Northeast Energy Efficiency Partnerships

Cost Effectiveness Screening Guidelines 2014

2014

The EM&V Forum Steering Committee adopted the Forum’s Cost-Effectiveness Screening Guidelines as a Forum product in November 2014.  The Forum’s Guidelines establish overarching principles that states should consider in reviewing their energy efficiency screening practices, which emphasize the importance of 1) alignment of screening with state energy policies, 2) ensuring symmetry of costs and benefits, 3) consideration of a range of options for estimating hard to quantify non-energy impacts, and 4) ensuring transparency in screening among stakeholders.  The Forum’s Guidelines also provide specific guidance in the areas of 1) accounting for non-energy impacts, 2) accounting for environmental compliance costs, and 3) accounting for risk and selecting appropriate discount rates.  The Guidelines are not intended to be prescriptive in recommending any one test over another, inclusion of any particular costs or benefits, or use of a specific discount rate.  States use of the Guidelines can help improve their screening practices by providing greater transparency and understanding of what costs and benefits should be considered, options for how they can be quantified or determined, and considerations for how to account for risk of energy efficiency resources. 

The Forum’s work in this area began in 2013 with conducting a Survey of State Cost-Effectiveness Screening Practices to help inform development of the guidance document. The survey showed that application of screening test practices in the Forum region vary significantly.  Despite largely using the same test (the TRC test), key differences exist in accounting for non-energy impacts (NEIs), environmental compliance costs, and accounting for risk, including the use of discount rates.  Such differences can lead to different screening results between and within states for similar programs. This has been particularly relevant to the TRC test, which calls for challenging decisions about how to account for the costs and benefits for program participants. 

The Forum Guidelines and supporting survey of screening practices in the region were both conducted by developed by Synapse Energy Economics, managed by NEEP, and informed by a project subcommittee of Forum state representatives.  For more information, please contact Julie Michals at jmichals@neep.org