2. Proposed Scope of the 2006 Update
The proposed scope of the 2006 Update reflects the avoided cost/E3 calculator updating issues discussed in D.05-09-043 (see Attachment), as well as those identified in the November 1 workshop report, as follows:
(1) Develop a common definition of peak (and critical peak or other terms, as appropriate) demand reductions to use in evaluating energy efficiency resources across proceedings.
(2) Update the interim avoided cost methodology/E3 calculator to more accurately reflect the impact of energy efficiency, distributed generation and demand response on peak and critical peak loads, including consideration of how critical peak avoided costs should be used in the context of energy efficiency measures that are not fully dispatchable.
(3) Consider how the recently adopted resource adequacy counting rules adopted in D.05-10-042 and D.04-10-035 might affect (1) and (2) above. For example, should the definition of peak or critical peak only apply to load reductions that count toward meeting resource adequacy requirements under the "top down" approach adopted by those rules?
(4) Improve the consistency in underlying load shape data and the methods by which that data is translated into peak savings estimates.
(5) Consider whether different definitions (different than that recommended in item (1)) of peak demand reductions for energy efficiency are needed for cost-effectiveness evaluation, establishment of energy efficiency peak reduction goals, evaluating achievement of those goals, critical peak pricing, and resource adequacy counting.
(6) Make improvements to measure load shapes, including:
· More accurate sources of data than those currently used
· Improvements to the consistency in underlying load shape data and the methods by which that data is translated into peak savings estimates.
· Specifications for the type of load shapes to be developed
· Period for defining demand impacts (e.g.: 60-minute, run time averages)
· Calibration of results to annual usage and end-use survey data
· Management of data options (how to meaningfully synthesize hundreds of simulation options per measure)
· How demand will be measured ex-post
(7) Determine the most appropriate calculation platform to use for the program evaluations (i.e., spreadsheet or database).
(8) Correct calculation anomalies with respect to Standard Practice Manual cost-effectiveness indicators/methodologies.
(9) Convert annual savings to peak savings for all measures using a consistent counting period (useful lives > 2 years).
(10) Identify areas where further refinements of input assumptions/model algorithms may be needed to create a common E3 calculator for use by all implementers.
In addition, interested parties may identify additional avoided cost updating issues to consider for the 2006 update that are not listed above. However, all parties should keep in mind that the Commission's goal is to resolve the 2006 update during the first half of 2006, or as soon thereafter as practicable. Therefore, in presenting their comments, parties should focus on issues that are of the highest priority to resolve within that timeframe. The 2006 update process is intended to refine the interim avoided cost methodology adopted in Phase 1 and E3 calculator model so that they more accurately reflect the impact of energy efficiency. Parties should also comment on how the avoided cost/E3 calculator updating issues discussed in D.05-09-043 relate to Phase 3 of this proceeding, and whether they should be addressed through the update process contemplated here or in Phase 3. As discussed in my January 4, 2005 scoping memo, in Phase 3 we intend to "develop a common methodology, consistent input assumptions and updating procedures needed to quantify all elements of long-run avoided cost across the various Commission proceedings, and adopt avoided cost calculations and forecasts that conform to those determinations."5
5 See Assigned Commissioner's Ruling and Scoping Memo, January 4, 2005, pp. 6-8.
