Ordering Paragraph 8: Measure Useful Life
Ordering Paragraph 8 provides:
"The utilities shall, jointly with interested stakeholders, after engaging in a public process, devise a table showing the proposed measure life for each energy efficiency measure included in their programs. The table shall be included in the PY 2000 applications and include a description of any remaining areas of disagreement. The utilities shall use the agreed upon values in their PY 2001 applications subject to our approval. As a general rule, the utilities shall use the same measure life in the cost-benefit calculations, particularly for statewide programs. Where there is a reason for varied measurement lives, the table should include agreed-upon variations, and, in the PY 2001 application, the utilities shall explain the basis for the variations."
The parties agree to the use of consistent useful life measures for all utilities and recommend the adoption of specific effective useful lives (EULs)5 for each measure, standardizing them among utilities and making some modifications to ensure consistency across common measure types. The recommended measure lives are set forth in Appendix C2 to the Workshop Report. The parties recommend that, for measures not addressed in the table, the EULs be based on best available information and that justification for the EULs be included in the utilities' PY2001 applications.
ORA disagrees with the recommendation to the extent that the EULs are in excess of 20 years.
The joint recommendation is reasonable and should be used for calculating the cost-effectiveness of PY 2001 programs.
While ORA's argument has some merit to the extent that technology is changing rapidly and customers can be viewed as changing their preferences with the change in technology, particularly with respect to appliances, its argument is less persuasive, based upon the record developed to date, that such changes will be made with respect to durable technologies. The EULs that exceed 20 years in both the non-residential and residential areas are not appliance-related. Non-residential settings with EULs exceeding 20 years include process overhaul, chillers, high efficiency furnaces, glazing, and domestic hot water boiler (gas). Residential settings with EULs exceeding 20 years include residential housing, space conditioning-glazing, insulation, duct testing and sealing, and residential gas air conditioning. There is an insufficient basis at this time to direct that lower EULs be used for these types of processes and equipment.
In the PY 2001 Applications, the utilities should append the table of EULs, updated for new measures included in PY 2001 programs, and to specifically identify those measures for which EULs were used based on "best available information."
The utilities should serve a document on the service list no later than November 8, 2000 identifying the EULs for any new measures and the EULs based on "best available information," together with supporting documentation.
5 The parties note that Appendix A of the M&E Protocols includes two definitions of measure life, "effective useful life" and "engineering useful life." The parties appropriately recommend that we use in these calculations "effective useful life" or EUL, which is defined as "an estimate of the median number of years that the measures installed under the program are still in place and operable."
