All demand-side resources undergo a cost-effectiveness analysis:

For additional background on cost-effectiveness:

Standard Practice Manual 

The foundation of cost-effectiveness analysis for all demand-side resources is based in the Standard Practice Manual.  The Standard Practice Manual contains the Commission’s method of evaluating energy saving investments using various cost-effectiveness tests. The four tests described in the Standard Practice Manual (i.e., the Total Resource Cost (TRC), Program Administrator Cost (PAC), Ratepayer Impact Measure (RIM), and Participant Cost Test (PCT)) assess the costs and benefits of demand-side resource programs from different stakeholder perspectives, including participants and non-participants.  The specific tests and the applications of those tests varies among the resources.

Avoided Cost Calculator

The primary benefits of demand-side resources are the avoided costs related to generation and distribution of energy from conventional power plants and natural gas lines. The avoided costs of electricity are modeled based on the following components: generation energy, generation capacity, ancillary services, transmission and distribution capacity, environment (i.e., avoided greenhouse gases), and avoided renewable portfolio standard. The avoided cost model is periodically updated to improve the accuracy of how benefits of demand-side resources are calculated. The most recent update was completed in 2016: