TRC of 1.0 or higher. Low-income programs are expected, and internal cost effectiveness tests like utility cost and ratepayer impact measure are also applied.

Cost Effectiveness Testing As detailed in D.14-10-046 8 , the CPUC has interpreted its mandate to deliver cost-effective energy efficiency and conservation programs as meaning that all energy efficiency portfolios of delivery agents should...

AI summary The CPUC mandates cost-effective energy efficiency programs, using Total Resource Cost (TRC) and Program Administration Cost (PAC) tests. California's Standard Practice Manual benchmarks energy efficiency integration, evaluating portfolios via TRC (net societal benefits) and PAC (program administrator costs). DEER database and E3's model support testing.

All California PAs must deliver energy efficiency portfolios which have a TRC and PAC greater than 1. Below is PG&E's historical cost effectiveness for its 2013 and 2014 program portfolio. PG&E 2013-2015 Incentive-to-Administrative Spendin...

AI summary This text outlines the requirement for California PAs to deliver energy efficiency portfolios with TRC and PAC greater than 1, and provides PG&E's historical cost effectiveness for its 2013 and 2014 program portfolio, including incentive-to-administrative spending ratios.

INCENTIVE LEVEL SETTING METHODOLOGY PG&E's Energy Efficiency Products organization was formed approximately six years ago in part to standardize and streamline the measures developed and marketed through PG&E's breadth of energy efficiency...

AI summary PG&E's Energy Efficiency Products organization standardizes energy efficiency measures and sets incentives based on market and technology trends. The process involves evaluating measures for technical merit and cost-effectiveness using the E3 model, with regulatory reporting requirements for changes exceeding 50% in incentive levels. The California Public Utility Commission focuses on portfolio cost-effectiveness, including total incentives and non-incentive costs.

11. Market Research PG&E staff will begin the incentive setting process by performing both primary and secondary market research in order to determine the measure performance metrics and costs. This will include holding interviews with the...

AI summary PG&E staff will conduct primary and secondary market research, including interviews with manufacturers and distributors, to determine measure performance metrics and costs. Results will be kept confidential to protect competitive information.

Northwest Power Plan 11 The Northwest Power & Conservation Council represents the regional power planning efforts of Idaho, Washington, Oregon and Montana. The Northwest Power Act requires that the Council produce a 20-year Power Plan each...

AI summary The Northwest Power & Conservation Council, representing Idaho, Washington, Oregon, and Montana, develops a 20-year Power Plan every five years. The 2016 Plan highlights energy efficiency as the least-cost resource, avoiding fuel price volatility and carbon risks. The Council prioritizes cost-effective energy efficiency to meet electricity needs while balancing costs for ratepayers and future capacity requirements.

COST EFFECTIVENESS TESTING & AVOIDED COSTS 14

AI summary The document focuses on cost-effectiveness testing and avoided costs in regulatory proceedings, referencing a footnote (14) for further details. Key entities include regulatory bodies, energy efficiency programs, and industry stakeholders involved in evaluating cost-effective energy solutions.

Cost Effectiveness - Electricity When evaluating cost effectiveness, the OPUC defined in Docket UM-551 that the following cost effectiveness tests are to be used: - Utility System Test - Societal Cost Test (similar to TRC) Programs and mea...

AI summary The Oregon Public Utility Commission (OPUC) defined cost effectiveness tests in Docket UM-551, including the Utility System Test and Societal Cost Test (similar to Total Resource Cost). Programs passing both tests qualify for Energy Trust Investment, with portfolio-level testing reported ex post.

Costs The OPUC has defined that the following elements be considered when determining the costs from the societal perspective 15 (i.e., Total Resource Cost): - 1. Total cost of efficiency measures and actions 16 , including costs to the En...

AI summary The OPUC outlines societal perspective costs for energy efficiency, including total measure costs, Energy Trust administrative expenses, and program management costs. Excluded are Oregon/Federal tax credits and non-energy-related program costs funded by agencies, as they are not part of the benefit-cost tests under PUC guidance.

Benefits (Avoided Costs) In the societal test, the Energy Trust will include the following benefits: - 1. The value of the electrical and/or gas energy saved based on the avoided cost forecasts of the utilities whose customers are served b...

AI summary The Energy Trust includes avoided costs, non-energy benefits, line losses, gas capacity benefits, and a 10% credit for energy efficiency. Benefits are based on PUC-approved forecasts and OPUC guidance, with proxies used for non-energy benefits until alternative methods are developed. Environmental costs are considered under OPUC guidance.

Portfolio vs. Measure Level Cost Effectiveness As mentioned above, cost effectiveness is calculated at both the measure and program levels. It is important to note that there are fundamental differences in what costs are included when test...

AI summary The document explains that cost effectiveness is evaluated at both measure and program levels. Measure-level analysis excludes administration and delivery costs, while program-level testing includes them to ensure total benefits exceed program costs. The Energy Trust requires programs to achieve a benefit-cost ratio greater than 1 for UCT and TRC tests.

Below are the cost effectiveness results which were calculated for each program as part of the Energy Trust's 2014 Annual Report. 19 Program Utility Cost Test Benefit Cost Ratio Societal (Total Resource Cost) Test Benefit Cost Ratio New Ho...

AI summary The Energy Trust's 2014 Annual Report presents cost effectiveness results for various energy efficiency programs, including New Homes and Products, Existing Homes, and New Buildings, with benefit-cost ratios ranging from 1.7 to 3.5 for utility and societal tests.

COST EFFECTIVENESS – NATURAL GAS The current market condition for natural gas prices (i.e., low price environment) has caused the Energy Trust and PUCs to reexamine gas measures over the last few years. The Energy Trust has been able to ca...

AI summary The Energy Trust and PUCs reevaluate natural gas measures due to low prices, referencing Order 94-950. Guidelines require a TRC ≥1.0 for gas efficiency portfolios, with exceptions for TRC 0.5-0.9. Measures below TRC 0.5 are excluded unless justified. This approach maintains program infrastructure and market momentum until gas prices rise.

Detailed Measure Development - •Identify technical guidelines and data, identify any data gaps and create research plan for gaps - •Stakeholder outreach - •Facilitation of crossprogram coordination - •Cost Effectiveness testing - •Draft Me...

AI summary The process involves identifying technical guidelines and data gaps, stakeholder outreach, cross-program coordination, cost-effectiveness testing, and drafting a Measure Approval Document (MAD). Measures with sufficient data and stakeholder support may be approved, while those with gaps may be piloted.

Measure Assumptions Document (MAD) What is a MAD: It is the decision of record determining measure cost effectiveness and authorizing use of a measure. The measure is clearly defined along with the conditions under which it is approved. Th...

AI summary The Measure Assumptions Document (MAD) is a regulatory decision defining energy efficiency measures, their cost-effectiveness, and approval conditions. It includes sections on validity, program scope, cost calculations, incentives, and technical details. Energy Trust engineering staff approve MADs after analysis by delivery contractors.

APPENDIX A: MEASURE DEVELOPMENT PROCESS

AI summary Appendix A outlines the Measure Development Process within a Nova Scotia regulatory proceeding, involving entities like the Nova Scotia Utility and Review Board (UARB) and the DSM Advisory Group (DSMAG). It references energy efficiency frameworks, cost methodologies, and stakeholder involvement in demand-side management (DSM) initiatives.

COST EFFECTIVENESS TESTING

AI summary The document section titled 'COST EFFECTIVENESS TESTING' is referenced, but no substantive content or analysis is provided in the text. Further details about cost-effectiveness methodologies, programs, or evaluations are not included in the excerpt.

Cost Effectiveness Requirements Cost effectiveness is evaluated at the program level by TRC. Fast track programs that were implemented early in the cycle had to score well above a TRC of 1.0. This was done to ensure that significant energy...

AI summary Cost effectiveness is evaluated using TRC at the program level. Fast track programs required a TRC above 1.0 to ensure significant energy savings, accounting for margins of error.

Avoided Supply Costs in TRC Calculation The benefits calculated in the TRC are the avoided supply costs. The avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution...

AI summary The TRC benefits are calculated as avoided supply costs, which include reductions in electric energy, natural gas, generation, transmission, and distribution capacity costs, valued at marginal cost during periods of load reduction.

NYSERDA ENERGY EFFICIENCY PROGRAM INCENTIVE AND COST EFFECTIVENESS POLICY

AI summary The document outlines NYSERDA's Energy Efficiency Program Incentive and Cost Effectiveness Policy, focusing on frameworks for evaluating and implementing energy efficiency initiatives. It emphasizes cost-effectiveness criteria, incentive structures, and alignment with broader energy goals such as Renewable Portfolio Standards (RPS) and the Reforming Energy Vision (REV). Key stakeholders include program administrators, local distribution companies (LDCs), and regulatory bodies.

Cost Effectiveness Testing Under the EEPS, NYSEDRA was required to conduct cost effectiveness testing at the project level. The TRC is used as the cost effectiveness test. Prior to the implementation of the EEPS, the TRC was applied at the...

AI summary Under the Energy Efficiency Portfolio Standard (EEPS), NYSERDA must conduct cost effectiveness testing using Total Resource Cost (TRC) at the project level. Previously, under the Clean Energy Fund (CEF), TRC was applied at the program level, and this will continue under CEF.

Avoided Costs The benefits calculated in the TRC are the avoided supply costs. For NYSERDA, the avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution capacity, va...

AI summary Avoided costs in the TRC encompass reductions in electric energy, natural gas, and grid infrastructure costs, valued at marginal cost during load reductions. NYSERDA calculates these benefits, with NY-ISO providing the avoided costs data.

Avoided Costs 2 Any updates to the avoided costs for Vermont are led by the PSB. Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics, which investigated the avoided e...

AI summary Vermont's avoided costs are updated by the PSB, with the last update in 2015 based on Synapse Energy Economics' report. Updates require board approval and are calculated regionally for New England. Key categories include avoided capacity/energy costs (linked to RPS), transmission/distribution costs, DRIPE, and CO2 emissions.

Vermont 2013-2015 Cost Effectiveness Results SCT 2.66 PAC 3.05 Based on analysis of the 2015-2017 program targets and budgets, it is assumed that the cost effectiveness projections will be slightly decreased, compared to historical perform...

AI summary The document presents cost effectiveness results for Vermont's programs from 2013 to 2015, showing SCT at 2.66 and PAC at 3.05. It also notes that projections for 2015-2017 may be slightly lower than historical performance.

TRC and PACT Both TRC and PACT tests are presented in Efficiency Maine's annual reports. However, only TRC is used to evaluate performance. PACT is used for program planning/stakeholder relationships. TRC and PACT by Efficiency Maine is ba...

AI summary Both TRC and PACT are used by Efficiency Maine, with TRC for performance evaluation requiring a net savings ratio over 1.0, while PACT is used for planning and stakeholder relations. The TRC methodology is based on a 2008 National Action Plan resource.

Avoided Costs TRC: The benefits included are the avoided costs of energy. Efficiency Maine participated in the AESC Study Group, which partnered with Tabors Caramanis Rudkevich for a study on marginal energy supply costs that are avoided d...

AI summary The document discusses avoided costs from energy efficiency programs, focusing on reductions in energy resources, transmission infrastructure, and wholesale market costs. Efficiency Maine uses the AESC Study Group's findings on marginal energy supply costs for cost-effectiveness testing. Key components include avoided retail capacity, energy, RPS compliance costs, and gas production reductions.

Cost Effectiveness Testing As per the 2016-2018 plan, there are three key elements to cost effectiveness: - 1. Each program is supposed to be screened for cost effectiveness. For Massachusetts, the TRC test is used for screening. There is...

AI summary The 2016-2018 plan outlines three cost effectiveness criteria: screening programs using the TRC test (used in Massachusetts), minimizing program administration costs, and employing competitive procurement. Justification is required for non-cost-effective elements, and future cost-effectiveness must be addressed.

Avoided Costs Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics which investigated the avoided energy supply costs for New England. Before any changes are implement...

AI summary Avoided costs in New England are periodically updated, last revised in 2015 via Synapse Energy Economics' report. Calculations cover the entire region, split into areas like Massachusetts. Key categories include avoided capacity/energy costs (linked to RPS compliance), transmission/distribution costs, DRIPE, and CO2 emissions costs. Changes require board approval.

Customer Class Breakdown There are the following types of customers: - Residential - Commercial 183 102 Avoided Costs - [http://ma-eeac.org/wordpress/wp-content/uploads/2015-Regional-Avoided-Cost-Study-](http://ma-eeac.org/wordpress/wp-con...

AI summary The document categorizes customers into Residential and Commercial classes. It references a 2015 Regional Avoided Cost Study by MA-EEAC, accessible via a provided URL, which may relate to cost methodologies in energy efficiency programs.

National Grid 2013-2015 Savings and Expenditure Sector Savings (MWh) Total Expenditure ($) Incentive Expenditure ($) Residential 805,157 $290,842,401 $222,323,354 Low Income 58,040 $85,604,742 $68,824,752 Commercial & Industrial 919,015 $3...

AI summary The text presents data on National Grid's energy savings and expenditures from 2013 to 2015 across residential, low-income, and commercial & industrial sectors. It includes savings in MWh, total expenditure, and incentive expenditure for each sector. Additionally, it provides ratios of incentive to total program spending and spending per kWh for each sector, highlighting cost-effectiveness considerations.

National Grid's cost effectiveness results for 2013-2015 are as follows: National Grid 2013-2015 Cost Effectiveness Results Expected TRC 3.69105 Actual TRC Not Available FUTURE TARGETS

AI summary The document outlines National Grid's cost effectiveness results for the years 2013-2015, showing the expected Total Resource Cost (TRC) as 3.69105, while the actual TRC is not available. The section also mentions future targets, though no details are provided.

Outputs - Total Gross Energy Savings; - Total Gross Demand Reduction; - Total Net Energy Savings; - Total Net Demand Reduction; - TRC Benefits; - TRC Costs; - TRC Net Benefits; - TRC Ratio; - PAC Benefits; - PAC Costs; - PAC Net Benefits;...

AI summary The document outlines key performance metrics for evaluating energy efficiency programs, including total energy and demand savings, TRC and PAC cost-benefit analyses, and levelized unit costs, which are essential for assessing program effectiveness and economic viability.

Inputs - Incentive screening threshold in terms of cost to the customer (From Measure Library); - Incentive screening threshold in terms of the program budget (From Measure Library); - Incentive screening threshold in terms of cost effecti...

AI summary The document outlines key inputs for incentive screening in energy programs, including cost thresholds to customers, program budget limits, cost-effectiveness criteria, sector classifications, delivery channels, and financial impact assessments using a Cost Effectiveness Calculator.

900 active programs across North America, major themes and principles could be identified that were employed by all jurisdictions in their incentive level setting processes. These principles include: - 1. Assess and account for customer mo...

AI summary The document reviews EfficiencyOne's incentive-setting approach in Nova Scotia, aligning with general principles like customer motivation assessment, technology analysis, and financial impact evaluation. While EfficiencyOne's methods are deemed aligned with comparable jurisdictions, improvements are recommended. Four programs (Instant Savings, Custom, Business Energy Rebates, Home Energy Assessment) are analyzed, with suggestions to refine methodologies further.

Program Financial Simulation To test the recommendations, a program financial simulation was conducted for both the Instant Savings and Custom programs. The current incentives were evaluated against multiple criteria, with a recommendation...

AI summary A program financial simulation was conducted for Instant Savings and Custom programs to evaluate current incentives against multiple criteria, resulting in recommendations regarding their appropriateness.

Participant Cost Test In evaluating a participant's purchase decision from a financial perspective, the PC test is a useful analysis to deploy. It assesses all of the direct financial considerations that a participant faces in making a pur...

AI summary The Participant Cost Test (PC test) evaluates financial considerations in purchase decisions by comparing financial benefits against costs. It focuses on direct financial factors to determine if benefits outweigh costs for participants.

Technology Research Technology research is essential when identifying participant perceived value as well as completing other analysis associated with incentive setting. The three forecasts that need to be developed are: Market price; - Te...

AI summary Technology research is critical for setting incentives, requiring analysis of market price, technology penetration, and performance. Factors like upfront costs, labor, and maintenance are considered, along with technology evolution over short-to-long term. This informs energy baselines and cost-effectiveness calculations, typically reviewed during the Technical Reference Manual (TRM) update process.

RETURN ON INVESTMENT The determination of the return on investment is an evaluation of factors from the program administrator's and broader society's perspective. For efficiency programs, return on investment is based on two general consid...

AI summary The evaluation of return on investment considers both cost effectiveness and budget impact for efficiency programs, assessed from the perspectives of program administrators and broader society. These factors determine the overall value and financial implications of implementing such programs.

Cost Effectiveness Cost effectiveness is usually determined using a benefit-cost analysis which explicitly or implicitly compares the cost of energy efficiency to other electricity or natural gas supply resources and may include other cons...

AI summary The section discusses methods for determining cost effectiveness, including benefit-cost analysis, Total Resource Cost (TRC), Program Administrator Cost (PAC) tests, and unit costs based on lifetime energy savings. These methods assess the economic viability of energy efficiency programs compared to other energy supply resources.

Table 4: Cost Effectiveness Tests and Relationship to Incentive Setting from a Return on Investment Perspective Cost Effectiveness Test General Description and Features Implication for Incentive Setting The TRC is an evaluation of the tota...

AI summary The document outlines the Total Resource Cost (TRC) as a cost-effectiveness test that evaluates the total benefits (energy and non-energy) against the total costs, including program administration and participant costs. The TRC does not directly include incentives but accounts for them as a subset of participant costs.

THEORETICAL THRESHOLDS FOR INCENTIVES Based on the return on investment criteria as well as perceived value considerations, there are three theoretical thresholds for incentives that are based on quantitative analysis: - 1. Customer Cost -...

AI summary The document outlines three theoretical thresholds for incentives based on return on investment and perceived value: Customer Cost, PAC Benefits (Cost Effectiveness), and Budget. These thresholds are derived from quantitative analysis and guide incentive structures in regulatory proceedings.

PAC Benefits (Cost Effectiveness) Threshold The PAC is the cost effectiveness test that reflects a program administrator's financial expenditure for a measure, program or portfolio. It is calculated by dividing the PAC benefits, which are...

AI summary The PAC Benefits (Cost Effectiveness) Threshold evaluates program cost-effectiveness by dividing avoided supply/distribution costs (benefits) by program costs (incentives and overhead). Incentives should not exceed PAC benefits adjusted for overhead. Jurisdictions often require a minimum PAC of 1.0, with higher targets (e.g., 2.0) limiting incentives to 50% of benefits.

JURISDICTION IDENTIFICATION AND SELECTION The selected jurisdictions were as follows: - Ontario (IESO); - Ontario (Union Gas); - British Columbia (BC Hydro); - California (PG&E); - Oregon (Energy Trust of Oregon); - Washington (Energy Trus...

AI summary The document lists selected jurisdictions for comparison, including Ontario, British Columbia, California, Oregon, Washington, New York, Vermont, Maine, and Massachusetts, each with specific energy organizations. Selection criteria include being best-in-class, similar size, market structure, policy environment, program delivery, and climate to Nova Scotia.

Research and Engagement Phase in benchmark jurisdictions (for new incentives)  Develop target budget and cost effectiveness thresholds

AI summary The text outlines a phase focused on research and engagement, including the development of target budgets and cost effectiveness thresholds in benchmark jurisdictions for new incentives.

COST EFFECTIVENESS AND AVOIDED COSTS At the portfolio level, cost effectiveness is guaranteed since the combination of savings targets and budget is lower than the cost effectiveness threshold (provided that the persistence of the energy s...

AI summary Nova Scotia's DSM program ensures portfolio-level cost effectiveness by maintaining savings targets and budgets below the cost threshold. ENS applies a TRC cutoff of 1.0 per program, including program administration costs in TRC screening. Non-compliant measures may be included for market transformation. Other jurisdictions sometimes exclude administration costs during measure-level testing.

SUMMARY OF RECOMMENDATIONS - 1. It is recommended that EfficiencyOne consider all of the general principles for incorporation into an incentive setting process. - CLEAResult has provided a documented, incentive setting process (that incorp...

AI summary The summary recommends that EfficiencyOne adopt a documented incentive-setting process, update technology assumptions through research, implement a TRM approach for cost-effectiveness metrics, develop a consolidated calculator for analysis, and conduct financial simulations of current incentives to evaluate their levels.

GENERAL PRINCIPLES FOR INCENTIVE RATE SETTING Based on CLEAResult's experience and research on best practices, it is recommended that any incentive level setting methodology should include the following general principles to understand: -...

AI summary The text outlines five general principles for incentive rate setting, emphasizing customer motivations, technology savings, supply chain considerations, financial impacts, and jurisdictional benchmarking. These recommendations are based on CLEAResult's research and experience in best practices for incentive methodologies.

TECHNOLOGY RESEARCH Technology research can provide both the basis for the value of the incentive investment through understanding the energy savings and it can provide insight into how often the incentive should be reviewed. It is very im...

AI summary The document outlines parameters for evaluating energy efficiency incentives, including technology penetration, costs, and energy savings. It emphasizes the importance of regular TRM updates and program evaluations to adjust incentives based on market conditions and cost-effectiveness, particularly when efficient technology penetration exceeds 50%.

6. What is the proposed incentive, forecasted participation and forecasted incentive expenditure? Ideally, the proposed incentive is supported by the customer and technology research, and is within the incentive screening thresholds identi...

AI summary The proposed incentive must align with customer and technology research, and adhere to screening thresholds. Forecasted participation and expenditure are determined using historical performance and compared to current incentives. Cost-effectiveness screening is not explicitly recommended for financial impact analysis, focusing instead on lifetime energy savings for PAC cost-effectiveness assessments.

Understand Financial Impacts EfficiencyOne conducts cost effectiveness testing using the TRC test. The TRC is calculated at the measure level to qualify measures, though some measures are included that do not pass the TRC test for strategi...

AI summary EfficiencyOne uses the TRC test for cost-effectiveness screening of energy efficiency measures and programs. It tracks financial impacts through program management and is implementing a new software system for better data tracking. Recommendations include improving macro-level budget understanding, setting incentive thresholds, and increasing tracking granularity.

For the Instant Savings Program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities Understand Financial Impacts For Instant Savings, EfficiencyOne gains an understanding of financial...

AI summary CLEAResult recommends continuing current activities for the Instant Savings Program, including program evaluation, planning, and financial analysis. These activities ensure cost-effectiveness and compliance with regulatory requirements such as TRC of ≥1.0. Incentive levels are not adjusted during campaigns due to the six-month notice requirement for retailers.

Principles section. Understand Supply Chain and Service Provider Considerations For the Custom Program, EfficiencyOne gains an understanding of the supply chain and service provider considerations through: 1. Ongoing Program Management and...

AI summary The document discusses how EfficiencyOne understands supply chain and service provider considerations through program management and evaluation, and how it assesses financial impacts via project screening, program management, and evaluation. CLEAResult recommends continuing current activities and implementing general principles to support the program.

For the Business Energy Rebates program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities During the program evaluation process, the energy savings assumptions and net-to gross ratio...

AI summary CLEAResult recommends updating energy savings assumptions and net-to-gross ratios during the program evaluation process for the Business Energy Rebates program, as these inputs significantly affect cost-effectiveness.

Other Considerations for Business Energy Rebates Program From reviewing program operations, the Business Energy Rebates program tracks retail pricing through the application process. This allows program managers to understand if incentive...

AI summary The Business Energy Rebates program monitors retail pricing and uses cost to the customer as an incentive screening threshold. High PAC is forecasted with continued monitoring ensuring effective incentive levels. However, the Instant Rebates stream lacks customer data, complicating alignment with local avoided costs.

For the Home Energy Assessment program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities During the program evaluation process, the energy savings assumptions and net-to-gross ratios...

AI summary CLEAResult recommends updating energy savings assumptions and net-to-gross ratios during the program evaluation process for the Home Energy Assessment program, as these inputs affect cost effectiveness and may require adjustments such as incentive level changes and introduction of new measures.

Other Considerations for the Home Energy Assessment Program The Home Energy Assessment program recently introduced an updated incentive structure, which featured an increased incentive for the initial audit, and premiums associated with bu...

AI summary The Home Energy Assessment Program updated its incentive structure, increasing initial audit incentives and introducing bundling premiums to boost participation and savings. CLEAResult data suggests bundling may improve savings and lower delivery costs, though effects are hard to isolate due to concurrent changes. Bundling is framed as a cost-effective strategy for customer acquisition, and personal energy planning services are credited with enhancing project savings. The text also notes potential for incentive zones aligned with local avoided costs.

INSTANT SAVINGS PROGRAM FINANCIAL SIMULATION For the Instant Savings Program, the program financial simulation analysis included the following six steps for each measure: - 1. Identify the current (2015) participation and incentive level;...

AI summary The Instant Savings Program financial simulation analysis outlines six steps to evaluate incentive levels: identifying participation, determining market penetration, setting cost-to-customer, program budget, and cost-effectiveness thresholds, and comparing current incentives to these thresholds. Parameters for measures were obtained from EfficiencyOne.

Cost Effectiveness Incentive Level Threshold EfficiencyOne has a PAC target of 1.9 for this program. For the calculation, it is assumed that program administration costs are 30 percent of total expenditure, which leaves the incentive costs...

AI summary EfficiencyOne's PAC target of 1.9 for its program involves two approaches: adjusting the threshold by excluding program administration costs (30% of total expenditure) or maintaining it by including measure-specific administration costs. CLEAResult recommends developing a more accurate cost-effectiveness calculator for incentive setting and program design.

Measure PAC of Current Incentive Level (including Program Administration Costs) Is PAC of Current Incentive Greater than Cost Effectiveness Incentive Level Threshold (including Program Administration Costs) ENERGY STAR® LED A Lamp 506.49 Y...

AI summary Table 29 presents the Program Assessment Criteria (PAC) for various energy efficiency measures, showing that the PAC of the current incentive level exceeds the cost effectiveness incentive level threshold for all listed measures, indicating that none of the measures breach the threshold.

CUSTOM PROGRAM FINANCIAL SIMULATION For the Custom Program Retrofit track, the program financial simulation analysis included the following steps: - 1. Identify the average project parameters for the analysis; - 2. Determine an appropriate...

AI summary The Custom Program Retrofit track's financial simulation analysis involved five steps: identifying average project parameters, determining cost-to-customer, program budget, and cost-effectiveness incentive thresholds, and comparing current incentives to these thresholds to assess required changes.

Measure Program Budget Incentive Threshold Current Program Budget Incentive Custom Project Retrofit Track $25,475 $24,106 Table 33: Program Budget Incentive Level Threshold for Average Project in Custom Retrofit Cost Effectiveness Incentiv...

AI summary The text presents a table outlining the Program Budget Incentive Threshold and Current Program Budget Incentive for the Custom Project Retrofit Track, with values of $25,475 and $24,106 respectively. It also references Table 33, which details the Cost Effectiveness Incentive Level Threshold for Average Project in Custom Retrofit.

Cost Effectiveness Testing In their conservation (CDM) plans, LDCs need to show portfolio cost effectiveness (TRC and PAC) if they are offering province-wide programs. If LDCs are offering local programs (only for their territory), those p...

AI summary LDCs must demonstrate portfolio cost effectiveness (TRC and PAC) for province-wide programs, while local programs require program-level cost effectiveness. Low-income programs can have a TRC of 0.7. The IESO oversees cost effectiveness for provincewide programs.

Avoided Costs For electricity, the major categories of benefit are: - Avoided Capacity Costs - Avoided Energy Costs - Transmission and Distribution Costs - 15% Adder for additional societal benefits - o Environmental benefits - o Employmen...

AI summary The text outlines four major categories of benefits for electricity: Avoided Capacity Costs, Avoided Energy Costs, Transmission and Distribution Costs, and a 15% adder for societal benefits, including environmental, employment, and other societal benefits.

1. Market Research The process starts by performing both primary and secondary market research in order to determine the measure performance metrics and costs. The objective is to determine awareness, barriers and purchase decisions. Marke...

AI summary The process involves primary and secondary market research to determine performance metrics, costs, awareness, barriers, and purchase decisions. Factors like market penetration and technology age (new vs. widespread solutions) are also evaluated.

3. Benchmarking Union Gas also reviews other jurisdictions and evaluates their measures and incentives relative to what is offered in other territories. The goal is to be relatively similar to other territories in their incentives. Other f...

AI summary Union Gas evaluates incentives and measures from other jurisdictions to align with industry standards, while considering factors like Incremental Equipment Costs. The goal is to maintain competitive and comparable incentive structures across territories.

6. Benchmarking BC Hydro reviews other jurisdictions and evaluates their measures and incentives relative to what is offered in other territories. Other factors such as Incremental Equipment Costs are investigated. Benchmarking is usually...

AI summary BC Hydro evaluates measures and incentives from other jurisdictions through benchmarking, considering factors like Incremental Equipment Costs. Benchmarking involves direct contact with utilities to compare programs across territories.

COST EFFECTIVENESS REQUIREMENTS Total Resource Cost (TRC) is used by BC Hydro and the BCUC at the program level to evaluate performance. Programs must have a TRC of 1.0 or greater. There is an expectation of low-income programs. Internally...

AI summary BC Hydro and BCUC require programs to have a Total Resource Cost (TRC) of 1.0 or greater. Additional internal cost-effectiveness tests, such as utility cost and ratepayer impact measures, are used. Low-income programs are expected to meet these criteria.

Calculating Cost effectiveness Cost effectiveness analysis is performed by looking at the stream of benefits and costs resulting from the DSM investment. Four metrics are calculated for each test: - 1. Benefit-cost ratio = PV (benefits) /...

AI summary The text outlines the calculation of cost effectiveness in demand-side management (DSM) investments through four metrics: benefit-cost ratio, net present value (NPV), and gross levelized cost per kilowatt-hour. These metrics assess the financial viability and efficiency of DSM initiatives.

Cost Effectiveness Testing As detailed in D.14-10-046 8 , the CPUC has interpreted its mandate to deliver cost-effective energy efficiency and conservation programs as meaning that all energy efficiency portfolios of delivery agents should...

AI summary The CPUC mandates cost-effective energy efficiency programs, evaluated via TRC and PAC tests. California's Standard Practice Manual and DEER database are benchmarks. E3 provides a portfolio model.

2013-2015 Total Portfolio $/kWh 2013 2014 2015 Gross Savings (kWh) 828,999,924 845,181,086 769,529,791 Spending $ 317,221,372 $ 365,056,021 $ 385,199,846 $/kWh $ 0.38 $ 0.43 $ 0.50 Excludes C&S,EM&V and On-Bill Financing expenses reported...

AI summary The table provides data on the 2013-2015 Total Portfolio \/kWh, including gross savings, spending, and \/kWh costs. It also includes PG&E's incentive-to-administrative spending ratios for the same period. The data is budgeted, not actual, and excludes certain expenses. The section titled 'Cost Effectiveness' suggests a focus on evaluating the efficiency of spending.

INCENTIVE LEVEL SETTING METHODOLOGY PG&E's Energy Efficiency Products organization was formed approximately six years ago in part to standardize and streamline the measures developed and marketed through PG&E's breadth of energy efficiency...

AI summary PG&E's Energy Efficiency Products organization standardizes energy efficiency measures and sets incentive levels using a structured process. The California Public Utility Commission (CPUC) regulates incentive changes, focusing on portfolio cost-effectiveness. PG&E employs the E3 Cost Effectiveness model and a 'gated' evaluation process (SPARC) to vet technologies, without requiring Total Resource Cost (TRC) or Program Administration Cost (PAC) thresholds above 1.

13. Incentive Rate Finalized Once the incremental measure cost is finalized, the Products team will set a standard incentive using the above considerations. Currently, PG&E is attempting to standardize this process in order to cascade the...

AI summary PG&E finalizes incentive rates for energy efficiency programs, standardizing processes for utility and third-party administered programs. Incentives are based on historical costs, payback periods (targeting under 5 years), and cost-effectiveness at the program level. Third-party programs may offer higher incentives ('kickers') to boost participation, while variable incentives (e.g., $/kWh) are updated less frequently.

Northwest Power Plan 11 The Northwest Power & Conservation Council represents the regional power planning efforts of Idaho, Washington, Oregon and Montana. The Northwest Power Act requires that the Council produce a 20-year Power Plan each...

AI summary The Northwest Power & Conservation Council, established under the Northwest Power Act, prioritizes energy efficiency as the least-cost resource in its 20-year Power Plan. The Plan emphasizes avoiding fuel price volatility, financial risks, and carbon reduction challenges while addressing regional capacity needs through cost-effective energy efficiency measures.

COST EFFECTIVENESS TESTING & AVOIDED COSTS 14

AI summary The section focuses on evaluating the cost-effectiveness of energy efficiency programs and calculating avoided costs, likely within the context of Nova Scotia's regulatory proceedings involving utility and energy management entities.

Cost Effectiveness - Electricity When evaluating cost effectiveness, the OPUC defined in Docket UM-551 that the following cost effectiveness tests are to be used: - Utility System Test - Societal Cost Test (similar to TRC) Programs and mea...

AI summary The OPUC, in Docket UM-551, outlines cost-effectiveness tests (Utility System Test and Societal Cost Test, similar to TRC) for qualifying energy programs. Measures passing both tests (benefit-cost ratio ≥1.0) are eligible for Energy Trust Investment, with portfolio-level cost-effectiveness reported ex post.

Costs The OPUC has defined that the following elements be considered when determining the costs from the societal perspective 15 (i.e., Total Resource Cost): - 1. Total cost of efficiency measures and actions 16 , including costs to the En...

AI summary The Oregon Public Utilities Commission (OPUC) outlines Total Resource Cost (TRC) components, including efficiency measures, administrative, and program management costs. Exclusions include Oregon/Federal tax credits and certain local program costs tied to non-energy factors. This aligns with PUC guidance on benefit-cost tests.

Benefits (Avoided Costs) In the societal test, the Energy Trust will include the following benefits: - 1. The value of the electrical and/or gas energy saved based on the avoided cost forecasts of the utilities whose customers are served b...

AI summary The Energy Trust includes benefits such as avoided energy costs, non-energy benefits, line losses, gas capacity benefits, and a 10% conservation credit under the Northwest Power Act. Benefits are based on utility forecasts approved by PUC and OPUC, with non-energy benefits using proxies until OPUC provides alternatives. Other environmental pollutants are considered only when specified by PUC.

Portfolio vs. Measure Level Cost Effectiveness As mentioned above, cost effectiveness is calculated at both the measure and program levels. It is important to note that there are fundamental differences in what costs are included when test...

AI summary The text discusses cost effectiveness analysis at measure and program levels. Measure-level testing excludes administration and delivery costs, while program-level testing includes them to ensure a benefit-cost ratio over 1 for UCT and TRC tests. The Energy Trust performs program-level testing to balance measure-level exclusions.

Below are the cost effectiveness results which were calculated for each program as part of the Energy Trust's 2014 Annual Report. 19 Program Utility Cost Test Benefit Cost Ratio Societal (Total Resource Cost) Test Benefit Cost Ratio New Ho...

AI summary The Energy Trust's 2014 Annual Report presents cost effectiveness results for various energy efficiency programs, showing benefit-cost ratios for both utility and societal (Total Resource Cost) tests across different program categories.

Detailed Measure Development - •Identify technical guidelines and data, identify any data gaps and create research plan for gaps - •Stakeholder outreach - •Facilitation of crossprogram coordination - •Cost Effectiveness testing - •Draft Me...

AI summary The process involves identifying technical guidelines, addressing data gaps, stakeholder engagement, cross-program coordination, cost-effectiveness testing, and drafting a Measure Approval Document (MAD). Measures with sufficient data and stakeholder support are promoted for approval, while those with gaps may be piloted.

Measure Assumptions Document (MAD) What is a MAD: It is the decision of record determining measure cost effectiveness and authorizing use of a measure. The measure is clearly defined along with the conditions under which it is approved. Th...

AI summary The Measure Assumptions Document (MAD) defines energy efficiency measures, their cost-effectiveness, and approval conditions. It outlines sections like Valid Date, Program, Market Segment, and Cost Effectiveness, with final assumptions and requirements. Energy Trust engineering staff approve MADs, though initial analysis often comes from Energy Trust delivery contractors.

Incentive Setting Considerations When setting a measure incentive the following components are some of the key considerations taken by the Energy Trust and their program delivery agents: - Relationship of incentive to measure Incremental E...

AI summary The Energy Trust considers factors like incremental equipment cost, market impact, and portfolio cost when setting incentives. Guidelines for LUEC are outlined, with performance measures set by OPUC. The process is seen as complex, requiring regular updates. Financial standards include 8% budget for administration.

Cost Effectiveness Requirements Cost effectiveness is evaluated at the program level by TRC. Fast track programs that were implemented early in the cycle had to score well above a TRC of 1.0. This was done to ensure that significant energy...

AI summary Cost effectiveness is evaluated at the program level using Total Resource Cost (TRC). Fast-track programs required scores above a TRC of 1.0 to ensure significant energy savings, accounting for margins of error.

Avoided Supply Costs in TRC Calculation The benefits calculated in the TRC are the avoided supply costs. The avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution...

AI summary The benefits calculated in the TRC are the avoided supply costs, including reductions in electric energy, natural gas, generation, transmission, and distribution capacity costs, valued at marginal cost during load reduction periods.

Costs in TRC Calculation The costs calculated in the TRC are costs paid by the program administrators and participants plus the increase in supply costs for any period when load is increased.

AI summary The Total Resource Cost (TRC) includes expenses incurred by program administrators and participants, as well as increased supply costs during periods of load growth. This calculation accounts for both administrative/participant expenditures and higher energy supply costs due to increased demand.

NYSERDA ENERGY EFFICIENCY PROGRAM INCENTIVE AND COST EFFECTIVENESS POLICY

AI summary NYSERDA's Energy Efficiency Program outlines incentives and cost-effectiveness policies for energy efficiency initiatives, focusing on program design and evaluation metrics.

Cost Effectiveness Testing Under the EEPS, NYSEDRA was required to conduct cost effectiveness testing at the project level. The TRC is used as the cost effectiveness test. Prior to the implementation of the EEPS, the TRC was applied at the...

AI summary Under the EEPS, NYSEDRA was required to conduct cost effectiveness testing at the project level using TRC. Prior to EEPS, TRC was applied at the program level under CEF, and will be again under CEF.

Avoided Costs The benefits calculated in the TRC are the avoided supply costs. For NYSERDA, the avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution capacity, va...

AI summary Avoided supply costs, calculated using the Total Resource Cost (TRC) method, include reductions in electric energy, natural gas, and distribution costs during load reductions. These costs are determined by the New York Independent System Operator (NY-ISO) on behalf of NYSERDA.

Previous Results (Savings, Expenditure, Cost Effectiveness) Year Electricity Savings Expenditure Cost Effectiveness 2013 Not Available Not Available Not Available 2014 Not Available Not Available Not Available 2015 Not Available Not Availa...

AI summary The text presents tables for 'Previous Results' and 'Future Targets' showing electricity savings, expenditure, and cost effectiveness from 2013 to 2018, with all data marked as 'Not Available'. It also references an 'Incentive Level Setting Methodology' section, which is not detailed in the provided text.

Avoided Costs 2 Any updates to the avoided costs for Vermont are led by the PSB. Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics, which investigated the avoided e...

AI summary Vermont's avoided costs are managed by the PSB, with the last update in 2015 using Synapse Energy Economics' report on New England's energy supply costs. Updates require board approval. Categories include avoided capacity/energy costs, transmission/distribution costs, DRIPE effects, and CO2 cost reductions, with RPS compliance impacting energy costs.

Utility Facts - Serves all of Vermont, other than Burlington Electric Department customers - Over 9,500 square miles - Services population of 500,000 - Funded through energy efficiency charge collected by participating electric utilities....

AI summary The utility serves all of Vermont except Burlington Electric Department customers, covering 9,500 square miles and 500,000 people. It is funded through an energy efficiency charge collected by participating utilities. A 2013 avoided costs report is referenced, highlighting energy efficiency initiatives.

Vermont 2013-2015 Cost Effectiveness Results SCT 2.66 PAC 3.05 Based on analysis of the 2015-2017 program targets and budgets, it is assumed that the cost effectiveness projections will be slightly decreased, compared to historical perform...

AI summary The analysis of the 2015-2017 program targets and budgets indicates that cost effectiveness projections may be slightly lower than historical performance.

MARKET STRUCTURE OVERVIEW The Efficiency Maine Trust Act came in effect in 2009 and is responsible for Efficiency Maine's inception as an independent Trust. Their purpose is to develop, plan, coordinate, and implement energy efficiency/alt...

AI summary The Efficiency Maine Trust Act (2009) established Efficiency Maine as an independent trust to implement energy efficiency programs. Key goals include weatherizing buildings, reducing peak load, and achieving cost-effective savings. The Maine Public Utilities Commission (MPUC) reviews triennial plans, approves budgets, and oversees program funding from utilities and markets. Energy efficiency is highlighted as the lowest-cost energy resource in Maine.

TRC and PACT Both TRC and PACT tests are presented in Efficiency Maine's annual reports. However, only TRC is used to evaluate performance. PACT is used for program planning/stakeholder relationships. TRC and PACT by Efficiency Maine is ba...

AI summary Efficiency Maine uses TRC (Total Resource Cost) for performance evaluation and PACT (Program Administrator Cost) for program planning and stakeholder engagement. TRC requires a net savings ratio above 1.0, while PACT is not used for performance testing. Both frameworks are based on a 2008 National Action Plan for Energy Efficiency report.

Avoided Costs TRC: The benefits included are the avoided costs of energy. Efficiency Maine participated in the AESC Study Group, which partnered with Tabors Caramanis Rudkevich for a study on marginal energy supply costs that are avoided d...

AI summary Efficiency Maine uses the AESC Study Group's findings on avoided costs from energy efficiency programs in New England for cost-effectiveness testing. The study, updated every three years, covers electricity and gas benefits, including reduced resource needs, infrastructure costs, and market prices.

Cost Effectiveness Testing As per the 2016-2018 plan, there are three key elements to cost effectiveness: - 1. Each program is supposed to be screened for cost effectiveness. For Massachusetts, the TRC test is used for screening. There is...

AI summary The 2016-2018 plan outlines three cost-effectiveness criteria: screening programs using the TRC test (Massachusetts), minimizing program administration costs, and employing competitive procurement. Non-cost-effective program elements require justification for future cost-effectiveness.

Avoided Costs Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics which investigated the avoided energy supply costs for New England. Before any changes are implement...

AI summary Avoided costs for New England's electricity were last updated in 2015 by Synapse Energy Economics, reviewed by the board, and categorized into benefits like avoided capacity and energy costs, transmission and distribution costs, and CO2 emissions reduction.

Customer Class Breakdown There are the following types of customers: - Residential - Commercial 99 Avoided Costs - [http://ma-eeac.org/wordpress/wp-content/uploads/2015-Regional-Avoided-Cost-Study-](http://ma-eeac.org/wordpress/wp-content/...

AI summary The document outlines two customer classes: Residential and Commercial. A footnote references a 2015 study on avoided costs by MA-EEAC, accessible via a provided URL. The study is cited but not detailed in the text.

National Grid's cost effectiveness results for 2013-2015 are as follows: National Grid 2013-2015 Cost Effectiveness Results Expected TRC 3.69 102 Actual TRC Not Available FUTURE TARGETS

AI summary National Grid's cost effectiveness results for 2013-2015 are presented, showing expected TRC as 3.69 but actual TRC is not available. The document also mentions future targets, though details are not provided.

2. Cost Effectiveness Calculator Section This section will take the inputs from the Measure Library section, combine them with the other inputs listed below, and output a cost effectiveness forecast. This will be used to determine the ince...

AI summary This section describes a cost effectiveness calculator that combines inputs from the Measure Library with additional data to produce a forecast. The output determines the incentive screening threshold based on cost effectiveness, guiding decisions on eligible programs or measures.

Outputs - Total Gross Energy Savings; - Total Gross Demand Reduction; - Total Net Energy Savings; - Total Net Demand Reduction; - TRC Benefits; - TRC Costs; - TRC Net Benefits; - TRC Ratio; - PAC Benefits; - PAC Costs; - PAC Net Benefits;...

AI summary The document outlines key output metrics for evaluating energy efficiency programs, including total energy and demand reductions, TRC (Total Resource Cost) and PAC (Program Administrator Cost) benefits and ratios, and levelized unit costs. These metrics support cost-benefit analysis and program performance evaluation.

Inputs - Incentive screening threshold in terms of Customer Cost (From Measure Library); - Incentive screening threshold in terms of the program budget (From Measure Library); - Incentive screening threshold in terms of cost effectiveness;...

AI summary The document outlines key inputs for evaluating energy efficiency programs, including incentive screening thresholds based on customer cost, program budget, and cost effectiveness, alongside sector-specific considerations, program delivery channels, and financial impact assessments using a cost effectiveness calculator.

EfficiencyOne will develop a consolidated calculator, per CLEAResult's recommendation. EfficiencyOne will leverage an existing program-specific cost-effectiveness calculator currently in use by the Custom Incentives program to expedite the...

AI summary EfficiencyOne is developing a consolidated calculator based on CLEAResult's recommendation, using an existing cost-effectiveness calculator from the Custom Incentives program to expedite the process. The calculator is expected to be completed by March 31, 2017.

Jurisdictional Scans CLEAResult undertook jurisdictional scans of various provincial and state utilities and energy efficiency agencies to: - 1) identify the incentive level setting methodologies and best practices in other jurisdictions;...

AI summary CLEAResult conducted jurisdictional scans to identify incentive-setting methodologies and best practices in energy efficiency programs, focusing on geographical similarity, market maturity, and program delivery mechanisms. Research combined primary and secondary data to benchmark Nova Scotia's Energy Nova Scotia (ENS) program against other jurisdictions, revealing multiple criteria for incentive design.

Cost Effectiveness Cost effectiveness is usually determined using a benefit-cost analysis which explicitly or implicitly compares the cost of energy efficiency to other electricity or natural gas supply resources and may include other cons...

AI summary Cost effectiveness is evaluated through benefit-cost analysis, comparing energy efficiency costs to supply resources. Common tests include Total Resource Cost (TRC) and Program Administrator Cost (PAC), which explicitly assess cost-effectiveness.

Budget Impact Program administrators are not only affected by cost effectiveness concerns when determining their return on investment. From CLEAResult's experience, in several jurisdictions, the program budget is usually the limiting facto...

AI summary The text emphasizes that program budgets, not just cost effectiveness, often limit expenditures in energy efficiency programs. While incentives may be cost-effective, they must align with budget constraints. Budget impact analysis should consider per-unit savings, per-participant costs, and total budget limits. ROI criteria set incentive ceilings but are often adjusted based on perceived value.

Participant Cost Test In evaluating a participant's purchase decision from a financial perspective, the PC test is a useful analysis to deploy. It assesses all of the direct financial considerations that a participant faces in making a pur...

AI summary The Participant Cost (PC) test evaluates whether financial benefits of a technology or service exceed costs from the participant's perspective. Benefits include incentives, tax credits, and utility savings, while costs cover purchase, installation, and maintenance. The test uses NPV with a discount rate and is reported as a benefits/costs ratio. A ratio above 1.0 indicates benefits outweigh costs, while below 1.0 suggests no payback, influencing incentive adjustments.

Technology Research Technology research is essential when identifying participant perceived value as well as completing other analysis associated with incentive setting. The three forecasts that need to be developed are: marketMarket price...

AI summary Technology research is crucial for assessing participant value and setting incentives, requiring analysis of market price, technology penetration, and performance. Factors like capital costs, labor, and maintenance are key, alongside long-term technology evolution. This data informs TRM updates and cost-effectiveness calculations from participant, administrator, and societal perspectives.

RETURN ON INVESTMENT The determination of the return on investment is an evaluation of factors from the program administrator's and broader society's perspective. For efficiency programs, return on investment is based on two general consid...

AI summary The document outlines that return on investment (ROI) for efficiency programs is evaluated from both the program administrator's and societal perspectives, focusing on cost effectiveness and budget impact as the two primary considerations.

Cost Effectiveness Cost effectiveness is usually determined using a benefit-cost analysis which explicitly or implicitly compares the cost of energy efficiency to other electricity or natural gas supply resources and may include other cons...

AI summary Cost effectiveness in energy efficiency is evaluated through benefit-cost analysis, comparing energy efficiency costs to supply resources. Key methods include Total Resource Cost (TRC) and Program Administrator Cost (PAC) tests, alongside unit cost analyses based on lifetime energy savings as indicators of cost-effectiveness.

Table 4: Cost Effectiveness Tests and Relationship to Incentive Setting from a Return on Investment Perspective Cost Effectiveness Test General Description and Features Implication for Incentive Setting The TRC is an evaluation of the tota...

AI summary The table outlines the Total Resource Cost (TRC) as a cost-effectiveness test, which evaluates the total utility and participant benefits compared to costs, excluding incentives directly but including them as a subset. It considers utility benefits, program administration costs, and participant costs, with benefits quantified as avoided supply and distribution costs and non-energy benefits.

THEORETICAL LIMITSTHRESHOLDS FOR INCENTIVES Based on the return on investment criteria as well as perceived value considerations, there are three theoretical limitsthresholds for incentives. that are based on quantitative analysis: - 1. Pe...

AI summary The document outlines three theoretical thresholds for incentives: Percentage of Customer Cost, PAC Benefits (Cost Effectiveness), and Budget. These thresholds are derived from quantitative analysis and considerations of return on investment and perceived value.

SIZE, STRUCTURE AND CLIMATE Vermont, Maine and National Grid in Massachusetts all serve a similar population to ENS's programs. In terms of budget magnitudes, stock and sales data, and electricity savings targets, their similarity in size...

AI summary The document compares ENS's programs with jurisdictions like Vermont, Maine, and National Grid, highlighting similar population sizes and structures. It contrasts ENS with diverse systems like BC Hydro and IESO to analyze incentive environments. Union Gas is included for natural gas insights, while Maine/Vermont/Massachusetts are selected for climate similarity to Nova Scotia, ensuring comparable HVAC and building technologies.

Research and Engagement Phase General Principle Definition Examples Identified Best Practice  Capture incentive rates used in benchmark jurisdictions (for new incentives)  Develop target budget and cost effectiveness thresholds

AI summary The text outlines a general principle related to research and engagement phases, emphasizing the capture of incentive rates from benchmark jurisdictions and the development of target budgets and cost effectiveness thresholds as best practices.

COST EFFECTIVENESS AND AVOIDED COSTS At the portfolio level, cost effectiveness is guaranteed since the combination of savings targets and budget is lower than the cost effectiveness threshold (provided that the persistence of the energy s...

AI summary ENS ensures portfolio-level cost effectiveness by setting a TRC threshold of 1.0 for programs, including PAC in TRC screening. Measures failing TRC may be included for market transformation. Administration costs are allocated via a unit-based adder, differing from other jurisdictions' approaches.

GENERAL PRINCIPLES FOR INCENTIVE RATE SETTING Based on CLEAResult's experience and research on best practices, it is recommended that any incentive level setting methodology should include the following general principles to understand: -...

AI summary CLEAResult recommends five principles for incentive rate setting, including customer motivations, technology savings, supply chain considerations, financial impacts, and jurisdictional benchmarking. These principles aim to ensure effective and equitable incentive methodologies.

Customer and Decision Basis for Program Budget Incentive Threshold Basis Absolute Limit Suggested Boundary/Ceiling Low Income Customer, Direct Install Model $/kWh $1.50/kWh $1.20/kWh Residential Customer, Small Purchase at Retailer $/kWh $...

AI summary The table outlines the incentive thresholds for various customer types and program models, specifying absolute limits and suggested boundaries for cost effectiveness. It addresses the question of acceptable incentive thresholds in terms of cost effectiveness.

6. What is the proposed incentive, forecasted participation and forecasted incentive expenditure? Ideally, the proposed incentive is supported by the customer and technology research, and is within the incentive screening thresholds identi...

AI summary The proposed incentive must align with customer and technology research and screening thresholds. Forecasted participation and expenditure are compared to current figures, with historical performance influencing participation forecasts. Cost effectiveness screening is not explicitly recommended for financial impact analysis beyond quantifying PAC benefits.

Understand Financial Impacts EfficiencyOne conducts cost effectiveness testing using the TRC test. The TRC is calculated at the measure level to qualify measures, though some measures are included that do not pass the TRC test for strategi...

AI summary EfficiencyOne uses the TRC test for cost-effectiveness screening at both measure and program levels, though some measures are included despite not passing the TRC test for strategic reasons. The organization tracks financial impacts through program management and is implementing a new data management system. Recommendations include improving tracking frequency and granularity.

For the Instant Savings Program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities Understand Financial Impacts For Instant Savings, EfficiencyOne gains an understanding of financial...

AI summary CLEAResult recommends continuing current activities for the Instant Savings Program, including program evaluation, planning, and financial analysis, while implementing general principles to support incentive level changes and new measures. Cost effectiveness is assessed using TRC and PAC, with regulatory requirements of TRC ≥1.0 at the program level.

Principles section. Understand Supply Chain and Service Provider Considerations For the Custom Program, EfficiencyOne gains an understanding of the supply chain and service provider considerations through: 1. Ongoing Program Management and...

AI summary The document discusses how EfficiencyOne gains an understanding of supply chain and service provider considerations through program management and evaluation. It also covers financial impacts through project screening, program management, and evaluation. CLEAResult recommends continuing current activities and expanding cost-effectiveness screening to include the Program Administrator Cost.

For the Business Energy Rebates program, CLEAResult has the following recommendations:  For the Business Energy Rebates Program, EfficiencyOne gains an understanding of especially for customer motivations and barriers through: underperfor...

AI summary CLEAResult provides recommendations for the Business Energy Rebates program, emphasizing the need for market research, ongoing program management, benchmarking, and evaluation. EfficiencyOne's approach includes understanding customer motivations, conducting research, and updating energy savings assumptions and net-to-gross ratios to ensure cost-effectiveness.

Other Considerations for Business Energy Rebates Program From reviewing program operations, the Business Energy Rebates program tracks retail pricing through the application process. This allows program managers to understand if incentive...

AI summary The Business Energy Rebates program monitors retail pricing to set appropriate incentive levels, relying on cost-to-customer thresholds. High Program Administrator Costs (PAC) are forecast but deemed manageable with active budget tracking. The Instant Rebates stream lacks customer data, complicating alignment with local avoided costs. Effective program oversight is emphasized to ensure cost-effectiveness.

For the Home Energy Assessment program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities During the program evaluation process, the energy savings assumptions and net-to-gross ratios...

AI summary CLEAResult recommends updating energy savings assumptions and net-to-gross ratios during the program evaluation process for the Home Energy Assessment program, as these inputs affect the cost effectiveness impact. The recommendations also include adjusting incentive levels and introducing new measures.

Other Considerations for the Home Energy Assessment Program The Home Energy Assessment program recently introduced an updated incentive structure, which featured an increased incentive for the initial audit, and premiums associated with bu...

AI summary The Home Energy Assessment Program introduced updated incentives with increased audit rewards and bundled incentives to boost participation and savings. Early data from CLEAResult suggests higher savings per home and lower delivery costs, though isolating bundling's impact is complex. Bundling is highlighted as a retail tactic to offset customer acquisition costs and align incentives with local avoided costs through premium/discount zones.

Program Financial Simulation Analysis

AI summary The document outlines a Program Financial Simulation Analysis, referencing Nova Scotia regulatory proceedings and energy efficiency initiatives. Key entities include regulatory bodies, energy efficiency programs, and technical methodologies for evaluating program costs and benefits.

Cost Effectiveness Incentive Level Threshold EfficiencyOne has a PAC target of 1.9 for this program. For the calculation, it is assumed that program administration costs are 30 percent of total expenditure, which leaves the incentive costs...

AI summary EfficiencyOne's PAC target of 1.9 is discussed with two approaches: adjusting based on administration costs (30% of expenditure) or keeping it fixed. CLEAResult's simplified calculator is noted, but a more accurate one is recommended for incentive setting and program design.

Measure Program Budget Incentive Threshold Current Program Budget Incentive Custom Project Retrofit Track $25,475 $24,106 Table 332933: Program Budget Incentive Level Threshold for Average Project in Custom Retrofit Cost Effectiveness Ince...

AI summary The table presents the Program Budget Incentive Threshold and Current Program Budget Incentive for the Custom Project Retrofit Track, highlighting a specific incentive level threshold for average projects in custom retrofit.

Cost Effectiveness Testing In their conservation (CDM) plans, LDCs need to show portfolio cost effectiveness (TRC and PAC) if they are offering province-wide programs. If LDCs are offering local programs (only for their territory), those p...

AI summary LDCs must demonstrate portfolio cost effectiveness (TRC and PAC) for province-wide programs, with local programs requiring program-level cost effectiveness. The low-income sector program allows a TRC of 0.7, and the IESO is responsible for maintaining cost effectiveness for provincewide programs.

Avoided Costs For electricity, the major categories of benefit are: - Avoided Capacity Costs - Avoided Energy Costs - Transmission and Distribution Costs - 15% Adder for additional societal benefits - o Environmental benefits - o Employmen...

AI summary The text outlines four major categories of benefits for electricity: Avoided Capacity Costs, Avoided Energy Costs, Transmission and Distribution Costs, and a 15% adder for societal benefits, including environmental, employment, and other societal benefits.

FUTURE TARGETS The Conservation First Framework covers the time period from 2015-2020. The province-wide budget for the six years is $2.2 billion, of which LDCs are provided with $1.8 billion. The IESO retains some funds for central servic...

AI summary The Conservation First Framework (CFF) for 2015-2020 includes a total budget of $2.2 billion, with $1.8 billion allocated to Local Distribution Companies (LDCs). The overall target for energy savings is 8.7 TWh, with LDCs responsible for 7 TWh annually. Each LDC must develop a CDM plan that aligns with budget and cost-effectiveness requirements.

1. Market Research The process starts by performing both primary and secondary market research in order to determine the measure performance metrics and costs. The objective is to determine awareness, barriers and purchase decisions. Marke...

AI summary The process involves primary and secondary market research to assess measure performance metrics, costs, awareness, barriers, and purchase decisions, considering market penetration and technology age (e.g., new vs. widespread solutions).

3. Benchmarking Union Gas also reviews other jurisdictions and evaluates their measures and incentives relative to what is offered in other territories. The goal is to be relatively similar to other territories in their incentives. Other f...

AI summary Union Gas evaluates measures and incentives in other jurisdictions to align with similar territories, considering factors like incremental equipment costs. The analysis aims to ensure competitive and comparable incentive structures across regions.

4. Incremental Equipment Cost Design Based on the market research and technology, Union will attempt to incentivize a portion of the incremental costIncremental Equipment Cost determined to motivate customers to implement. Typically, this...

AI summary The document outlines Union's strategy to incentivize 25-35% of incremental equipment costs to encourage customer implementation. Incremental costs are calculated as the difference between measure costs and standard costs for measures with base cases, or as full measure costs for those without.

COST EFFECTIVENESS REQUIREMENTS Total Resource Cost (TRC) is used by BC Hydro and the BCUC at the program level to evaluate performance. Programs must have a TRC of 1.0 or greater. There is an expectation of low-income programs. Internally...

AI summary BC Hydro and BCUC use Total Resource Cost (TRC) at the program level, requiring a TRC of 1.0 or greater. Low-income programs are expected, and other internal cost-effectiveness tests like utility cost and ratepayer impact measures are applied.

Calculating Cost effectiveness Cost effectiveness analysis is performed by looking at the stream of benefits and costs resulting from the DSM investment. Four metrics are calculated for each test: - 1. Benefit-cost ratio = PV (benefits) /...

AI summary The text outlines the calculation of cost effectiveness for Demand Side Management (DSM) investments using four metrics: benefit-cost ratio, net present value, and gross levelized cost. These metrics evaluate the stream of benefits and costs associated with DSM initiatives.

Cost Effectiveness Testing As detailed in D.14-10-046 8 , the CPUC has interpreted its mandate to deliver cost-effective energy efficiency and conservation programs as meaning that all energy efficiency portfolios of delivery agents should...

AI summary The CPUC mandates cost-effective energy efficiency programs using Total Resource Cost (TRC) and Program Administration Cost (PAC) tests. California's Standard Practice Manual guides evaluation, with TRC measuring societal net benefits and PAC focusing on program administrator costs. The DEER database and E3's model are used for testing.

INCENTIVE LEVEL SETTING METHODOLOGY PG&E's Energy Efficiency Products organization was formed approximately six years ago in part to standardize and streamline the measures developed and marketed through PG&E's breadth of energy efficiency...

AI summary PG&E's Energy Efficiency Products organization standardizes energy efficiency measures and evaluates new technologies using a structured process (SPARC) to set appropriate incentive levels. The process involves the E3 Cost Effectiveness model and ensures alignment with market trends while maintaining portfolio-level cost effectiveness. The California Public Utilities Commission (PUC) focuses on overall program cost effectiveness, including incentives and non-incentive costs.

13. Incentive Rate Finalized Once the incremental measure cost is finalized, the Products team will set a standard incentive using the above considerations. Currently, PG&E is attempting to standardize this process in order to cascade the...

AI summary PG&E is standardizing incentive rates for its programs and third-party administrators, using historical costs, payback periods, targeted incentives, and program-level cost effectiveness. Incentives are updated less frequently, with the last update three years ago.

Northwest Power Plan 11 The Northwest Power & Conservation Council represents the regional power planning efforts of Idaho, Washington, Oregon and Montana. The Northwest Power Act requires that the Council produce a 20-year Power Plan each...

AI summary The Northwest Power & Conservation Council, under the Northwest Power Act, produces a 20-year Power Plan every five years. The 2016 Plan highlights energy efficiency as the least-cost resource, avoiding fuel price volatility and carbon risks, and meeting future capacity needs. The Council prioritizes cost-effective energy efficiency to balance ratepayer costs with capacity requirements.

Cost Effectiveness - Electricity When evaluating cost effectiveness, the OPUC defined in Docket UM-551 that the following cost effectiveness tests are to be used: - Utility System Test - Societal Cost Test (similar to TRC) Programs and mea...

AI summary The OPUC defined in Docket UM-551 that cost effectiveness for electricity programs requires passing both the Utility System Test and Societal Cost Test (similar to TRC). Programs meeting these criteria qualify for Energy Trust Investment, with portfolio-level testing reported ex post.

Costs The OPUC has defined that the following elements be considered when determining the costs from the societal perspective 15 (i.e., Total Resource Cost): - 1. Total cost of efficiency measures and actions 16 , including costs to the En...

AI summary The OPUC outlines societal perspective costs for energy efficiency, including Total Resource Cost (TRC), which encompasses efficiency measure costs, Energy Trust administrative expenses, and program management costs. Tax credits and certain administrative costs are excluded, aligning with PUC guidance on benefit-cost tests.

Benefits (Avoided Costs) In the societal test, the Energy Trust will include the following benefits: - 1. The value of the electrical and/or gas energy saved based on the avoided cost forecasts of the utilities whose customers are served b...

AI summary The Energy Trust includes benefits like avoided energy costs, non-energy benefits using proxies, line losses, and gas capacity improvements in its societal test. Regulatory bodies like PUC and OPUC approve these methods, with a 10% credit for energy efficiency under the Northwest Power Act. Environmental benefits, such as reduced carbon emissions, are also considered.

Portfolio vs. Measure Level Cost Effectiveness As mentioned above, cost effectiveness is calculated at both the measure and program levels. It is important to note that there are fundamental differences in what costs are included when test...

AI summary The document explains that cost effectiveness is evaluated at both measure and program levels. Measure-level testing excludes administration and delivery costs, focusing on measure-specific costs, while program-level testing includes these costs to ensure total benefits exceed total program costs. The Energy Trust conducts both approaches, requiring programs to achieve a benefit-cost ratio above 1 for UCT and TRC tests.

Below are the cost effectiveness results which were calculated for each program as part of the Energy Trust's 2014 Annual Report. 19 Program Utility Cost Test Benefit Cost Ratio Societal (Total Resource Cost) Test Benefit Cost Ratio New Ho...

AI summary The document presents cost effectiveness results for various energy efficiency programs from the Energy Trust's 2014 Annual Report, including benefit-cost ratios from both the Utility Cost Test and the Societal (Total Resource Cost) Test.

COST EFFECTIVENESS – NATURAL GAS The current market condition for natural gas prices (i.e., low price environment) has caused the Energy Trust and PUCs to reexamine gas measures over the last few years. The Energy Trust has been able to ca...

AI summary The Energy Trust and PUCs reevaluate natural gas measures due to low prices, referencing Order 94-950. Guidelines require a TRC ≥1.0 for gas efficiency portfolios, with exceptions for TRC 0.5-0.9 and removal for TRC <0.5. This approach maintains program infrastructure and market momentum until gas prices rise.

Detailed Measure Development - •Identify technical guidelines and data, identify any data gaps and create research plan for gaps - •Stakeholder outreach - •Facilitation of crossprogram coordination - •Cost Effectiveness testing - •Draft Me...

AI summary The process outlines steps for developing energy efficiency measures, including identifying technical guidelines, stakeholder engagement, cross-program coordination, cost-effectiveness testing, and drafting a Measure Approval Document (MAD). Measures with sufficient data and stakeholder support may proceed to approval, while those with gaps may be piloted.

Measure Assumptions Document (MAD) What is a MAD: It is the decision of record determining measure cost effectiveness and authorizing use of a measure. The measure is clearly defined along with the conditions under which it is approved. Th...

AI summary The Measure Assumptions Document (MAD) is a regulatory decision approving energy measures, detailing their cost-effectiveness, and outlining approval conditions. It includes sections like scope, program eligibility, cost calculations, and requirements. Energy Trust delivery contractors conduct analyses, but all MADs are approved by Energy Trust engineering staff.

Incentive Setting Considerations When setting a measure incentive the following components are some of the key considerations taken by the Energy Trust and their program delivery agents: - Relationship of incentive to measure incremental c...

AI summary The Energy Trust considers factors like incremental costs, market impact, and portfolio cost effectiveness when setting incentives. They use guidelines for LUEC and performance measures set by Oregon's OPUC, with specific targets for utilities like PGE and PacifiCorp. Regular updates to incentives are recommended as markets evolve.

APPENDIX A: MEASURE DEVELOPMENT PROCESS

AI summary The appendix outlines the process for developing energy efficiency measures, referencing regulatory bodies, technical manuals, and cost methodologies. It includes acronyms related to energy efficiency programs, cost calculations, and regulatory frameworks in Nova Scotia and other jurisdictions.

2010 $2.046.E99 2011 $3,046,588 2012 2013 $8,066,906 $4,748,800 $25,945,436 $12,790,000 $6,963,628 2014 $6,000,900 φ4,740,000 $25,945,430 $12,790,000 φ0,903,026 2015 Figure 464546 : Electric Savings Result 99 Program Names (Savings in MWh)...

AI summary The text presents tables showing electric and gas savings results from various programs between 2009 and 2015. It includes data on accumulated savings, program names, and specific savings by program type and year. The section also mentions 'Cost Effectiveness Testing,' indicating a focus on evaluating the financial performance of these programs.

Cost Effectiveness Requirements Cost effectiveness is evaluated at the program level by TRC. Fast track programs that were implemented early in the cycle had to score well above a TRC of 1.0. This was done to ensure that significant energy...

AI summary Cost effectiveness is evaluated using Total Resource Cost (TRC) at the program level. Fast-track programs implemented early required TRC scores above 1.0 to ensure significant energy savings, accounting for error margins.

Avoided Supply Costs in TRC Calculation The benefits calculated in the TRC are the avoided supply costs. The avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution...

AI summary The Total Resource Cost (TRC) calculation focuses on avoided supply costs, encompassing reductions in electric energy, natural gas, generation, transmission, and distribution capacity costs. These costs are valued at marginal cost during periods of load reduction.

Costs in TRC Calculation The costs calculated in the TRC are costs paid by the program administrators and participants plus the increase in supply costs for any period when load is increased.

AI summary The Total Resource Cost (TRC) calculation includes costs borne by program administrators and participants, as well as increased supply costs during periods of load growth. This approach accounts for both direct program expenses and indirect impacts on supply-side costs.

NYSERDA ENERGY EFFICIENCY PROGRAM INCENTIVE AND COST EFFECTIVENESS POLICY

AI summary The document outlines NYSERDA's Energy Efficiency Program Incentive and Cost Effectiveness Policy, focusing on evaluating energy efficiency initiatives through cost-effectiveness criteria, program administration, and technical reference methodologies.

Cost Effectiveness Testing Under the EEPS, NYSEDRA was required to conduct cost effectiveness testing at the project level. The TRC is used as the cost effectiveness test. Prior to the implementation of the EEPS, the TRC was applied at the...

AI summary Under the Energy Efficiency Portfolio Standard (EEPS), NYSEDRA was required to apply the Total Resource Cost (TRC) method at the project level. Previously, under the Clean Energy Fund (CEF), TRC was applied at the program level, and this will continue post-EEPS implementation.

Avoided Costs The benefits calculated in the TRC are the avoided supply costs. For NYSERDA, the avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution capacity, va...

AI summary The TRC (Total Resource Cost) includes avoided supply costs calculated by NYSERDA, encompassing reductions in electric energy, natural gas, generation, transmission, and distribution capacity costs. These costs are valued at marginal cost during load reduction periods and are provided by the NY-ISO.

Avoided Costs 2 Any updates to the avoided costs for Vermont are led by the PSB. Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics, which investigated the avoided e...

AI summary Vermont's avoided costs are updated periodically by the PSB, with the last update in 2015 based on Synapse Energy Economics' report. Calculations include categories like Avoided Capacity Costs and Avoided Energy Costs tied to RPS compliance. Changes require board approval, and costs are calculated regionally for New England, including Vermont.

Utility Facts - Serves all of Vermont, other than Burlington Electric Department customers - Over 9,500 square miles - Services population of 500,000 Avoided Costs - [http://psb.vermont.gov/sites/psb/files/projects/EEU/2013avoidedcosts/AES...

AI summary The utility serves all of Vermont except Burlington Electric Department customers, covering 9,500 square miles and 500,000 people. Avoided costs are detailed in a 2013 report, funded through an energy efficiency charge collected by participating utilities.

Vermont 2013-2015 Cost Effectiveness Results SCT 2.66 PAC 3.05 Based on analysis of the 2015-2017 program targets and budgets, it is assumed that the cost effectiveness projections will be slightly decreased, compared to historical perform...

AI summary The document discusses the 2013-2015 cost effectiveness results for Vermont, noting that projections for 2015-2017 programs may be slightly lower than historical performance due to analysis of program targets and budgets.

MARKET STRUCTURE OVERVIEW The Efficiency Maine Trust Act came in effect in 2009 and is responsible for Efficiency Maine's inception as an independent Trust. Their purpose is to develop, plan, coordinate, and implement energy efficiency/alt...

AI summary The Efficiency Maine Trust Act (2009) established Efficiency Maine as an independent trust to implement energy efficiency programs. It sets 10- and 20-year savings goals, including weatherizing homes, reducing peak load, and cutting fossil fuel use. The Maine Public Utilities Commission (MPUC) reviews triennial plans, approves budgets, and mandates utility funding. Energy efficiency is highlighted as the lowest-cost resource, with specific cost metrics provided.

TRC and PACT Both TRC and PACT tests are presented in Efficiency Maine's annual reports. However, only TRC is used to evaluate performance. PACT is used for program planning/stakeholder relationships. TRC and PACT by Efficiency Maine is ba...

AI summary Efficiency Maine uses TRC (Total Resource Cost) for performance evaluation and PACT (Program Administrator Cost) for program planning and stakeholder engagement. TRC requires a net savings ratio exceeding 1.0, based on a 2008 National Action Plan for Energy Efficiency report. PACT is not used for performance testing.

Avoided Costs TRC: The benefits included are the avoided costs of energy. Efficiency Maine participated in the AESC Study Group, which partnered with Tabors Caramanis Rudkevich for a study on marginal energy supply costs that are avoided d...

AI summary The document discusses avoided costs in energy efficiency programs, including Total Resource Cost (TRC) benefits. Efficiency Maine uses the AESC Study Group's findings on marginal energy supply cost reductions for cost-effectiveness testing. Key electricity benefits include reduced resource demand, transmission costs, and wholesale market impacts. Gas benefits involve lower production and distribution costs. The AESC Study is revised every three years.

Costs TRC at the Program level: - Costs incurred by program participants (incremental costsIncremental Equipment Costs) - Costs of running the energy efficiency programs (delivery and administration costs) TRC at the Measure level: Costs i...

AI summary The document outlines Total Resource Cost (TRC) and Program Administrator Cost (PAC) categorizations at Program and Measure levels. TRC includes incremental equipment costs, delivery/administration costs, and incentive costs, while PAC focuses on measure-related incremental costs and program delivery expenses.

Cost Effectiveness Testing As per the 2016-2018 plan, there are three key elements to cost effectiveness: - 1. Each program is supposed to be screened for cost effectiveness. For Massachusetts, the TRC test is used for screening. There is...

AI summary The 2016-2018 plan outlines three cost effectiveness criteria: screening programs using the TRC test (specifically in Massachusetts), minimizing program administration costs, and employing competitive procurement processes.

Avoided Costs Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics which investigated the avoided energy supply costs for New England. Before any changes are implement...

AI summary Avoided costs for New England, last updated in 2015 via Synapse Energy Economics' report, are calculated regionally and require board approval. Key benefits include avoided capacity and energy costs, transmission/distribution costs, and CO2 emissions reductions. Renewable Portfolio Standards (RPS) influence avoided energy costs by reducing renewable acquisition needs.

Customer Class Breakdown There are the following types of customers: - Residential - Commercial 102 Avoided Costs - [http://ma-eeac.org/wordpress/wp-content/uploads/2015-Regional-Avoided-Cost-Study-](http://ma-eeac.org/wordpress/wp-content...

AI summary The document outlines two customer classes: Residential and Commercial. It references a 2015 Regional Avoided Cost Study by the Massachusetts Energy Efficiency Advisory Committee (EEAC).

NATIONAL GRID - ENERGY EFFICIENCY PROGRAMMING

AI summary The document outlines National Grid's Energy Efficiency Programming, focusing on regulatory proceedings in Nova Scotia. It references key entities, acronyms, and topics related to energy efficiency, demand-side management, and regulatory frameworks.

National Grid 2013-2015 Savings and Expenditure Sector Savings (MWh) Total Expenditure ($) Incentive Expenditure ($) Residential 805,157 $290,842,401 $222,323,354 Low Income 58,040 $85,604,742 $68,824,752 Commercial & Industrial 919,015 $3...

AI summary The document presents National Grid's energy savings and expenditure data for the years 2013-2015, categorizing information by sector (Residential, Low Income, Commercial & Industrial). It includes metrics such as total expenditure, incentive expenditure, and cost-effectiveness ratios.

National Grid's cost effectiveness results for 2013-2015 are as follows: National Grid 2013-2015 Cost Effectiveness Results Expected TRC 3.69 105 Actual TRC Not Available FUTURE TARGETS

AI summary The document outlines National Grid's cost effectiveness results for 2013-2015, highlighting the expected Total Resource Cost (TRC) of 3.69, while the actual TRC is not available. Future targets are also mentioned, though specific details are not provided.

1. Measure Library Section (from TRM process recommendation in report) This section should include the details of each measure in the portfolio, or measures being considered. - Efficient Technology Name; - Efficient Technology Description;...

AI summary This section outlines the structure for documenting energy efficiency measures, including technology details, cost estimates, savings projections, and screening criteria. It emphasizes parameters like TRC, PAC, PC, and cost-effectiveness thresholds for program evaluation.

2. Cost Effectiveness Calculator Section This section will take the inputs from the Measure Library section, combine them with the other inputs listed below, and output a cost effectiveness forecast. This will be used to determine the ince...

AI summary This section outlines a cost effectiveness calculator that uses inputs like avoided supply costs, program administration costs, measure energy savings, and discount rates to forecast cost effectiveness. The output determines incentive screening thresholds for energy efficiency programs.

Outputs - Total Gross Energy Savings; - Total Gross Demand Reduction; - Total Net Energy Savings; - Total Net Demand Reduction; - TRC Benefits; - TRC Costs; - TRC Net Benefits; - TRC Ratio; - PAC Benefits; - PAC Costs; - PAC Net Benefits;...

AI summary The document outlines key output metrics for evaluating energy efficiency programs, including energy and demand savings, TRC (Total Resource Cost) and PAC (Program Administrator Cost) benefits and costs, and cost ratios. These metrics help assess program effectiveness and economic viability.

Inputs - Incentive screening threshold in terms of cost to the customerCustomer Cost (From Measure Library); - Incentive screening threshold in terms of the program budget (From Measure Library); - Incentive screening threshold in terms of...

AI summary The document outlines key inputs for evaluating energy efficiency programs, including customer cost thresholds, program budget limits, cost-effectiveness criteria, sector categorization, delivery channels, and financial impact assessments. These parameters are used to screen incentives and guide program implementation in regulatory proceedings.

Incremental Costs as Incentive Thresholds CLEAResult provides three theoretical limits for incentives: (1) percentage of customer cost, (2) PAC benefits, and (3) budget. 3 On page 44 of the report, CLEAResult discusses in detail acceptable...

AI summary CLEAResult outlines three incentive limits (customer cost percentage, PAC benefits, budget) but is criticized for overemphasizing project cost and underemphasizing customer cost/ROI. The analysis argues that CLEAResult's framework is inappropriate for setting incentive levels, citing experience with energy efficiency programs across jurisdictions.

Cost-effectiveness On page 45 of the report, CLEAResult recommends the use of the Program Administrator Cost (PAC) test to set incentive ceilings. We agree with this approach, but we also recommend using the results of both the PAC test an...

AI summary CLEAResult recommends using the Program Administrator Cost (PAC) test for incentive ceilings. The response agrees but suggests combining PAC and Participant Cost (PC) test results to optimize incentives. Adjustments based on benefit-cost ratios and payback years are proposed to balance participation rates and cost-effectiveness.

Minor Comments on the Summary of Influences on Incentive Rates Section Table 2 ( "Summary of Influences on Incentive Rates") on pages 19-20 of the report discusses factors that put upward or downward pressure on incentive rates by incentiv...

AI summary The comment requests CLEAResult to include examples of customer costs and PAC benefits in Table 2 of the report, which summarizes influences on incentive rates. The feedback was developed through discussions with the Utility and Review Board staff and signed by two senior associates.

ncentives can be incorporated into E1's DSM program delivery to induce participant behavior. 1 EfficiencyOne 2016‐2018 Demand Side Management Resource Plan, Board Order, M06733, October 7, 2015, page 2, paragraph 9. 2 Exhibit E ‐1, Efficie...

AI summary NS Power recommends incorporating incentives into E1's DSM program, reviewing high-cost programs, and expanding jurisdictional comparisons to include lower-cost DSM regions. References include Board Order M06733 and the CLEAResult Report. NS Power seeks further stakeholder engagement.

Non-Financial Incentives NS Power, in their letter of comment, suggested that "…the E1 report investigate how non-financial incentives can be incorporated into E1's DSM program delivery to induce participant behavior." 4 EfficiencyOne and...

AI summary NS Power requested E1 investigate non-financial incentives for DSM programs. EfficiencyOne and CLEAResult argue their methodologies assess all incentive types, including non-financial, using cost-effectiveness and market research. ENS's existing non-financial programs include appliance pick-up and energy audits. EfficiencyOne emphasizes using cost-effective incentives to overcome customer barriers.

The Use of Incremental Cost In their letter of comment, Synapse indicates that incremental costs should form the basis of the customer cost incentive threshold. Further, Synapse indicates that incremental costs are an appropriate threshold...

AI summary Synapse Energy Economics Inc. argues incremental costs should set customer cost incentive thresholds for most projects. EfficiencyOne and CLEAResult agree for end-of-life replacement but disagree with Synapse's definition for other project types, advocating total project costs for early-retirement scenarios. All parties seek clarification in the report.

Program Budget as an Incentive Threshold Synapse has presented an argument that suggests program incentive budgets should drive program design and budgeting, as opposed to vice versa . & lt;sup>14 Supra note 3 at Appendix A, p 44. & lt;sup...

AI summary Synapse argues that program budgets should drive energy efficiency program design, while CLEAResult highlights challenges in fluid budget adjustments. EfficiencyOne agrees with Synapse but notes high-cost measures may face approval barriers. All parties emphasize the program budget threshold's role in managing incentive levels and decision-making, alongside cost-effectiveness and customer cost thresholds.

Role of Financing Synapse indicates that "[t]he CLEAResult report should discuss financing and incorporate it as a key factor to influence incentive levels, including the diagrams for incentive development processes provided on pages 52 an...

AI summary Synapse Energy Economics Inc. argues that the CLEAResult report must incorporate financing as a key factor in determining incentive levels. EfficiencyOne asserts that existing methodologies already accommodate financing-based incentives, which they analyze using techniques like Conjoint Analysis. EfficiencyOne notes they offer financing options to customers and consider external incentives when setting incentive levels.

OTHER FACTORS FOR INCENTIVE OPTIMIZATION E1 and CLEAResult critiqued our suggestions to include other factors for incentive optimization, such as simple payback years and benefit-cost ratios with the PAC test and the participant cost test....

AI summary E1 and CLEAResult opposed including metrics like simple payback years and benefit-cost ratios with the PAC and participant cost tests, arguing they might cause unpredictable participation changes by focusing on Program Administrator benefits rather than customer value. However, CLEAResult's own framework incorporates both customer value and ROI, suggesting benefit/cost ratios should be included.

Consensus Position Following consultation, EfficiencyOne, CleaResult and Synapse reached the following consensus: - All parties support the use of the Remaining Useful Life Discounted Incremental Cost method for Early Replacement projects....

AI summary EfficiencyOne, CleaResult, and Synapse agree on using the Remaining Useful Life Discounted Incremental Cost method for Early Replacement projects and cost-effectiveness testing. They also support clarifying incentive limits in the CleaResult report to align with this method's suggested cost thresholds.

Go-Forward Plan - EfficiencyOne will provide justification for incentives exceeding incremental costs (for End-Of-Life Replacement projects), or "Remaining Useful Life Discounted Incremental Costs" (for Early Replacement measures) during t...

AI summary EfficiencyOne will justify incentives exceeding incremental costs for DSM projects, providing details to stakeholders and the UARB. CleaResult will update reports to reflect consensus positions, removing absolute limits. Synapse is involved in agreed-upon go-forward points, though not yet reviewed by DSMAG. A method for calculating Remaining Useful Life Discounted Incremental Costs is defined.

Consensus As a result of further engagement, EfficiencyOne, CleaResult and Synapse, reached the following consensus position: - Customer research should broadly guide the ultimate optimization of incentive amounts under the objective funct...

AI summary EfficiencyOne, CleaResult, and Synapse reached consensus on two key points: customer research should guide incentive optimization under a minimum participation threshold, and the Program Administrator Cost (PAC) test is critical for evaluating utility ROI. While PAC can flag unattractive incentives, revised investments must undergo market testing for effectiveness.

Use of Participant Cost Test In our comments on the initial report, we indicated that "we consider the Participant Cost (PC) test an important metric that can be weighed against the results of the Program Administrator Cost (PAC) and Total...

AI summary The Participant Cost (PC) test is highlighted as a key metric in evaluating a participant's perceived value, included in the revised incentive setting report. However, it is omitted from Table 5, which lists customer cost considerations. The DSMAG argues for its inclusion in Table 5 to align with the report's new narratives on pages 19 and 26.

Incremental Equipment Costs In the appendices (as elsewhere in the revised report), "incremental costs" was universally changed to "Incremental Equipment Costs." If the program administrators in these case studies use a different definitio...

AI summary The term 'incremental costs' was universally changed to 'Incremental Equipment Costs' in appendices and the revised report. However, if program administrators use a different definition, these changes may be inaccurate. CLEAResult is advised to verify the appropriateness of these changes.

April 27, 2017 Doreen Friis Regulatory Affairs Officer/Clerk Nova Scotia Utility and Review Board 1601 Lower Water Street, 3rd Floor P.O. Box 1692, Unit "M" Halifax, NS B3J 3S3 Re: M07544 ‐ EfficiencyOne (E1) ‐ Incentive Setting Methodolog...

AI summary NS Power provides feedback on EfficiencyOne's revised incentive methodology, highlighting gaps in non-financial incentives, jurisdictional comparisons implying E1's advanced stage, lack of low-income focus, and questioning incentives for short-payback projects. They recommend optimizing the DSM plan using study findings.

General Comments - 1- The report is a very detailed compilation of incentive setting methodologies at a blueprint level. However, the report treats the question of incentive setting as an issue isolated from all other customer outreach eff...

AI summary The report's approach to incentive setting is criticized for isolating it from customer outreach efforts like education and supply chain engagement, which should be co-optimized. CLEAResult's benchmarking selects jurisdictions with large energy efficiency budgets and top-performing utilities, including Ontario, British Columbia, and ACEEE-top-ranked U.S. utilities.

File No: SM002557-00003 April 27, 2017 Nancy G. Rubin, Q.C. Direct Dial: 902.420-3337 [email protected] Delivered by E-mail Doreen Friis Regulatory Affairs Officer/Clerk Nova Scotia Utility and Review Board 3rd Floor 1601 Lower Wa...

AI summary The Industrial Group critiques EfficiencyOne's revised incentive methodology for lacking financial detail and not establishing a maximum incentive cap beyond 100%, which they deem illogical. The methodology was developed following the Board's 2016-2018 DSM Plan hearing directive, with the Industrial Group advocating for stricter financial analysis and incentive limits.

e a lower cap on incentives, other than perhaps for certain exceptional low income measures. If the measure has any value to the customer through energy savings, there should be no reason to pay 100%. EfficiencyOne has agreed to conduct a...

AI summary The document discusses incentive caps for energy efficiency measures, with EfficiencyOne agreeing to a two-year financial simulation (2017-2018) on existing incentives. The Industrial Group urges an earlier initial simulation by June 30, 2017, to allow mid-course adjustments. CLEAResult's best practices for cost-effective testing are cited, including measure-level screening and temporary exceptions for low-income or emergency measures. The Industrial Group supports limited inclusion of non-cost-effective measures in exceptional cases.

16 2. APPLICATION OF INCENTIVE LIMITS 17 Based on several stakeholder comments, it seems a concise description of 18 EfficiencyOne's intended application of incentive limits would be helpful. CLEAResult 19 has advised that EfficiencyOne sh...

AI summary EfficiencyOne is applying incentive limits through three categories: cost-to-customer, program budget, and utility cost-effectiveness. CLEAResult recommends specific calculation bases, while NSP's consultant Brattle Group suggests using PAC and PC tests by setting benefit/cost ratios to 1. EfficiencyOne uses a Consolidated Calculator to determine theoretical maximum incentives, with the lowest value as the upper limit.

he report to include education and awareness in Table 6. 22 23 24 Synapse Comment 25 "…the PC test should be included in Table 5 as another key factor to consider with 26 regards to customer cost." 1 EfficiencyOne Response 2 ENS agrees but...

AI summary The text discusses debates over including the PC test in tables and clarifying incentive thresholds. Synapse suggests adding the PC test to Table 5, while EfficiencyOne places it in Table 4 with TRC and PAC tests. CLEAResult explains upper limits are based on common practices, and terminology was simplified to 'Upper Limit' for clarity. Synapse questions boundary development and terminology consistency, prompting clarifications.

1 6. REPLY TO NS POWER ON OTHER ISSUES 2 NS Power Comment 3 "The CLEAResult Report focused on financial incentives and did not evaluate the merits 4 of non-financial incentives, such as educational programs and outreach. Co-optimizing 5 al...

AI summary EfficiencyOne responds to NS Power's comments on the CLEAResult Report, emphasizing that the Board's original direction focused solely on financial incentives, not education/outreach. The report provides upper limits for incentives, with education considered below those limits. NS Power argues that EfficiencyOne's DSM costs imply a later stage in energy efficiency adoption, leading to lower potential and higher costs.

4) Financial Impact Analysis The financial impact analysis requires the answering of six questions: - i. What is the current incentive, forecasted participation and forecast incentive expenditure? - ii. What is the market penetration ( obt...

AI summary The financial impact analysis outlines six questions regarding incentives, participation, and thresholds, and discusses jurisdictional benchmarking for existing and new incentives. Benchmarking is recommended for new incentives to address knowledge gaps, while existing incentives rely on other performance parameters.

Application of Incentive Limits When conducting the financial impact analysis, there are three thresholds that can be used to help quantify an incentive's financial performance: - 1) Cost to Customer - 2) Program Budget - 3) Cost Effective...

AI summary The document outlines three financial thresholds (Cost to Customer, Program Budget, Cost Effectiveness) for evaluating incentive performance. CLEAResult recommends EfficiencyOne use these to assess incentives transparently, with upper limits serving as guidelines rather than prescriptive rules. Broader program design rules may also be considered, allowing flexibility in incentive setting.

Financing The need for financing as a program design element will surface during the customer research and the identification of barriers. If upfront costs are an issue, while lifetime costs and cash flow are not a concern to customers, fi...

AI summary The document discusses financing as a program design element, noting its relevance when upfront costs are barriers. The project methodology was updated to exclude upfront cost analysis, while Table 6 now includes financing as a parameter affecting incentive levels. The Net Present Value of financing costs is to be incorporated into budget and cost-effectiveness analyses, potentially reducing incentives.

Evidence for Upper Limits of Cost to Customer and Program Budget Thresholds The concept of setting upper limits for incentive levels is a relatively new practice, and there is limited documentation. Many jurisdictions will have their own i...

AI summary The document discusses upper limits for customer costs and program budgets in energy efficiency programs, citing examples from Energy Trust of Oregon, Union Gas, and Pacific Gas & Electric. Ontario's Retrofit and Process and Systems Upgrade programs use specific incentive caps. CLEAResult's experience informs suggested thresholds in Table 17 and 18, emphasizing cost-effectiveness assessments and program budget thresholds.

earch activities and TRM process - Perform short-term program design or incentive-level cost effectiveness screening - Integrate the review protocol that has been provided in the Excel-based tool. The consolidated calculator will allow Eff...

AI summary CLEAResult developed tools and processes for EfficiencyOne to improve incentive setting, including an Excel-based tool and documentation templates. A financial simulation evaluated Instant Savings and Custom programs, finding most incentives appropriate but flagging heavy-duty timers and outdoor clotheslines for review due to cost and market penetration concerns.

Jurisdictional Scans CLEAResult undertook jurisdictional scans of various provincial and state utilities and energy efficiency agencies to: - 1) identify the incentive level setting methodologies and best practices in other jurisdictions;...

AI summary CLEAResult conducted jurisdictional scans to identify incentive-setting methodologies and best practices in energy efficiency programs. Jurisdictions were selected based on geographical similarity, portfolio maturity, ACEEE recognition, and program delivery mechanisms. Research combined secondary data analysis with primary insights to benchmark ENS's program performance against comparative metrics.

Program Financial Simulation To test the recommendations, a program financial simulation was conducted for both the Instant Savings and Custom programs. The current incentives were evaluated against multiple criteria, with a recommendation...

AI summary A program financial simulation was conducted for Instant Savings and Custom programs to evaluate current incentives against multiple criteria, with recommendations on their appropriateness.

Participant Cost Test In evaluating a participant's purchase decision from a financial perspective, the PC test is a useful analysis to deploy. It assesses all of the direct financial considerations that a participant faces in making a pur...

AI summary The Participant Cost (PC) test evaluates a participant's purchase decision by comparing financial benefits and costs. It assesses direct financial considerations to determine if benefits outweigh costs, aiding in financial decision-making.

Technology Research Technology research is essential when identifying participant perceived value as well as completing other analysis associated with incentive setting. The three forecasts that need to be developed are: - Market price; -...

AI summary Technology research is crucial for setting incentives, requiring analysis of market price, technology penetration, and performance. Factors like capital costs, labor, and maintenance are considered, alongside technology evolution. This data informs cost-effectiveness calculations and is integral to updating the Technical Reference Manual (TRM), which contains measure assumptions for energy consumption baselines and cost analyses.

Benchmarking If an incentive or technology is new, there may not be any historical data to assist with forecasting price and penetration curves in a utility's local market. Benchmarking incentive rates against similar technologies or progr...

AI summary Benchmarking against other jurisdictions is proposed when local data is unavailable, though challenges exist due to differences in currency, regulations, and infrastructure. Two approaches are outlined: direct benchmarking using comparable jurisdictions and adjustments for differences, though adjustments are imprecise. Engaging with other regions is emphasized to understand market nuances.

RETURN ON INVESTMENT The determination of the return on investment is an evaluation of factors from the program administrator's and broader society's perspective. For efficiency programs, return on investment is based on two general consid...

AI summary The evaluation of return on investment for efficiency programs considers cost effectiveness and budget impact from both the program administrator's and broader societal perspectives. These factors are central to assessing the financial and societal value of such programs.

Cost Effectiveness Cost effectiveness is usually determined using a benefit-cost analysis which explicitly or implicitly compares the cost of energy efficiency to other electricity or natural gas supply resources and may include other cons...

AI summary Cost effectiveness is evaluated through benefit-cost analysis, comparing energy efficiency costs to supply resources. Key methods include Total Resource Cost (TRC) and Program Administrator Cost (PAC) tests, alongside unit costs based on lifetime energy savings as indicators of cost effectiveness.

Table 4: Cost Effectiveness Tests and Relationship to Incentive Setting from a Return on Investment Perspective Cost Effectiveness Test General Description and Features Implication for Incentive Setting The TRC is an evaluation of the tota...

AI summary This table outlines the Total Resource Cost (TRC) as a cost-effectiveness test, which evaluates the total benefits and costs of energy efficiency programs. It notes that the TRC does not directly include incentives but considers program administration and participant costs, with guidance from Nova Scotia's DSM Advisory Group (DSMAG).

THEORETICAL THRESHOLDS FOR INCENTIVES Based on the return on investment criteria as well as perceived value considerations, there are three theoretical thresholds for incentives that are based on quantitative analysis: - 1. Customer Cost -...

AI summary The document outlines three theoretical incentive thresholds based on quantitative analysis: Customer Cost, PAC Benefits (Cost Effectiveness), and Budget. These thresholds are determined by return on investment criteria and perceived value considerations.

SIZE, STRUCTURE AND CLIMATE Vermont, Maine and National Grid in Massachusetts all serve a similar population to ENS's programs. In terms of budget magnitudes, stock and sales data, and electricity savings targets, their similarity in size...

AI summary The document compares ENS's energy efficiency programs with those in Vermont, Maine, and Massachusetts due to similar population sizes and market structures. It also contrasts ENS with jurisdictions like BC Hydro and NYSERDA, which have different systems and oversight. Maine, Vermont, and Massachusetts were selected for their climate similarity to Nova Scotia, affecting HVAC and building envelope technologies.

Research and Engagement Phase General Principle Definition Examples Identified Best Practice  Capture incentive rates used in benchmark jurisdictions (for new incentives)  Develop target budget and cost effectiveness thresholds

AI summary The text outlines a general principle related to research and engagement, emphasizing the capture of incentive rates from benchmark jurisdictions and the development of target budget and cost effectiveness thresholds as best practices.

COST EFFECTIVENESS AND AVOIDED COSTS At the portfolio level, cost effectiveness is guaranteed since the combination of savings targets and budget is lower than the cost effectiveness threshold (provided that the persistence of the energy s...

AI summary The document discusses Nova Scotia's approach to cost-effectiveness in demand-side management (DSM), emphasizing TRC thresholds (1.0) for program measures, inclusion of program administration costs in TRC screening, and exceptions for non-compliant measures. It contrasts ENS's methods with other jurisdictions like Oregon's Energy Trust, noting variations in handling administration costs.

SUMMARY OF RECOMMENDATIONS - 1. It is recommended that EfficiencyOne consider all of the general principles for incorporation into an incentive setting process. - CLEAResult has provided a documented, incentive setting process (that incorp...

AI summary The summary outlines recommendations for EfficiencyOne to adopt a structured incentive setting process, including leveraging CLEAResult's methodology, updating technology assumptions through research, implementing a TRM approach, developing a consolidated calculator, and conducting program financial simulations to evaluate current incentive levels.

GENERAL PRINCIPLES FOR INCENTIVE RATE SETTING Based on CLEAResult's experience and research on best practices, it is recommended that any incentive level setting methodology should include the following general principles to understand: -...

AI summary CLEAResult recommends five principles for incentive rate setting, including customer motivations, technology savings, supply chain considerations, financial impacts, and jurisdictional benchmarking, to guide effective incentive level methodologies.

3. What is the acceptable incentive threshold in terms of Customer Cost? With respect to Customer Cost, there may be an acceptable incentive level threshold that is based on the retail price, project cost, Incremental Equipment Cost or pro...

AI summary The document discusses acceptable incentive thresholds for Customer Cost, referencing factors like retail price, Incremental Equipment Cost, and payback periods. It emphasizes a 100% limit on Incremental Equipment Cost, which may be exceeded with justification. Thresholds are presented as guidelines, not hard caps, with examples of 50-70% of retail price or one-year payback periods. CLEAResult's experience informs suggested thresholds in Table 17.

5. What is the acceptable incentive threshold in terms of cost effectiveness? With respect to cost effectiveness, there may be an acceptable incentive level threshold that is based on measure, program or portfolio cost effectiveness target...

AI summary The text discusses determining an acceptable incentive threshold based on cost effectiveness for the Program Administrator Cost (PAC), suggesting an upper limit tied to forecasted benefits minus administration costs. It highlights the lifetime energy savings approach, which excludes capacity benefits, and recommends EfficiencyOne develop a consolidated calculator to assess individual measure thresholds, as detailed in Appendix B.

Understand Financial Impacts EfficiencyOne conducts cost effectiveness testing using the TRC test. The TRC is calculated at the measure level to qualify measures, though some measures are included that do not pass the TRC test for strategi...

AI summary EfficiencyOne uses the Total Resource Cost (TRC) test for cost-effectiveness screening at both measure and program levels, though some measures are included for strategic reasons even if they fail the TRC. A new software-based data management system is being implemented to track measure implementations. Recommendations include improving granularity in tracking frequency and determining appropriate incentive screening thresholds.

For the Instant Savings Program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities Understand Financial Impacts For Instant Savings, EfficiencyOne gains an understanding of financial...

AI summary CLEAResult recommends continuing current activities for the Instant Savings Program, including program evaluation, planning, and financial analysis, and implementing general principles to support cost-effectiveness and regulatory requirements such as a TRC of ≥1.0.

updated, consistent with the recommendations in the General Principles section. Understand Supply Chain and Service Provider Considerations For the Custom Program, EfficiencyOne gains an understanding of the supply chain and service provid...

AI summary EfficiencyOne gains insights into supply chain and service provider considerations through program management and evaluation. Financial impacts are understood via project screening, program management, and evaluation. CLEAResult recommends continuing current activities and expanding cost-effectiveness screening to include the Program Administrator Cost.

For the Business Energy Rebates program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities During the program evaluation process, the energy savings assumptions and net-to gross ratio...

AI summary CLEAResult recommends updating energy savings assumptions and net-to-gross ratios during the program evaluation process for the Business Energy Rebates program, as these inputs significantly affect cost-effectiveness impact.

Other Considerations for Business Energy Rebates Program From reviewing program operations, the Business Energy Rebates program tracks retail pricing through the application process. This allows program managers to understand if incentive...

AI summary The Business Energy Rebates program monitors retail pricing to set appropriate incentives, relying on Program Administrator Cost (PAC) forecasts and ongoing tracking. Challenges include difficulty in aligning Instant Rebates with local avoided costs due to limited customer data.

For the Home Energy Assessment program, CLEAResult has the following recommendations: General Principle Current Activities Recommended Activities During the program evaluation process, the energy savings assumptions and net-to-gross ratios...

AI summary CLEAResult recommends updating energy savings assumptions and net-to-gross ratios during the program evaluation process for the Home Energy Assessment program, as these inputs significantly affect cost-effectiveness.

Other Considerations for the Home Energy Assessment Program The Home Energy Assessment program recently introduced an updated incentive structure, which featured an increased incentive for the initial audit, and premiums associated with bu...

AI summary The Home Energy Assessment Program introduced updated incentives, including increased initial audit incentives and bundled incentives to boost participation. Early data from CLEAResult suggests higher savings per home and lower delivery costs, though isolating bundling's impact is challenging. Bundling is framed as a cost-effective strategy for programs with high customer acquisition costs, while personal energy planning services and localized incentive zones are proposed to enhance savings and align with avoided costs.

INSTANT SAVINGS PROGRAM FINANCIAL SIMULATION For the Instant Savings Program, the program financial simulation analysis included the following six steps for each measure: - 1. Identify the current (2015) participation and incentive level;...

AI summary The Instant Savings Program's financial simulation analysis involves six steps: assessing participation levels, market penetration, cost-to-customer thresholds, program budget thresholds, cost-effectiveness thresholds, and comparing current incentives to these thresholds. Data for measures was sourced from EfficiencyOne.

Cost Effectiveness Incentive Level Threshold EfficiencyOne has a PAC target of 1.9 for this program. For the calculation, it is assumed that program administration costs are 30 percent of total expenditure, which leaves the incentive costs...

AI summary EfficiencyOne's PAC target of 1.9 is calculated assuming program administration costs are 30% of total expenditure, with incentive costs at 70%. Two approaches are discussed: adjusting the PAC threshold to include only incentive expenditure or calculating administration costs per measure. CLEAResult recommends developing a detailed cost effectiveness calculator for accurate incentive level setting.

Measure PAC of Current Incentive Level (including Program Administration Costs) Is PAC of Current Incentive Greater than Cost Effectiveness Incentive Level Threshold (including Program Administration Costs) ENERGY STAR® LED A Lamp 506.49 Y...

AI summary The table presents the Program Administrator Cost (PAC) for various energy efficiency measures and indicates whether the PAC exceeds the cost effectiveness incentive level threshold. For all listed measures, the PAC does not breach the threshold.

CUSTOM PROGRAM FINANCIAL SIMULATION For the Custom Program Retrofit track, the program financial simulation analysis included the following steps: - 1. Identify the average project parameters for the analysis; - 2. Determine an appropriate...

AI summary The Custom Program Retrofit track's financial simulation analysis involves five steps: identifying project parameters, determining thresholds for customer incentives, program budget, cost effectiveness, and comparing current incentives to these thresholds to assess necessary changes.

Measure Program Budget Incentive Threshold Current Program Budget Incentive Custom Project Retrofit Track $25,475 $24,106 Table 34: Program Budget Incentive Level Threshold for Average Project in Custom Retrofit Cost Effectiveness Incentiv...

AI summary The document presents a table with information on program budget incentive levels for a custom project retrofit track, including a threshold and current incentive amounts. It also references a section on cost effectiveness incentive level thresholds.

Cost Effectiveness Testing In their conservation (CDM) plans, LDCs need to show portfolio cost effectiveness (TRC and PAC) if they are offering provincewide programs. If LDCs are offering local programs (only for their territory), those pr...

AI summary LDCs must demonstrate portfolio cost effectiveness (TRC and PAC) for provincewide programs, with a 0.7 TRC exception for low-income programs. The IESO oversees cost effectiveness for provincial programs, including societal benefits in TRC calculations.

Avoided Costs For electricity, the major categories of benefit are: - Avoided Capacity Costs - Avoided Energy Costs - Transmission and Distribution Costs - 15% Adder for additional societal benefits - o Environmental benefits - o Employmen...

AI summary The document outlines four major electricity benefit categories: Avoided Capacity Costs, Avoided Energy Costs, Transmission and Distribution Costs, and a 15% Adder for societal benefits (environmental, employment, and other societal benefits). These represent key considerations in regulatory proceedings related to energy efficiency and demand-side management.

Costs Under the TRC-plus test include: - Costs incurred by program participants (incremental costs) - Costs of running the energy efficiency programs (delivery and administration costs)

AI summary The TRC-plus test includes incremental costs incurred by program participants and delivery/administration costs of energy efficiency programs. This methodology evaluates both direct participant expenses and program operational expenditures.

3. Benchmarking Union Gas also reviews other jurisdictions and evaluates their measures and incentives relative to what is offered in other territories. The goal is to be relatively similar to other territories in their incentives. Other f...

AI summary Union Gas evaluates measures and incentives from other jurisdictions to align with similar territories, considering factors like Incremental Equipment Costs to ensure competitiveness and effectiveness in their programs.

COST EFFECTIVENESS REQUIREMENTS Total Resource Cost (TRC) is used by BC Hydro and the BCUC at the program level to evaluate performance. Programs must have a TRC of 1.0 or greater. There is an expectation of low-income programs. Internally...

AI summary BC Hydro and BCUC require programs to meet a Total Resource Cost (TRC) threshold of 1.0 or higher. Low-income programs are expected, and internal cost-effectiveness tests include utility cost and ratepayer impact measures.

Calculating Cost Effectiveness Cost effectiveness analysis is performed by looking at the stream of benefits and costs resulting from the DSM investment. Four metrics are calculated for each test: - 1. Benefit-cost ratio = PV (benefits) /...

AI summary The document explains how cost effectiveness for DSM investments is calculated using four metrics: benefit-cost ratio, net present value, and gross levelized cost. These metrics analyze the stream of benefits and costs over time.

Cost Effectiveness Testing As detailed in D.14-10-046 8 , the CPUC has interpreted its mandate to deliver cost-effective energy efficiency and conservation programs as meaning that all energy efficiency portfolios of delivery agents should...

AI summary The CPUC mandates cost-effective energy efficiency programs, evaluated via TRC and PAC tests. California's Standard Practice Manual sets benchmarks, defining TRC as societal net benefits and PAC as program administrator costs. E3 provides portfolio testing models, while DEER database supports measure-level analysis.

INCENTIVE LEVEL SETTING METHODOLOGY PG&E's Energy Efficiency Products organization was formed approximately six years ago in part to standardize and streamline the measures developed and marketed through PG&E's breadth of energy efficiency...

AI summary PG&E's Energy Efficiency Products organization standardizes energy efficiency measures and evaluates technologies for inclusion in programs. The process involves regulatory reporting to the California Public Utility Commission (CPUC) when incentive levels change by over 50%, with a focus on portfolio cost effectiveness. PG&E uses the E3 Cost Effectiveness model and does not require individual measures to meet TRC or PAC thresholds above 1, allowing investment in high-potential technologies.

Northwest Power Plan 11 The Northwest Power & Conservation Council represents the regional power planning efforts of Idaho, Washington, Oregon and Montana. The Northwest Power Act requires that the Council produce a 20-year Power Plan each...

AI summary The Northwest Power & Conservation Council, representing Idaho, Washington, Oregon, and Montana, emphasizes energy efficiency as the least-cost resource in its 20-year Power Plan. The Council prioritizes cost-effective energy efficiency to meet electricity needs, avoiding fuel price risks and carbon reduction challenges.

COST EFFECTIVENESS TESTING & AVOIDED COSTS 14

AI summary The section discusses cost-effectiveness testing and avoided costs in regulatory proceedings, though no detailed content is provided in the text. The heading references a footnote (14) but lacks substantive analysis or data.

Cost Effectiveness - Electricity When evaluating cost effectiveness, the OPUC defined in Docket UM-551 that the following cost effectiveness tests are to be used: - Utility System Test - Societal Cost Test (similar to TRC) Programs and mea...

AI summary The OPUC defined in Docket UM-551 that cost effectiveness for electricity programs requires passing both Utility System Test and Societal Cost Test (similar to TRC) with a benefit-cost ratio of 1.0 or higher. Such programs qualify for Energy Trust Investment, with portfolio-level cost effectiveness reported ex post.

Costs The OPUC has defined that the following elements be considered when determining the costs from the societal perspective 15 (i.e., Total Resource Cost): - 1. Total cost of efficiency measures and actions 16 , including costs to the En...

AI summary The OPUC defines societal perspective costs for Total Resource Cost (TRC) to include Energy Trust incentives, administrative, and program management costs, excluding consumer-paid costs and tax credits. Local program costs funded by federal/state agencies are excluded due to non-energy considerations. The utility system test focuses on Energy Trust costs, not consumer expenses.

Benefits (Avoided Costs) In the societal test, the Energy Trust will include the following benefits: - 1. The value of the electrical and/or gas energy saved based on the avoided cost forecasts of the utilities whose customers are served b...

AI summary The Energy Trust includes benefits like avoided energy costs, non-energy benefits, line losses, and gas capacity improvements in its societal test. It uses PUC-approved forecasts and applies a 10% credit under the Northwest Power Act. Non-energy benefits may use proxies until OPUC provides alternatives. Environmental impacts and utility system tests are also considered.

Portfolio vs. Measure Level Cost Effectiveness As mentioned above, cost effectiveness is calculated at both the measure and program levels. It is important to note that there are fundamental differences in what costs are included when test...

AI summary The text explains that measure-level cost effectiveness excludes administration and delivery costs, while program-level testing includes them. The Energy Trust conducts both approaches, requiring programs to achieve a benefit-cost ratio greater than 1 for UCT and TRC tests to ensure total benefits exceed costs.

Below are the cost effectiveness results which were calculated for each program as part of the Energy Trust's 2014 Annual Report. 19 Program Utility Cost Test Benefit Cost Ratio Societal (Total Resource Cost) Test Benefit Cost Ratio New Ho...

AI summary The document presents cost effectiveness results for various energy efficiency programs from the Energy Trust's 2014 Annual Report, including benefit-cost ratios for utility and societal tests across different program categories.

COST EFFECTIVENESS – NATURAL GAS The current market condition for natural gas prices (i.e., low price environment) has caused the Energy Trust and PUCs to reexamine gas measures over the last few years. The Energy Trust has been able to ca...

AI summary Low natural gas prices prompted the Energy Trust and PUCs to reevaluate gas measures using Order 94-950. The Energy Trust applies TRC thresholds (≥1.0, 0.5-0.9 with exceptions, <0.5 excluded) to maintain program infrastructure and market momentum until gas prices rise. Portfolio-level cost-effectiveness tests help manage program delivery.

Detailed Measure Development - •Identify technical guidelines and data, identify any data gaps and create research plan for gaps - •Stakeholder outreach - •Facilitation of crossprogram coordination - •Cost Effectiveness testing - •Draft Me...

AI summary The process for developing detailed measures includes identifying technical guidelines, addressing data gaps, stakeholder outreach, cross-program coordination, cost-effectiveness testing, and drafting a Measure Approval Document (MAD). Measures with sufficient data and stakeholder support are promoted for approval, while those with insufficient data may be piloted.

Measure Assumptions Document (MAD) What is a MAD: It is the decision of record determining measure cost effectiveness and authorizing use of a measure. The measure is clearly defined along with the conditions under which it is approved. Th...

AI summary A Measure Assumptions Document (MAD) is a formal decision authorizing energy efficiency measures, detailing their cost-effectiveness, technical specifications, incentives, and requirements. It includes sections like scope, program eligibility, savings calculations, and baseline conditions, approved by Energy Trust engineering staff after analysis by delivery contractors.

Incentive Setting Considerations When setting a measure incentive the following components are some of the key considerations taken by the Energy Trust and their program delivery agents: - Relationship of incentive to measure incremental c...

AI summary The Energy Trust considers factors like incremental costs, market impact, and portfolio budget when setting incentives. Incentives are guided by LUEC thresholds (3-3.5 cents/kWh for electricity, 50 cents/therm for gas) and annual performance targets set by Oregon's Commission. The process is deemed 'more art than science,' requiring regular updates. Financial standards mandate 8% of the budget for administration.

KEY PLAYERS

AI summary The 'KEY PLAYERS' section lists organizations, programs, and regulatory bodies involved in energy efficiency, utility regulation, and demand-side management in Nova Scotia and other regions. It includes acronyms for entities such as the Utility and Review Board, Efficiency Nova Scotia Corporation, and various energy efficiency initiatives and methodologies.

Figure 46: Electric Savings Result 9 Program Names (Savings in MWh) Accumulated Savings to Year C&I Custom Efficiency C&I Equipment Rebate Small Business Direct Install Residential Direct Install Appliance Bounty Residential Room Air Condi...

AI summary The text presents tables detailing electric and gas savings results from various programs over the years, including accumulated savings, targets, and program-specific data. The section on 'Cost Effectiveness Testing' suggests a thematic focus on evaluating the cost-effectiveness of these programs.

Cost Effectiveness Requirements Cost effectiveness is evaluated at the program level by TRC. Fast track programs that were implemented early in the cycle had to score well above a TRC of 1.0. This was done to ensure that significant energy...

AI summary Cost effectiveness is evaluated using TRC. Fast-track programs required a TRC above 1.0 to ensure significant energy savings, considering margins of error.

Avoided Supply Costs in TRC Calculation The benefits calculated in the TRC are the avoided supply costs. The avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution...

AI summary The Total Resource Cost (TRC) calculation includes avoided supply costs, which encompass reductions in electric energy, natural gas, generation, transmission, and distribution capacity costs. These costs are valued at marginal cost during periods of load reduction.

Costs in TRC Calculation The costs calculated in the TRC are costs paid by the program administrators and participants plus the increase in supply costs for any period when load is increased.

AI summary The Total Resource Cost (TRC) includes costs paid by program administrators and participants, as well as increased supply costs during periods of higher load. This calculation accounts for both administrative and supply-side impacts of demand-side management programs.

NYSERDA ENERGY EFFICIENCY PROGRAM INCENTIVE AND COST EFFECTIVENESS POLICY

AI summary The document outlines NYSERDA's Energy Efficiency Program Incentive and Cost Effectiveness Policy, focusing on criteria for evaluating energy efficiency initiatives. Key entities include NYSERDA, EERS, EEPS, and SBC III, with topics centered on energy efficiency, cost-effectiveness, and incentive structures.

Cost Effectiveness Testing Under the EEPS, NYSEDRA was required to conduct cost effectiveness testing at the project level. The TRC is used as the cost effectiveness test. Prior to the implementation of the EEPS, the TRC was applied at the...

AI summary Under the Energy Efficiency Portfolio Standard (EEPS), NYSERDA was required to conduct project-level cost effectiveness testing using the Total Resource Cost (TRC) method. Previously, under the Clean Energy Fund (CEF), TRC was applied at the program level, and this approach will continue post-EEPS implementation.

Previous Results (Savings, Expenditure, Cost Effectiveness) Year Electricity Savings Expenditure Cost Effectiveness 2013 Not Available Not Available Not Available 2014 Not Available Not Available Not Available 2015 Not Available Not Availa...

AI summary The text presents tables with missing data on electricity savings, expenditure, and cost effectiveness for the years 2013 to 2018, and mentions an incentive level setting methodology, though no details are provided.

Avoided Costs 2 Any updates to the avoided costs for Vermont are led by the PSB. Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics, which investigated the avoided e...

AI summary Vermont's avoided costs are managed by the PSB, with the last update in 2015 based on Synapse Energy Economics' report on New England's energy supply costs. Updates require board approval. Categories include avoided capacity and energy costs, transmission/distribution costs, and CO2 reduction benefits.

EFFICIENCY VERMONT –OVERVIEW

AI summary The document provides an overview of Efficiency Vermont, focusing on energy efficiency initiatives, regulatory proceedings, and related programs. Key elements include demand-side management, technical reference manuals, and regulatory bodies involved in energy efficiency standards and cost evaluations.

Utility Facts - Serves all of Vermont, other than Burlington Electric Department customers - Over 9,500 square miles - Services population of 500,000 - Funded through energy efficiency charge collected by participating electric utilities....

AI summary The utility serves most of Vermont (excluding Burlington Electric Department customers), covering 9,500 square miles and 500,000 residents. Funding comes from an energy efficiency charge collected by participating utilities. A 2013 avoided costs report is referenced in a footnote.

Efficiency Vermont's spending for 2013 and 2014 is provided below: Prior Year Current Year 2014 Cumulative starting 1/1/12 Cumulative starting 1/1/12 # participants with installations 37,483 54,135 131,094 131,094 Operating Costs Administr...

AI summary Efficiency Vermont's spending for 2013 and 2014 is detailed, showing increases in operating and incentive costs, with a focus on participant and trade ally incentives. The data also includes metrics like MWh savings and cost-effectiveness ratios.

Vermont 2013-2015 Cost Effectiveness Results SCT 2.66 PAC 3.05 Based on analysis of the 2015-2017 program targets and budgets, it is assumed that the cost effectiveness projections will be slightly decreased, compared to historical perform...

AI summary The analysis of the 2015-2017 program targets and budgets suggests that cost effectiveness projections may be slightly lower than historical performance, based on the provided SCT and PAC values.

MARKET STRUCTURE OVERVIEW The Efficiency Maine Trust Act came in effect in 2009 and is responsible for Efficiency Maine's inception as an independent Trust. Their purpose is to develop, plan, coordinate, and implement energy efficiency/alt...

AI summary The Efficiency Maine Trust Act (2009) establishes Efficiency Maine as an independent trust to implement energy efficiency programs, targeting 100% residential weatherization by 2030, 100 MW peak load reduction by 2020, and 30% fossil fuel reduction by 2030. The Maine Public Utilities Commission (MPUC) reviews triennial plans, which outline cost-effective energy savings goals and funding mechanisms, including ratepayer contributions and market revenues. Energy efficiency is highlighted as the lowest-cost resource, with savings costs averaging 4.3 cents/kWh for electricity and $12.96/MMBtu for heating fuels.

TRC and PACT Both TRC and PACT tests are presented in Efficiency Maine's annual reports. However, only TRC is used to evaluate performance. PACT is used for program planning/stakeholder relationships. TRC and PACT by Efficiency Maine is ba...

AI summary Efficiency Maine uses TRC (Total Resource Cost) for performance evaluation and PACT (Program Administrator Cost) for planning/stakeholder engagement. TRC requires a net savings threshold >1.0 at the measure level, based on a 2008 EPA resource. PACT is not used for performance testing.

Avoided Costs TRC: The benefits included are the avoided costs of energy. Efficiency Maine participated in the AESC Study Group, which partnered with Tabors Caramanis Rudkevich for a study on marginal energy supply costs that are avoided d...

AI summary The text discusses avoided costs from energy efficiency programs, focusing on benefits like reduced resource requirements, infrastructure costs, and market price impacts. Efficiency Maine collaborated on a study with Tabors Caramanis Rudkevich to assess marginal energy supply costs, used for cost-effectiveness testing. Key components include avoided retail capacity, energy, RPS compliance costs, and gas production reductions.

MASSACHUSETTS ENERGY EFFICIENCY PROGRAM INCENTIVE AND COST EFFECTIVENESS POLICY Massachusetts is viewed as one of the leading jurisdictions for promoting energy efficiency in North America. It is ranked as the #1 jurisdiction in ACEEE's 20...

AI summary Massachusetts leads in energy efficiency, mandated by the Green Communities Act to prioritize cost-effective measures. Targets include 2.6% retail sales (2015) and 4,122 GWh savings (2016-2018). Funding comes from charges, capacity markets, cap-and-trade, and surcharges, with 10% allocated to low-income programs.

Cost Effectiveness Testing As per the 2016-2018 plan, there are three key elements to cost effectiveness: - 1. Each program is supposed to be screened for cost effectiveness. For Massachusetts, the TRC test is used for screening. There is...

AI summary The 2016-2018 plan outlines three cost effectiveness criteria: screening programs using the TRC test, minimizing program administration costs, and employing competitive procurement. Massachusetts uses the TRC test for screening, while administration costs and procurement methods are emphasized for efficiency.

Avoided Costs Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics which investigated the avoided energy supply costs for New England. Before any changes are implement...

AI summary Avoided costs are periodically updated, with the last update in 2015 based on Synapse Energy Economics' report on New England's avoided energy supply costs. Updates require board approval. Calculations cover the entire New England region, including Massachusetts, with categories like avoided capacity costs, renewable portfolio standards (RPS) compliance costs, and transmission/distribution costs.

Customer Class Breakdown There are the following types of customers: - Residential - Commercial 99 Avoided Costs -

AI summary The document outlines two customer classes: Residential and Commercial. It references a study on avoided costs from the Massachusetts Energy Efficiency Advisory Committee (MA-EEAC) via a provided URL.

National Grid's cost effectiveness results for 2013-2015 are as follows: National Grid 2013-2015 Cost Effectiveness Results Expected TRC 3.69102 Actual TRC Not Available FUTURE TARGETS

AI summary National Grid's cost effectiveness results for 2013-2015 show that the expected Total Resource Cost (TRC) is 3.69102, but the actual TRC is not available. The text also mentions 'Future Targets,' indicating ongoing planning or goals for cost effectiveness.

2. Cost Effectiveness Calculator Section This section will take the inputs from the Measure Library section, combine them with the other inputs listed below, and output a cost effectiveness forecast. This will be used to determine the ince...

AI summary The Cost Effectiveness Calculator Section integrates inputs from the Measure Library and other data to generate a cost effectiveness forecast. This forecast determines the incentive screening threshold for evaluating program measures.

Inputs - Avoided Supply Costs (energy and capacity); - Local Avoided Supply Costs (energy and capacity); - Fixed Program Administration Costs; - Year of Implementation; - Measure Participation; - Variable Costs; - Annual Operating Costs (F...

AI summary The document outlines key inputs for evaluating energy efficiency programs, including avoided supply costs, program administration expenses, measure participation rates, energy savings persistence, and financial factors like discount and inflation rates. These parameters inform cost-benefit analyses and program effectiveness assessments.

Outputs - Total Gross Energy Savings; - Total Gross Demand Reduction; - Total Net Energy Savings; - Total Net Demand Reduction; - TRC Benefits; - TRC Costs; - TRC Net Benefits; - TRC Ratio; - PAC Benefits; - PAC Costs; - PAC Net Benefits;...

AI summary The document outlines key outputs from a regulatory proceeding, including energy and demand savings metrics, TRC (Total Resource Cost) and PAC (Program Administrator Cost) analyses, and cost ratios. These outputs evaluate the financial and operational impacts of energy efficiency initiatives.

900 active programs across North America, major themes and principles could be identified that were employed by all jurisdictions in their incentive level setting processes. These principles include: - 1. Assess and account for customer mo...

AI summary EfficiencyOne's incentive-setting approach in Nova Scotia aligns with cross-jurisdictional principles but requires refinement. The analysis evaluated four programs (Instant Savings, Custom, Business Energy Rebates, Home Energy Assessment) and identified opportunities for improvement, supported by research on customer behavior and market dynamics.

Program Financial Simulation To test the recommendations, a program financial simulation was conducted for both the Instant Savings and Custom programs. The current incentives were evaluated against multiple criteria, with a recommendation...

AI summary A program financial simulation was conducted for Instant Savings and Custom programs to evaluate current incentives against multiple criteria, resulting in recommendations regarding their appropriateness.

Participant Cost Test In evaluating a participant's purchase decision from a financial perspective, the PC test is a useful analysis to deploy. It assesses all of the direct financial considerations that a participant faces in making a pur...

AI summary The Participant Cost (PC) test evaluates a participant's purchase decision by analyzing direct financial considerations, determining if financial benefits outweigh costs.

Technology Research Technology research is essential when identifying participant perceived value as well as completing other analysis associated with incentive setting. The three forecasts that need to be developed are: - Market price; -...

AI summary Technology research is crucial for determining participant value and incentive strategies. Key factors include market price, technology penetration, and performance, with considerations of pricing, costs, and long-term technology evolution. Analysis informs energy consumption baselines and updates to the Technical Reference Manual (TRM).

RETURN ON INVESTMENT The determination of the return on investment is an evaluation of factors from the program administrator's and broader society's perspective. For efficiency programs, return on investment is based on two general consid...

AI summary The ROI evaluation considers program administrator and societal perspectives, focusing on cost effectiveness and budget impact for efficiency programs.

Cost Effectiveness Cost effectiveness is usually determined using a benefit-cost analysis which explicitly or implicitly compares the cost of energy efficiency to other electricity or natural gas supply resources and may include other cons...

AI summary The text discusses cost effectiveness determination through benefit-cost analysis, comparing energy efficiency to other resources. It highlights the use of Total Resource Cost (TRC) and Program Administrator Cost (PAC) tests, as well as unit costs based on lifetime energy savings below a target value as indicators.

Table 4: Cost Effectiveness Tests and Relationship to Incentive Setting from a Return on Investment Perspective Cost Effectiveness Test General Description and Features Implication for Incentive Setting The TRC is an evaluation of the tota...

AI summary This table outlines the Total Resource Cost (TRC) method for evaluating cost-effectiveness in programs, considering both utility and participant benefits and costs. It explains that TRC does not directly include incentives but accounts for them as a subset of participant costs, provided the incentive is less than the participant cost. Program administration costs are also considered separately.

Budget Impact Program administrators are not only affected by cost effectiveness concerns when determining their return on investment. From CLEAResult's experience, in several jurisdictions, the program budget is usually the limiting facto...

AI summary The text emphasizes that program budgets, not cost-effectiveness, often limit energy efficiency programs. While incentives may be cost-effective, they must align with budget constraints. Budget impact analysis should consider per-unit savings, per-participant costs, and total program budgets. Return on investment criteria set incentive ceilings, but actual incentives are often lower due to participant value perceptions.

THEORETICAL THRESHOLDS FOR INCENTIVES Based on the return on investment criteria as well as perceived value considerations, there are three theoretical thresholds for incentives that are based on quantitative analysis: - 1. Customer Cost -...

AI summary The document outlines three theoretical thresholds for incentives based on quantitative analysis: Customer Cost, PAC Benefits (Cost Effectiveness), and Budget, which are determined by return on investment criteria and perceived value considerations.

PAC Benefits (Cost Effectiveness) Threshold The PAC is the cost effectiveness test that reflects a program administrator's financial expenditure for a measure, program or portfolio. It is calculated by dividing the PAC benefits, which are...

AI summary The PAC Benefits (Cost Effectiveness) Threshold evaluates program administrator costs relative to avoided supply and distribution costs. PAC is calculated as benefits divided by costs, with incentives ideally limited to PAC benefits. Minimum thresholds (e.g., 1.0) ensure cost-effectiveness, while higher targets (e.g., 2.0) restrict incentives and overhead to 50% of benefits.

The Role of Financing If upfront costs are an issue, but not monthly or annual cash flows, the provision of low-interest or zero-interest financing may be valued by customers, either as a stand-alone incentive, or in combination with an up...

AI summary Low-interest or zero-interest financing may help customers with upfront costs in energy efficiency projects, especially when PC test ratios exceed 1.0 and payback targets are met. CLEAResult notes customers prefer upfront incentives over financing if mutually exclusive. NPV of financing costs should be included in program budget and PAC analyses.

INCENTIVE RATE REVIEW PROTOCOL After determining incentive values by analyzing the considerations that determine the two influences (perceived value, return on investment) of incentive setting, the final requirement is to establish and fol...

AI summary The document outlines a periodic review protocol for incentive rates in energy efficiency programs, emphasizing the need for regular assessments based on market dynamics, stakeholder engagement, and technology evolution. Reviews should occur annually or biennially, with more frequent checks for rapidly changing technologies. Factors like customer pricing, technology penetration, and financial impacts are central to the evaluation process.

Jurisdictional Research

AI summary Jurisdictional research focuses on Nova Scotia's regulatory framework, involving energy efficiency programs and cost methodologies. Key entities include the Nova Scotia Utility and Review Board (UARB) and the Demand Side Management Advisory Group (DSMAG).

JURISDICTION IDENTIFICATION AND SELECTION The selected jurisdictions were as follows: - Ontario (IESO); - Ontario (Union Gas); - British Columbia (BC Hydro); - California (PG&E); - Oregon (Energy Trust of Oregon); - Washington (Energy Trus...

AI summary The jurisdictions selected for comparison include Ontario, British Columbia, California, Oregon, Washington, New York, Vermont, Maine, and Massachusetts, chosen for their best-in-class status, similar size, market structure, energy efficiency policies, program delivery models, and climate to Nova Scotia.

SIZE, STRUCTURE AND CLIMATE Vermont, Maine and National Grid in Massachusetts all serve a similar population to ENS's programs. In terms of budget magnitudes, stock and sales data, and electricity savings targets, their similarity in size...

AI summary The document compares ENS's energy efficiency programs with those in Vermont, Maine, and Massachusetts due to similar population sizes and structures. Other jurisdictions with different systems, like BC Hydro and NYSERDA, were selected for diverse environments. Union Gas was included for a natural gas perspective, and Maine, Vermont, and Massachusetts were chosen for their climate similarity to Nova Scotia, affecting HVAC and building technologies.

Co E f fec ive st t ne ss Te ing st T he f fec ive f m t e t co s ne ss o ea su res , d p fo l ios ho l d be t p rog ra ms a n or s u d de ine he he tes te to te t rm r a w d i f ica ion in inc ive t t mo en o r dm in is ion is ire d tra t...

AI summary The text discusses the methodology for identifying best practices in incentive setting, focusing on effective measures, programs, and strategies that ensure proper implementation and alignment with cost-effectiveness, including the use of the Technical Reference Manual and the Public Affairs Committee.

COST EFFECTIVENESS AND AVOIDED COSTS At the portfolio level, cost effectiveness is guaranteed since the combination of savings targets and budget is lower than the cost effectiveness threshold (provided that the persistence of the energy s...

AI summary The document discusses Nova Scotia's approach to cost effectiveness in demand-side management (DSM), emphasizing a TRC threshold of 1.0 for program measures. Program administration costs (PAC) are included in TRC screening, though exceptions exist for market transformation. Comparisons to other jurisdictions highlight varying approaches to administration costs in TRC calculations.

3. What is the acceptable incentive threshold in terms of Customer Cost? With respect to Customer Cost, there may be an acceptable incentive level threshold that is based on the retail price, project cost, Incremental Equipment Cost or pro...

AI summary The acceptable incentive threshold for Customer Cost is typically capped at 100% of Incremental Equipment Cost, with exceptions requiring Program Administrator justification. Guidelines suggest 50-70% of retail price or a one-year payback, but these are not hard limits. Early replacement projects use RULDICM instead of Incremental Equipment Cost. Customer research informs threshold decisions, emphasizing flexibility over rigid caps.

5. What is the acceptable incentive threshold in terms of cost effectiveness? With respect to cost effectiveness, there may be an acceptable incentive level threshold that is based on measure, program or portfolio cost effectiveness target...

AI summary The acceptable incentive threshold is based on cost effectiveness, using a lifetime energy savings approach to set ceilings. Capacity benefits are excluded, and customer cost remains the priority. EfficiencyOne is recommended to develop a consolidated calculator to determine individual measure thresholds, with data details in Appendix B.

6. What is the proposed incentive, forecasted participation and

AI summary The section addresses proposed incentives, forecasted participation rates, and related methodologies for energy efficiency programs in Nova Scotia. Key considerations include cost-benefit analyses, program administration, and regulatory oversight by entities like the UARB and NSP.

forecasted incentive expenditure? Ideally, the proposed incentive is supported by the customer and technology research, and is within the incentive screening thresholds identified above. When the proposed incentive and forecasted participa...

AI summary The text outlines a process for evaluating proposed incentives based on customer and technology research, screening thresholds, and historical performance to forecast participation and compare total expenditures with current incentives. It emphasizes that cost effectiveness screening is not explicitly recommended for financial impact analysis beyond specific uses.

JURISDICTIONAL BENCHMARKING Jurisdictional benchmarking is not essential for existing incentives. The current program performance, historical experience and recommended research should provide a comprehensive analysis for incentive setting...

AI summary Jurisdictional benchmarking is not essential for existing incentives due to current program performance and historical data. For new incentives, it is recommended to compare with other jurisdictions, considering factors like market size and delivery approaches.

Other Considerations for Business Energy Rebates Program From reviewing program operations, the Business Energy Rebates program tracks retail pricing through the application process. This allows program managers to understand if incentive...

AI summary The Business Energy Rebates program monitors retail pricing to set appropriate incentive levels using the Participant Cost (PAC) threshold. It assumes high PAC won't breach cost-effectiveness thresholds if tracked properly. Challenges include limited data for Instant Rebates and difficulty aligning with local avoided costs.

Other Considerations for the Home Energy Assessment Program The Home Energy Assessment program recently introduced an updated incentive structure, which featured an increased incentive for the initial audit, and premiums associated with bu...

AI summary The Home Energy Assessment Program introduced updated incentives, including increased audit incentives and bundled incentives to encourage larger projects. Early data suggests higher savings per home and lower delivery costs, though bundling's impact is hard to isolate due to concurrent changes. Bundling is seen as effective for customer acquisition, and personal energy planning services have enhanced savings. Zone-based incentive adjustments may align with local avoided costs.

Program Financial Simulation Analysis

AI summary The document outlines a Program Financial Simulation Analysis, though specific details are not provided in the text. It references regulatory and energy efficiency-related acronyms, suggesting the analysis may involve utility regulation, demand-side management, and cost methodologies.

Cost Effectiveness Incentive Level Threshold EfficiencyOne has a PAC target of 1.9 for this program. For the calculation, it is assumed that program administration costs are 30 percent of total expenditure, which leaves the incentive costs...

AI summary EfficiencyOne's PAC target of 1.9 involves assumptions about program administration costs (30% of expenditure) and incentive costs (70%). Two approaches are discussed: adjusting the PAC threshold by excluding administration costs or including them per measure. CLEAResult recommends developing a more accurate cost-effectiveness calculator for incentive level setting and program design.

Measure PAC of Current Incentive Level (including Program Administration Costs) Is PAC of Current Incentive Greater than Cost Effectiveness Incentive Level Threshold (including Program Administration Costs) ENERGY STAR® LED A Lamp 506.49 Y...

AI summary The table outlines the Participant Cost (PAC) of current incentive levels for various energy efficiency measures, including program administration costs, and indicates whether these costs exceed the Cost Effectiveness Incentive Level Threshold.

CUSTOM PROGRAM FINANCIAL SIMULATION For the Custom Program Retrofit track, the program financial simulation analysis included the following steps: - 1. Identify the average project parameters for the analysis; - 2. Determine an appropriate...

AI summary The financial simulation for the Custom Program Retrofit track involves five steps: identifying project parameters, setting incentive thresholds, and comparing current incentives to these thresholds to determine if adjustments are needed.

Identification of Parameters for Average Custom Retrofit Project The parameters for an average Custom Retrofit project were provided by EfficiencyOne. To provide multiple options for modelling, three different measure archetypes were selec...

AI summary EfficiencyOne provided parameters for an average Custom Retrofit project, including three measure archetypes with varying energy savings persistence. These affect cost effectiveness incentive levels, and CLEAResult can only comment on average project incentives, not specific ones.

Comparison of Current Incentive Level to Incentive Level Thresholds Measure Cost to Customer Program Budget Cost Effectiveness Incentive Level Threshold Incentive Level Threshold Incentive Level Threshold Exceeded? Exceeded? Exceeded? Cust...

AI summary The table compares the current incentive level for the Custom Project Retrofit Track against predefined incentive level thresholds, showing that none of the thresholds (cost to customer, program budget, cost effectiveness) have been exceeded.

Appendix A – Jurisdictional Scans

AI summary Appendix A – Jurisdictional Scans outlines regulatory considerations for energy efficiency and demand-side management in Nova Scotia. It references organizations, methodologies, and programs involved in utility regulation, including cost analysis frameworks and stakeholder groups.

Cost Effectiveness Testing In their conservation (CDM) plans, LDCs need to show portfolio cost effectiveness (TRC and PAC) if they are offering province-wide programs. If LDCs are offering local programs (only for their territory), those p...

AI summary LDCs must demonstrate portfolio cost effectiveness (TRC and PAC) for province-wide programs, with a TRC exception of 0.7 for low-income programs. The IESO oversees cost effectiveness for province-wide programs, including societal benefits in TRC calculations.

Avoided Costs For electricity, the major categories of benefit are: - Avoided Capacity Costs - Avoided Energy Costs - Transmission and Distribution Costs - 15% Adder for additional societal benefits - o Environmental benefits - Employment...

AI summary The document outlines four major categories of benefit for electricity: Avoided Capacity Costs, Avoided Energy Costs, Transmission and Distribution Costs, and a 15% adder for societal benefits including environmental, employment, and other societal advantages.

Cost Effectiveness Requirements The gas utilities' overall DSM goals are to achieve all the cost-effective DSM available in its market. The OEB determined that cost effectiveness should be based on the Total Resource Cost-plus (TRC-plus) t...

AI summary Nova Scotia gas utilities must achieve all cost-effective Demand Side Management (DSM) programs. The Ontario Energy Board (OEB) mandates the Total Resource Cost-plus (TRC-plus) test for screening, with a 0.7 threshold for low-income programs and 1.0 for Resource Acquisition programs. Market transformation programs are exempt from cost-effectiveness testing.

1. Market Research The process starts by performing both primary and secondary market research in order to determine the measure performance metrics and costs. The objective is to determine awareness, barriers and purchase decisions. Marke...

AI summary The market research process involves primary and secondary research to assess performance metrics, costs, consumer awareness, barriers, purchase decisions, market penetration, and technology age (e.g., new vs. widespread solutions).

3. Benchmarking Union Gas also reviews other jurisdictions and evaluates their measures and incentives relative to what is offered in other territories. The goal is to be relatively similar to other territories in their incentives. Other f...

AI summary Union Gas evaluates incentives and measures from other jurisdictions to ensure alignment with industry standards, while considering factors like Incremental Equipment Costs as part of its benchmarking process.

COST EFFECTIVENESS REQUIREMENTS Total Resource Cost (TRC) is used by BC Hydro and the BCUC at the program level to evaluate performance. Programs must have a TRC of 1.0 or greater. There is an expectation of low-income programs. Internally...

AI summary BC Hydro and BCUC require programs to have a Total Resource Cost (TRC) of 1.0 or higher for evaluation. Low-income program expectations and internal cost-effectiveness tests like utility cost and ratepayer impact measures are also applied.

Calculating Cost effectivenessEffectiveness Cost effectiveness analysis is performed by looking at the stream of benefits and costs resulting from the DSM investment. Four metrics are calculated for each test: - 1. Benefit-cost ratio = PV...

AI summary The document outlines the calculation of cost effectiveness for DSM investments using four metrics: benefit-cost ratio, net present value, and gross levelized cost. These metrics assess the financial viability of demand-side management initiatives by comparing the present value of benefits and costs.

Cost Effectiveness Testing As detailed in D.14-10-046 8 , the CPUC has interpreted its mandate to deliver cost-effective energy efficiency and conservation programs as meaning that all energy efficiency portfolios of delivery agents should...

AI summary The CPUC mandates cost-effective energy efficiency programs, using TRC and PAC tests. California's Standard Practice Manual and Energy Efficiency Policy Manual guide evaluations, comparing avoided generation costs against program costs. DEER database and E3's model support measure-level and portfolio testing.

INCENTIVE LEVEL SETTING METHODOLOGY PG&E's Energy Efficiency Products organization was formed approximately six years ago in part to standardize and streamline the measures developed and marketed through PG&E's breadth of energy efficiency...

AI summary PG&E's Energy Efficiency Products organization standardizes energy efficiency measures and sets incentives using a structured process involving the California Public Utility Commission (CPUC). The process includes evaluating technologies for cost-effectiveness using the E3 model and ensuring alignment with market trends. PG&E does not require individual measures to meet TRC or PAC thresholds above 1, allowing investment in high-potential technologies.

Northwest Power Plan 11 The Northwest Power & Conservation Council represents the regional power planning efforts of Idaho, Washington, Oregon and Montana. The Northwest Power Act requires that the Council produce a 20-year Power Plan each...

AI summary The Northwest Power & Conservation Council develops a 20-year Power Plan every five years, emphasizing energy efficiency as the least-cost resource. The 2016 Plan highlights energy efficiency's role in avoiding fuel price volatility, financial risks, and carbon reduction policy impacts, while meeting future capacity needs. The Council prioritizes cost-effective energy efficiency for ratepayers over other resource options.

COST EFFECTIVENESS TESTING & AVOIDED COSTS 14

AI summary The document section focuses on cost-effectiveness testing and avoided costs in regulatory proceedings, referencing footnote 14. It involves analysis of energy efficiency programs, cost methodologies, and regulatory frameworks in Nova Scotia.

Cost Effectiveness - Electricity When evaluating cost effectiveness, the OPUC defined in Docket UM-551 that the following cost effectiveness tests are to be used: - Utility System Test - Societal Cost Test (similar to TRC) Programs and mea...

AI summary The OPUC, via Docket UM-551, outlines two cost-effectiveness tests (Utility System Test and Societal Cost Test, similar to TRC) for evaluating energy programs. Measures passing both tests (benefit-cost ratio ≥1.0) qualify for Energy Trust Investment, with portfolio-level ex post reporting required.

Costs The OPUC has defined that the following elements be considered when determining the costs from the societal perspective 15 (i.e., Total Resource Cost): - 1. Total cost of efficiency measures and actions 16 , including costs to the En...

AI summary The OPUC outlines Total Resource Cost (TRC) elements for societal cost analysis, including efficiency measure costs, Energy Trust administrative/program management costs, and excluding consumer-paid costs and tax credits. Program management costs from locally funded programs are excluded due to non-energy considerations. The utility system test includes Energy Trust incentives and administrative costs.

Benefits (Avoided Costs) In the societal test, the Energy Trust will include the following benefits: - 1. The value of the electrical and/or gas energy saved based on the avoided cost forecasts of the utilities whose customers are served b...

AI summary The Energy Trust includes energy savings, non-energy benefits, line losses, gas capacity benefits, and a 10% conservation credit in its societal test. Benefits are based on utility forecasts approved by PUC and OPUC, with merged cost forecasts for electric and gas utilities. Non-energy benefits use proxies until OPUC provides alternatives. Environmental benefits, including reduced carbon emissions, are considered under integrated resource planning.

Portfolio vs. Measure Level Cost Effectiveness As mentioned above, cost effectiveness is calculated at both the measure and program levels. It is important to note that there are fundamental differences in what costs are included when test...

AI summary The document explains that cost effectiveness is evaluated at both measure and program levels. Measure-level testing excludes administration and delivery costs, while program-level testing includes them. The Energy Trust requires programs to achieve a benefit-cost ratio greater than 1 for UCT and TRC tests.

Below are the cost effectiveness results which were calculated for each program as part of the Energy Trust's 2014 Annual Report. 19 Program Utility Cost Test Benefit Cost Ratio Societal (Total Resource Cost) Test Benefit Cost Ratio New Ho...

AI summary The Energy Trust's 2014 Annual Report presents cost effectiveness results for various energy efficiency programs, showing benefit-cost ratios for both utility and societal (Total Resource Cost) tests across different program categories.

COST EFFECTIVENESS – NATURAL GAS The current market condition for natural gas prices (i.e., low price environment) has caused the Energy Trust and PUCs to reexamine gas measures over the last few years. The Energy Trust has been able to ca...

AI summary Low natural gas prices prompted the Energy Trust and PUCs to reevaluate gas measures using Order 94-950. Guidelines require a TRC ≥1.0 for portfolio inclusion, with exceptions for TRC 0.5-0.9. Measures below TRC 0.5 are excluded unless justified. This maintains program infrastructure until gas prices rise, allowing portfolio-level cost-effectiveness testing to manage program delivery.

Detailed Measure Development - •Identify technical guidelines and data, identify any data gaps and create research plan for gaps - •Stakeholder outreach - •Facilitation of crossprogram coordination - •Cost Effectiveness testing - •Draft Me...

AI summary The process involves identifying technical guidelines, addressing data gaps, stakeholder outreach, cross-program coordination, cost-effectiveness testing, and drafting a Measure Approval Document (MAD). Measures with sufficient data and stakeholder support are promoted to approval, while those with insufficient data may be piloted.

Detailed Measure Development - •Identify technical guidelines and data, identify any data gaps and create research plan for gaps - •Stakeholder outreach - •Facilitation of crossprogram coordination - •Cost Effectiveness testing - •Draft Me...

AI summary The process outlines steps for developing energy efficiency measures, including identifying technical guidelines, stakeholder outreach, cross-program coordination, cost-effectiveness testing, and drafting a Measure Approval Document (MAD). Measures with sufficient data and stakeholder support are promoted for approval, while those with data gaps may be piloted.

Incentive Setting Considerations When setting a measure incentive the following components are some of the key considerations taken by the Energy Trust and their program delivery agents: - Relationship of incentive to measure Incremental E...

AI summary The document outlines key considerations for setting energy efficiency measure incentives, emphasizing incremental costs, market impact, portfolio cost-effectiveness, and adherence to LUEC guidelines (3-3.5 cents/kWh for electricity, 50 cents/therm for gas). It highlights the Energy Trust's performance measures, including 85% savings goals and 8% budget allocation for administration. The process is described as 'more of an art than a science,' requiring regular updates as markets evolve.

Avoided Supply Costs in TRC Calculation The benefits calculated in the TRC are the avoided supply costs. The avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution...

AI summary The Total Resource Cost (TRC) calculation includes avoided supply costs, which encompass reductions in energy and capacity costs valued at marginal cost during periods of load reduction.

NYSERDA ENERGY EFFICIENCY PROGRAM INCENTIVE AND COST EFFECTIVENESS POLICY

AI summary The document outlines NYSERDA's Energy Efficiency Program, focusing on incentive structures and cost-effectiveness criteria. It references technical methodologies, evaluation processes, and regulatory frameworks for energy efficiency initiatives.

Cost Effectiveness Testing Under the EEPS, NYSEDRA was required to conduct cost effectiveness testing at the project level. The TRC is used as the cost effectiveness test. Prior to the implementation of the EEPS, the TRC was applied at the...

AI summary Under the EEPS, NYSEDRA was required to conduct project-level cost effectiveness testing using the TRC. Previously, under the CEF, TRC was applied at the program level, and this approach will continue under CEF.

Avoided Costs The benefits calculated in the TRC are the avoided supply costs. For NYSERDA, the avoided supply costs include the reduction in costs of electric energy, natural gas, generation and transmission, and distribution capacity, va...

AI summary The TRC (Total Resource Cost) calculates benefits as avoided supply costs, including reductions in electric energy, natural gas, and distribution capacity costs, valued at marginal cost during load reductions. These avoided costs are provided by the NY-ISO (New York Independent System Operator) for NYSERDA (New York State Energy Research and Development Authority).

APPENDIX A-8: VERMONT (EFFICIENCY VERMONT)

AI summary Appendix A-8 discusses Efficiency Vermont, focusing on energy efficiency programs and regulatory considerations. It references various acronyms related to energy efficiency, utility regulation, and cost methodologies.

Avoided Costs 2 Any updates to the avoided costs for Vermont are led by the PSB. Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics, which investigated the avoided e...

AI summary Vermont's avoided costs are periodically updated by the PSB, with the last update in 2015 based on a Synapse Energy Economics report. Avoided costs include categories like Avoided Energy Costs tied to RPS compliance, Transmission and Distribution Costs, DRIPE, and CO2 emissions. Updates require board approval.

EFFICIENCY VERMONT –OVERVIEW

AI summary Overview of Efficiency Vermont, focusing on energy efficiency initiatives and regulatory considerations. The text outlines key programs, stakeholders, and methodologies related to demand-side management and energy conservation in Nova Scotia.

Utility Facts - Serves all of Vermont, other than Burlington Electric Department customers - Over 9,500 square miles - Services population of 500,000 - Funded through energy efficiency charge collected by participating electric utilities....

AI summary The utility serves all of Vermont except Burlington Electric Department customers, covering 9,500 square miles and 500,000 people. It is funded through an energy efficiency charge collected by participating utilities, with avoided cost data available in a 2013 report linked to the Vermont Public Services Board.

Efficiency Vermont's spending for 2013 and 2014 is provided below: Prior Year Current Year 2014 Cumulative starting 1/1/12 Cumulative starting 1/1/12 # participants with installations 37,483 54,135 131,094 131,094 Operating Costs Administr...

AI summary Efficiency Vermont's spending for 2013 and 2014 is detailed, with a focus on operating costs, technical assistance, support services, and incentive costs. The data includes participant numbers, cost breakdowns, and energy savings metrics, highlighting the program's effectiveness in energy efficiency.

Vermont 2013-2015 Cost Effectiveness Results SCT 2.66 PAC 3.05 Based on analysis of the 2015-2017 program targets and budgets, it is assumed that the cost effectiveness projections will be slightly decreased, compared to historical perform...

AI summary The document presents cost effectiveness results for Vermont from 2013 to 2015, showing SCT at 2.66 and PAC at 3.05. It assumes that cost effectiveness projections for 2015-2017 programs will be slightly lower than historical performance.

MARKET STRUCTURE OVERVIEW The Efficiency Maine Trust Act came in effect in 2009 and is responsible for Efficiency Maine's inception as an independent Trust. Their purpose is to develop, plan, coordinate, and implement energy efficiency/alt...

AI summary The Efficiency Maine Trust Act (2009) established Efficiency Maine as an independent trust to implement energy efficiency programs, aiming for 100% residential weatherization by 2030 and 100 MW peak-load reduction by 2020. The Maine Public Utilities Commission (MPUC) approves triennial plans, which outline cost-effective savings targets and funding from ratepayers and the Forward Capacity Market. Energy efficiency is highlighted as the lowest-cost resource, with average savings costs of 4.3 cents/kWh for electricity and $12.96/MMBtu for heating fuels.

PORTFOLIO MATURITY AND HISTORICAL PERFORMANCE DSM programs were administered by electric utilities before 2002. Efficiency Maine was then established in 2002 to promote electricity efficiency, reduce energy costs and improve the environmen...

AI summary Efficiency Maine, established in 2002, administered energy efficiency programs from 2004-2010, achieving 486,342 MWh annual savings and a 2.92 benefit-to-cost ratio. Initially part of the Maine Public Utilities Commission (MPUC), it became an independent Trust in 2009.

TRC and PACT Both TRC and PACT tests are presented in Efficiency Maine's annual reports. However, only TRC is used to evaluate performance. PACT is used for program planning/stakeholder relationships. TRC and PACT by Efficiency Maine is ba...

AI summary Efficiency Maine uses both TRC and PACT, with TRC for performance evaluation requiring a net savings >1.0 and PACT for program planning/stakeholder engagement. TRC methodology is based on a 2008 National Action Plan report. Only TRC is applied at the measure level for performance reviews.

Costs TRC at the Program level: - Costs incurred by program participants (Incremental Equipment Costs) - Costs of running the energy efficiency programs (delivery and administration costs) TRC at the Measure level: • Costs incurred from th...

AI summary The document outlines cost structures for energy efficiency programs, distinguishing between Program-level and Measure-level Total Resource Costs (TRC) and Program Administration Costs (PACT). Program-level costs include incremental equipment, delivery/administration, and incentives, while Measure-level costs focus on incremental equipment expenses.

1. Market Research/Stakeholder Engagement The process starts by performing both primary and secondary market research in order to determine the measure performance metrics and costs. This will include data from utilities and consulting sta...

AI summary The process involves primary and secondary market research to determine measure performance metrics and costs, consulting stakeholders such as contractors, vendors, customers, and advocacy groups.

MASSACHUSETTS ENERGY EFFICIENCY PROGRAM INCENTIVE AND COST EFFECTIVENESS POLICY Massachusetts is viewed as one of the leading jurisdictions for promoting energy efficiency in North America. It is ranked as the #1 jurisdiction in ACEEE's 20...

AI summary Massachusetts leads in energy efficiency, mandated by the Green Communities Act requiring utilities to prioritize cost-effective programs. The 2016-2018 plan targets 4,122 GWh savings with a $1.96B budget, funded via charges, capacity markets, cap-and-trade, and surcharges. 10% of budgets must address low-income sectors.

Cost Effectiveness Testing As per the 2016-2018 plan, there are three key elements to cost effectiveness: - 1. Each program is supposed to be screened for cost effectiveness. For Massachusetts, the TRC test is used for screening. There is...

AI summary The 2016-2018 plan outlines three cost effectiveness criteria: screening programs using the Total Resource Cost (TRC) test in Massachusetts, minimizing program administration costs, and employing competitive procurement. Non-cost-effective program elements require justification for future cost-effectiveness.

Avoided Costs Periodically, the avoided costs are updated. The last update occurred in 2015, based on a report by Synapse Energy Economics which investigated the avoided energy supply costs for New England. Before any changes are implement...

AI summary The document outlines the process for updating avoided costs in New England, referencing a 2015 Synapse Energy Economics report. Avoided costs are calculated regionally, with categories including Avoided Energy Costs tied to Renewable Portfolio Standards (RPS), Transmission/Distribution Costs, and CO2 emissions. Board approval is required before implementation.

National Grid 2013-2015 Savings and Expenditure Sector Savings (MWh) Total Expenditure ($) Incentive Expenditure ($) Residential 805,157 $290,842,401 $222,323,354 Low Income 58,040 $85,604,742 $68,824,752 Commercial & Industrial 919,015 $3...

AI summary The document outlines National Grid's energy savings and expenditure from 2013 to 2015, including savings by sector and spending ratios. It highlights the cost effectiveness of energy efficiency programs, with residential, low-income, and commercial & industrial sectors showing varying levels of savings and expenditure.

National Grid's cost effectiveness results for 2013-2015 are as follows: National Grid 2013-2015 Cost Effectiveness Results Expected TRC 3.69 102 Actual TRC Not Available FUTURE TARGETS

AI summary The document presents National Grid's cost effectiveness results for the years 2013 to 2015, highlighting the expected Total Resource Cost (TRC) of 3.69 and noting that the actual TRC is not available. It also mentions future targets, though they are not detailed in the provided text.

1. Measure Library Section (from TRM process recommendation in report) This section should include the details of each measure in the portfolio, or measures being considered. - Efficient Technology Name; - Efficient Technology Description;...

AI summary The Measure Library Section outlines data requirements for evaluating energy efficiency measures, including technology details, costs, savings, and screening thresholds. It emphasizes metrics like TRC (Total Resource Cost), PAC (Participant Cost), and PC test, alongside parameters for forecasting penetration and pricing. The section supports DSM (Demand Side Management) program evaluation and cost-effectiveness analysis.

2. Cost Effectiveness Calculator Section This section will take the inputs from the Measure Library section, combine them with the other inputs listed below, and output a cost effectiveness forecast. This will be used to determine the ince...

AI summary This section integrates inputs from the Measure Library with additional data to generate a cost effectiveness forecast, which determines the incentive screening threshold for evaluating program measures.

Outputs - Total Gross Energy Savings; - Total Gross Demand Reduction; - Total Net Energy Savings; - Total Net Demand Reduction; - TRC Benefits; - TRC Costs; - TRC Net Benefits; - TRC Ratio; - PAC Benefits; - PAC Costs; - PAC Net Benefits;...

AI summary The document outlines key output metrics for regulatory analysis, including energy savings, demand reduction, TRC (Total Resource Cost) benefits and costs, PAC (Participant Cost) metrics, PC (Participant Cost) ratios, and levelized unit costs for energy and demand reduction.

Inputs - Incentive screening threshold in terms of Customer Cost (From Measure Library); - Incentive screening threshold in terms of the program budget (From Measure Library); - Incentive screening threshold in terms of cost effectiveness;...

AI summary The document outlines key inputs for incentive screening, including thresholds based on customer cost, program budget, and cost effectiveness, along with sector classifications, program delivery channels, and financial motivation/impact data from the Cost Effectiveness Calculator.