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Cost Effectiveness Background for the Energy Savings Assistance Program

Cost Effectiveness Background for the Energy Savings Assistance Program. ESAP Workshop 3 October 20, 2011 SDG&E / SoCalGas. Overview. Regulatory background The CE tests currently used for the ESA Program The models used to run the tests Non-energy benefits The inputs required

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Cost Effectiveness Background for the Energy Savings Assistance Program

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  1. Cost Effectiveness Background for the Energy Savings Assistance Program ESAP Workshop 3 October 20, 2011 SDG&E / SoCalGas

  2. Overview • Regulatory background • The CE tests currently used for the ESA Program • The models used to run the tests • Non-energy benefits • The inputs required • How the results are used

  3. LIEE Cost Effectiveness Background • 2000: In response to D.00-09-036, a technical subcommittee is formed to develop a cost effectiveness test which would include non-energy benefits. • 2001: In response to D.01-03-028, the Low Income Public Purpose Test (LIPPT) model is developed by TekMRKT Works, Skumatz Economic Research, Inc. and Megdal Associates. • 2002: In response to D.01-12-020, the LIPPT is modified to evaluate the LIEE program and individual measures. • 2003: In response to D.02-08-034, IOUs use the modified model to test their programs

  4. LIEE Cost Effectiveness Background • 2004: ACR directed the IOUs to institute a process for considering measures for the PY2006 program. • 2005: proposals for new measures are solicited and assessed using the cost effectiveness criteria approved by the Commission. • 2008: In D.08-11-031, the Commission established new cost effectiveness criteria for determining which measures could be in the program

  5. The Cost Effectiveness Tests • Currently the IOUs report 3 tests: • The modified participant test (MPT) • The utility cost test (UCT) • The total resource cost test (TRC) • Only the MPT and UCT are used to determine which measures are included in the program • Only the MPT and UCT include non-energy benefits (NEBs)

  6. The Models • A modified version of the LIPPT model (developed in 2001) is used to estimate the NEBs • The model was developed in 2001 • The model allows input of basic assumptions regarding the NEBs • NEBs are estimated on a per household basis and then allocated across measures based on their share of energy savings • The E3 Calculator for Energy Efficiency is used to estimate the avoided costs for the UTC and the TRC

  7. NEBs Included in the Tests Utility: • Reduced arrearage cost • Reduced bad debt written off • Fewer shutoffs • Fewer reconnects • Fewer notices • Fewer customer calls • Fewer emergency gas svc calls • CARE subsidy avoided Participant: • Water/sewer savings • Fewer shutoffs • Fewer calls to utility • Fewer reconnects • Property Value benefits • Fewer fires • Moving costs / mobility • Fewer illnesses and lost days from work/school • Net benefits for comfort & noise • Net benefits for additional hardship

  8. NEB Study • A study was conducted in 2010 to look at the status of NEBs, research what other states are using, and report the value range • The report provided information on NEBs reported in other states/programs including a table of reported values • NEBs are very difficult to quantify and no precise methods are being used. • Many of the other values reported are a % of energy savings • Any additional studies and customer surveys would cost much more than originally budgeted

  9. The report is on the LIOB website: http://www.liob.org Look under “Reports” May12, 2010 Non-Energy Benefits: Status, Findings, Next Steps, and Implications for Low Income Program Analyses in California Skumatz Economic Research Assoc and The Cadmus Group

  10. How the CE Results are Used • Currently the IOUs report the test results for the portfolio and for each measure by fuel type, housing type and climate zone (Tables A-5, A-6, A-7) • Continuing program measures are required to have a result of 0.25 for either the MPT or UCT • New measures are required to have a result of 0.25 for both the MPT and UCT • In cases where the measure does not pass but does provide health or safety benefits, measures may be kept regardless of the test result (example: furnaces and hot water heaters)

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