Development of an Illinois Energy Efficiency Policy Manual

1. Development of an Illinois Energy Efficiency Policy Manual A Proposed Process and Approval Plan Presented by: Karen Lusson Illinois Attorney General’s Office

2. Why the need for a Policy Manual? • In all five 2013 three-year plan dockets, ICC ordered that the utilities and DCEO work with other utilities, the Staff, and the SAG to complete a policy manual through the SAG process, following a recommendation from the OAG; • Past SAG presentations have made clear that evaluation procedures vary among evaluators, making meaningful comparison and evaluation of utility- and DCEO-administered programs difficult;

3. Why the need for a Policy Manual? • Reconciliation dockets routinely trigger disallowance issues that perhaps could be resolved collaboratively through the development of a consensus policy manual; • Utilities seeking certainty and risk avoidance could be assisted through the development of common procedures and guidelines; • Goal of efficient administration of programs is served; • Consistent policies/planning approaches will result in enhanced evaluation consistency.

4. Purpose of the Policy Manual • Create a living document that captures broad principles, policies and guidelines for program administrators, implementers and evaluators; • Captures and consolidates existing ICC policy (e.g., cost-effectiveness calculated at portfolio, not measure level); • Assist program administrators with defining cost categories, such as Administrative costs, Implementation costs, evaluation costs, etc., so that independent evaluator and Commission assessment of costs is consistent among utilities and DCEO; • Documents, for ICC approval, SAG development of additional policy and guidelines, such as CHP savings calculation , DCEO opt-out auditing rules, others; • Appendices to the Policy Manual would include the NTG framework, the NTG update schedule, the TRM, TRM Policy Manual and any “rules” or consensus items coming out of the IPA workshops.

5. What Policy Manual is Not • An in-depth, “in the weeds” framework delineating specific contracting and auditing practices in the administration of EE programs; • An exercise in usurping Commission authority

6. Suggested Policy Manual Topics • Definitions • Costs • Administrative costs • Marketing costs • Incentives costs • Implementation costs • Evaluation costs • Fuel-switching, including when allowed • Breakthrough technologies

7. Suggested Policy Manual Topics (cont’d) • Guiding Policies for Program Administrators • Describe statutory directive that all customers be served (portfolio of programs and demand response measures “represent a diverse cross-section of opportunities for customers of all rate classes to participate in the programs.” 220 ILCS 5/8-103(f)(4); 8-104(f)(4)); • Portfolio balancing among customer classes; • Statutory goal of joint delivery of electric and gas measures (220 ILCS 5/8-104(k); ICC Orders in 13-0550, 13-0549; • Cost-effectiveness evaluated at portfolio level, rather than individual measures; • Record Program flexibility rules from ICC orders; • Record Portfolio Rebalancing and Process, including fund-shifting rules, notification and timeline for review by SAG, from ICC Orders; • Record Policies (based on statutory language and ICC orders) related to coordination of Sec. 8-103 and IPA EE procurement.

8. Suggested Policy Manual Topics (cont’d) • Studies Guidelines • Potential • Baseline • Must be coordinated across utilities; draft plans to be discussed with SAG for SAG comment prior to initiating study; • How often? • Program Evaluation • Oversight and Reporting Requirements • Draft plans coordinated across utilities; discussed with SAG prior to implementation; • Process for circulation of draft reports (SAG gets draft reports at same time as Utilities and DCEO); • Process for circulation of final evaluation reports.

9. Suggested Policy Manual Topics (cont’d) • Program Evaluation (continued) • Savings Calculation (cross reference TRM) • Cost-effectiveness • TRC Policies: • Goal to minimize non-cost-effective measures and programs unless business justification for including; • Portfolio level cost effectiveness test; • When proposing non-cost-effective measures, written business justification (rationale) must be provided for including non-cost-effectiveness measures in plan; • If non-cost-effective measures included between plan cycles, PAs must present to SAG and solicit review and comment; • Timeline for measuring cost-effectiveness; • Inclusion of all avoided utility costs, including electric, capacity, T&D, ancillary, water savings, carbon emission; • Inclusion of non-energy benefits.

10. Suggested Policy Manual Topics(cont’d) • Net-to-Gross Calculation • Consistent methodologies • Spillover protocols • Free ridership • Updating NTG values • Process for annual update (timing of reports from evaluators to permit sufficient SAG review time) • Timing – all measure values should be finalized no later than March 1 • Process for annual Policy Manual updates

11. Suggested Policy Manual Topics (cont’d) • Others? SAG-driven process for amending/adding policies • Email Celia within five (5) business days with suggestions for other topics

12. Proposed Policy Manual Development Process • Creation of a subcommittee of any interested SAG members (Email Celia within 5 business days if you want to participate); • Assign topics to committee members, who will research, solicit feedback as needed and prepare draft language; • Present to full subcommittee for review, edits; • Present to SAG at upcoming monthly meetings as topics are completed for comment, consensus development; • December completion date; • OAG (other SAG members?) files petition with ICC seeking approval of consensus document.

13. Subcommittee participation • Email Celia by July 1 re: • interest in participating in subcommittee; • any additional issues to consider.

14. Questions?