Page 221 - Sustainable Cities and Communities Design Handbook

Life Cycle Analysis Chapter j 10 195

revenue requirements), the test results are unaffected by the uncertainties of
projected average rates, thus reducing the uncertainty of the test results.
Average rates and assumptions associated with how other options are financed
(analogous to the issue of incentives for DSM programs) are also excluded
from most supply-side cost determinations, again making the TRC Test useful
for comparing demand- and supply-side options.

Weakness of the Total Resource Cost Test

The treatment of revenue shifts and incentive payments as transfer paymentsd
identified previously as a strengthdcan also be considered a weakness of the
TRC Test. While it is true that most supply-side cost analyses do not include
such financial issues, it can be argued that DSM programs should include these
effects since, in contrast to most supply options, DSM programs do result in
lost revenues.
In addition, the costs of the DSM “resource” in the TRC Test are based on
the total costs of the program, including costs incurred by the participant.
Supply-side resource options are typically based only on the costs incurred by
the power suppliers.
Finally, the TRC Test cannot be applied meaningfully to load building
programs, thereby limiting the ability to use this test to compare the full range
of DSM options.

Formulas

The formulas for NPV TRC , BCR TRC , and levelized costs are as follows:
NPV TRC ¼ B TRC C TRC

BCR TRC ¼ B TRC =C TRC
LC TRC ¼ LCRC=IMP
where

NPV TRC ¼ NPV of total costs of the resource
BCR TRC ¼ BCR of total costs of the resource
LC TRC ¼ Levelized cost per unit of the total cost of the resource (cents per
kWh for conservation programs; dollars per kW for load management
programs)
B TRC ¼ Benefits of the program
C TRC ¼ Costs of the program
LCRC ¼ TRCs used for levelizing
IMP ¼ Total discounted load impacts of the program
PCN ¼ Net participant costs.