Topic:"Operating Expenses" in M07544

ake an energy-efficient choice. Financial incentives address the cost barrier. The jurisdictions investigated in this project feature financial incentives as a key component of their program strategy. Depending on the program and jurisdict...

AI summary Financial incentives are a key component of energy efficiency programs, with some jurisdictions allocating up to 75-80% of program budgets to them. National Grid exemplifies this approach. Massachusetts and Oregon require minimizing program administration costs to ensure participants receive most financial benefits.

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.

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 to program administration costs: adjusting the PAC threshold to exclude administration costs or including them per measure. CLEAResult recommends developing a more accurate cost effectiveness calculator for incentive level setting.

Avoided Supply Cost (Benefits) Given the differences between Union Gas' and Enbridge's geography, system and customers and such, it is expected the avoided supply cost will be different between the two gas utilities. Under the TRC-plus tes...

AI summary The text explains that avoided supply costs will differ between Union Gas and Enbridge due to their distinct geographic, system, and customer factors. Under the TRC-plus test, benefits include avoided natural gas costs, transmission/distribution costs, and a 15% non-energy benefit adder for environmental, economic, and social advantages.

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.

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.

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.

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.

ake an energy-efficient choice. Financial incentives address the cost barrier. The jurisdictions investigated in this project feature financial incentives as a key component of their program strategy. Depending on the program and jurisdict...

AI summary Financial incentives are a major component of energy efficiency programs, with some jurisdictions allocating 75-80% of program budgets to them. National Grid and regions like Massachusetts and Oregon emphasize minimizing administrative costs to maximize participant benefits. This highlights the significant role of incentives in driving energy efficiency.

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.

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.

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.

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.

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.

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.

ake an energy-efficient choice. Financial incentives address the cost barrier. The jurisdictions investigated in this project feature financial incentives as a key component of their program strategy. Depending on the program and jurisdict...

AI summary Financial incentives are a major component of energy efficiency programs, comprising up to 75-80% of program budgets. Examples include National Grid's electricity conservation programs and requirements in Massachusetts and Oregon to minimize administration costs, ensuring participants receive most financial benefits.

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.

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 electricity supply and distribution costs. PAC is calculated as benefits divided by costs, including overhead and incentive expenses. Incentives should ideally not exceed PAC benefits adjusted for overhead. While a minimum PAC of 1.0 is common, higher thresholds (e.g., 2.0) can be targeted to limit costs to 50% of benefits.

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.

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.

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

AI summary The TRC-plus test includes incremental equipment costs borne by participants and delivery/administration costs of energy efficiency programs. This framework evaluates total resource costs beyond direct equipment expenses.

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.

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.

Incentive Setting Theory and its Application to Energy Efficiency Programs On pages 15 through 18 of the report, CLEAResult discusses two important influences on incentive setting, namely the perceived value of the product or service and t...

AI summary The text critiques CLEAResult's use of 'perceived value' and 'return on investment' in incentive setting, arguing these terms cause confusion between customer and societal perspectives. It recommends clarifying terminology, emphasizing customer payback periods, and incorporating the Participant Cost (PC) test alongside Program Administrator Cost (PAC) and Total Resource Cost (TRC) tests for determining incentives.

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 Theoretical Limits for Incentives Section First, we recommend CLEAResult offer a detailed definition of the theoretical limits. CLEAResult mentions "[i]ncentives can exceed these limits (and often do), but a reference poi...

AI summary The text provides four recommendations for CLEAResult's report: clarify the definition and relationship of 'theoretical limits,' remove the dollar sign from Figure 4's y-axis, rename 'percentage of customer cost' to 'customer cost,' and correct the representation of PAC benefits as a benefit-cost ratio. These edits aim to improve clarity and accuracy in cost calculations and terminology.

5. Discussion of Financing within the Report

AI summary The section discusses financing aspects within the report, referencing the Program Administrator Cost (PAC) acronym. No detailed arguments or entities are explicitly mentioned in the provided text.

6. Clarification of Theoretical Limits and Incentive Thresholds

AI summary This section addresses the need to clarify theoretical limits and incentive thresholds within the regulatory proceeding, focusing on definitions and criteria for program administrator costs (PAC) and their implications for stakeholder compliance and cost management.

ake an energy-efficient choice. Financial incentives address the cost barrier. The jurisdictions investigated in this project feature financial incentives as a key component of their program strategy. Depending on the program and jurisdict...

AI summary Financial incentives are a critical component of energy efficiency programs, with some jurisdictions allocating 75-80% of budgets to them. National Grid and regions like Massachusetts and Oregon emphasize minimizing administrative costs to ensure participants receive maximum financial benefits from 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.

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.

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.

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.

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.

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.

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.

ake an energy-efficient choice. Financial incentives address the cost barrier. The jurisdictions investigated in this project feature financial incentives as a key component of their program strategy. Depending on the program and jurisdict...

AI summary Financial incentives are a key component of energy efficiency programs, with some jurisdictions allocating 75-80% of program budgets to them. National Grid and regions like Massachusetts and Oregon emphasize minimizing administration costs to maximize participant benefits. This highlights the significant role of incentives in driving energy efficiency.

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 For electricity efficiency and conse...

AI summary The document discusses cost-effectiveness tests for electricity efficiency and conservation programs, focusing on utility benefits, program administration costs, and incentive costs. It highlights how program administrators may set internal targets for program administration costs, which can influence the availability of funds for incentives.

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.

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.

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.

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.

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.

History In 1999, Oregon lawmakers and citizens envisioned a future with Oregon homes and businesses powered by clean, affordable energy. They established stable, consistent funding to help Oregonians invest in energy efficiency and renewab...

AI summary In 1999, Oregon lawmakers and citizens established Energy Trust of Oregon to promote clean, affordable energy through energy efficiency and renewable resources. Launched in 2002 by the Oregon Public Utilities Commission, the Trust focuses on cost-effective programs, renewable energy support, low administrative costs, and customer satisfaction, benefiting customers of four utilities across two states.

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.

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 borne by program administrators and participants, as well as increased supply costs during periods of load growth. This calculation accounts for both administrative and supply-side impacts of demand-side management initiatives.

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.

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.

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.