DER Cost-Effectiveness

Avoided Cost Calculator

The primary benefits of demand-side resources are the avoided costs related to generation and distribution of energy.  The avoided costs of electricity are modeled based on the following components: generation energy, generation capacity, ancillary services, transmission and distribution capacity, greenhouse gases, and high global warming potential gases.  The Avoided Cost Calculator is updated biannually to improve the accuracy of how benefits of demand-side resources are calculated.  The most recent update was completed in 2022:

Current (2022) ACC Models

2024 ACC Update Staff Proposal (R.22-11-013, Track 1)

On 8 August 2023, CPUC Administrative Law Judge Lau issued a ruling which included CPUC Energy Division's Staff Proposal for 2024 updates to the Avoided Cost Calculator.  On 16 August 2023, Energy Division hosted a public workshop on the staff proposal.  Here you can find the slides, a recording, Q&A function text, and a transcript from the workshop.

Data Request and Responses

The CPUC Energy Division's responses to all data requests regarding the 2024 Avoided Cost Calculator Update will be served to the R.22-11-013 and R.14-10-003 Service Lists and will be posted below as they are completed, along with all supporting files.

  • August 23rd Data Request from the Public Advocates Office: On 23 August 2023, the Public Advocates Office submitted a Data Request to Energy Division regarding the 2024 ACC Updated Staff Proposal.  Energy Division's response to this data request can be viewed here.  The supporting files can be found here.
  • August 25th Data Request from SEIA: On 25 August 2023, SEIA submitted a Data Request to Energy Division regarding the 2024 ACC Update Staff Proposal.  Energy Division's response to this data request can be viewed here.  The supporting files can be found here.
  • August 28th Data Request from the Joint IOUs: On 28 August 2023, Join IOUs submitted a Data Request to Energy Division regarding the 2024 ACC Update Staff Proposal.  Energy Division's response to this data request can be viewed here.  The supporting files can be found here.
 

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.

Air Quality Adder Data

On 14 March 2018, a ruling in the IDER proceeding (A.14-10-003) issued a Staff Proposal entitled "Distributed Energy Resource Cost-Effectiveness Evaluation: Further Recommendation on the Societal Cost Test."  The data used to the determine the Interim Air Quality Adder discussed in this Staff Proposal can be found here.

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

For additional background on cost-effectiveness: