Page 205 - Sustainable Cities and Communities Design Handbook

Life Cycle Analysis Chapter j 10 179

nonrenewable fossil fuels, must be treated as fuel substitution. In common
with other types of fuel substitution, any cost of gas transmission and distri-
bution, and environmental externalities, must be accounted for. In addition,
cost-effectiveness analyses of self-generation should account for utility
interconnection costs. Similarly, a thermal energy storage device should be
treated as a load management program when the predominant effect is to shift
load. If the acceptance of a utility incentive by the customer to install the
energy storage device is a decisive aspect of the customer’s decision to remain
an electric utility customer (i.e., to reject or defer the option of installing a gas-
fired cogeneration system), then the predominant effect of the thermal energy
storage device has been to substitute electricity service for the natural gas
service that would have occurred in the absence of the program.
In addition to Fuel Substitution and Load Building Programs, recent utility
program proposals have included reference to “load retention,” “sales reten-
tion,” “market retention,” or “customer retention” programs. In most cases, the
effect of such programs is identical to either a Fuel Substitution or a Load
Building programdsales of one fuel are increased relative to sales without the
program. A case may be made, however, for defining a separate category of
program called “load retention.” One unambiguous example of a load retention
program is the situation where a program keeps a customer from relocating to
another utility service area. However, computationally the equations and
guidelines included in the manual to accommodate Fuel Substitution and Load
Building programs can also handle this special situation.

Basic Methods

The chapter identifies the cost and benefit components and cost-effectiveness
calculation procedures from four major perspectives: Participant, Ratepayer
Impact Measure (RIM), Program Administrator Cost (PAC), and TRC. A fifth
perspective, the Societal, is treated as a variation on the TRC Test. The results
of each perspective can be expressed in a variety of ways, but in all cases it is
necessary to calculate the net present value (NPV) of program impacts over the
lifecycle of those impacts.
Table 10.1 summarizes the cost-effectiveness tests addressed in the manual.
For each of the perspectives, the table shows the appropriate means of
expressing test results. The primary unit of measurement refers to the way of
expressing test results that is considered by the staff of the two commissions as
the most useful for summarizing and comparing DSM program’s cost effec-
tiveness. Secondary indicators of cost effectiveness represent supplemental
means of expressing test results that are likely to be of particular value for
certain types of proceedings, reports, or programs.
This chapter does not specify how the cost effectiveness test results are to
be displayed or the level at which cost effectiveness is to be calculated (e.g.,
groups of programs, individual programs, and program elements for all or