By Guest Blogger Kara Saul Rinaldi

More than half of the states in the nation have created programs to increase the energy efficiency of homes through a comprehensive approach that looks at all opportunities to save energy, from insulation to upgrading heating and cooling systems. When taxpayer and ratepayer dollars are used, it is essential that these programs are reviewed with a cost-effectiveness test that provides policymakers with adequate knowledge about the programs’ effectiveness. Unfortunately, in many states, the testing system is deeply flawed. The way cost-effectiveness tests are currently applied frequently hinders the design and implementation of residential energy efficiency programs, particularly programs intended to support comprehensive energy efficiency upgrades.

For three decades, the Total Resource Cost (TRC) test has been the principle screening tool that regulators have used to assess the cost-effectiveness of energy efficiency programs and make decisions regarding the use of ratepayer dollars to support the programs. Unfortunately, the way the TRC test is applied often leads to support for single-measure programs rather than whole-house retrofits – despite the fact that the whole-house approach actually delivers deeper and more cost-effective energy savings.  Because of this, the TRC test, when poorly applied, impedes the realization of significant, cost-effective energy savings through state-run energy efficiency programs.

In general, whole-house programs do not tend to score as well in the TRC test as single-measure programs that encourage highly cost-effective measures, such as lighting. This is due in part to the different ways in which the TRC test is implemented, some of which cause particular difficulties for whole-house programs. The TRC test typically includes participant contributions to the cost of an energy efficiency upgrade, resulting in a poor score for a highly leveraged whole-house program – even if leveraging public dollars with private investment is generally seen as desirable in other contexts. On the flip side, the TRC test fails to capture the full benefits of energy efficiency, such as increased comfort, which are frequently significant, although difficult to quantify. To make matters worse, the TRC is sometimes used to screen each individual measure or project, which might sound cost-effective in practice, but creates confusion about what jobs are eligible, decreases customer interest, and adds to a program’s administrative costs.

New York, which for years has been a leader in home performance programs, recently implemented a rule requiring application of the TRC at the measure-level. As a result, the program’s output is declining after years of steady growth. Elsewhere, the application of the TRC has discouraged the creation of strong whole-house energy efficiency programs, or has forced program administrators to develop create programs designed to pass cost-effectiveness tests, rather than to deliver real energy savings to homeowners.

So what should be done to ensure the cost-effectiveness of energy efficiency programs across the country is more accurately evaluated?

Policy-makers and commissioners should adopt a different tool, the Program Administrator Cost (PAC) test, which compares the cost of reducing energy consumption to the cost of supplying an equivalent amount of energy. The Program Administrator Cost test makes sense as the primary screening tool for energy efficiency programs because it is relatively simple to administer, and provides a good measure of whether an energy efficient program delivers savings at a cost comparable to the cost of generating and supplying energy.

If the PAC test is not adopted as the primary test, a set of “best practices” should be used to administer the TRC test. Examples of best practices include testing cost-effectiveness on a program-wide or portfolio basis (not at the level of individual projects or measures), and including all benefits as well as all costs.

It is clear that the current process of evaluating the cost-effectiveness of energy efficiency programs needs fundamental change.  The existing cost-effectiveness tests, as currently implemented, frequently undermine important public policy goals, such as job creation, carbon reduction, and energy independence.  We need to stop undermining these important policy goals and ensure that policymakers have the right information, thanks to the right testing, to help homeowners save energy.

For a more detailed report on these issues, please see the National Home Performance Council’s new report entitled, Getting to Fair Cost-Effectiveness Testing: Using the PAC Test, Bes....

 

Kara Saul Rinaldi is the Executive Director of the National Home Performance Council, a 501-c3 dedicated to encouraging improved home energy performance using a whole-house approach. For more information on NHPC, please call (202)463-2005, or visitwww.nhpci.orgShe is a guest blogger for Energy Efficiency Markets newsletter. Pick up the free newsletter at www.RealEnergyWriters.com


Views: 134

Comment

You need to be a member of Home Energy Pros to add comments!

Join Home Energy Pros

Home Energy Pros

Home Energy Pros was founded by the developers of Home Energy Saver Pro (sponsored by the U.S. Department of Energy,) and brought to you in partnership with Home Energy magazine.

Latest Activity

daniel manriquez replied to Trip's discussion Starting a Home Weatherization Business. Considering it...
"I would talk to Daniel Tait at http://www.nexusenergycenter.org/ . They do a lot of work with…"
40 minutes ago
Tom White's video was featured

Main St Nevada City, Historic Victorian energy upgrade story, Balance Point HP, Debra Little

Energy upgrade of historic 1866 Victorian by Gavin Healy & Dan Perunko of Balance Point Home Performance; Nevada City, CA. Extensive retrofit: attic, wall & ...
1 hour ago
Profile IconRamon Aguirre, John Kane, Bobby Hight and 3 more joined Home Energy Pros
3 hours ago
Jim Gunshinan commented on Jim Gunshinan's blog post My Energy Upgrade California—The Numbers Are In
"Thanks Nate for more good stuff to chew on—and nutritional! We may be running out to Home…"
12 hours ago
Tom Conlon commented on Jim Gunshinan's blog post My Energy Upgrade California—The Numbers Are In
"Jim,I just got around to re-reading your four-part series and I think this is a really interesting…"
12 hours ago
Nate Adams commented on Jim Gunshinan's blog post My Energy Upgrade California—The Numbers Are In
"$50 in health ain't much... not with my crappy high deductible plan. It buys half of a cold…"
12 hours ago
tedkidd commented on Jim Gunshinan's blog post My Energy Upgrade California—The Numbers Are In
"Yep, this thread has some good discussion. Back to dehumidification.  This may be…"
16 hours ago
Jim Gunshinan commented on Jim Gunshinan's blog post My Energy Upgrade California—The Numbers Are In
"Thanks for the clarification Nate. If I had the ability to precisely measure what $50 of health…"
18 hours ago
Nate Adams commented on Jim Gunshinan's blog post My Energy Upgrade California—The Numbers Are In
"Jim, Just a clarification, it's not DEhumidification I'm worried about in your climate,…"
18 hours ago
Chris McTaggart posted events
18 hours ago
Jim Gunshinan commented on Jim Gunshinan's blog post My Energy Upgrade California—The Numbers Are In
"Hi Nate, I'm glad this post has generated so much good discussion, since that is its main…"
18 hours ago
Diane Chojnowski's group was featured
Thumbnail

Facebook Pages

Does your company or organization have a Facebook Page?This group is for pros who have facebook…See More
18 hours ago

© 2014   Created by Lawrence Berkeley National Laboratory.

Badges  |  Report an Issue  |  Terms of Service