The following tests will be used to determine whether a
program is cost effective.
A.
Modified Societal Test. Programs that are reasonably likely to
satisfy the Modified Societal Test are cost effective. The Modified Societal
Test is satisfied when the program benefits exceed the program costs. Costs and
benefits shall be considered in the Modified Societal Test regardless of
whether they are paid or experienced by the program participant or by the
natural gas distribution utility or any other individual, business, or
government agency.
1.
Program
benefits. Program benefits will include the following:
(a) Avoided natural gas commodity costs.
These estimates may be differentiated by time periods that influence market
prices, including but not limited to peak and off-peak periods and summer and
winter periods.
(b) Avoided natural
gas transportation,distribution, and storage costs, using estimates of gas
transportationmarginal costs. These estimates may be differentiated by time
periods that influence costs.
(c)
Avoided electric costs including any energy, capacity, and transmission and
distribution costs avoided as a result of program implementation.
(d) Other resource benefits, such as reduced
water and sewer costs.
(e)
Non-resource benefits, including customer benefits such as reduced operation
and maintenance costs, deferred replacement costs, productivity improvements,
economic development benefits and environmental benefits, to the extent such
benefits can be reasonably quantified and valued.
2.
Program costs. Program costs
will include the following:
(a) Direct program
costs, including program design, administration, implementation, marketing,
evaluation and other reasonably identifiable costs directly associated with the
program.
(b) Measure costs. For new
construction programs, measure costs are the incremental costs of the energy
efficiency measure, including installation, over an equivalent baseline
measure. For retrofit programs, measure costs are the full cost of the energy
efficiency measure, including installation, less any salvage for the replaced
measure.
(c) Ongoing customer
costs, including costs such as increased operation and maintenance costs,
reduced productivity, and lost economic development opportunities, and
environmental degradation, to the extent such costs can be reasonably
quantified and valued.
3.
Discount rate assumption. The
discount rate used for present value calculations shall be the gas distribution
utility's most recently established weighted cost of capital.
4.
Net present value. Cost
effectiveness of a gas efficiency measure will be calculated based on the net
present value of the costs and benefits over the expected life of the
measure.
5.
Post-program
effects. For programs expected to influence the development of
self-sustaining markets, program cost effectiveness will be calculated for a
reasonable additional period after the program is terminated in order to
capture post-program market effects.
6.
Incentive Level Limitation.
When developing a program that satisfies the Modified Societal Test, the gas
distribution utility shall consider the value of the program savings associated
with natural gas production and delivery when setting incentive
levels.
B.
Unquantifiable Cost Effectiveness Test. Gas distribution utilities
may implement a program without satisfying the Modified Societal Test if
approved by the Commission based on a demonstration that:
1. program benefits are known to exist but
cannot be quantified with sufficient accuracy to conclude that program benefits
exceed program costs;
2. the
program satisfies some unquantifiable statutory criterion or an unquantifiable
goal or objective established by the Commission in implementing 35-A M.R.S.A.
§4711; and
3. the entire
portfolio of gas conservation programs taken together and including the cost of
the unquantifiable program produces quantifiable benefits that substantially
exceed total portfolio program costs.
Gas distribution utilities shall not spend or commit to spend
more than 5% of the annual conservation budget on any program found to be cost
effective under this Subsection B without express Commission approval of the
spending level.
