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A New, New Jersey Approach to Program Cost Effectiveness

July 29, 2020

For the past several years, DSM professionals have been considering how to update the traditional standard practice cost effectiveness tests to reflect a more holistic view of the impact of energy efficiency programs. On July 30, 2020, the New Jersey Bureau of Public Utilities (BPU) will be holding a stakeholder meeting to discuss a new proposed New Jersey Cost Test that will be used in the State’s Clean Energy Act of 2018. Here is a link for additional information https://njcleanenergy.com/calendar

Previously, New Jersey has used all five of the traditional tests in reviewing demand-side management programs (Total Resource, Societal, Program Administrator, Participant, and Rate Impact.) The BPU believes that this new test will more accurately reflect the environmental and economic factors impacting low income communities and will ensure universal access to energy efficiency programs.

The BPU Staff used the Total Resource Cost Test as a starting point and has included non-energy impacts to the other direct energy benefits. These non-energy impacts are savings related to public health and safety, water and sewer savings and the benefits of economic development. Quantifying these non-energy benefits has traditionally been a challenge. The BPU’s approach in this quantification is to rely on available studies and industry consensus. For instance, it has been accepted that the health benefits of energy efficiency programs exist but have been difficult to assign an energy dollar value. The BPU proposes to use a 2019 report from the US EPA that created a methodology where health values of energy efficiency range from $0.03 to $0.08 per kWh depending on time of the savings.

As other states start to follow New Jersey’s lead on modifying these resource costs test to meet the new clean energy future, calculating the tests can be accomplished easily with ANB System’s ePLAN cost effectiveness calculator. ePLAN is a web-based solution that runs all the standard practices tests including the New Jersey Test, and is flexible enough to allow the user to build and define their own tests. ePLAN is a powerful tool in that it performs test calculations ranging from the measure to portfolio level. Additionally, it allows a “What-if Scenario” where combinations of measures and incentives can be modeled to achieve cost effectiveness targets. ePLAN is a more effective option than using spreadsheets to analyze cost effectiveness through all phases for program design, implementation, and evaluation.

Michael Stockard is an independent consultant at Stockard Energy Advising and is a member of the Advisory Panel at ANB Systems. Michael has over 39 years of experience in the design and implementation of demand-side management programs.

For more information about ANB Systems, ePLAN or any of their other products, please visit www.anbsystems.com or contact them at info@anbsystems.com or 1-281-494-0689.