AgdaPkt 2020-01-13 Joint - Laserfiche WebLink

Browse Search

7.A. - Page 66 of 285 2019 Energy Efficiency Ordinance Cost-effectiveness Study 2.5 Cost-effectiveness Cost-effectiveness was evaluated for all sixteen climate zones and is presented based on both TDV energy, using the Energy Commission's LCC methodology, and an On -Bill approach using residential customer utility rates. Both methodologies require estimating and quantifying the value of the energy impact associated with energy efficiency measures over the life of the measures (30 years) as compared to the prescriptive Title 24 requirements. Results are presented as a lifecycle benefit -to -cost (B/C) ratio, a net present value (NPV) metric which represents the cost-effectiveness of a measure over a 30 -year lifetime taking into account discounting of future savings and costs and financing of incremental first costs. A value of one indicates the NPV of the savings over the life of the measure is equivalent to the NPV of the lifetime incremental cost of that measure. A value greater than one represents a positive return on investment. The B/C ratio is calculated according to Equation 3. Equation 3 NPV of lifetime benefit Bene f it — to — Cost Ratio = NPV of lifetime cost In most cases the benefit is represented by annual utility savings or TDV savings and the cost by incremental first cost and replacement costs. However, in some cases a measure may have incremental cost savings but with increased energy related costs. In this case, the benefit is the lower first cost and the cost is the increase in utility bills. The lifetime costs or benefits are calculated according to Equation 4. Equation 4 NPV of lifetime cost/benefit = Zt 1Annual cost/benefits * (1 + r)s Where: • n = analysis term • r= discount rate The following summarizes the assumptions applied in this analysis to both methodologies. • Analysis term of 30 -years • Real discount rate of 3 percent • Inflation rate of 2 percent • First incremental costs are financed into a 30 -year mortgage • Mortgage interest rate of 4.5 percent • Average tax rate of 20 percent (to account for tax savings due to loan interest deductions) 2.5.1 On -Bill Customer Lifecycle Cost Residential utility rates were used to calculate utility costs for all cases and determine On -Bill customer cost- effectiveness for the proposed packages. The Reach Codes Team obtained the recommended utility rates from each IOU based on the assumption that the reach codes go into effect January of 2020. Annual utility costs were calculated using hourly electricity and gas output from CBECC-Res and applying the utility tariffs summarized in Table 5. Appendix B — Utility Tariff Details includes the utility rate schedules used for this study. The applicable residential time -of -use (TOU) rate was applied to all cases.13 Annual electricity production in excess of annual electricity consumption is credited to the utility account at the applicable wholesale rate based on the approved " Under NEM rulings by the CPUC (D-16-01-144, 1/28/16), all new PV customers shall be in an approved TOU rate structure. https://www.cpuc.ca.gov/General.aspx?id=3800 13 2019-08-01 318