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diverse views of stakeholders before adopting externality values and policy
rules, which are an integral part of the cost-effectiveness evaluation.
PARTICIPANT TEST
Definition
The Participant Test is the measure of the quantifiable benefits and costs to the
customer due to participation in a program. Since many customers do not base
their decision to participate in a program entirely on quantifiable variables, this
test cannot be a complete measure of the benefits and costs of a program to a
customer.
Benefits and Costs
The benefits of participation in a demand-side program include a reduction in
the customer’s utility bill(s), any incentive paid by the utility or other third
parties, and any federal, state, or local tax credit received. The reductions to
the utility bill(s) should be calculated using the actual retail rates that would
have been charged for the energy service provided (electric demand or energy
or gas). Savings estimates should be based on gross savings, as opposed to net
energy savings (refer to point 1 in Notes).
In the case of fuel substitution programs, benefits to the participant also
include the avoided capital and operating costs of the equipment/appliance not
chosen. For load building programs, participant benefits include an increase in
productivity and/or service, which is presumably equal to or greater than the
productivity/service without participating. The inclusion of these benefits is
not required for this test, but if they are included then the Societal Test should
also be performed.
The costs to a customer of program participation are all out-of-pocket
expenses incurred as a result of participating in a program, plus any increases
in the customer’s utility bill(s). The out-of-pocket expenses include the cost of
any equipment or materials purchased, including sales tax and installation; any
ongoing operation and maintenance costs; any removal costs (less salvage
value); and the value of the customer’s time in arranging for the installation of
the measure, if significant.
How the Results Can Be Expressed
The results of this test can be expressed in four ways: through a net present
value per average participant (NPV avp ), a NPV for the total program, a
benefitecost ratio (BCR), or discounted payback. The primary means of
expressing test results is the NPV for the total program; discounted payback,
BCR, and per participant NPV avp are secondary tests.