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7.A. - Page 67 of 285 2019 Energy Efficiency Ordinance Cost-effectiveness Study NEM2 tariffs for that utility. Minimum daily use billing and mandatory non -bypassable charges have been applied. Future change to the NEM tariffs are likely; however, there is a lot of uncertainty about what those changes will be and if they will become effective during the 2019 code cycle (2020-2022). The net surplus compensation rates for each utility are as follows:" • PG&E: $0.0287 / kWh • SCE: $0.0301 / kWh • SDG&E: $0.0355 / kWh Utility rates were applied to each climate zone based on the predominant IOU serving the population of each zone according to Two SCE tariff options were evaluated: TOU-D-4-9 and TOU-D-PRIME. The TOU-D-PRIME rate is only available to customers with heat pumps for either space or water heating, a battery storage system, or an electric vehicle and therefore was only evaluated for the all -electric cases and the Efficiency & PV/Battery packages. The rate which resulted in the lowest annual cost to the customer was used for this analysis, which was TOU-D-4-9 in all cases with the exception of the single family all -electric cases in Climate Zone 14. Table 5. Climate Zones 10 and 14 are evaluated with both SCE/SoCalGas and SDG&E tariffs since each utility has customers within these climate zones. Climate Zone 5 is evaluated under both PG&E and SoCalGas natural gas rates. Two SCE tariff options were evaluated: TOU-D-4-9 and TOU-D-PRIME. The TOU-D-PRIME rate is only available to customers with heat pumps for either space or water heating, a battery storage system, or an electric vehicle and therefore was only evaluated for the all -electric cases and the Efficiency & PV/Battery packages. The rate which resulted in the lowest annual cost to the customer was used for this analysis, which was TOU-D-4-9 in all cases with the exception of the single family all -electric cases in Climate Zone 14. Table 5: IOU Utility Tariffs Applied Based on Climate Zone Source: Utility websites, See Appendix B — Utility Tariff Details for details on the tariffs applied. Utility rates are assumed to escalate over time, using assumptions from research conducted by Energy and Environmental Economics (E3) in the 2019 study Residential Building Electrification in California study (Energy & Environmental Economics, 2019). Escalation of natural gas rates between 2019 and 2022 is based on the currently filed General Rate Cases (GRCs) for PG&E, SoCalGas and SDG&E. From 2023 through 2025, gas rates are assumed to escalate at 4% per year above inflation, which reflects historical rate increases between 2013 and 2018. Escalation of electricity rates from 2019 through 2025 is assumed to be 2% per year above inflation, based on electric utility estimates. After 2025, escalation rates for both natural gas and electric rates are assumed to drop to a more conservative 1% escalation per year above inflation for long-term rate trajectories beginning in 2026 through 2050. See Appendix B — Utility Tariff Details for additional details. 14 Net surplus compensation rates based on 1 -year average February 2018 — January 2019. 14 2019-08-01 319 Electric / Gas Electricity Natural Climate Zones Utility (Time -of -use) Gas 1-5, 11-13, 16 PG&E E-TOU, Option B G1 5 PG&E / SoCalGas E-TOU, Option B GR 6, 8-10, 14, 15 SCE / SoCal Gas TOU-D-4-9 or GR TOU-D-PRIME 7, 10, 14 SDG&E TOU-DRI GR Source: Utility websites, See Appendix B — Utility Tariff Details for details on the tariffs applied. Utility rates are assumed to escalate over time, using assumptions from research conducted by Energy and Environmental Economics (E3) in the 2019 study Residential Building Electrification in California study (Energy & Environmental Economics, 2019). Escalation of natural gas rates between 2019 and 2022 is based on the currently filed General Rate Cases (GRCs) for PG&E, SoCalGas and SDG&E. From 2023 through 2025, gas rates are assumed to escalate at 4% per year above inflation, which reflects historical rate increases between 2013 and 2018. Escalation of electricity rates from 2019 through 2025 is assumed to be 2% per year above inflation, based on electric utility estimates. After 2025, escalation rates for both natural gas and electric rates are assumed to drop to a more conservative 1% escalation per year above inflation for long-term rate trajectories beginning in 2026 through 2050. See Appendix B — Utility Tariff Details for additional details. 14 Net surplus compensation rates based on 1 -year average February 2018 — January 2019. 14 2019-08-01 319