Minnesota: A New BCA Test for Efficiency Programs

The Minnesota Department of Commerce (DOC) process that applied the NSPM process over the past year culminated in a recent commission decision. A new case study shows how a state can use the NSPM BCA framework to develop a primary cost-effectiveness test for energy efficiency (and any other DER, or combination). This MN Case Study – prepared by NESP – summarizes how the framework, via a stakeholder process, was used to develop the Minnesota Cost Test (MCT). The MCT will be applied to the utilities’ 2024-2026 Conservation Improvement Program (CIP) Triennial Plans.

Maryland: Unified BCA Docket for All DERS - Workgroup Kickoff

The Commission opened the Unified BCA docket (Case No. 9674) in early 2022, and then convened a workgroup (Order 90212) directing utilities to issue an RFP on its behalf to retain workgroup facilitation services. E4TheFuture – with a project team comprised of Energy Futures Group, Rábago Energy, Steven Schiller Consulting, and AnnDyl Policy Group – was awarded a contract to provide facilitation and technical services to support the Unified BCA workgroup process (initial meeting 7/24/23). The process will build on the jurisdiction specific tests (JSTs) developed 2021-22: one for electric vehicles (Statewide EV BCA Methodology) and the second for energy efficiency (Maryland JST). It will consider metrics presented in an Energy Storage Working Group report in Docket 9619.

Michigan: Stakeholders Comment on Utilities' BCA Proposal for DER Pilots 

We reported earlier this year that in response to the Michigan Public Service Commission’s (MPSC) July 27, 2022 Order in Case No. 20898, DTE Electric Company and Consumers Energy (the Companies) submitted Proposed Requirements and Further Guidance on Benefit-Cost Analyses for Pilot Initiatives on 2/1/23, describing the Companies’ application of the NSPM 5-step process and consideration of the NSPM’s core principles to develop a JST that can be applied to pilot projects at scale. In April the Commission invited stakeholders to provide comments on the utilities’ proposal by 6/23, asking*:

1.   Are necessary elements missing from the BCA proposal? Are there additional impact categories which should be considered? 

2.   The BCA proposal recommends three potential treatments for different impacts: monetized, quantitative, and qualitative. Are the proposed treatments for each impact appropriate?

3.   The proposal includes an assumed discount rate of the after-tax WACC. Is this an appropriate discount rate?

4.   What, if any, changes to the BCA proposal are required in order for natural gas utilities to make use of the BCA proposal for pilots?

5.   Do stakeholders find value in the development of a spreadsheet-based tool for both the Staff and utility personnel to utilize? How can the tool be used to provide additional transparency into BCA assumptions?

6.   Are there regulatory examples of JST or BCA developments in other states that could be instructive for use in Michigan?

*(abbreviated)

Comments submitted by NGOs and utilities included the American Council for an Energy-Efficient Economy (ACEEE); the Michigan Energy Innovation Business Council (MEIBC); the Midwest Energy Efficiency Alliance (MEEA); Consumers Energy Company, DTE Electric Company, and DTE Gas Company (the Companies). See comments in Case U-20898.

Maine: NSPM BCA Framework Used to Develop a Maine Test for DG

Pursuant to the requirements set forth by the LD 936 – An Act to Amend State Laws Relating to Net Energy Billing and the Procurement of Distributed Generation Act (‘the Act’), the Governor’s Energy Office (GEO), in collaboration with the PUC, formed a Distributed Generation Stakeholder Group tasked with publishing a report on DG project programs to be implemented between 2024 and 2028 and the need for improved grid planning. A final Distributed Generation Stakeholder Group report was submitted to the legislature 1/6/23. It included an economic analysis of potential ‘successor’ DG programs in Maine, conducted by Synapse and Sustainable Energy Advantage (SEA). The analysis assessed the cost-effectiveness of the successor programs, where Synapse developed a Maine Test using the NSPM BCA framework. The report concluded that successor programs would result in substantial new renewable energy deployment consistent with the state’s policy goals, including: achieving Maine’s renewable energy and emissions reduction requirements and energy storage goals; resulting in significant ratepayer benefits such as reducing overall electricity rates for all Maine ratepayers; ensuring future DG deployment accounts for land use, equity, and other important considerations; and maximizing access to federal benefits for Maine. A description of the Maine Test can be found in Section 3.2 of the Economic Assessment (also a report appendix), where three successor programs were modelled and used to create a fourth, hybrid program. The hybrid program BCA results showed a benefit-cost ratio of 1.67 and net benefits of $6.60 million, and that it is possible to design DG programs such that they result in long-term rate reductions.

Puerto Rico: A Puerto Rico Cost Test Developed for Efficiency Programs

The Energy Bureau of the Puerto Rico Public Service Regulatory Board developed a Puerto Rico Benefit-Cost Test (PR Test) using the NSPM framework through a stakeholder process comprising four workshops. We missed reporting on this last summer, so are including now! Synapse Energy Economics facilitated the workshop series to apply the NPSM multi-step process. In Workshop 1, the jurisdiction’s key applicable policies were identified. In Workshop 2, stakeholders determined the Utility System Impacts that should be included in the cost test. In the third workshop, they focused on which non-utility impacts to include in the test. Prior to Workshop 4, stakeholders prioritized impacts to study first; during the workshop, they addressed the analysis period, assessment level, treatment of free ridership and spillover, and discount rate. Synapse used the input and comments to develop a report proposing the PR Test. After further stakeholder input and comments, the Energy Bureau adopted the final PR Test in August 2022 (Case Number: NEPR-MI-2021-0009).

Oregon Docket UM 2197 Acceptance of Distribution System Plan – Part Two 2/21/23. In their report regarding Portland General Electric’s Distribution System Plan, the Oregon PUC Staff notes the Plan presents ongoing work to improve accounting of costs and benefits for DERs and aims for a consistent BCA test for use across planning activities. Staff reiterate a recommendation made by Renewable Northwest to use the principles of the NSPM and agree on the need for a stakeholder process to consider DER valuation.

California Docket CA R2211013 Opening Comments of the CEDMC on Administrative Law Judge's Ruling Seeking Comments from Parties on the Societal Cost Test and Air Quality Research Results 4/28/23. In their comments in response to whether the Commission should use the Societal Cost Test when evaluating the cost-effectiveness of DERs, the California Efficiency and Demand Management Council recommended using the NSPM as a framework for the California PUC to update the Societal Cost Test to reflect more modern DER benefits (pg 9).

Hawaii Docket No. 2019-0323 Instituting a Proceeding to Investigate Distributed Energy Resource Policies Pertaining to The Hawaiian Electric Companies 6/1/23. The HI Public Utilities Commission added to their requirements for final modeling results that utilities were submitting on DER export rates that they use the NSPM as a framework for the discussion of how DER value streams and avoided costs are reflected in their rates, or which value streams and avoided costs aren’t accounted for but should be (pgs 23-24).

The issue of lost/gained revenues impacts associated with DERs has become a hotbed of argument in regulatory dockets and decisions. Guest writer Karl Rábago (Rábago Energy) is a former commissioner who expertly illuminates the backdrop of utility recovery of revenue requirements, in particular in the context of distributed generation; he shows the danger of mixing apples and oranges if lost revenues are included in BCAs. Karl hopes that more stakeholders can approach the issue from a position that embraces a common understanding, with the NSPM providing guidance based on foundational principles.