20240916AVU to Staff 9 - Attachment C.pdf

Memorandum V
April 15, 2024 neea
TO: Nicole Hydzik, Director of Energy Efficiency,Avista Utilities; Kim Boynton, Manager of
Planning and Analytics,Avista Utilities
CC: Susan Hermenet,Vice President, NEEA Research, Evaluation and Analytics; Becca Yates,
Executive Director, NEEA
FROM: Stephanie Rider, Director, NEEA Data, Planning, and Analytics
SUBJECT: Cost Effectiveness Assessment Scenarios for Cycle 7 Funding
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Background
This memo addresses Avista Utilities' request for an estimated Utility Cost Test(UCT) on NEEA's portfolio
of expected energy savings for Cycle 7 (2025-2029) specific to its Idaho territory to support the
contracting process for Cycle 7 funding.
To fulfill this request, NEEA performed a UCT assessment of the NEEA portfolio with varying assumptions
about the amount of energy savings reported from new building code activities and advancements.
Model assumptions and results are detailed below.
The Approach
As discussed with Avista staff,the approach utilizes the Regional Technical Forum's ProCost model'and
associated assumptions to provide benefit cost ratios based on the Cycle 7 investment and expected
energy savings. This approach uses regional energy and capacity values as a proxy for Avista specific
marginal costs to provide a directional assessment for Avista Utilities decision making supporting Cycle 7
funding.
Table 1 lists the model assumptions NEEA employed for this UCT analysis.
Table 1:Model Assumptions
Assumption Value Notes
Discount Rate 3.75 Societal real discount rate used in the 2021 Power Plan.
Program and 10 Years Reflects energy savings benefits accrued during the 5-year cycle
Measure Life as well as continued market effects for an additional 5 years.
Peak Benefits Winter ProCost Regional winter peak values.
'ProCost I Regional Technical Forum (nwcouncil.org)
z Time period over which the costs and benefits are counted from a utility investment perspective. The same value
was used for physical measure life. This is a conservative assumption as many of the efficiency measures in NEEA's
C7 portfolio have physical measure lives significantly longer than 10 years and will continue to deliver benefits to
Avista customers beyond what is counted in this analysis.

Carbon Included in ProCost includes the value of avoided CO2 emissions in its electric
Benefits Electric market cost estimates.
Scenario
Other Benefits None NEEA does not include additional credit for conservation.
Savings 2025-2029 NEEA forecasted Net Market Effects savings within Avista's Idaho
Savings service territory based on historical trends and program
Forecasts expectations.The ranges are based on variations of savings from
new construction building energy code.
Utility Costs Based on Avista Idaho's 2.18%share of the Cycle 7 total alliance electric
Funder Share budget of$211,800,000 and 3.82%of the natural gas budget of
of NEEA Cycle 7 $35,316,000.
total budget
Transforming technology performance and market structure typically takes 10-20 years to remove
barriers that allow for sustained conditions favorable for the energy efficient product. NEEA believes that
this approach and set of assumptions is a conservative approximation of NEEA's market transformation
efforts in a utility cost test approach.
The Results
NEEA ran six scenarios for Avista Utilities' Idaho funding using these model inputs to reflect varying
outputs in the Cycle 7 forecast for the electric and natural gas portfolios separately. The table below
summarizes those results.
Table 2:ProCost forecast of Utility Cost Test for Avista Utilities Idaho Cycle 7
Fuel Forecast with Code Benefit Cost Ratio
benefit level at:
Electric 100% 4.1
50% 2.6
25% 1.9
Natural Gas 100% 5.9
50% 3.1
25% 1.7
Summary and detailed ProCost files generated for each of the above scenarios in support of this request
can be found at this location: https://neea.sharepoint.com/sites/AUISA/Shared%20Documents
Separately, NEEA IT staff will send you the required documentation to provide access to this site.
Please contact Stephanie Rider([e-mail]) if you have any questions or additional needs.