Chapter 4901:1-39 [Energy Efficiency Programs]
(A) "Achievable potential" means the reduction in energy usage or peak demand that would likely result from the expected adoption by homes and businesses of the most efficient, cost-effective measures, given effective program design, taking into account remaining barriers to customer adoption of those measures. Barriers may include market, financial, political, regulatory, or attitudinal barriers, or the lack of commercially available product. "Achievable potential" is a subset of "economic potential."
(B) "Anticipated savings" means the reduction in energy usage or peak demand that will accrue from contractual commitments for program participation made in the reporting period, which measures in such programs are scheduled for installation in the subsequent reporting periods.
(C) "Capital stock" means all devices, equipment, and processes that use or convert energy.
(D) "Coincident peak-demand savings" means the demand savings for energy efficiency measures that are expected to occur during the summer on-peak period which is defined as June through August on weekdays between three p.m. and six p.m.
(E) "Commission" means the public utilities commission of Ohio.
(F) "Cost effective" means the measure, program, or portfolio being evaluated that satisfies the total resource cost test.
(G) "Demand response" means a change in customer behavior or a change in customer-owned or operated assets that affects the demand for electricity as a result of price signals or other incentives.
(H) "Economic potential" means the reduction in energy usage or peak demand that would result if all homes and businesses adopted the most efficient and cost-effective measures. Economic potential is a subset of the "technical potential."
(J) "Energy baseline" means the average total kilowatt-hours of distribution service sold to retail customers of the electric utility in the preceding three calendar years as reported in the electric utility's most recent long-term forecast report, pursuant to division (A)(2)(a) of section 4928.66 of the Revised Code. The total kilowatt-hours sold shall equal the total kilowatt-hours delivered by the electric utility.
(L) "Energy efficiency" means reducing the consumption of energy while maintaining or improving the end-use customer's existing level of functionality, or while maintaining or improving the utility system functionality.
(M) "Independent program evaluator" means the person(s) hired by one or more of the electric utilities, at the direction of the commission, to complete the following activities:
(1) Monitor, verify, evaluate, and report on the electric energy savings and peak-demand reductions resulting from utility program and mercantile customer activities.
(2) Determine program and portfolio cost-effectiveness.
(3) Conduct program process evaluations.
(4) Perform due-diligence reviews of evaluations or documentation provided by an electric utility or mercantile customer, as directed by the commission.
Such person shall work at the sole direction of the commission.
(N) "Market transformation" means a lasting structural or behavioral change in the marketplace that increases customer adoption of energy efficiency or peak reduction measures that will be sustained after any program promoting such behavior ceases.
(O) "Measure" means any material, device, technology, operational practice, or educational program that makes it possible to deliver a comparable level and quality of end-use energy service while using less energy or less capacity than would otherwise be required.
(Q) "Nonenergy benefits" mean societal benefits that do not affect the calculation of program cost-effectiveness pursuant to the total resource cost test including but not limited to benefits of low-income customer participation in utility programs; reductions in greenhouse gas emissions, regulated air emissions, water consumption, natural resource depletion to the extent the benefit of such reductions are not fully reflected in cost savings; enhanced system reliability; or advancement of any other state policy enumerated in section 4928.02 of the Revised Code.
(R) "Peak demand," when measuring reduction programs, means the average maximum hourly electricity usage during the highest 100 hours on the electric utility's system in a calendar year.
(S) "Peak-demand baseline" means the average peak demand on the electric utility's system in the preceding three calendar years as reported in the electric utility's most recent long-term forecast report, pursuant to division (A)(2)(a) of section 4928.66 of the Revised Code.
(V) "Program" means a single offering of one or more measures provided to consumers. For example, a weatherization program may include insulation replacement, weather stripping, and window replacement measures.
(W) "Staffs' means the staff or authorized representative of the public utilities commission.
(X) "Technical potential" means the reduction in energy usage or peak demand that would result if all homes and businesses adopted the most efficient measures, regardless of cost.
(Y) "Total resource cost test" means an analysis to determine if, for an investment in energy efficiency or peak-demand reduction measure or program, on a life-cycle basis, the present value of the avoided supply costs for the periods of load reduction, valued at marginal cost, are greater than the present value of the monetary costs of the demand-side measure or program borne by both the electric utility and the participants, plus the increase in supply costs for any periods of increased load resulting directly from the measure or program adoption. Supply costs are those costs of supplying energy and/or capacity that are avoided by the investment, including generation, transmission, and distribution to customers. Demand-side measure or program costs include, but are not limited to, the costs for equipment, installation, operation and maintenance, removal of replaced equipment, and program administration, net of any residual benefits and avoided expenses such as the comparable costs for devices that would otherwise have been installed, the salvage value of removed equipment, and any tax credits.
(Z) "Verified savings" means an annual reduction of energy usage or peak demand from an energy efficiency or peak-demand reduction program directly measured or calculated using reasonable statistical and/or engineering methods consistent with approved measurement and verification guidelines.
(A) Pursuant to division (A)(1)(a) of section 4928.66 of the Revised Code, beginning in 2009, each electric utility is required to implement energy efficiency programs. Such programs, at a minimum, shall achieve established statutory benchmarks for energy efficiency. Additionally, pursuant to division (A)(1)(b) of section 4928.66 of the Revised Code, beginning in 2009, each electric utility is required to implement peak-demand reduction programs designed to achieve established statutory benchmarks for peak-demand reduction. The purpose of this chapter is to establish rules for the implementation of electric utility programs that will encourage innovation and market access for cost-effective energy efficiency and peak-demand reduction, achieve the statutory benchmark for peak-demand reduction, meet or exceed the statutory benchmark for energy efficiency, and provide for the participation of stakeholders in developing energy efficiency and peak-demand reduction programs for the benefit of the state of Ohio.
(B) The commission may, upon an application or a motion filed by a party, waive any requirement of this chapter, other than a requirement mandated by statute, for good cause shown.
(A) Assessment of potential. Prior to proposing its comprehensive energy efficiency and peak-demand reduction program portfolio plan, an electric utility shall conduct an assessment of potential energy savings and peak-demand reduction from adoption of energy efficiency and demand-response measures within its certified territory, which will be included in the electric utility's program portfolio filing pursuant to rule 4901:1-39-04 of the Administrative Code. An electric utility may collaborate with other electric utilities to co-fund or conduct such an assessment on a broader geographic basis than its certified territory. However, such an assessment must also disaggregate results on the basis of each electric utility's certified territory. Such assessment shall include, but not be limited to, the following:
(1) Analysis of technical potential. Each electric utility shall survey and characterize the energy-using capital stock located within its certified territory and quantify its actual and projected energy use and peak demand. Based upon the survey and characterization, the electric utility shall conduct an analysis of the technical potential for energy efficiency and peak-demand reduction obtainable from applying alternate measures.
(2) Analysis of economic potential. For each alternate measure identified in its assessment of technical potential, the electric utility shall conduct an assessment of cost-effectiveness using the total resource cost test.
(3) Analysis of achievable potential. For each alternate measure identified in its analysis of economic potential as cost-effective, the electric utility shall conduct an analysis of achievable potential. Such analysis shall consider the ability of the program design to overcome barriers to customer adoption, including, but not limited to, appropriate bundling of measures.
(4) For each measure considered, the electric utility shall describe all attributes relevant to assessing its value, including, but not limited to potential energy savings or peak-demand reduction, cost, and nonenergy benefits.
(B) Program design criteria. When developing programs for inclusion in its program portfolio plan, an electric utility shall consider the following criteria:
(1) Relative cost-effectiveness.
(2) Benefit to all members of a customer class, including nonparticipants.
(3) Potential for broad participation within the targeted customer class.
(4) Likely magnitude of aggregate energy savings or peak-demand reduction.
(5) Nonenergy benefits.
(6) Equity among customer classes.
(7) Relative advantages or disadvantages of energy efficiency and peak-demand reduction programs for the construction of new facilities, replacement of retiring capital stock, or retrofitting existing capital stock.
(8) Potential to integrate the proposed program with similar programs offered by other utilities, if such integration produces the most cost-effective result and is in the public interest.
(9) The degree to which a program bundles measures so as to avoid lost opportunities to attain energy savings or peak reductions that would not be cost-effective or would be less cost-effective if installed individually.
(10) The degree to which the program design engages the energy efficiency supply chain and leverages partners in program delivery.
(11) The degree to which the program successfully addresses market barriers or market failures.
(12) The degree to which the program leverages knowledge gained from existing program successes and failures.
(13) The degree to which the program promotes market transformation.
(C) Promising measures not selected. Each electric utility shall identify measures considered but not found to be cost-effective or achievable but show promise for future deployment. The electric utility shall identify potential actions that it could undertake to improve the measure's technical potential, economic potential, and achievable potential to enhance the likelihood that the measure would become cost-effective and reasonably achievable.
(D) The electric utility may seek to collaborate or consult with other utilities, regional and municipal governmental organizations, nonprofit organizations, businesses, and other stakeholders to develop programs meeting the requirements of this chapter.
(A) Each electric utility shall design and propose a comprehensive energy efficiency and peak-demand reduction program portfolio, including a range of programs that encourage innovation and market access for cost-effective energy efficiency and peak-demand reduction for all customer classes, which will achieve the statutory benchmarks for peak-demand reduction, and meet or exceed the statutory benchmarks for energy efficiency. An electric utility's first program portfolio plan filed pursuant to this rule, shall be filed with supporting testimony prior to January 1, 2010. Each electric utility shall file an updated program portfolio plan by April 15, 2013, and by the fifteenth of April every third year thereafter, unless otherwise directed by the commission.
(B) Each electric utility shall demonstrate that its program portfolio plan is cost-effective on a portfolio basis. In general, each program proposed within a program portfolio plan must also be cost-effective, although each measure within a program need not be cost-effective. However, an electric utility may include a program within its program portfolio plan that is not cost-effective when that program provides substantial nonenergy benefits.
(C) Content of filing. An electric utility's program portfolio plan shall include, but not be limited to, the following:
(2) A description of stakeholder participation in program planning efforts and program portfolio development.
(3) A description of attempts to align and coordinate programs with other public utilities' programs.
(4) A description of existing programs. The electric utility shall provide a summary of existing programs with a recommendation for whether the program should continue and, if so, a description of its relationship to any proposed programs. If a program has previously been approved and is unchanged, the electric utility may reference the program description currently in effect. If the electric utility is proposing to modify an existing program, the electric utility shall provide a description of the proposed modification and the basis for proposed changes.
(5) A description of proposed programs. An electric utility shall describe each program proposed to be included within its program portfolio plan with at least the following information:
(a) A narrative describing why the program is recommended pursuant to the program design criteria in this chapter.
(b) Program objectives, including projections and basis for calculating energy savings and/or peak-demand reduction resulting from the program.
(c) The targeted customer sector.
(d) The proposed duration of the program.
(e) An estimate of the level of program participation.
(f) Program participation requirements, if any.
(g) A description of the marketing approach to be employed, including rebates or incentives offered through each program, and how it is expected to influence consumer choice or behavior.
(h) A description of the program implementation approach to be employed.
(i) A program budget with projected expenditures, identifying program costs to be borne by the electric utility and collected from its customers, with customer class allocation, if appropriate.
(j) Participant costs, if any.
(k) Proposed market transformation activities, if any, which have been identified and proposed to be included in the program portfolio plan.
(l) A description of the plan for preparing reports that document the electric utility's evaluation, measurement, and verification of the energy savings and/or peak-demand reduction resulting from each program and the process evaluations conducted by the electric utility. The independent program evaluator will prepare an independent evaluation, measurement, and verification plan at the direction of the commission staff to monitor, verify, evaluate and report on the energy savings and peak-demand reductions resulting from utility programs and mercantile customer activities. The independent program evaluator's plan may rely on data collected and reported by the electric utility.
(D) Unless otherwise ordered by the commission, any person may file objections within sixty days after the filing of an electric utility's program portfolio plan. Any person filing objections shall specify the basis for all objections, including any proposed additional or alternative programs, or modifications to the electric utility's proposed program portfolio plan.
(E) The commission shall set the matter for hearing and shall cause notice of the hearing to be published one time in a newspaper of general circulation in each county in the electric utility's certified territory. At such hearing, the electric utility shall have the burden to prove that the proposed program portfolio plan is consistent with the policy of the state of Ohio as set forth in section 4928.02 of the Revised Code, and meets the requirements of section 4928.66 of the Revised Code.
(A) Initial benchmark report. Within sixty days of the effective date of this rule, each electric utility shall file an initial benchmark report with the commission that identifies the following information:
(1) The energy and demand baselines for kilowatt-hour sales and kilowatt demand for the reporting year; including a description of the method of calculating the baseline, with supporting data.
(2) The applicable statutory benchmarks for energy savings and electric utility peak-demand reduction.
(B) An electric utility may file an application to adjust its sales and/or demand baseline.
The baseline shall be normalized for weather and for changes in numbers of customers, sales, and peak demand to the extent such changes are outside the control of the electric utility. The electric utility shall include in its application all assumptions, rationales, and calculations, and shall propose methodologies and practices to be used in any proposed adjustments or normalizations. To the extent approved by the commission, normalizations for weather, changes in numbers of customers, sales, and peak demand shall be consistently applied from year to year.
(C) Portfolio status report. By March fifteenth of each year, each electric utility shall file a portfolio status report addressing the performance of all approved energy efficiency and peak-demand reduction programs in its program portfolio plan over the previous calendar year which includes, at a minimum, the following information:
(1) Compliance demonstration. Each electric utility shall include a section in its portfolio status report detailing its achieved energy savings, achieved demand reductions, and the expected demand reductions that its programs were reasonably designed to achieve, relative to its corresponding baselines. At a minimum, this section of the portfolio status report shall include each of the following:
(a) An update to its benchmark report.
(b) A comparison with the applicable benchmark of actual energy savings and peak-demand reductions achieved by electric utility programs.
(c) An affidavit as to whether the reported performance complies with the statutory benchmarks.
(2) Program performance assessment. Each electric utility shall include a section in its portfolio status report demonstrating whether it has successfully implemented the energy efficiency and demand-reduction programs approved in its program portfolio plan. At a minimum, this section of the annual portfolio status report shall include each of the following:
(a) A description of each approved energy efficiency or peak-demand reduction program implemented in the previous calendar year including:
(i) The key activities undertaken in each program, the number and type of participants, a comparison of the forecasted savings to the verified savings achieved by such program, the magnitude of anticipated savings, and a trend analysis of how anticipated savings will be realized over the life of the program.
(ii) All energy savings counted toward the applicable benchmark as a result of energy efficiency improvements implemented by mercantile customers and committed to the electric utility.
(iii) All peak-demand reductions counted toward the applicable benchmark as a result of energy efficiency improvements, demand response, or demand reduction improvements implemented by mercantile customers and committed to the electric utility.
(iv) A description of all transmission and distribution infrastructure improvements made by the electric utility that reduce line losses to the extent the reduction in line losses has been applied to meet the applicable benchmarks with a calculation and description of the net impact of such improvements on losses.
(b) An evaluation, measurement, and verification report that documents the energy savings and peak-demand reduction values and the cost-effectiveness of each energy efficiency and demand-side management program reported in the electric utility's portfolio status report. Such report shall include documentation of any process evaluations and expenditures, measured and verified savings, and cost-effectiveness of each program. Measurement and verification processes shall confirm that the measures were actually installed, the installation meets reasonable quality standards, and the measures are operating correctly and are expected to generate the predicted savings. Upon commission order, the staff may publish guidelines for program measurement and verification.
(c) A recommendation for whether each program should be continued, modified, or eliminated. The electric utility may propose alternative programs to replace eliminated programs, taking into account the overall balance of programming in its program portfolio plan. The electric utility shall describe any alternate program or program modification by providing at least the information required for proposed programs in its program portfolio plan pursuant to this chapter. An electric utility may seek written staff approval to reallocate funds between programs serving the same customer class at any time, provided that the reallocation supports the goals of its approved program portfolio plan and is limited to no more than twenty-five per cent of the funds available for programs serving that customer class. In addition, an electric utility may change its program mix or budget allocations at any time, as long as it provides notice to all parties in the proceeding in which the program portfolio plan was approved.
(D) Independent program evaluator report. Subsequent to the filing of the electric utility's portfolio status report, the independent program evaluator will prepare and file a report of the independent program evaluator's activities and conclusions in monitoring, verifying, and evaluating the energy savings and peak-demand reductions resulting from the electric utility programs and mercantile customer activities. The report shall also include the verification and evaluation, through the use of due-diligence techniques including project inspections, of the electric utility's evaluation, measurement, and verification report.
(E) An electric utility may satisfy its peak-demand reduction benchmarks through a combination of energy efficiency and peak-demand response programs implemented by electric utilities and/or programs implemented on mercantile customer sites where the mercantile program is committed to the electric utility.
(1) For energy efficiency programs, an electric utility may count the programs' effects resulting in coincident peak-demand savings.
(2) For demand response programs, an electric utility may count demand reductions towards satisfying some or all of the peak-demand reduction benchmarks by demonstrating that either the electric utility has reduced its actual peak demand, or has the capability to reduce its peak demand and such capability is created under either of the following circumstances:
(a) A peak-demand reduction program meets the requirements to be counted as a capacity resource under the tariff of a regional transmission organization approved by the federal energy regulatory commission.
(b) A peak-demand reduction program equivalent to a regional transmission organization program, which has been approved by this commission.
(F) A mercantile customer's energy savings and peak-demand reductions shall be measured by including the effects of all demand-response programs of the mercantile customer and all mercantile customer-sited energy efficiency and peak-demand reduction programs. A mercantile customer's energy savings and peak-demand reductions shall be presumed to be the effect of a demand response, energy efficiency, or peak-demand reduction program to the extent they involve the early retirement of fully functioning equipment, or the installation of new equipment that achieves reductions in energy use and peak demand that exceed the reductions that would have occurred had the customer used standard new equipment or practices where practicable. Electric utilities may make an alternative demonstration that mercantile customer energy savings or peak demand reductions are effects of such a program.
(G) A mercantile customer may file, either individually or jointly with an electric utility, an application to commit the customer's demand reduction, demand response, or energy efficiency programs for integration with the electric utility's demand reduction, demand response, and energy efficiency programs, pursuant to division (A)(2)(d) of section 4928.66 of the Revised Code. Such application shall:
(1) Address coordination requirements between the electric utility and the mercantile customer with regard to voluntary reductions in load by the mercantile customer, which are not part of an electric utility program, including specific communication procedures.
(2) Grant permission to the electric utility and staff to measure and verify energy savings and/or peak-demand reductions resulting from customer-sited projects and resources.
(3) Identify all consequences of noncompliance by the customer with the terms of the commitment.
(4) Include a copy of the formal declaration or agreement that commits the mercantile customer's programs for integration, including any requirement that the electric utility will treat the customer's information as confidential and will not disclose such information except under an appropriate protective agreement or a protective order issued by the commission pursuant to rule 4901-1-24 of the Administrative Code.
(5) Include a description of all methodologies, protocols, and practices used or proposed to be used in measuring and verifying program results, and identify and explain all deviations from any program measurement and verification guidelines that may be published by the commission.
(H) An electric utility shall not count in meeting any statutory benchmark the adoption of measures that are required to comply with energy performance standards set by law or regulation, including but not limited to, those embodied in the Energy Independence and Security Act of 2007, or an applicable building code.
(I) Benchmarks not reasonably achievable. If an electric utility determines that it is unable to meet a benchmark due to regulatory, economic, or technological reasons beyond its reasonable control, the electric utility may file an application to amend its benchmarks. To the extent that forecasted peak demand and peak prices do not materialize for economic reasons, the electric utility may be granted a waiver of its benchmark for the difference between actual performance and expected performance of demand response programs.
(J) Benchmarks not reasonably achievable. If an electric utility determines that it is unable to meet a benchmark due to regulatory, economic, or technological reasons beyond its reasonable control, the electric utility may file an application to amend its benchmarks. To the extent that forecasted peak demand and peak prices do not materialize for economic reasons, the electric utility may be granted a waiver of its benchmark for the difference between the actual and expected performance of demand response programs. In any such application, the electric utility shall demonstrate that it has exhausted all reasonable compliance options.
(A) Any person may file comments regarding an electric utility's initial benchmark report or annual portfolio status report filed pursuant to this chapter within thirty days of the filing of such report.
(B) Upon receipt of such report, the staff shall review the report and any timely filed comments, and file its findings and recommendations regarding program implementation and compliance with the applicable benchmarks, and any proposed modifications thereto, verifying the electric utility's compliance or noncompliance with its approved program portfolio plan and the mandated energy efficiency improvements and peak-demand reductions. If staff finds that an electric utility has not demonstrated compliance with the approved program portfolio plan or annual sales or peak-demand reductions required by division (A) of section 4928.66 of the Revised Code, staff may recommend remedial action and/or the assessment of a forfeiture. Additionally, the staff may recommend modifications to a program within the electric utility's program portfolio plan.
(C) The commission may schedule a hearing on the electric utility's portfolio benchmark report or status report. If staff recommends a forfeiture, the commission shall schedule a hearing on the staff's recommendations.
(D) The commission shall adopt, or modify and adopt, the staff's recommendations and findings as its annual verification report of the electric utility's achieved energy efficiency and peak-demand reductions pursuant to division (B) of section 4928.66 of the Revised Code. Such verification report shall be provided to the consumers' counsel of Ohio.
(A) With the filing of its proposed program portfolio plan, the electric utility may submit a request for recovery of an approved rate adjustment mechanism, commencing after approval of the electric utility's program portfolio plan, of costs due to electric utility peak-demand reduction, demand response, energy efficiency program costs, appropriate lost distribution revenues, and shared savings. Any such recovery shall be subject to annual reconciliation after issuance of the commission verification report issued pursuant to this chapter.
(1) The extent to which the cost of transmission and distribution infrastructure investments that are found to reduce line losses may be classified as or allocated to energy efficiency or peak-demand reduction programs, pursuant to division (A)(2)(d) of section 4928.66 of the Revised Code, shall be limited to the portion of those investments that are attributable to and undertaken primarily for energy efficiency or demand reduction purposes.
(2) Mercantile customers, who commit their peak-demand reduction, demand response, or energy efficiency projects for integration with the electric utility's programs as set forth in rule 4901:1-39-08 of the Administrative Code, may individually or jointly with the electric utility, apply for exemption from such recovery.
(B) Any person may file objections within thirty days of the filing of an electric utility's application for recovery. If the application appears unjust or unreasonable, the commission may set the matter for hearing.
An application to commit a mercantile customer program for integration filed pursuant to paragraph (G) of rule 4901:1-39-05 of the Administrative Code, may include a request for an exemption from the cost recovery mechanism set forth in rule 4901:1-39-07 of the Administrative Code. To be eligible for such exemption, the mercantile customer must consent to providing an annual report on the energy savings and electric utility peak-demand reductions achieved in the customer's facilities in the most recent year. The report shall include the following:
(A) A demonstration that energy savings and peak-demand reductions associated with the mercantile customer's program are the result of investments that meet the total resource cost test, or that the electric utility's avoided cost exceeds the cost to the electric utility for the mercantile customer's program.
(B) A statement distinguishing programs implemented before and after January 1, 2009, or in future reports filed for years subsequent to 2009, before and after the most recent year.
(C) A quantification of the energy savings or peak-demand reductions for programs initiated prior to 2009 in the baseline period, recognizing that programs may have diminishing effects over time as technology evolves or equipment degrades.
(D) A recognition that the energy saving and demand reduction effects during the electric utility's baseline period of any mercantile customer-sited energy efficiency or peak-demand reduction programs that are integrated into an electric utility's programs are excluded from the electric utility's baselines by increasing its baseline for energy savings and baseline for peak-demand reductions by the amount of mercantile customer energy savings and demand reductions.
(E) A listing and description of the customer programs implemented, including measures taken, devices or equipment installed, processes modified, or other actions taken to increase energy efficiency and reduce peak demand, including specific details such as the number, type, and efficiency levels both of the installed equipment and the old equipment that is being replaced, if applicable.
(F) An accounting of expenditures made by the mercantile customer for each program and its component energy savings and electric utility peak-demand reduction attributes.
(G) The timeline showing when each program went into effect, and when the energy savings and peak-demand reductions occurred.
(H) Any request for an exemption may be combined with any other reasonable arrangement, approved pursuant to Chapter 4901:1-38 of the Administrative Code, if such reasonable arrangement contains appropriate measurements and verification of program results.