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NEBs: Some Proposals for Improvement in the Next Program cycle

NEBs: Some Proposals for Improvement in the Next Program cycle. ESAP Workshop 3 October 20, 2011 SDG&E/SCG. Where We Are Now. Two major NEB Studies have been conducted by the State over the past several years.

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NEBs: Some Proposals for Improvement in the Next Program cycle

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  1. NEBs: Some Proposals for Improvement in the Next Program cycle ESAP Workshop 3 October 20, 2011 SDG&E/SCG

  2. Where We Are Now • Two major NEB Studies have been conducted by the State over the past several years. • Even though these studies were conducted many years apart, they resulted in very little change in values and program impact. • We have learned that: • NEBs can be extremely difficult and costly to Measure taking resources away from program activities. • Accuracy of the many NEBs estimates is questionable and controversial and very difficult to use effectively in modeling. • No new significant NEBs have been discovered.

  3. NEB Values From SERA Study- Participant Values are per household, per year.

  4. NEB Values - Utility Values are per household, per year

  5. Possible Options to Using NEBs in the Future Without Placing an Undo Burden on Program Resources • Reduce the Number of NEBs to those that are truly relevant and Important to the CE of the Program. • Of the Remaining NEBs, separate out those that are easily and inexpensively measured and add those directly into the CE Benefits • For all other NEBs develop a factor based on Energy Savings and use that in the CE Model.

  6. NEBs Proposed to be Eliminated From Cost Effectiveness Tests • Utility • Fewer Shutoffs • Fewer Reconnects • Fewer Notices • Reduction in Emergency Gas Service Calls • Participant • Fewer Shutoffs • Fewer Calls to Utility • Fewer Reconnects • Moving Costs

  7. NEBs Proposed to Continue to be Included in Cost Effectiveness Tests • Utility • Reduced arrearages • Fewer customer calls • CARE subsidy avoided • Participant • Water savings • Property values • Fewer fires • Fewer illnesses • Comfort

  8. Which of the Remaining NEBs Are Easy or Difficult to Measure • Participant • Water savings: • Easily measured. Methodology required the average Gallons per measure saved and an average water rate. • Property values: • Easily measured, Based upon the value of “Minor Home Repair” or other increase in property value ( if permanent). • Fewer fires: • Very difficult to measure. Currently based on many assumptions with no back-up. • Fewer illnesses: • Difficult to measure. Based on an average number of sick days away from work. No reliable source. • Comfort: • Difficult to Measure. No reliable source or methodology.

  9. Which of the Remaining NEBs Are Easy or Difficult to Measure (Continued) • Utility • Reduced Carrying Costs on Arrearages: • Difficult to measure accurately. Methodology relies on utility data but also an assumption concerning the % of program induced reductions in Arrearages. No reliable data available. • Fewer Customer Calls: • Difficult to measure Accurately. Methodology relies on utility data but also an assumption concerning the % of program induced reduction in Calls. No reliable data available. • Reduced Rate Subsidy: • Easily measured with Utility data.

  10. NEBs That Could Be Included in a Factor for CE Tests. • Utility • Reduced arrearages • Fewer customer calls • Participant • Fewer fires • Fewer illnesses Increased Health • Comfort

  11. NEB Factor • There are a number of NEBs that most agree exist but are extremely difficult to measure. These include: • Increased Comfort • Increased Health • Reduced Fires • Two options: • 1) Conduct additional expensive studies to try and determine values to use for each of these NEBs. Results would most likely be similar to what we have found in the past and they would be ambiguous and controversial. • 2) Take the information we now have and develop a factor that can be used as an addition to the energy benefits in the CE Tests. This could be done via one additional study, done over the next cycle, that reviews the previous studies and the current literature and proposes a factor. This would dramatically reduce measurement costs and put more resources where they belong, in the actual program.

  12. Cost effectiveness tests • Currently, the NEBs are used in two C.E. tests: • Modified participant test • [Bill savings + participant NEBs] ÷ program costs • Participant costs = $0 so program costs used instead • Utility cost test • [avoided costs + utility NEBs] ÷ program costs • Should a TRC test also be used?

  13. Societal NEBs?? • Of the NEBs currently being used, only a few could be considered true Societal benefits. These might include: • Water Savings – Since all of society benefits by increasing water conservation. • Fewer Fires – Reduces costs of fire fighting and insurance outside the program. • Fewer Illnesses – Sick people are not productive and may require societal care. • Emission Reductions: • Already Included in the Avoided Costs used in the CE tests. • Economic Benefits: • Because the ESAP programs are based on transfer payments, they net out in TRC tests. • While the programs do create benefits such as jobs and taxes, they do it at the expense of the private sector through increased electric and gas rates. This then results in extremely small or even negligible net benefits to overall society. • Other Possible Societal Benefits??

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