States Using the NSPM: MD, DC, WA
(NESP Quarterly February 14, 2022 – with one updated link below for Maryland, since newsletter publication date)
After nearly a year of meetings, the “PC44” EV Work Group submitted a consensus Statewide EV BCA Methodology Report (“EV BCA Report”) to the Commission for approval 12/1/21. The commission accepted the proposal in a hearing 1/12/22 (Commission Acceptance of EV BCA Framework in Case No. 9478 – PC44; ML 238539).
As background, a working group was formed per commission direction in early 2021 to address deficiencies and concerns around the utilities’ EV Pilot BCA methodology (see Office of People’s Counsel comments). The Commission ordered that: “the PC44 Electric Vehicle Work Group develop and propose for Commission consideration a consensus benefit-cost approach and methodology by December 1, 2021 […] The Commission specifically requests that the EV Work Group examine the National Standard Practice Manual and the existing BCA framework used to review the EmPOWER Maryland programs for best practices in developing an EV BCA methodology.” (Maryland PSC Order 89678 in Case 9645 in BG&E Multi-Rate Plan Section 238).
The EV Work Group convened nearly a dozen times to develop an appropriate cost-effectiveness test for valuing utility EV investments, and it used the NSPM BCA framework to guide the process. The EV BCA Report, developed by Gabel Associates, describes the consensus methodology used to develop the EV BCA framework, including a primary test, referred to as the MD-EV Jurisdiction Specific Test (MD-EV JST).
Chris Neme (Energy Futures Group) served as technical advisor to the commission staff on behalf of the NESP. He presented on the Maryland EV WG process and development of the MD-EV JST – with Amanda Best of the Maryland PSC – at a SEEA webinar in December: Electric Vehicle Programs: How to Strike a Balance Between Excitement and Execution. Mark Warner (Gabel Associates) presented on the MD-EV JST and consideration of non-energy impacts at the NARUC Center for Policy Innovation webinar 1/20/22.
Meanwhile, the Future Program Work Group (FPWG) is applying the NSPM to develop a BCA test for the EmPOWER Maryland energy efficiency programs. Proposals on the table, with broad stakeholder support, include adopting an EmPOWER Maryland JST. A final proposal and consensus report to the Commission is due mid-April 2022.
As a result of the EV Working Group process to develop an EV BCA framework, the Leader of the EV WG issued a PSC Staff recommendation to the Commission to consider opening a new proceeding. The recommendation suggested use of the Maryland EV and EmPOWER efficiency BCA developments with the NSPM to create a “Unified BCA” methodology across all DERs. The commission opened Case No. 9674 in December 2021 to explore the process of developing a unified BCA methodology, and issued a request for comments due 2/15/22.
The Clean Energy DC Omnibus Amendment of 2018, enacted by the Washington, District of Columbia Council, charges the DC Public Service Commission (the Commission) with evaluating the effects of utility proposals on global climate change and in achievement of the District’s commitments to reduce greenhouse gas emissions. In undertaking its charge, the Commission initiated a proceeding through a Notice of Inquiry (Case No. GD-2019-04-M) and directed that a “Clean Energy Act Implementation Working Group” (CEIWG) be convened. In taking these steps, the Commission sought guidance on appropriate GHG and “carbon footprint” measurement and verification metrics; GHG emissions reporting requirements; standards for quantifying and monetizing impacts; and a “Benefit-Cost Analytical Framework” (“BCA framework”), taking into account best practices from other jurisdictions with similar climate goals, all designed to enable the Commission to assess compliance with the Clean Energy DC Act.
The PSC Staff convened and facilitated the CEIWG from fall of 2020 through October 2021. In its very first meeting, Staff cited the NSPM for DERs in a presentation to stakeholders. Smart Electric Power Alliance (NSPM for DERs co-author) presented at a subsequent CEIWG meeting; thereafter, technical advisor Karl Rabago of Rabago Energy and NSPM project coordinator Julie Michals provided direct technical assistance to the PSC Staff team throughout the CEIWG process to develop a report with a recommended BCA Framework to the Commission. The role of the NESP technical advisors – funded in part by E4TheFuture and Lawrence Berkeley National Laboratory – was to provide objective guidance to the Staff and stakeholders on application of the NSPM for DERs.
Over the course of the year that involved a series meetings, the commission Staff received extensive CEIWG input that informed a 325-page majority consensus report filed by Staff with the Commission for review. Staff’s report laid out the background and process, documented majority and non-majority recommendations, and made specific recommendations to the Commission, including that it:
- Adopt “a consistent BCA Framework, based on the guidance of the NSPM-DER, that can organically evolve in a systematic and economically sound manner to assimilate technology, policy, and market/customer changes, as well as to address multi-sited DERs and their interactive effects; multi-sectoral applications; dynamic utility system optimization planning; and coordinated end-to-end utility planning.”
- Adopt the NSPM Principles to govern the development and application of the BCA Framework.
- Ensure alignment of the BCA Framework with applicable District policies by adopting a societal cost test that aligns with the District’s applicable policy goals.
The report also recommended the Commission approve a Phase II process to address methodological approaches to quantifying the impacts indicated in the report and approved by the Commission, including those impacts that are difficult to quantify. The process for Phase II, whether facilitated through rulemaking, another working group, or a combination of both, is to be determined by the Commission.
The 2019 Clean Energy Transformation Act (CETA) requires significant changes to electric utility planning in Washington state including, among other provisions, a transition to clean energy by 2045. CETA also requires utilities to ensure that all customers benefit from the transition to clean energy through the equitable distribution of benefits and reduced burdens. The 2019 legislation created a new requirement, the Clean Energy Implementation Plan (CEIP).
The WA UTC adopted rules in 2020 to guide investor-owned electric utilities’ planning efforts to meet CETA’s mandates. The Commission’s final rules were adopted 12/28/20, in Dockets UE-190698, UE-191023, and UE-190837. During the rulemaking process, the Commission received stakeholder requests for additional guidance regarding changes to cost-effectiveness test calculations implicit in CETA, in particular concerning distributed energy resources (DERs).
In response to these requests, the UTC opened Docket UE-210804 to investigate cost-effectiveness, with a focus on how CETA necessarily changes the standard practice of using the modified total resource cost test (TRC) and utility cost test (UCT) as the primary and secondary screening tests currently used in the state. The scope of the UTC’s current investigation is to ensure consistent evaluation of distributed energy resources.
The UTC’s Notice of Opportunity to Comment in the cost-effectiveness testing docket states that it will follow the process and principles described in the NSPM for DERs using the NSPM principles. The notice asks a series of questions about the scope and application of the NSPM, to which stakeholders submitted comments in December 2021. In general, the comments indicate that:
- Stakeholders are supportive of using the UTC’s proposed NSPM 5-step framework process to review existing cost-effectiveness testing practices.
- Key impacts/issues to address, including methodologies to quantify impacts, are: avoided costs of energy capacity (and load shapes used); program overhead costs; customer costs; program incentives; non-energy impacts; measure life; incremental cost, measure lifetimes; environmental and societal benefits; economic benefits; public health impacts, energy equity, accounting for federal subsidies; double counting of impacts; symmetry in treatment of benefits and costs; and how each impact should be weighted in the analysis.
- Stakeholders are mixed on whether the docket should evaluate both electric and gas DER cost effectiveness testing, or only electric.
Next steps are to be determined by the UTC staff, based on feedback they received from stakeholders and priority issues to address.
Meanwhile, in December 2021, Puget Sound Energy (PSE) submitted its draft Clean Energy Implementation Plan (Docket 210795) where PSE indicates (pg. 36) that it followed NSPM guidance to evaluate different suites of DERs to create a portfolio that promotes equity, diverse offerings, and minimizes costs. PSE notes the NSPM recommends any BCA should align with the policy goals of the jurisdiction, and thus chose the Societal Cost Test and Participant Cost Test for their primary and secondary cost tests, respectively.
See the entire February 2022 NESP Quarterly.