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February 20, 2025 — In this issue, discover new resources, developments, and what's in store for NESPTM in 2025. We are pleased to announce two big projects: the launch of an open-source benefit-cost analysis modeling tool (OpenBCA) and a forthcoming update of the National Standard Practice ManualTM. Learn about a new NESP publication to support BCA analyses, examples of state NSPM applications, and upcoming case studies addressing energy affordability alongside BCAs. And, the Database of Screening Practices (DSP) has a new home. Read on for details...
Julie Michals, Director
Josh Owens, Senior Associate
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-OpenBCA Tool Project Launch
-NSPM for DERs v2 Preview
-NSPM State BCA Updates
-New Report:
NEIs in Distributed Gen & Storage BCAs
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-Energy Affordability and Other Metrics
-DSP Now Hosted by American Council for an Energy-Efficient Economy (ACEEE)
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OpenBCA Tool - Project Launch
An NESP Open-Source Modeling Tool for BCA of DERs
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NESP is excited to announce this initiative to develop an open-source benefit-cost analysis tool – what we are calling the OpenBCA Tool. Launched in January 2025, the project is funded by U.S. Department of Energy and E4TheFuture, with support from ICF, Recurve, and Berkeley Lab. The OpenBCA Tool is due to be completed in early 2026.
Conducting BCAs has become increasingly important for informing decisions around DER and other resource investments and strategies. Existing tools often fall short; most models rely on traditional cost tests (e.g., CA Standard Practice Manual) and do not allow for flexibility to model jurisdiction-specific tests such as those developed using NSPM guidance. Many are proprietary, operating as “black box” tools with little or no transparency of the input assumptions. Open-source models such as the OpenBCA Tool promote transparency by allowing users to examine the underlying algorithms and methodologies.
Further, older, spreadsheet-based tools are often slow, cumbersome, and inadequate for analyzing large datasets or capturing temporal and locational impacts. By contrast, software- and cloud-based tools can efficiently analyze a wide range of DER measures and/or multiple DER types, across many hours (e.g., 8760) to model temporal impacts needed for comprehensive BCA — all while maintaining clarity and transparency of inputs and results.
The OpenBCA Tool is being built to align with the NSPM framework, empowering jurisdictions to develop JSTs that align with their unique policy priorities, regulatory needs, and energy goals. The tool will also support traditional cost tests as secondary measures and will include features to assess rate impacts.
Methodologies for input calculations will largely be based on NESP’s Methods, Tools, & Resources Handbook for Quantifying DER Impacts which documents methods for the full range of potential costs and value streams of DERs. Developed using Python and SQL and hosted on GitHub, the tool offers two user pathways — standalone and integrated — ensuring broad accessibility.
The model is being developed in consultation with the state of Michigan, which recently developed a new cost-effectiveness test for DERs using the NSPM framework as part of Michigan PSC Docket U-20898 (see Michigan Case Study below). Development of the OS-BCA Tool will also include input from other states this year, and once developed, training will be provided to states. For more information about this project and its progress, please visit the project overview.
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In late 2025, NESP will publish an update to NSPM for DERs (2020), which will incorporate learning from NSPM use in jurisdictions across the U.S. and Canada and expand on key benefit-cost analysis topics.
With the expanded application of the NSPM — its core principles, multi-step process, and specific guidance — to a range of regulatory contexts as the industry evolves, the updated version will ensure the manual remains a relevant, practical and useful resource for jurisdictions.
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Examples of topics to be addressed in the update include:
- Expanding guidance and examples of BCA application across regulatory contexts (e.g., programs, procurement, pricing, distribution system and integrated system planning),
- Clarifying the role of BCA as a part of a broader regulatory decision framework for DER and other resource investments,
- Addressing how state energy offices can apply the NSPM in various policy contexts and energy planning applications,
- Updating guidance on accounting for reliability, resilience and risk in BCAs,
- Incorporating certain use case examples (e.g., virtual power plants (VPPs), microgrids, community solar), and
- Expanding guidance on selecting discount rates to apply in BCAs.
NESP will convene an advisory group to inform the update. Stay tuned for the status of v2 in future editions of NESP News.
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State BCA Updates
NSPM in the Context of System Planning, VPPs, Energy Efficiency, and More
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Over a dozen jurisdictions have applied or are using the NSPM to inform their cost-effectiveness analyses of DERs across North America. In 30+ other jurisdictions, the NSPM is recommended to support BCA for a range of DERs in various regulatory contexts. Notable examples:
Oregon PUC Docket No. UM2197 – In its Distribution System Plan, Portland General Electric Company exemplified the NSPM as a cost test that includes the benefits and costs of DERs, demonstrating its applicability for VPP portfolios. PGE also included a table detailing different NSPM utility system impact categories.
Washington UTC Filing U-240281 – The Washington Utilities and Transportation Commission is applying the NSPM principles in a rulemaking required to implement the states Decarbonization Act in ESHB 1589. The rulemaking pertains to integrating gas and electric integrated system planning (ISP) requirements for Large Combination Utilities into a unified system plan.
Virginia SCC Docket PUR-2024-00120: On July 17, 2024, Virginia enacted an amendment to the Code of Virginia, referred to as the Savings Achieved Via Efficiency (SAVE) Act 2024 (SB565) requiring the State Corporation Commission (“SCC”) to establish regulations for a single, cost-effectiveness test to evaluate proposed energy efficiency programs. The law directed the SCC to develop this test using the benefit-cost analysis (BCA) framework from the NSPM. The SCC opened Docket PUR-2024-00120 and convened a stakeholder group to inform the development of the new cost-effectiveness test. A consulting team was retained to lead the stakeholder process, with E4TheFuture and Energy Futures Group (EFG) staff serving as subject matter experts to support stakeholders. Keystone Policy Center facilitated the process. Eight (8) stakeholder meetings were held from September 2024 to January 2025 that followed the NSPM multi-step process to develop a Virginia jurisdiction specific test. A final report in March 2025 will provide recommendations for proposed regulations to be reviewed and approved by the Commission.
See map below for a snapshot of BCA activities in states looking to NSPM for guidance, and details at this summary of NSPM references.
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Commissions Approve New BCA Test for DERs:
Case Studies
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We’ve been reporting in NESP News on state processes to develop new — or modify existing —cost-effectiveness tests for DERs using the NSPM guidance, and on key issues that arise in stakeholder discussions and development of recommendations to commissioners. NESP published two recent case studies describing the processes and key topics addressed in Maryland and Michigan.
Maryland: NESP developed a Maryland NSPM Case Study, that describes the state’s process for developing a unified BCA (UBCA) test in Case No. 9674. The Commission issued Order No. 91424 last fall, approving the recommendations of the work group on its proposed UBCA test to apply to all DERs, along with use of secondary tests. The Commission also directed the establishment of Phase II proceedings to address the implementation of the framework.
Michigan: NESP developed a Michigan NSPM Case Study describing how the Michigan Public Service Commission, in Docket U-20898, directed utilities to submit a proposed JST using NSPM guidance for application to DER pilot programs. The utilities filed their proposal with the MPSC, and intervenors were invited to comment on the utilities’ proposed JST by responding to a series of Commission questions. The resulting JST, also referred to as the “Societal Test”, aligns with Michigan’s clean energy goals.
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DER Investments - Energy Affordability
and Other Metrics
| | By Ida Weiss, Synapse Energy Economics and Greg Ehrendreich, MEEA | | The project team of E4TheFuture, Synapse Energy Economics, and the Midwest Energy Efficiency Alliance (MEEA) is using the Distributional Equity Analysis (DEA) Guide to develop two case studies in Illinois assessing how the costs and benefits of DER investments are distributed to different populations. The project is supported by staff from the Illinois Commerce Commission (ICC) and involves broad stakeholder input via Work Group meetings. A total of five meetings have occurred to date, covering stages 1-5 of the multi-stage DEA process shown in Figure 1. | | Figure 1. DEA Stages Overview | | The Project Team is looking retrospectively at the energy efficiency (EE) and beneficial electrification (BE) plans from two of the largest utilities in Illinois – Commonwealth Edison (ComEd) and Ameren Illinois Company (Ameren). Stages 1-4 were addressed for both the BE and EE simultaneously. The Project Team is now focused on stages 5-7, which are being staggered, starting first with the BE plan DEA (currently at Stage 6), followed by the EE plan in spring 2025. | | |
We’re excited to announce that our Database of Screening Practices (DSP) has moved to the American Council for an Energy-Efficient Economy (ACEEE).
The DSP provides comprehensive information on state cost-effective screening practices for ratepayer-funded electric and natural gas energy efficiency programs. States can use the DSP to learn about other states’ practices, and to readily access and better understand policies, processes, and studies that support assumptions used by states in their BCA. The DSP can also help to identify where and how states are using the NSPM to guide their BCA practices.
NESP will continue to collaborate with ACEEE to provide updates on BCA practices around the country, and to support ACEEE’s efforts to ensure the DSP remains an essential tool for advancing cost-effectiveness practices and learning nationwide.
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New NESP Report on DER Non-Energy Impacts
Explores State Practices in Evaluating Non-Energy Impacts for Select DERs
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The rapid growth and deployment of DERs is creating dynamic and complex challenges for regulators, utilities, and policymakers as they assess the benefits and costs of DER systems and incentive programs. The Database of Screening Practices, now a project of ACEEE (see article above), documents BCA practice for energy efficiency, including where, what and how states account for non-utility system impacts. However, there is little tracking of state practices on the accounting of these impacts for other DER types.
A February 2025 report by AnnDyl Policy Group, State Benefit-Cost Analysis Practices: Accounting for Non-Utility System Impacts of Select Distributed Energy Resources, prepared for NESP explores how a sample of states are addressing non-utility system impacts, both societal and host customer categories, in BCAs for select DERs. While some states have established formal methods, practices vary significantly, and many states have limited data on these impacts – particularly for distributed generation and distributed storage – as highlighted in Table ES1.
Table ES1. State Accounting for Societal Impacts of DERs
| | The report identifies opportunities to create more consistent BCA frameworks and expand research into other DER types, such as building electrification and electric vehicles. | | | | |
