The four bill calculations

Fuel Substitution

Fuel substitution means, for example, replacing a gas furnace with an electric heat pump: gas bills fall, electric bills rise. The CET has three fuel-substitution fuel types: AllElec-New, FuelSub-ToElec, FuelSub-ToGas.

Key details

• These are lifecycle savings calculations over the EUL of the measures.

• The dollar amounts are discounted to the year the measure is installed.

What these four calculations do

The CET (Cost Effectiveness Tool) asks whether an energy efficiency program is worth the money.

One of its tests is the RIM test (Ratepayer Impact Measure). It asks:

When some customers use less energy, the utility collects less revenue. How much does that shift onto everyone else's bills?

These four outputs work out the dollar value of bill changes for each measure, then adds it to the program's cost to get the RIM cost.

The calculations

Units × Installation Rate × Realization Rate × Net-to-Gross × energy saved × price of that energy

Conditional logic in the equations sort the result by its sign:

·      Positive result: goes in the Reduction column.

·      Negative result (fuel switching only): flipped to positive and put in the Increase column.

Adding up prices over the measure's life

A measure saves energy for years, so the code adds up the price of energy over its whole life. The CET code does this in slices:

1. First baseline: full years of the first life period (EUL1, effective useful life).

2. First baseline, fraction: the partial last year (a 10.5-year life counts half of year 11).

3. Second baseline, first fraction: the leftover part of that same year, belonging to the second baseline.

4. Second baseline: full years of the second period.

5. Second baseline, fraction 2: the partial last year of the second period.

These same slices are used for both electric and gas rates.

Each rate is divided by Raf raised to a power. Raf is 1 + the discount rate.

The final step: RIM cost

RIMCost = BillReducElec + BillReducGas + PACCost

RIMCostNoAdmin = BillReducElec + BillReducGas + PACCostNoAdmin

Lost bill revenue is added to the program administrator cost (PACCost). NoAdmin is the same without admin overhead.

Where Bill Incr comes in (the benefit side)

After bill impacts are calculated, each test is calculated as a benefit/cost ratio:

Test numerator i.e. the top of the fraction (benefits)

PAC = ElecBen + GasBen + WaterEnergyBen + OtherBen

TRC = ElecBen + GasBen + WaterEnergyBen + OtherBen + TaxCredits

RIM = ElecBen + GasBen + WaterEnergyBen + OtherBen + BillIncrElec + BillIncrGas