Guidelines Revisions Defining What RTF Means by “Savings”

1. Guidelines RevisionsDefining What RTF Means by “Savings” December 17, 2013

2. Treating Energy Efficiency as a Resource Implications for Defining Savings • Power Act: • Resources are actual or planned load reduction resulting from a conservation measure”. • 1st year might be “actual” or “historical savings” • Planned savings might represent savings over the life of the measure • A resource must be “reliable and available within the time it is needed” (i.e., the reliability of EE must be comparable to other resources) • Near term need might be satisfied by estimates of “first year” savings • Long term need requires estimate of “persistent savings” • The Council (and BPA) are to account for historical experience with similar measures when determining the amount of power that a conservation measure may be expected to save • Treatment of EE as resource, requires internal consistency between baseline used in load forecast and baselines used for savings estimates • Note: targets based on current practice are lower than those based on “existing conditions” • People are using RTF savings in their cost-effectiveness analyses to make investment decisions • Cost-effectiveness calculations assume savings persist for the life of the measure

3. Process for Reaching Agreement on RTF Savings Definition • Focus on UES measures • Discuss options for four parts of the definition • Baseline for Current Practice • Remaining Use Life (RUL) • Baseline for Pre-Conditions • Measure interactions • After meeting, members vote and explain why • See draft voting template • Discuss voting and decide at subsequent meeting

4. Example Measures • Current Practice • CFL’s • Clothes washers • Pre-Conditions • Weatherization & Heat Pump Conversions • Refrigerator Early Decommissioning

5. Current Practice Baseline – Council’s Plan • Council’s Plan: Use Baseline from Council Plan • Based on knowledge at start of Council 20 year forecast of • Recent market choices • Upcoming codes and standards • RTF baseline would remain constant for five years (until a new Plan). • Pro’s • Simple, less updating. • Aligns perfectly with Plan baseline. • Con’s • For rapidly moving markets, doesn’t give programs feedback on real market. • Utilities often need data more frequently (2-year IRP cycle).

6. Current Practice Baseline – Today’s Market • Today’s Market: Use recent data on market choices to set a baseline for each measure’s sunset period • Based on direct observations of the current market – beginning of sunset period. • Remains constant for savings sunset period • Pro’s • Helps programs adjust to rapidly moving markets. • Does not require forecasting. • Con’s • Likely to overstate program savings over the sunset period if market changing fast. • Savings not comparable to Council baseline – so target tracking requires estimating savings since Council Plan.

7. Current Practice Baseline – Forecasted Market • Forecasted Market: Estimate market choices over the sunset period • Savings could be average over sunset period or end-point of period • Sunset period could be one to five years (limit in current guidelines) • Pro’s • Helps programs adjust to rapidly moving markets. • Attempts to get savings correct over sunset period. • Con’s • Requires forecast of baseline conditions over sunset period. • Longer sunset period require longer forecasts which are less certain • Savings not comparable to Council baseline – so target tracking requires estimating savings since last Council Plan

8. Estimating RUL: Options • Assume any measure with a pre-conditions baseline has RUL = EUL. • Generally assume RUL=EUL, but allow a case to be made for exceptional measures • Use a simple rule (for example RUL is 1/3 of EUL) • Use a simple rule but allow exceptions • Forecast the average RUL during each sunset period • Remove Pre-Condition Baseline from Guidelines – always use current practice, assuming RUL = 0.

9. Pre-Conditions Baseline: Options • Today’s Conditions: Data on typical conditions (RBSA, etc.) at the beginning of each measure’s sunset period • Based on direct observations of the market • Forecasted Conditions: Estimate of “average” typical conditions over the sunset period • Requires short-term forecasting

10. Measure Interactions • Currently the Guidelines say… • “Interaction is significant if the RTF determines that it is likely to account for more than 10% of the measure savings.” • Measure identifiers can be used to account for some measure interactions • Example: For an attic insulation measure, measure definition depends on whether there is a heat pump • There would be one UES for “with heat pump”, and one UES for “without a heat pump”. • Requires more data to be collected by programs • Should this strategy be recognized by the Guidelines?

11. Measure Interactions – Other Strategies • Strategies other than measure identifiers • None. Do what programs will tolerate with measure identifiers • Estimate based on “full package” (LMI, Option 3, etc.) • End of sunset period • End of EUL • End of planning period • Estimate based on program evaluation findings • Requires sample data on what measures were present when each measure was installed, and which measures were installed simultaneously • Effectively defines the baseline conditions for each measure • Estimate based on general population characteristics • Same as above, but data not tied to recent participants.