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OCTOBER 5, 2022 – We kick off this fall season with news of state progress in applying the National Standard Practice Manual (NSPM), the launch of an energy equity project, and share expert voices on topics of interest. Enjoy this issue and we welcome your feedback!
— Julie Michals & Natalie Fortman
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--How Are States Using the NSPM?
--*New* Distributional Equity Project
--PUF Article: Consistency in BCA
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--Monetizing Societal Health Impacts
--BCA Training - Don't Miss IEPEC!
--Upcoming Events
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How Are States Using the NSPM? | |
States are applying the NSPM framework to update or modify their existing benefit cost analysis (BCA) practices through stakeholder processes. Each jurisdiction is unique in its process and scope, and can serve as examples of what might work best in your jurisdiction of interest. See recent developments below, and refer to past NESP newsletters for further background. See also NSPM Application Case Studies describing states that have fully applied the NSPM framework, and companion NSPM resources that support quantification of impacts (MTR Handbook) and that illustrate BCA for various use cases (BCA Case Studies). | |
Minnesota - After facilitating a series of stakeholder workshops to apply the NSPM, the Minnesota Department of Commerce (DOC) developed a draft Working Group report, with input from the Cost-Effectiveness Advisory Committee (CAC), that includes a recommendation to adopt a new primary Minnesota Test (MN Test). The DOC will now lead additional workshops to identify methodologies to quantify impacts for use in the MN Test. Read More below. | |
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“Applying the NSPM’s framework to Minnesota’s cost-effectiveness update process has resulted in a comprehensive and transparent examination of our current practices. After going through the NSPM’s step-by-step process with our cost-effectiveness advisory committee, we now better understand what impacts should be included in our Primary Test for screening utility programs. The NSPM has been a really useful tool that has helped us navigate how to examine and update our tests."
--Adam Zoet, Director MN Commerce Department
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Washington - The Utilities & Transportation Commission (UTC) opened Docket UE-210804 in November 2021 to develop a new cost-effectiveness test that aligns with the state's Clean Energy Transformation Act (CETA) and other policies. Using the NSPM principles and framework, the UTC is now facilitating a series of technical workshops to apply the NSPM 5-step process. Read More below. | |
Colorado - Public Service Company of Colorado (PSCo or Xcel) is required by Commission rules to file a distribution system plan (DSP) every two years (Proceeding No. 20R-0516E), including consideration of non-wires alternatives or solutions for major distribution grid projects. PSCo submitted its DSP on May 2, including a proposed benefit-cost methodology for NWAs developed by ICF. In its filing, PSCo proposes an Expanded, Modified TRC (EMTRC) that builds on its existing Modified TRC. Informed by applying the NSPM, the EMTRC incorporates additional value streams to reflect localized and customer benefits that may be realized by NWAs, as well as greater alignment with Colorado’s clean energy and equity goals. Public comments filed in late September were generally positive on the proposed EMTRC and its alignment with the NSPM principles. | |
Maine - The state of Maine Governor’s Energy Office (GEO) issued an RFP in June 2022 seeking proposals for analysis, program design, and stakeholder engagement services to support the work of the Distributed Generation Stakeholder Group, including development of a cost-effectiveness test. In its Request for Proposals (RFP), the GEO notes that the test should be based on best practices, such as those outlined in the NSPM (pg. 8). Synapse Energy Economics was selected to perform the work. Read More below. | |
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Other State Updates and NSPM References
Colorado (Docket 21R-0449G): While the NSPM is being used in CO in the context of electric utility non-wires alternative proposals, it is also being recommended in the context of natural gas non-pipe alternatives. In their comments related to Commission Interim Decision No. C22-0427-I, AEE recommends the use of the NSPM as an appropriate starting point for developing a robust BCA methodology for non-pipe alternatives. AEE explains how the NSPM principles provide a balance between flexibility and consistency and will support the goals of the planning process (pgs. 11-12).
Michigan (Case No. 20898): On July 27, 2022, the Michigan Public Service Commission (MPSC) ordered the utilities to file proposed Michigan-specific BCA requirements that may be used in multiple types of dockets including pilot proposals, distribution planning, and rate cases by September 1, 2022, where the proposed BCAs should be informed by the NSPM and tailored to Michigan’s regulatory structure and requirements (pg. 20). A subsequent order was issued by the Commission that postpones the filing to next year and directs the utilities to file BCA requirements for evaluating pilot proposals no later than February 1, 2023, where the BCAs should still be informed by the NSPM (pgs. 3-4).
Wisconsin (Docket 5-FE-104): In response to the Public Service Commission of Wisconsin’s request for comments on Phase II of the Quadrennial Planning Process, Clean Wisconsin and the Midwest Energy Efficiency Alliance (MEEA) both point to the NSPM as an example of BCA best practices and recommend the development of a new cost-effectiveness test based on the NSPM.
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*New* Distributional Equity Project | |
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We are excited to announce that we have partnered with Lawrence Berkeley National Laboratory (LBNL) to develop guidance for conducting Distributional Equity Analysis (DEA). Jointly funded by US DOE and E4TheFuture, this project will build on the Methods, Tools & Resources Chapter 9 conceptually framework for DEA, and will involve research on the current state of equity measurement in DER valuation, development of a how-to guide for stakeholders to conduct DEA, and an example case study that applies the DEA framework. This work will build on related national energy equity efforts, such as the Energy Equity Project and others. Stay tuned for more information about this critical project being launched this fall.
Learn More on BCA and Equity:
Midwest Energy Efficiency Alliance (MEEA) Webinar: October 27, 2022 1pm CT/2pm ET: Accessing Equity: Resources for the Efficiency Industry. Tim Woolf, Synapse Energy Economics; Justin Schott, Energy Equity Project; Allison Carlson, Illume Advising. Register here.
ACEEE Summer Study: Natalie Fortman presented our DEA framework at the recent ACEEE Summer Study. Check out our paper, coauthored by E4TheFuture and Synapse Energy Economics, and Natalie's presentation, including this illustrative diagram explaining the key differences between BCA and DEA.
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Source: NESP. While BCA measures the absolute impact of a program in monetary terms (i.e., the impact of a program to all blue customers), DEA measures the relative impact of a program between the target population (orange customers) and other customers (blue customers). | |
PUF Article: Consistency in BCA | |
How can regulators avoid the pitfall of "arbitrary and capricious" decisions? According to the NSPM, the opposite of arbitrary is “consistent.” Read about how consistency in BCAs leads to better regulatory outcomes for all stakeholders in the October issue of Public Utilities Fortnightly, where authors John Shenot (Regulatory Assistance Project) and Chris Neme (Energy Futures Group) share examples of and insights on the consistent (and inconsistent) valuation of resources. | |
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Monetizing Societal Health Impacts in BCA | |
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Although many states account for host-customer non-energy impacts (NEIs) in their BCAs -- as outlined in the recently refreshed Database of Screening Practices (DSP) -- Illinois is leading the way on monetizing societal health NEIs for their TRC test.
We are pleased to welcome guest writer Patricia Plympton to describe the methodology developed by Guidehouse to assess and monetize the societal health NEIs of ComEd’s energy efficiency portfolio in Illinois.
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BCA Training - Don't Miss IEPEC | |
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October 11, 2022 10am PT/1pm ET: Lumina Webinar. Navigating the Heat Pump Landscape: Helping Consumers, Utilities and Cities Make Economic Decisions. Lumina and Apex Analytics have developed a tool based on NSPM guidance to help optimize cost-effectiveness of building electrification programs. James Milford, Lumina; Justin Spencer, Apex Analytics; Brian Tholl, Fort Collins Utilities. Register here.
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October 27, 2022 1pm CT/2pm ET: Midwest Energy Efficiency Alliance (MEEA) Webinar. Accessing Equity: Resources for the Efficiency Industry. Tim Woolf, Synapse Energy Economics; Justin Schott, Energy Equity Project; Allison Carlson, Illume Advising. Register here.
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October 27, 2022 2:45pm PT/5:45pm ET: California Energy and Demand Management Council (CEDMC). Session 2: Equity, Jobs and Decarbonization. Tim Woolf, Synapse Energy Economics. More information and registration here.
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November 1, 2022: IEPEC Workshop. Evolving Evaluation 202: Evaluation and Cost Effectiveness in a DER World. Steve Schiller, LBL and Olivia Patterson and Jayden Wilson, Opinion Dynamics. More information and registration here.
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NSPM for DERs – provides a comprehensive framework based on policy-neutral, non-biased, and economically-sound principles to support the BCA of DERs.
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BCA Use Case Examples – three case studies are hypothetical examples using real-world data to illustrate NSPM application in different use cases, developed by ICF and Smart Electric Power Alliance (SEPA). ICF hosted a webinar to provide an overview, with a focus on the solar+storage commercial use case. Get the recording and slides (Sept. 2022).
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