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costs) paid by the utility and the participants, plus the increase in supply costs for any period in which load has been increased. Sometimes includes externalities (DHHS). Externalities - The consequences or impacts of resource decisions that are not directly accounted for in the price paid for the resource (DHHS). Societal Cost test (SCT): The benefit-cost test that evaluates programs from a broad societal perspective. It is identical to the Total Resource Cost test except that the benefits include beneficial externalities and the costs can include negative externalities. Benefits can include avoiding environmental or social externalities (e.g., reduced pollutant emissions) and “non-price” benefits enjoyed by participants (improved comfort, aesthetic qualities, etc.) (DHHS). Utility Cost or Program Administrators Cost test (PACT): A benefit-cost test that measures the net costs of a program based on the costs incurred by the utility (including incentive costs) and excluding any net costs incurred by the participant. The benefits for the Utility Cost test are the avoided supply costs of energy and demand. Avoided credit and collection costs should also be included, as they are system costs. The costs for the Utility Cost test are the program costs incurred by the utility, the incentives paid to the customer, and any increased supply costs (DHHS). Participants' Cost Test (PCT): A test which evaluates DSM programs from the perspective of the program's participants. The benefits include reductions in utility bills, incentives paid by the utility and any state, federal or local tax benefits received. The costs include all out-of-pocket expenses incurred as a result of participating in a program (DHHS). Rate Impact Measure Test (RIM): A test which measures what happens to customer bills or rates due to changes in utility revenues and operating costs caused by a DSM program. The benefits for the RIM are the savings from avoided supply or other system costs. The costs for the RIM are the program costs incurred by the utility, the incentives paid to the participants, decreased revenues for any period when load has been decreased and increased supply costs for any period when load has been increased (DHHS). Table 1: The Five Principal Cost-Effectiveness Tests Used in Energy Efficiency Test Acronym Participant Cost Test PCT Utility/Program Administrator Cost Test PACT Ratepayer Impact measure Test RIM Total Resource Cost Test TRC Societal Cost Test SCT Source: EPA 2008. Key Question Answered Will the participants benefit over the measure life? Will utility bills increase? Will utility rates increase? Will the total costs of energy in the utility service territory decrease? Is the utility, state, or nation better off as a whole? Summary Approach Comparison of costs and benefits of the customer installing the measure. Comparison of utility or program administrator costs to supply-side resource costs. Comparison of administrator costs and utility bill reductions to supply-side resource costs. Comparison of program administrator and customer costs to utility resource savings. Comparison of society's costs of energy efficiency to resource savings and non- cash costs and benefits. The most common primary measurement of energy efficiency cost-effectiveness is the TRC, followed by the SCT. A positive TRC result indicates that the program will produce a net reduction in energy costs in the utility service territory over the lifetime of the program. The TRC and SCT cost tests help to answer 7PDF Image | Energy Efficiency Resource Standards
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