Page 226 - Sustainable Cities and Communities Design Handbook

200 Sustainable Cities and Communities Design Handbook

complete standardization of the techniques and procedures for developing
inputs for such parameters as load impacts, marginal costs, or average rates.
Nevertheless, a series of guidelines can help to establish acceptable procedures
and improve the chances of obtaining reasonable levels of consistent and
meaningful cost-effectiveness results. The following “rules” should be viewed
as appropriate guidelines for developing the primary inputs for the cost-
effectiveness equations contained in the manual:
1. In the past, marginal costs for electricity were based on production cost
model simulations that clearly identify key assumptions and characteristics
of the existing generation system as well as the timing and nature of any
generation additions and/or power purchase agreements in the future. With
a deregulated market for wholesale electricity, marginal costs for electric
generation energy should be based on forecast market prices, which are
derived from recent transactions in California energy markets. Such
transactions could include spot market purchases as well as longer term
bilateral contracts, and the marginal costs should be estimated based on
components for energy as well as demand and/or capacity costs, as is
typical for these contracts.
2. In the case of submittals in conjunction with a utility rate proceeding,
average rates used in demand-side management (DSM) program cost-
effectiveness evaluations should be based on proposed rates. Otherwise,
average rates should be based on current rate schedules. Evaluations based
on alternative rate designs are encouraged.
3. Time-differentiated inputs for electric marginal energy and capacity costs,
average energy rates, demand charges, and electric load impacts should be
used for
a. load management programs
b. any conservation program that involves a financial incentive to the
customer
c. any fuel substitution or load building program.
Costing periods used should include, at a minimum, summer and
winter, on- and off-peak; further disaggregation is encouraged.
4. When program participation includes customers with different rate
schedules, the average rate inputs should represent an average weighted by
the estimated mix of participation or impacts. For General Rate Case
proceedings it is likely that each major rate class within each program will
be considered as program elements requiring separate cost-effectiveness
analyses for each measure and each rate class within each program.
5. Program administration cost estimates used in program cost-effectiveness
analyses should exclude costs associated with the measurement and eval-
uation of program impacts unless the costs are a necessary component to
administer the program.