Page 218 - Sustainable Cities and Communities Design Handbook

192 Sustainable Cities and Communities Design Handbook

Participant and the RIM Tests, where the revenue (bill) change and the
incentive terms intuitively cancel (except for the differences in net and gross
savings).
The benefits calculated in the TRC Test are the avoided supply costsdthe
reduction in transmission, distribution, generation, and capacity costs valued at
marginal costdfor the periods when there is a load reduction. The avoided
supply costs should be calculated using net program savings, savings net of
changes in energy use that would have happened in the absence of the pro-
gram. For fuel substitution programs, benefits include the avoided device costs
and avoided supply costs for the energy-using equipment not chosen by the
program participant.
The costs in this test are the program costs paid by both the utility and the
participants plus the increase in supply costs for the periods in which load is
increased. Thus all equipment costs, installation, operation and maintenance,
cost of removal (less salvage value), and administration costs, no matter who
pays for them, are included in this test. Any tax credits are considered a
reduction to costs in this test. For fuel substitution programs, the costs also
include the increase in supply costs for the utility providing the fuel that is
chosen as a result of the program.

How the Results Can Be Expressed

The results of the TRC Test can be expressed in several forms: as NPV, BCR,
or as a levelized cost. The NPV is the primary unit of measurement for this
test. Secondary means of expressing TRC Test results are BCR and levelized
costs. The Societal Testdexpressed in terms of NPV, BCR, or levelized
costsdis also considered a secondary means of expressing results. Levelized
costs as a unit of measurement are inapplicable for fuel substitution programs,
since these programs represent the net change of alternative fuels, which are
measured in different physical units (e.g., kWh or therms). Levelized costs are
also not applicable for load building programs.
NPV TRC is the discounted value of the net benefits to this test over a
specified period of time. It is a measure of the change in the TRCs due to the
program. A NPV above 0 indicates that the program is a less expensive
resource than the supply option upon which the marginal costs are based.
BCR TRC is the ratio of the discounted total benefits of the program to the
discounted total costs over some specified time period. It gives an indication of
the rate of return of this program to the utility and its ratepayers. A BCR above
1 indicates that the program is beneficial to the utility and its ratepayers on a
TRC basis.
The levelized cost is a measure of the total costs of the program in a form
that is sometimes used to estimate costs of utility-owned supply additions. It
presents the total costs of the program to the utility and its ratepayers on a per
kW, per kWh, or per therm basis levelized over the life of the program.