Cost-Effectiveness Evaluation Calculator Walkthrough

1. Cost-Effectiveness Evaluation Calculator Walkthrough Energy and Environmental Economics, Inc. April 8, 2005

2. Purpose of the Calculators • Provide a tool that allows users to input program information and select from pre-determined end-use shapes to calculate program cost effectiveness. • Preprocess hourly data to a more manageable form • Allow easy calculation of measure benefits by climate zone • Recognizes both the shape and cost differences by climate zone.

3. Calculator Files • CEE Tool Res 1g.xls • Tool for residential measures • Inputs, outputs and methods detailed in Tech Memo Res 1g.doc • CEE Tool Com 1d.xls • Tool for non-residential measures • Inputs, outputs and methods detailed in Tech Memo Com 1d.doc • Climate zones are described in CLIMATE ZONES-T24.Doc • Tools are DRAFT • Provided now to aid in implementation planning • Numbers do not fully reflect the MPR gas forecast • Tools are currently set-up for PG&E’s service territory only • Numbers do not necessarily reflect the final PG&E load shapes • Files are large due to PG&E’s requirement for 300 simultaneous measures in one file. Reducing this to 100 would reduce file size by over 50%.

4. Calculator Tabs Users will only interact with these three tabs • Input:All user inputs describing program and measures • Output:Program overall impacts, and by sector and quarter • Output-Measure: Impacts for each measure • Calculations: The calculations • CostG: Avoided costs for Gas • CostE: Pre-processed data for electric • PolicyManual: Inputs for NTG Ratio and measure life. The remaining tabs are used for the calculations, and may be locked or hidden in the final version

5. Residential Tool • Input Tab • User Inputs are in unshaded cells. • Generic user inputs in the top 7 rows. Note that some incentives and rebates are input while others are calculated. • Measure info begins in row 11 • Dropdown lists used where possible • Climate Zone, Measure EU shape, Measure type, Program type • Notes • CZ selection should match EU shape • Selection of “system” climate zone will use the lowest capacity value CZ for that measure. • Installation schedule starts in Row T (for 12 qtrs)

6. Residential Tool Output • Output Tab • Total Program Costs • Total program impacts • TRC and PAC results (lifecycle and levelized) • BC Ratios are approximations • Net Impacts by year • Net Impacts by Sector (res non-issue) • Net Impacts by Climate Zone • Net Impacts by measure • Net Impacts by month (out 20 years)

7. Non-Residential Tool • Input Tab • Same as residential tool with a few additions… • Target Sector (Col C) is used • Because of the form of PG&E’s data, all measure EU shapes are not available for all Target Sectors, so Column F indicates when mismatches occur. • Summer Peak kW savings (Col P) will be needed when an TOU costing period based shape is used.

8. Pre-processing

9. Calculators Make use of Pre-Processed End Use Shapes • Pre-processing allows for the detail from the hourly avoided costs and the hourly end use shapes to be captured, while streamlining program design and evaluation. • Pre-processing basically takes a normalized end use load shape and multiples it against the hourly avoided costs. The resulting hourly benefits are then summed into four quarters for each year of the 20 year forecast period. For each year, 8760 hourly values are condensed to four values. Because the load shape information and the cost information are multiplied at the hourly level BEFORE summation into quarters, there is NO loss of precision. • The quarterly benefits by end use (and by climate zone) are the building blocks for the cost effectiveness evaluation in the Calculators. • For those cases where hourly load shapes do not exist, TOU values were used. TOU will be less precise. • Both methods are described in more detail in the following two slides.

10. Pre-processing – Hourly Loads • Hourly Shapes (by sector, measure, CZ) • Multiply against 8760hr x 30yr x 10Climate zones (if shapes applies to all CZs) • Calculate avoided costs by quarter for each shape • Generation (Energy and Capacity combined) • T&D Capacity • Calculate Average Monthly Peak and Non-coincident peaks for 12 months • Average monthly peak is the average load during the five highest system hours for each month. • Non-coincident peak is the highest load during the month.

11. Pre-processing: TOU Factors • TOU Costing Period Factors • Average hourly avoided energy costs across TOU periods • Separate implied generation capacity from all-in market price for Non-Res • Sum hourly capacity costs across TOU periods. • Calculate avoided costs by quarter for each shape • Generation net energy • Generation capacity (for non-Residential) • T&D Capacity • Calculate Monthly Average and Non-coincident Peaks • Residential • Monthly average: Smr Pk or Wtr Ptl demand, based on kWh H-factor • Non-coincident: largest average seasonal demand, based on kWh H-factor • Non-Residential • Monthly average: use Smr Pk and Wtr Ptl TOU factors for Smr and Wtr quarters • Non-coincident: Use highest of seasonal TOU Factors