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Costs Administration Equipment Incentives Revenue Loss Value of Service Lost. Benefits Avoided Costs Environmental Non-energy Non-monetary Tax Credits. Cost Benefit Analysis. Benefit Cost Ratio Net Benefits Payback Period. Cost-Effectiveness Analysis.
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Costs Administration Equipment Incentives Revenue Loss Value of Service Lost Benefits Avoided Costs Environmental Non-energy Non-monetary Tax Credits Cost Benefit Analysis • Benefit Cost Ratio • Net Benefits • Payback Period
The Standard Practice Manual (SPM) • Developed to measure the cost-effectiveness of Energy Efficiency programs • Use four tests to measure cost-effectiveness from four perspectives: • Society: The Total Resource Cost (TRC) test • Program Administrator: The Program Administrator (PAC) test • Ratepayers: The Ratepayer Impact Measure (RIM) test • Participant: The Participant Test
ESAP tests • MPT – Modified Participant Test • Benefits are bill reductions and participant non-energy benefits • Costs are measure costs (administrative and capital costs of the measure) • UCT – Utility Cost Test • Benefits are the avoided costs of the energy savings and utility non-energy benefits • Costs are measure costs (administrative and capital costs of the measure) • TRC – Total Resource Cost • Benefits are the avoided costs of the energy savings • Costs are measure costs (administrative and capital costs of the measure) Avoided costs and NEBs are calculated by discounting annual values over the lifetime of the equipment to determine the Net Present Value. The % of ESAP’s administrative costs and NEBs assigned to each measure are based on the measure’s energy savings.
Cost and Benefits Used TRC MPT UCT Blue text indicates optional, hard-to-quantify benefits. Italic text indicates that value may be different for different tests
What is the difference between the ESAP tests and the SPM tests? • ESAP Utility test does not include the capital costs to participant, tax credits, or increased supply costs. However, these values should be zero for ESAP. • ESAP Utility test includes NEBs, which are not included in the PAC or the EE TRC, and included only as an “optional benefit” in the DR TRC. • Other than including NEBs, the ESAP Utility test is effectively the same as both the TRC and PAC tests. • ESAP Participant test measures bill reductions and participant NEBs vs. measure costs (i.e., the benefits to the participants vs. the costs to society). It is unclear whose exactly whose perspective this represents.
