Best Practices in Energy Efficiency Program Screening - Synapse ...

theory this approach would produce the most accurate representation of OPIs.
The challenges and uncertainties of quantifying OPIs are frequently cited as
reasons for not including them in energy efficiency screening. We note that these
challenges and uncertainties exist for many aspects of utility regulation and
planning, including estimates of avoided costs that form the heart of energy
efficiency screening. Some states have been able to develop quantitative
estimates of OPIs that are sufficiently reliable for planning purposes. 24
Readily measurable OPIs only: Develop quantitative estimates of those OPIs that
are readily measurable. This is a practical approach because several OPIs are
readily measureable without significant time or financial commitments. 25
However, it may fail to capture the full range of OPIs, depending upon the
resources and time dedicated to the effort.
Sensitivity analysis: Consider cost-effectiveness results with varying ranges of
OPIs included. For example, New York regulators are provided with benefit-cost
ratios that include a range of OPIs; from zero OPIs, to half of the readily
measurable OPIs, to all of the readily measurable OPIs. This approach assists
regulators in understanding the range of effects that OPIs can have on benefitcost
ratios, and may help to address concerns about uncertainty in the OPI
values. However, this method could require a more qualitative analysis, thus
removing the benefit of a “bright line” metric afforded by the use of a costeffectiveness
test.
Adder: Apply an adder to the efficiency program benefits to reflect all the OPIs.
The adder would be used to represent the full range of other program benefits
that accrue to customers. Higher adders could be applied to low-income
programs to reflect the higher level of OPIs that are likely to accrue to lowincome
customers. Adders could be applied at the measure, program, sector, or
portfolio levels. Overall, this is a simplified approach that does not require
extensive evaluation activities. On the other hand it may be seen as too much of
an approximation, and determining an appropriate adder may be difficult.
Reduced Benefit-Cost Ratio Threshold. Apply a lower benefit-cost threshold
than 1.0 to efficiency programs, especially for programs that are expected to
have significant OPIs. This approach has a similar effect as applying an adder to
account for OPIs; an adder can be converted into a lower threshold and viceversa.
Using an adder has the benefit of being more transparent and avoiding
the need to change energy efficiency screening thresholds or apply different
thresholds for different programs.
Hybrid: A combination of the various options could be employed to create a
hybrid approach. For example, a state could include all readily measurable
OPIs, and use an adder for hard to measure OPIs. As discussed above,
Vermont uses an adder for OPIs in addition to readily measurable OPIs, while
Colorado requires an adder but also allows for readily measurable OPIs.
Further, a state could include readily measurable OPIs, and conduct a sensitivity
analysis for additional OPIs. This approach is most consistent with the nature of
OPIs, whereby some OPIs are easily and readily quantified, while others require
24 See, for example, NMR 2010.
25 For additional information on methodologies for quantifying OPIs, see SERA 2010 and NMR 2010.
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