Page 214 - Sustainable Cities and Communities Design Handbook

188 Sustainable Cities and Communities Design Handbook

for cost escalation are made from there. The first-year revenue impact is the
change in rates in the first year of the program or the bill change needed to get
total revenues to match revenue requirements only for that year. The annual
revenue impact (ARI) is the series of differences between revenues and rev-
enue requirements in each year of the program. This series shows the cumu-
lative rate change or bill change in a year needed to match revenues to revenue
requirements. Thus the ARI RIM for year 6 per kWh is the estimate of the
difference between present rates and the rate that would be in effect in year 6
due to the program. For results expressed as lifecycle, annual, or first-year
revenue impacts, negative results indicate favorable effects on the bills of
ratepayers or reductions in rates, whereas positive test result values indicate
adverse bill impacts or rate increases.
NPV RIM gives the discounted dollar net benefit of the program from the
perspective of rate levels or bills over some specified time period. An NPV
above 0 indicates that the program will benefit (lower) rates and bills.
The benefitecost ratio (BCR RIM ) is the ratio of the total benefits of a
program to the total costs discounted over some specified time period. A BCR
above 1 indicates that the program will lower the rates and bills.

Strengths of the Ratepayer Impact Measure Test
In contrast to most supply options, DSM programs cause a direct shift in
revenues. Under many conditions, revenues lost from DSM programs have to
be made up by ratepayers. The RIM Test is the only test that reflects this
revenue shift along with the other costs and benefits associated with the
program.
An additional strength of the RIM Test is that the test can be used for all
DSM programs (conservation, load management, fuel substitution, and load
building). This makes the RIM Test particularly useful for comparing impacts
among DSM options.
Some of the units of measurement for the RIM Test are of greater value
than others, depending upon the purpose or type of evaluation. The lifecycle
revenue impact per customer is the most useful unit of measurement when
comparing the merits of programs with highly variable scopes (e.g., funding
levels) and when analyzing a wide range of programs that include both electric
and natural gas impacts. BCR can also be very useful for program design
evaluations to identify the most attractive programs or program elements.
If comparisons are being made between a program or group of conserva-
tion/load management programs and a specific resource project, lifecycle cost
per unit of energy and annual and first-year net costs per unit of energy are the
most useful way to express test results. Of course, this requires developing
lifecycle, annual, and first-year revenue impact estimates for the supply-side
project.