GUIDELINES FOR THE DEVELOPMENT AND MAINTENANCE OF MEASURE COSTS AND BENEFITS ESTIMATION METHODS November 2011 Prepared for: The Regional Technical Forum Navigant Consulting, Inc. 1990 N. California Blvd., Suite 700 Walnut Creek, CA 94596 Phone: 925.935.0270 Fax: 925.935.0290 www.navigant.com © 2011 Navigant Consulting, Inc. i Table of Contents 1 Purpose and Scope ............................................................................................................. 1 1.1 Key Terms ....................................................................................................................................................... 1 1.2 Guidelines Overview..................................................................................................................................... 2 2 Measure Costs and Benefits Analysis and Reporting Requirements ......................... 3 2.1 2.2 2.3 2.4 2.5 2.6 3 Measure Specification ................................................................................................................................... 3 Element Identification ................................................................................................................................... 3 Element Analysis ........................................................................................................................................... 3 Reporting Requirements ............................................................................................................................... 4 Analysis Expectations ................................................................................................................................... 4 Statistical and Rigor Requirements ............................................................................................................. 4 Estimation Procedures – Capital Costs ........................................................................... 5 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 4 Material ........................................................................................................................................................... 5 Ancillary Material .......................................................................................................................................... 6 Disposal ........................................................................................................................................................... 7 Labor ................................................................................................................................................................ 7 Design and Engineering ................................................................................................................................ 9 Permitting and Licensing .............................................................................................................................. 9 Markups .......................................................................................................................................................... 9 Delivery ......................................................................................................................................................... 10 Estimation Procedures – Maintenance .......................................................................... 11 4.1 4.2 4.3 4.4 5 Introduction .................................................................................................................................................. 11 Ongoing Maintenance – Labor ................................................................................................................... 11 Ongoing Maintenance – Material .............................................................................................................. 11 Ongoing Maintenance – Disposal .............................................................................................................. 11 Estimation Procedures – Operations ............................................................................. 12 5.1 5.2 5.3 5.4 5.5 5.6 5.7 Introduction .................................................................................................................................................. 12 Electricity and Natural Gas ........................................................................................................................ 12 Propane, Heating Oil, and Wood .............................................................................................................. 13 Other Fuel ..................................................................................................................................................... 13 Water ............................................................................................................................................................. 13 Consumable Materials................................................................................................................................. 14 Consumable Disposal .................................................................................................................................. 15 6 Estimation Procedures – Ancillary Impacts ................................................................. 16 7 Measure Economic Maintenance ................................................................................... 17 ii 7.1 Measure Economic Analysis Lifetime ....................................................................................................... 17 7.2 Cross-Measure Standardization Spreadsheet(s) ...................................................................................... 17 8 RTF Process for Specifying Measure Economic Elements ......................................... 18 9 Measure Economic Element Analysis Methods .......................................................... 19 9.1 Data Cleaning ............................................................................................................................................... 19 9.2 Estimation Approaches ............................................................................................................................... 19 10 Appendix I: Data Sources and Justification for Source Selection ............................. 22 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 Regional Sales (Price and Volume) ..................................................................................................... 22 In-Store Retail ........................................................................................................................................ 23 Contractor and Project Invoices .......................................................................................................... 23 Online Retail .......................................................................................................................................... 24 Built-Up Cost Analysis ......................................................................................................................... 25 Contractor Interview ............................................................................................................................ 25 Distributor Interview ............................................................................................................................ 26 Program Tracking Data ........................................................................................................................ 27 Additional Professional and Industrial Market Actor and Program Administrator Interviews 27 RS Means or Other Secondary Sources .............................................................................................. 27 Analyst Estimates .................................................................................................................................. 28 Maintenance Staff Interviews .............................................................................................................. 28 Justification for Source Selection ......................................................................................................... 28 Appendix II: Measure Economic Element Reference Sheet ................................................ 30 iii 1 Purpose and Scope This document provides guidelines for the development of estimates of the quantifiable, monetizable costs and benefits of energy efficiency measures. These guidelines provide a systematic approach to developing estimates and documenting approaches and sources. It is intended to supplement the Guidelines for RTF Savings Estimation Methods and Guidelines for RTF Measure Lifetime Estimation Methods, which together are used to determine the cost-effectiveness of energy efficiency measures. 1.1 Key Terms The following terms are used throughout this document. » Measure Costs and Benefits – The quantifiable, monetizable impacts that result from an energy efficiency measure. For Regional Technical Forum (RTF) purposes, these have been categorized as capital cost, operations, maintenance, and ancillary impacts. “Measure Costs and Benefits” refers to the incremental effects of a conservation measure, relative to the baseline action. » Measure Costs and Benefits Element – Discreet measure monetizable impacts that may have unique methodologies for estimation of values. Values may be either positive (cost) or negative (benefit) for each individual element, depending on the measure. » Element Type – A categorization of measure costs and benefits elements specific to a measure. For example, an element might be classified as residential or commercial, depending on the measure. Each element has an associated list of element types, and each element type has an associate priority list of data sources. » Measure Costs and Benefits Analysis – The full analysis of all measure costs and benefits elements, including documentation of data sources, methods, and justification for all elements not evaluated. Cross-Measure Standardization – The information (for example, values, data sets, data sources, and/or analysis methods) that is standard across many measure assessments. These data are developed, organized, and maintained by the RTF and stated in the RTF Measure Costs and Benefits Standard Information Workbooks. » Measure Costs and Benefits Checklist – A checklist developed together with these guidelines to facilitate the systematic analysis of measure economics described here. The analyst can use the checklist to document elements analyzed, data sources used, and justification for not analyzing elements and/or using higher priority data sources. » Incremental Effects – The effect of implementing a conservation measure, relative to the baseline activity (i.e., not implementing the conservation measure). The following baseline conditions are defined in the Guidelines for RTF Savings Estimation Methods and are considered within these guidelines: o Current Practice – Existing equipment or configuration has no remaining useful life. Incremental cost is defined as the difference between the cost of the standard efficiency installation or replacement and the measure. o Pre-Condition – Existing equipment or configuration still has significant remaining useful life. The baseline conditions assume that no installation would occur and therefore no cost is incurred. Incremental cost is defined as the full cost of the measure installation. 1 1.2 Guidelines Overview This document defines each of the identified measure costs and benefits elements, along with their respective requirements for documentation, data source use, and other methods for determining measure costs and benefits estimates. More specifically, this document provides: » Section 2 – A description of the measure costs and benefits analysis process » Sections 3 through 6 – For each measure costs and benefits element: o A prioritization of data sources and description of analysis approaches o Specification of all data, sources, and justifications required o Identification of cross-measure standardization of values, data sets, data sources, and analysis methods » Section 7 – Maintenance of measure costs and benefits analyses and cross-measure standardized data » Section 8 – The RTF process for modifying the measure costs and benefits element set » Section 9 – A discussion on the appropriate use of data cleaning and analysis methods » 2 2 Measure Costs and Benefits Analysis and Reporting Requirements This section summarizes the RTF measure costs and benefits analysis and reporting requirements. Analysis begins with the clear specification of the measure (including the baseline) and the identification of relevant measure costs and benefits elements. For each relevant element, the guidelines are then used to select data sources and analysis methods. Finally, analysis is documented, including the completion of the RTF Measure Costs and Benefits Checklist. 2.1 Measure Specification The measure economic analysis begins with the statement of baseline and measure characteristics, which should match those provided for the energy savings analysis. 1 2.2 Element Identification The analyst shall then consider each costs and benefits element enumerated in these Guidelines and identify all elements relevant to the measure. The RTF Measure Costs and Benefits Checklist may be used to facilitate this process. Each element has associated element types. For example, for many elements there are Unit Energy Savings (UES) and Standard Protocol types that reflect the classification of the measure energy savings. Each type may have a different priority list of data sources. Therefore, depending on the element type, an element may have different preferred analysis methods for different measures. The elements presented within these guidelines are not exclusive and the user may recommend additional elements to be considered for a specific measure economic analysis. The RTF may accept these additional proposed elements if quantifiable, monetizable estimates of impacts can be reliably provided. 2.3 Element Analysis For each element (or grouping of elements) assessed, the analyst should complete the following actions: 1) Identify the element type, as described in these guidelines for each specific element. 2) Select the data source from the priority list of data sources provided in the Guidelines in the subsection covering the element in question. Section XX describes and discusses each of these sources. 3) Select an analysis method. 4) Conduct the analysis. Guidelines for the Development and Maintenance of RTF Savings Estimation Methods http://www.nwcouncil.org/energy/rtf/subcommittees/deemed/Guidelines%20for%20RTF%20Savings%20Esti mation%20Methods%20(Release%206-1-11).pdf 1 3 2.4 Reporting Requirements The measure costs and benefits analysis should be included in the measure assessment workbook, as should the Measure Costs and Benefits Checklist. » Measure costs and benefits analyses should include raw and cleaned data sets and a clear description of the cleaning process. Each step of the analysis should be clearly labeled. » The checklist should contain the following items: o A summary of elements analyzed and excluded o Justification for elements not considered (not applicable, assumed to have a negligible incremental impact, or included in an aggregate analysis of multiple elements) o A summary of data sources used for each element and justification for not using higher priority data sources, where applicable o A justification for analysis methodology for each element o Documentation of the analysis and summary of results (including any specifications for how analysis and results are presented) o Estimate of element value and data disposition from which to gauge uncertainty in the estimate 2.5 Analysis Expectations The intent of these guidelines is to standardize the process by which measure economic estimates are developed and to make the analyses transparent to the RTF. The RTF does not expect each element to be thoroughly and individually analyzed for each measure: » For most measure assessments, the majority of measure elements will be excluded, typically because there is no incremental impact of a particular element or the expected impact is negligible relative to other economic impacts. » In many cases, economic elements will be analyzed in groups (for example, contractor interviews or project invoices may be used to determine full capital costs), and a single estimate will be provided for the entire group of elements. 2.6 Statistical and Rigor Requirements The RTF requires the measure costs and benefits analysis and the analysis of each measure economic element to be unambiguous estimates. It is left to the discretion of the RTF to determine the adequacy of rigor for each measure costs and benefits analysis. The analyst is required to provide the documentation of data sources, methods, and estimates of uncertainty2 necessary for the RTF to make these determinations. Although acceptable levels of uncertainty are not set for the elements, providing the RTF with the inputs to gauge uncertainty is necessary. 2 4 3 Estimation Procedures – Capital Costs Capital costs are the incremental costs incurred in the acquisition and installation of an energy-efficient measure, relative to the stated baseline. This section describes measure economic elements that comprise capital costs, and the element-specific methods for determining their values. Capital costs comprise the following measure economic elements: » Material » Ancillary material » Disposal » Labor » Design and engineering » Permitting/licensing » Markups » Delivery Sales tax is not considered in RTF measure economic analyses because the societal total resource cost test— which the RTF uses to determine cost-effectiveness—is not affected by this type of transfer within a society. The following sections discuss each of the capital cost measure economic elements. 3.1 Material Material refers to the primary equipment installed for the baseline and measure. 3.1.1 Element Types and Priority List of Data Sources The Material measure costs and benefits element for a measure can be classified as either “UES” or “Standard Protocol” based on the measure type defined by the Guidelines for RTF Savings Estimation Methods. » UES – These measures tend to have easily identifiable traits, installations are independent of the site, and equipment contains no major sub-components. The following is the priority list of data sources for UES Capital Costs: o Regional sales (price and volume) o In-store retail o Contractor invoices o Online retail o Built-up cost analysis » Standard Protocol – These measures tend to have materials that contain sub-components that can vary the resulting efficiency and energy consumption characteristics, and installations and resulting performance are site-specific and/or dependent on site conditions. The following is the priority list of data sources for Standard Protocol Capital Costs: o Contractor interviews o Distributor interviews o Contractor and project invoices o Program tracking data 5 o 3.1.2 Additional professional and industrial market actors and program administrators Cross-Measure Standardization No Materials information is standardized across measures. 3.2 Ancillary Material Ancillary material refers to the components and consumables required to complete the proper installation of equipment and systems. Ancillary material does not include the capital cost of the actual measure or the labor costs associated with the installation. Examples of ancillary materials include wiring, exhaust/flue piping, pipe solder, fasteners (e.g., nails, screws), adhesives or sealants (e.g., glue, caulk, and spray foam), equipment mounting materials (e.g., footings, anchors, and concrete), or cleaning supplies. Ancillary materials are associated with the installation and not the ongoing maintenance. Ongoing maintenance material and labor are covered under separate measure economic elements. Ancillary material incremental impacts reflect the differences in requirements and practices for those installations. For example, for gas water heaters, changing from a standard unit to a condensing unit may require condensate drains and a condensate-resistant flue pipe. 3.2.1 Element Types and Priority Lists of Data Sources The Material measure costs and benefits element for a measure can be classified as either “UES” or “Standard Protocol” based on the measure type defined by the Guidelines for RTF Savings Estimation Methods. » UES – These measures tend to have easily identifiable traits, installations are independent of the site, and equipment contains no major sub-components. The following is the priority list of data sources for UES Ancillary Material Costs: o Contractor invoices o On-site installer interview or documentation review o Retail (in-store and online) » Standard Protocol – These measures tend to have materials that contain sub-components that can vary the resulting efficiency and energy consumption characteristics, and installations and resulting performance are site-specific and/or dependent on site conditions. The following is the priority list of data sources for Standard Protocol Ancillary Material Costs: o Contractor interviews o Contractor invoices o Interviews with additional professional and industrial market actors and program administrators 3.2.2 Cross-Measure Standardization Ancillary costs are not standardized across measures. 6 3.3 Disposal Disposal refers to the removal, hauling, and discarding or recycling of existing equipment or by-products of new equipment installations. Disposal does not include any disposal associated with the ongoing maintenance of the measure. For example, the cost of replacement and disposal of spent air filters in heating, ventilating, and air-conditioning (HVAC) equipment is covered under other measure economic elements. This does not include demolition or any of the labor associated with activity required to complete the measure installation. When considering between disposal types, the least expensive option should be assumed unless the measure includes the specification of a particular disposal/recycle process, in which case the cost of that process should be used. For example, recycling costs should be counted if recycling is required as a measure specification. Disposal costs should not differentiate between different disposal times for baseline and measure activities. For example, for early replacement measures, if a disposal would occur at a later date in the baseline case (at the end of useful life), then that disposal cost should be subtracted from the disposal cost for the measure case. No value shall be given to delaying the disposal cost in the baseline case. Therefore, disposal impacts should only be addressed in cases where implementation of a conservation measure results in a change in disposal requirements—either in quantity of method of disposal. For example, an appliance recycling measure may incur recycling costs that exceed the standard disposal costs for baseline appliances. 3.3.1 Element Types and Priority Lists of Data Sources There is a single element type: Disposal. The following is the priority list of data sources for this element: » Contractor invoices » Contractor interviews » Additional professional and industrial market actors and program administrators 3.3.2 Cross-Measure Standardization Disposal costs are not standardized across measures. 3.4 Labor Labor is the direct effort associated with the installation of equipment and systems, provided by either hired contractors or in-house staff. Labor analysis details should identify the steps taken or the practices used to install both basic installations and complex systems including their individual components. Labor is typically estimated in units of time (for example, man-hours), to which standard labor rates are applied. Labor pertains to the direct effort associated with the installation and impacts that may be incurred when installations are conducted by hired contractors or in-house staff: » Hired contractors – Labor hours include those hours for the contractors associated with the installation (i.e., the same hours that would appear on a customer invoice). While overhead may be included in their labor rates, the overhead associated with managers or other support staff that is not directly involved with the installation should not be included in the labor cost estimate. » In-house staff – The hours worked and hourly rates of the staff directly involved with the installation should be counted. The labor of other support staff, such as supervisors not directly involved with the installation, should not be included. 7 Labor costs are typically arrived at by multiplying labor units of time by a wage rate that is appropriate for the trade or person performing the task, as discussed in section 3.4.2. 3.4.1 Element Types and Priority Lists of Data Sources The labor measure costs and benefits element for a measure can be classified as either “UES” or “Standard Protocol” based on the measure type defined by the Guidelines for RTF Savings Estimation Methods. » UES – These measures tend to have easily identifiable traits, installations are independent of the site, and equipment contains no major sub-components. The following is the priority list of data sources for UES Labor hours: o Contractor invoices o RS Means and other secondary sources o Analyst estimates » Standard Protocol – These measures tend to have materials that contain sub-components that can vary the resulting efficiency and energy consumption characteristics, and installations and resulting performance are site-specific and/or dependent on site conditions. The following is the priority list of data sources for Standard Protocol Labor costs: o Contractor interviews o Additional professional and industrial market actors and program administrators 3.4.2 Cross-Measure Standardization Labor rates ($/hour) are standard across all measures and can be found in [RTF MEASURE ECONOMIC STANDARD DATA SPREADSHEET]. The RTF develops these labor rates through a survey of contractors and technicians. Weightings within categories are also developed by the RTF (for example, percentage of rural contractors and percentage of urban contractors). These values are updated every two years. [SUBCOMMITTEE SHOULD PROVIDE FEEDBACK ON THIS PARAGRAPH] Labor rates and their associated weightings can also be used to develop costs for specific market subsets. For other labor rates such as rates for in-house staff, the analyst may present proposed rates to the RTF for consideration and approval. [Discuss additional requirements/analysis needed to justify rates.] Classifications for rates include: » Residential o Electricians o HVAC technicians o Plumbers o Residents o Other3 » Commercial and Industrial o Electricians o HVAC technicians o Plumbers o Other 3 Other may include in-house staff rates that may vary for different organizations and industries. 8 3.5 Design and Engineering Design and Engineering is the design and specification of project details. 3.5.1 Element Types and Priority Lists of Data Sources There is a single element type for this element: Design and Engineering. Contractor interviews and invoices are the recommended data sources for this element. Interviews are preferable, given the complexity of this element. 3.5.2 Cross-Measure Standardization No information for Design and Engineering is standardized across measures. 3.6 Permitting and Licensing Permitting and licensing refers to the fees paid to a municipality in order to install equipment. This element is highly variable across jurisdictions. If the impact of this element is not negligible, a broad data collection effort is required to capture the variability in permitting and licensing fees across the region. 3.6.1 Element Types and Priority Lists of Data Sources There is a single element type for this element: Permitting and Licensing. Contractor interviews and invoices are the recommended data sources for this element. Interviews are preferable, given the complexity of this element. 3.6.2 Cross-Measure Standardization The information for Permitting and Licensing is not standardized across all measure assessments and therefore should be considered on a case by case basis. 3.7 Markups Markups are the additions to the cost of an item applied at various transaction points in the product delivery stream from manufacturer to purchasing end user. Where material and ancillary material costs are not collected from the perspective of the end user (e.g., wholesale distributor pricing and retail pricing for contractor-installed products), markups may need to be applied to costs to reflect the true cost to the end user. 3.7.1 Element Types Priority Lists of Data Sources There is a single element type for this element: Markups. Standard markup assumptions provided by the RTF should be used. 3.7.2 Cross-Measure Standardization Due to difficulties in collecting markup data from retailers and contractors, the RTF maintains standard markup rate assumptions by product type and distribution and delivery methods. This data is reviewed by the RTF every two years. 9 3.8 Delivery Delivery impacts arise from the costs incurred to deliver material and ancillary material to the site of installation, for example shipping costs, or delivery fees from a retailer. 3.8.1 Element Types Priority Lists of Data Sources There is one element type: Delivery. The following is a prioritized list of data sources for delivery costs: » Program tracking database » Invoices » Analyst estimates 3.8.2 Cross-Measure Standardization No information for Delivery is standardized across measures. 10 4 4.1 Estimation Procedures – Maintenance Introduction Maintenance is broadly defined as the “performance of routine, preventive, predictive, scheduled and unscheduled actions aimed at preventing equipment failure or decline with the goal of increasing efficiency, reliability, and safety.” 4 The measure economic maintenance elements are: » Ongoing maintenance – labor » Ongoing maintenance – materials » Ongoing maintenance – disposal The definitions and analysis methods for these elements are similar to the labor and ancillary materials elements in the Capital Cost category (Section 9). 4.2 Ongoing Maintenance – Labor The cost of labor can be quantified using the same sources and methods described in Section 3.4, Labor. For ongoing maintenance, an additional data source would be interviews with maintenance staff at sites where the measure (or similar measure) has been installed. 4.3 Ongoing Maintenance – Material The cost of materials for ongoing maintenance can be quantified using the same sources and methods described in Section 3.2, Ancillary Material. For ongoing maintenance, an additional data source would be interviews with maintenance staff at sites where the measure (or similar measure) has been installed. 4.4 Ongoing Maintenance – Disposal The cost of disposing of spent materials can be quantified using the same sources and methods described in Section 3.3, Disposal. For ongoing maintenance, an additional data source would be interviews with maintenance staff at sites where the measure (or similar measure) has been installed. There may be ambiguity between disposal costs in this Maintenance Category and the Operations Category of measure economic elements. In these cases, to avoid double counting, analysts should select one category to place these costs under and make this decision clear in the RTF Measure Economics Checklist. 4 U.S. Department of Energy, http://www1.eere.energy.gov/femp/pdfs/omguide_complete.pdf 11 5 5.1 Estimation Procedures – Operations Introduction For the purposes of these guidelines, “operations” are defined broadly as all economic impacts arising from energy and material consumed or disposed of as the result of normal use of the equipment addressed by the measure. This includes impacts from energy consumption, non-energy consumables (for example, water, or soap), and disposal of spent materials (for example, oil or refrigerant). The measure economic operations elements are: » Electricity » Natural gas » Propane » Heating oil » Wood » Other fuel » Water » Consumable materials » Disposal 5.2 Electricity and Natural Gas These elements address the economic impact of changes in electricity and natural gas consumption. 5.2.1 Element Types and Priority Lists of Data Sources Each element has a single element type: Electricity and Natural Gas, respectively. All electricity and natural gas costs should be obtained from the RTF. 5.2.2 Cross-Measure Standardization Electricity and natural gas prices are standardized across measures. The RTF uses estimates of forecast wholesale electricity and natural gas prices derived from the most recent power plan of the Northwest Power and Conservation Council. The estimates vary by the time of day and the month of the year, and by year for a 20-year forecast period. These estimates are reviewed and adopted by the RTF upon Council adoption of a new or updated Regional Power Plan. Gas and electricity cost inputs used by the RTF are documented in the 'MC_and_LOADSHAPE' workbook. RTF economic analysis of measures includes many other factors for which inputs are derived from the most recent Council plan. These include an estimate of a risk mitigation credit that reflects the long-run cost of new generating resources and the range of uncertainties for all key determinants of electricity market prices including costs of fuel, capital, carbon taxes, loads, hydro conditions, and others. RTF economic analysis of measures takes into account when the energy is saved, line losses, the value of deferred transmission and distribution capacity, the Regional Act Credit, and a series of financial assumptions for cost and term of measure financing. Details for these assumptions can be found in the ProCost workbooks and the 'MC_and_LOADSHAPE' workbooks used by the RTF. 12 5.3 Propane, Heating Oil, and Wood Incremental impacts on propane, heating oil, and wood consumption are captured by these three elements. 5.3.1 Element Types and Priority Lists of Data Sources For each of these elements, there are two element types: » Residential » Commercial/Industrial All propane, heating oil, and wood costs should be obtained from the RTF Measure Economic Standard Data Spreadsheet. 5.3.2 Cross-Measure Standardization Propane costs ($/gallon), heating oil costs ($/gallon) and wood costs ($/cord) are standard across all measures and can be found in the RTF Measure Economic Standard Data Spreadsheet. Costs and their associated weightings can also be used to develop costs for specific market subsets. The RTF develops these costs through a survey of regional marginal costs. Weightings within categories are also developed by the RTF (for example, percentage of rural residential customers and percentage of urban residential customers). These values are updated every year. 5.4 Other Fuel The economic impacts of any fuels not explicitly listed as measure economic elements are captured here. 5.4.1 Element Types and Priority Lists of Data Sources There is a single element type: Other fuel. Given the open-ended nature of this element, data sources cannot be recommended. 5.4.2 Cross-Measure Standardization Given the open-ended nature of this element, there is no cross-measure standardization. 5.5 Water Water refers to cost or savings due to the incremental change in water consumed by the end user as a result of the energy efficiency measure. This measure economic element only includes the full cost or cost savings of water paid for by the end user. The energy analysis should not include any embedded energy implications of water consumption, as this would result in a double counting of the value of that embedded energy (once as the value of energy savings in the energy analysis and a second time a part of the total water costs). For measure analyses in which the energy analysis includes the change in water consumption resulting from the measure, the calculated volume can be multiplied by the cost of water (e.g., $/gallon) to arrive at the total water impact. For those energy analyses without water volume already calculated, the Energy Guidelines 13 (Guidelines for the Development and Maintenance of RTF Savings Estimation Methods) should be followed to develop that volume change estimate. The cost per gallon associated with water accounts for both freshwater supply and wastewater. For residential and commercial applications, separate wastewater impacts should not be calculated. For agriculture, separate water and wastewater impacts can be calculated as these may not necessarily be coupled in all applications. Water impacts should only be considered where there is a substantial change in water consumption as a result of different operating characteristics between baseline and efficient measure equipment. 5.5.1 Element Types and Priority Lists of Data Sources The water measure economic element can be classified as residential, commercial, or agricultural. Subclassifications for each sector are: » Region [RTF/SUBCOMMITTEE TO HELP DEFINE REGIONS] » Rural/urban All water costs ($/gallon) should be obtained from the RTF Standard Measure Economic Data Spreadsheet. 5.5.2 Cross-Measure Standardization Water costs ($/gallon) are standard across all measures and can be found in [RTF MEASURE ECONOMIC STANDARD DATA SPREADSHEET]. Costs and their associated weightings can also be used to develop costs for specific market subsets. The RTF develops these costs through a survey of regional marginal costs. Weightings within categories are also developed by the RTF (for example, percentage of rural residential customers and percentage of urban residential customers). These values are updated every two years. [SUBCOMMITTEE SHOULD PROVIDE FEEDBACK ON THIS PARAGRAPH] 5.6 Consumable Materials Materials that are not explicitly listed as measure economic elements are captured here. One example of this would be clothes washing soap: the difference in soap consumption (type or quantity) between types of washing machines (e.g., top vs. front loaded) and/or temperature settings (e.g., cold vs. hot water washing). The cost of materials for operations can be quantified using the same sources and methods described in Section 3.2, on Capital ancillary materials. 5.6.1 Element Types and Priority Lists of Data Sources See Section 3.2, Ancillary Material. An additional data source would be interviews with maintenance staff at sites where the measure (or similar measure) has been installed. 5.6.2 Cross-Measure Standardization Given the open-ended nature of this element, there is no cross-measure standardization. 14 5.7 Consumable Disposal The cost of disposing of spent materials can be quantified using the same sources and methods described in Section 3.3. There may be ambiguity between disposal costs in this Operations Category and the Maintenance Category of measure economic elements. In these cases, to avoid double counting, analysts should select one category to apply these costs, and make this decision clear in the RTF Measure Economics Checklist. 5.7.1 Element Types and Priority Lists of Data Sources See Section 3.3 on Capital disposal. An additional data source would be interviews with maintenance staff at sites where the measure (or similar measure) has been installed. 5.7.2 Cross-Measure Standardization See Section 3.3. 15 6 Estimation Procedures – Ancillary Impacts Ancillary impacts are defined as any effects, positive or negative, that result from an energy efficiency measure that are not captured through the energy analysis or the categories of capital costs, operations, and maintenance. Common measure economic elements include: » Building Owner o Building value o Rent premiums » Building Operator o Equipment downtimes o Renewable energy credits o Resale of on-site generation » Business o Marketing and public relations o Productivity o Absenteeism o Attracting and retaining top tenants and employees » Building Occupants o Occupant comfort o Occupant illness o Indoor environmental quality » Utility o Reduced customer calls, shutoffs, and reconnections for delinquency o Reduced cost collection activities o Reduced arrearages and carrying costs for arrearages » Societal o Income generated from measure installation o Avoided costs for unemployment benefits o Reduced heat island effect Conclusive estimates of the monetary impact of these elements do not generally exist. Therefore, the RTF does not consider these elements further in this document. Instead, an analyst may choose to include ancillary impacts in their analysis if they can demonstrate that these impacts are significant, quantifiable, and monetizable for the measure in question. 16 7 Measure Economic Maintenance This section discusses the maintenance of data and analyses required to keep RTF measure economic analyses current. This pertains to both current RTF-approved analyses as well as RTF cross-measure standardized data. 7.1 Measure Economic Analysis Lifetime When a measure’s economics are expected to change rapidly, the RTF may accept a measure analysis with a measure economics sunset date earlier than the energy analysis sunset date. In these cases, the RTF should specify what part of the measure economic analysis needs to be updated (e.g., material cost). The most common reasons for requiring updates are: » Emerging technologies: Capital costs and possibly maintenance cost are declining quickly enough to affect the cost-effectiveness. In these cases, product cost data will likely need to be re-collected. » Commodity-based sensitivities: measures that are highly dependent on commodity (e.g., copper, steel, and aluminum) costs (e.g., motors) may fluctuate dramatically enough to affect costeffectiveness during the lifetime of the measure analysis. In these cases, the level of effort specified by the RTF to update costs for existing approved measures should be minimal. Where possible, economic data can be updated by applying appropriate scaling factors, such as a Producer Price Index5, Consumer Price Index6, or ratio of current and historical costs for similar products. 7.2 Cross-Measure Standardization Spreadsheet(s) The RTF is responsible for maintaining the data provided in the RTF Measure Economics Standard Datasets workbook. This workbook includes individual worksheets for each measure economic element, addressing relevant standardized data across measures, such as values, data sets, data sources, and methods. Each sheet includes the data sources, data, methods, and data vintages used to develop the standardized information, as well as a recommended sunset date for the information. The RTF should review this workbook annually and prioritizes standardized information to update or add. 5 6 Bureau of Labor Statistics. Producer Price Indexes. http://www.bls.gov/ppi/ Bureau of Labor Statistics. Consumer Price Indexes. http://www.bls.gov/cpi/ 17 8 RTF Process for Specifying Measure Economic Elements As new measures, analysis methods, and data sources arise, the elements, as defined in this document, may require revision or deletion. The categorization of elements might also be revised. Changes should most commonly be made at the element level, rather than to an entire category or subcategory of elements. For elements that the RTF chooses to include, the RTF should provide the following items: » A description of the element » A priority list of data sources » The specification of what should be standardized across measures (e.g,, values, data sets, data sources, analysis methods) » Identification of the person or entity that will be tasked with developing the standardized information and updating the RTF Measure Economics Standard Information Workbooks » Specification of how often the standard information should be updated » The reason for inclusion of a new element and the intended purpose and use 18 9 Measure Economic Element Analysis Methods This section provides guidance on methods used for measure economic element analysis. Analysis begins with the review and cleaning of data sets, and is followed by the execution of an estimation method. 9.1 Data Cleaning Raw data sets should be reviewed and cleaned before being analyzed. Cleaning steps include: » Formatting – Ensuring that records are formatted or consistency. Common formatting activities include converting numbers stored as text into numerical entries and standardizing the spelling and wording of categories. » Treatment of incomplete records – Incomplete records should be identified and addressed. Typically, incomplete records are discarded if any of the missing fields are used in the analysis. » Removal of duplicate records – Duplicate records should be identified and removed. In some data sets, near duplicate records may exist. The analyst must then decide whether to remove near duplicates or not. » Identification and treatment of outliers – Outliers are observations that are abnormally far from other values in the data set. Outliers may be naturally occurring or due to error in data entry and/or conversion. Naturally occurring outliers can arise from atypical circumstances at the source of the record (e.g., extremely high measure installation costs at a hazardous site). The outliers may be included; removed if comparable values are not anticipated in measure implementation (e.g., program participation is unlikely where installation costs would be very high); or removed if the measure specifications are tightened to exclude likely causes of the outlying data. Formal tests such as the Grubbs’ Test (for testing for a single outlier) and the Tietjen-Moore Test (for testing for multiple outliers) can be used to identify true statistical outliers in data sets. Both raw and cleaned datasets should be provided in the measure economic analysis, along with a description of all cleaning activities. The description should be clear enough for a reviewer to reproduce the cleaned dataset from the raw dataset. 9.2 Estimation Approaches There are various analytical methods for estimating measure economic element impacts from relevant data sets. Estimation methods include: » Arithmetic mean (average) » Weighted average » Median » Regression » Custom measures 9.2.1 Arithmetic Mean This approach averages all observations into a single point estimate and represents the middle or expected value of a data set. It is most appropriate when the data set represents a random sample, and an estimate of 19 the expected value in the underlying population is desired. Provided that the data is a random sample, an unbiased estimate of average cost is produced. There are limitations to using an arithmetic mean. This methodology does not identify cost-influencing parameters (e.g., special features, efficiency level), although this level of cost modeling may not be necessary. Also, skewed distributions and outliers can influence this method. Despite this, the arithmetic mean approach can be very useful and give representative results so long as the sample is clearly defined and restrictive (e.g., specific model numbers, specific cost resource). 9.2.2 Weighted Average The weighted average assigns more weight, or importance, to certain data points. This approach is most appropriate when the data set is not a random sample from the underlying population, and the analyst wishes to obtain the expected value of the population. By weighting observations according to their frequency in the population, the analyst can construct an unbiased estimate of the population average, such as an unbiased estimate of average capital costs in the population. Weights can be defined as market variables (e.g., market share of a particular manufacturer, equipment size) or cost influential feature sets (e.g., distribution of stainless-steel models, distribution of efficiencies) and are used to derive the weighted average cost. This results in the observations with higher weight contributing more to the final weighted average than the observations with a low weight. Like the arithmetic mean method, the weighted average approach can be influenced by outliers and skewed distributions. Outlying data points and skewed distributions should be checked for when using the weighted average method. 9.2.3 Median Where outlying values are present, using a median value may be more representative of a population’s central tendency. However, precisely because it is not influenced by outliers, it does not communicate asymmetry in the extremes of the sample distribution. For example, the median of the data series 1, 2, 3, 40, 50 is the same as the median of the data series 1, 2, 3, 4, 5 (median = 3). Median values can also be used together with the sample average to communicate the degree of skew in the sample distribution, and, therefore provide a good summary check of whether outliers are asymmetrically clustered on one end of the distribution. 9.2.4 Regression Modeling Regression modeling can be used to disaggregate cost effects of energy from non-energy features and to determine the effect of observable characteristics on the mean value of the measure element cost. If a sample is not randomly selected, regression modeling can still generate unbiased mean values of Y conditional on observable variables X, if the sample selection process is itself random conditional on a subset of X, such as would occur in stratified random sampling. Regression modeling expresses a variable as a function of observable characteristics and an error term. For measure economic analysis, the specific measure cost “Y” is typically expressed as a function of a set of variables “X” affecting cost (e.g., efficiency, unit size). For instance, the linear model takes the form, 20 𝑌 = 𝛼 + 𝛽𝑋 + 𝜀, (1) where 𝛼 is a constant, β is a set of unknown parameters, and 𝜀 is an error term. Using available cost data, the function parameters β are estimated according to a specified criterion, such as minimizing the sum of squared deviations between the actual value of Y and the predicted value of Y. (This is called “ordinary least squares” regression.) Conceptually, regression analysis is related to the arithmetic mean. For a given data set, the average value of Y can be obtained from the following regression: 𝑌 = 𝛼 + 𝜀, (2) in which case 𝛼 is the mean value of Y in the data set. By comparison, estimating the regression equation in (1) generates the average value of Y conditional on X: 𝑌̅ = 𝛽𝑋. In other words, regression analysis is preferred to the arithmetic mean if the analyst is interested not just in the overall mean, but in how the mean is conditioned by variables X. To be done properly, regression requires more statistical sophistication on the part of the analyst than other approaches require. 9.2.5 Controlling For Non--Energy Features Material and other costs may be influenced by non--energy features in ways that cannot be addressed by regression analysis. One example is when the available data does not indicate non-energy features or does not indicate them consistently. Another example is when there is a strong correlation between the non-energy features and the efficiency level of products, such as some kitchen appliances. In these cases, the analyst should make a reasonable attempt isolate the effect of the change in efficiency level. This may be achieved by estimation methods such as using a minimum bid or price, rather than an average, or using the average price of the lowest quartile of data points, rather than the average of the full data set. 9.2.6 Custom Cost Estimates In instances where a measure is technically complex, the “Custom” approach may be appropriate. Custom cost estimates may be used when equipment or system configurations are of a unique nature and require cost estimate “built up” for the specific technical details of the measure and project. The process is somewhat subjective and often relies on limited installation data; this method is prone to estimate variability. 21 10 Appendix I: Data Sources and Justification for Source Selection 10.1 Regional Sales (Price and Volume) Applicable measure cost and benefits elements: Material, basic. The most accurate data source for estimating material costs are sales price and sales volume data for the equipment recently purchased in the region. Sale prices typically reflect the actual costs paid by end users and are thus, the most reliable. Sales volumes provide the weighting necessary for the most accurate results. When using this approach, further analysis of markups is not required. Regional sales data also aid other research efforts and market characterizations such as defining fuel uses, equipment sizings, and manufacturer/brand preferences. The most commonly available source of regional sales data is in the form of utility program tracking data. This information can be coupled with data from other sources to offer analysis that is specific to a particular program. Utility program tracking data may include customer invoices that can provide information specific to installations in addition to purchases. Note that baseline data may not be available when using program tracking data. If program tracking data is used, the program delivery mechanism should be identified before analysis is conducted. The program delivery mechanism dictates how information is collected within the tracking data and provides context for understanding the values. For example, tracking data for an upstream prescriptive rebate would include wholesale data while a direct install program would most likely source information from a contractor prior to the application of a customer markup. In cases where program tracking data is unavailable, point of sale data can be used as a proxy for regional sales. Point of sale data can also be gathered from stores. This type of information provides volume and market share data. However, obtaining it from stores requires establishing and maintaining a strong relationship with store staff. The following presents a summary of potential strengths and weaknesses of in-store retail data: In-store retail data strengths: » Local/regional retail prices paid by customers for both measure and base equipment » Interviews with store staff can be developed as well and structured to gain additional information. For example, market weighting data from sales volume information » Easy to identify and establish sources » Data is available over time to support price trending. In-store retail data weaknesses: » Requires significant resources (e.g., staff travel, time at stores) to gather information » Cost updates will require significant resources » Limited to simple measures » No labor/installation information » Shelf surveys yield no sales volume weighting. This assumes all observed items are purchased in the same volumes. 22 10.2 In-Store Retail Applicable measure economic elements: » Material, basic » Ancillary material, basic » Ongoing maintenance – material, basic » Consumable materials, basic For items available at retail stores, a survey of stores can be conducted to collect information on material and supplies that support a measure installation. Store surveys may yield information on costs, equipment types, size ranges available (e.g., wattages, input ratings), efficiency ranges available, and non-energy-related feature variations. In-store retail surveys should identify the specific region, boundary, or area served by a given store so that cost-influencing factors dependent on location can be identified and isolated. Costinfluencing factors can include variations in taxes between states or localities, for example. Stores included in surveys should come from both urban and rural settings in order to fully characterize the market. Surveys should also target a wide range of store types including grocery, big-box hardware, and drugstores. Upon identifying possible retailers, a sampling plan should be specified, and any weighting methods should be identified and described. 10.3 Contractor and Project Invoices Applicable measure economic elements: » Material, basic » Material, complex » Ancillary material, basic » Ancillary material, complex » Disposal » Labor hours, basic » Design and engineering » Permitting and licensing » Delivery » Ongoing maintenance – labor, basic » Ongoing maintenance – material, basic » Ongoing maintenance – material, complex » Ongoing maintenance – disposal » Consumable materials, basic » Consumable materials, complex » Consumable disposal Information on contractor-installed measures can come from invoices and pricing sheets. Contractor invoices are a documented source of actual measure costs to end users. Invoices often include useful information on the equipment installed such as model number and manufacturer that facilitate market characterization in addition to incremental cost development. Customer invoices may be itemized to capture all aspects of an installation including material components, project design costs, material used to support an installation, and labor, for example. Invoices may also be 23 available for maintenance service and upkeep of installed measures. This can include maintenance materials, labor, and consumables required for operation. Some contractors may not differentiate some components such as material and labor costs, or identify the cost of specific ancillary components. Invoices for both baseline and efficiency equipment should be collected. Invoices provide clear information on the type of equipment installed (e.g., size, manufacturer, and model number), and contact information to facilitate interviews if needed. Price sheets from contractors may also be used as these provide data in a transparent and standardized format for comparison. Price sheets may not represent the actual costs paid by customers; verification may be required. However, price sheets are useful for incremental costs (baseline to measure equipment comparisons) and for determining the variety of manufacturers offered. 10.4 Online Retail Applicable measure economic elements: » Material, basic » Ancillary material, basic » Ongoing maintenance – material, basic » Consumable materials, basic An online survey of costs for both material and supporting material (i.e., ancillary, maintenance, and operations-related materials) is often the least-cost method of collecting data and can offer easy access to a comprehensive list of vendors, manufacturers, brands, efficiency levels, and sizes for a given measure type. Internet data is extensive, transparent, and accessible and can be used to identify the full range of equipment available to the market, along with equipment specifications. Internet cost data is inexpensive to obtain and can be readily updated. Internet costs may not reflect the full cost for measures with contractor markups applied. Additionally, Internet data typically is not region-specific and does not include any information on installations. Finally, Internet costs may not reflect actual costs for measures where the majority of purchases are made through channels other than the Internet. The following presents a summary of potential strengths and weaknesses of online retail data: Online data strengths: » Sufficient data for developing incremental costs of measure and base pairs » Can provide large data volumes to facilitate regressions analysis » Easy to identify and establish sources » Inexpensive data collection, including the potential to automate data collection through data “scraping” programs » Data available over time to support price trending Online data weaknesses: » Typically does not capture local or regional prices » » Limited to simple and common measure types No information on installation practices 24 10.5 Built-up Cost Analysis Applicable measure economic elements: Material, basic. In some cases, it may not be possible to isolate the incremental material cost of a measure by directly comparing the costs of efficient and baseline technologies (i.e., if the same non-energy features are not offered for standard and high-efficiency equipment7). In these cases, a built-up cost approach may be used to estimate the incremental cost between a baseline technology and the efficient case specifications. This method would separate out any variations in price that are present as a result of the differences in nonenergy factors and make the true incremental cost accessible for measure analysis. An example of this method would be to estimate the incremental cost of high-efficiency, hard-wired lighting fixtures for which identical-looking standard efficiency fixtures are not available. In this case, the incremental cost of the high-efficiency lighting element over the standard efficiency lighting element could be used, as incremental cost of wiring and non-lighting features can be assumed to be negligible. 10.6 Contractor Interview Applicable measure economic elements: » Material, complex » Ancillary material, complex » Disposal » Labor hours, complex » Design and engineering » Permitting and licensing » Ongoing maintenance – labor, complex » Ongoing maintenance – material, complex » Ongoing maintenance – disposal » Consumable materials, complex » Consumable disposal Cost information from contractors can be gathered through telephone interviews. Costs are generally actual retail costs paid by customers. Contractors can also be interviewed to obtain information on other aspects of installation such as ancillary material, design and engineering costs, labor rates, and labor hours for specific installations. Contractors will have specialized knowledge and experience with measures and can provide specific information on installation times, required professionals (both number of persons and required trades), equipment markup percentages, and high-volume discount percentages. Additionally, contractors can provide details on the changes required to move from standard to efficient equipment, the types of existing conditions found at installation sites (and how this can impact installations and material selections), and details on the most prevalent materials and equipment installed in a particular region. 7 For example, lighting fixtures. 25 Contractors are also a useful source for calibrating data. Interviews can be structured in a way so that draft analyses (or portions of analyses) can be presented to contractors to gauge how closely the analyses results match their own work practices. Finally, contractor interviews may yield useful information on maintenance and operations requirements. Contractors typically have first-hand knowledge of the requirements for operating and maintaining the equipment that they install. The following presents a summary of potential strengths and weaknesses of contractor interview data: Contractor data strengths: » Local/regional retail prices paid by customers for both measure and base equipment » Interviews can be structured to gain additional information (e.g., market-weighting data) » Established relationships with contractors will facilitate future data collection efforts to support price trend studies » Best source of labor rates and labor hours data » Single source for both measure and base equipment technical specifications » Facilitates match-pairs analysis » Best source for major residential equipment and complex systems Contractor data weaknesses: » Difficult to establish/initiate sources » Cost to obtain data (time and staff for interviews) 10.7 Distributor Interview Applicable measure economic elements: Material, complex. While distributors (and manufacturers) may not provide pricing seen by purchasing end users, they are useful in providing wholesale costs for large regions. Although specific costs paid by customers are not provided, robust costs not subjected to varying contractor markups can be obtained. Markups from the distributor to the contractor and ultimately to the customer are required supplements to information gathered through distributor interviews. Material costs are generally the only type of information provided and distributors are not involved with installations. Analysts should note that distributors may not provide information readily as this can be sensitive and competitive information. The following presents a summary of potential strengths and weaknesses of distributor interview data: Distributor data strengths: » Wholesale prices for both measure and base equipment » Interviews can be structured to gain additional information (e.g., market-weighting data) Distributor data weaknesses: » Difficult to establish/initiate sources » Distributors may be the most reluctant to hand over information » Wholesale costs will require a markup » Cost to obtain data (time and staff for interviews) 26 10.8 Program Tracking Data Applicable measure economic elements: » Material, complex » Delivery For measures related to existing programs, program tracking data can be useful and coupled with other data sources to offer information on the market that is specific to a particular program and measure. Utility program tracking data may include customer invoices that can provide information specific to installations in addition to purchases. Program tracking data may list material model numbers, manufacturers, and brands, for example. Program tracking data may also list installing contractor contact information for further research using interviews. Note that baseline data may not be available for current practice measures, however. If program tracking data is used, the program delivery mechanism should be identified before analysis is conducted. The program delivery mechanism dictates how information is collected within the tracking data. For example, tracking data for an upstream prescriptive rebate would include wholesale data while a direct install program would most likely source information from a contractor prior to their markup to the customer being applied. 10.9 Additional Professional and Industrial Market Actor and Program Administrator Interviews Applicable measure economic elements: » Material, complex » Ancillary material, complex » Disposal » Labor hours, complex » Ongoing maintenance – labor, complex » Ongoing maintenance – material, complex » Ongoing maintenance – disposal » Consumable materials, complex » Consumable disposal Other industry professionals familiar with specific equipment, the process to install it, and the maintenance and operations requirements may provide useful information on material costs such as equipment costs, installation practices, and the current conditions of the market or of a particular program (for the case where program administrators are interviewed). While these individuals typically do not have details on specific material specifications or costs, the information they provide may be used to establish benchmarks in costs or to calibrate analysis activities. 10.10 RS Means or Other Secondary Sources Applicable measure economic elements: » Labor hours, basic » Ongoing maintenance – labor, basic 27 RS Means (http://rsmeans.reedconstructiondata.com/) or other similar secondary sources may be used to estimate hours for basic installations and maintenance. RS Means offers both national and regionally specific estimates of labor installation and maintenance hours for a comprehensive list of equipment. 10.11 Analyst Estimates Applicable measure economic elements: » Labor hours, basic » Delivery » Ongoing maintenance – labor, basic For basic measures, analysts may provide their own estimates for certain installation hours, delivery costs, and maintenance labor requirements. Transparent and thorough analyses should supplement these assumptions and should typically be used where costs are small or only represent a small portion of the overall measure cost. 10.12 Maintenance Staff Interviews Applicable measure economic elements: » Ongoing maintenance – labor, basic » Ongoing maintenance – labor, complex » Ongoing maintenance – material, basic » Ongoing maintenance – material, complex » Ongoing maintenance – disposal » Consumable materials, basic » Consumable materials, complex » Consumable disposal Similar to contractor interviews, maintenance staff can be interviewed either on-site or over the phone in order to gather information on the maintenance and operation of installed measures. Maintenance staff may either be in-house staff or hired service contractors who maintain equipment and perform regularly scheduled upkeep. Information from maintenance staff interviews may include maintenance labor and material needs, operation material needs, and disposal requirements. Maintenance staff will have specialized knowledge and experience with measures and can provide specific information on the upkeep requirements encountered. Additionally, maintenance staff can provide details on the changes in maintenance and operations that occur when moving from standard to efficient equipment, and information on the typical conditions of measure installations (both new and existing) and site conditions for a particular region. 10.13 Justification for Source Selection Multiple data sources may exist for each element. The analyst should identify: » Available data sources » The characteristics of each data set and their differences (e.g., region surveyed, sample size, and vintage) » The limitations and uncertainties associated with the data 28 Sources from the prioritized lists should be examined to determine their appropriateness for a given analysis. If a source is not to be used (i.e., a higher priority source is skipped for a lower priority source) the reason behind the decision should be stated in the Measure Costs and Benefits Checklist. The following are characteristics to consider when selecting a data source: » Accessibility to information » Resources required (cost and time) to obtain and maintain information » Ability to facilitate updates (and updates for specific capital cost components) » Ability to support cost trending over multiple program years » Scope of market covered by source (e.g., range of products, manufacturers, and regions) » Ability to isolate specifics and create subset data (e.g., specific markets, manufacturers) » Sufficient data to develop estimate ranges across various spectrums (e.g., material costs across range of available efficiency levels) » Information on both baseline and measure equipment » Information on complex and custom systems as well as the components that make up those systems Secondary data sources8 may be used. Where secondary data is used, efforts should be made to adjust for any differences between the measure specifications from the secondary analysis and the measure in question, including differences in time, location, or demographics. Analysts must provide the same summary information and source justification for secondary data sources as for primary data sources. When using secondary sources, several factors should be considered: » Vintage – Information may be dated. When possible, sources should be validated to determine if they are still useful and relevant. Older cost sources can be updated using indexes such as Producer Price Indexes (PPIs) discount rates, through a ratio of past and current costs for similar products. » Geographical attribution – Secondary sources are often tied to a particular region, state, or utility territory. Data from other regions should be adjusted to account for differences in cost of living, local regulatory burdens that may increase costs, and other factors. Secondary sources such as RS Means should be used to adjust data from outside the region to be representative of the Northwest. » Reliability – Secondary sources should come from known and reliable sources and the nature of a source’s development should be understood. » Granularity and transparency – Secondary sources should clearly define and identify the methods and components used to develop full capital costs. Similar to the effort needed to gather primary data, secondary sources should show the source of their information and how the data analyses were applied. For example, secondary sources that provide spreadsheet tools in addition to documentation typically provide high levels of granularity and transparency. When reliable data sources are unavailable for a measure economic element that is expected to be significant, the analyst may use their professional judgment or defer to the RTF to provide this estimate. 8 Secondary data refers to data previously collected for other purposes. 29 Appendix II: Measure Economic Element Reference Sheet Category Sub-Category Element Element types Basic Material Complex Capital cost Capital cost Basic Ancillary material (wiring, condensate flue, etc.) Complex Disposal RTF-supplied standardized values Prioritized sources » » » » » » » » » » » Regional sales (price and volume) In-store retail Contractor invoices Online retail Built up cost analysis Secondary sources Contractor interviews Distributor interviews Contractor and project invoices Program tracking data Additional professional and industrial market actors and program administrators » » » » » » Contractor invoices » » Contractor invoices On-site installer interview or documentation review Retail (in-store and online) Contractor interviews Contractor invoices Interviews with additional professional and industrial market actors and program administrators Contractor interviews 30 Category Sub-Category Element Labor Element types RTF-supplied standardized values Basic hours Labor rates Complex hours Labor rates Design and engineering Permitting/licensing Markups RTF Mark-ups Delivery (e.g. shipping costs) Ongoing maintenance, labor Basic hours Labor rates Complex hours Labor rates Basic Maintenance Maintenance Ongoing maintenance, materials Complex Ongoing maintenance, disposal Operations Fuel Electricity From ProCost Prioritized sources » » » » » » » » » » » » » » » » » » RTF Supplied » » » Contractor invoices RTF Supplied Contractor interviews Contractor invoices Contractor interviews Contractor invoices RTF Supplied Program tracking database Invoices Analyst estimates RTF Supplied RTF Supplied Contractor invoices On-site installer interview or documentation review Retail (in-store and online) Contractor interviews Contractor invoices Interviews with additional professional and industrial market actors and program administrators Contractor interviews RTF Supplied 31 Category Sub-Category Element Element types Natural gas Propane RTF-supplied standardized values From ProCost Residential Cost per gallon Commercial /Industrial Heating oil Service rates Wood Cost per cord Other fuel Water Cost per gallon Basic Consumable materials Non-energy consumables Complex Basic Chemicals - disposal Complex Ancillary Impacts Building value Rent premiums Equipment downtimes Renewable energy credits Prioritized sources » » » » » » » » » » » » » RTF Supplied » » » » » » » » Contractor invoices RTF Supplied RTF Supplied RTF Supplied RTF Supplied Not specified RTF Supplied Contractor invoices On-site installer interview or documentation review Retail (in-store and online) Contractor interviews Contractor invoices Interviews with additional professional and industrial market actors and program administrators Contractor interviews Contractor invoices Contractor interviews Not specified Not specified Not specified Not specified 32 Category Sub-Category Element Element types RTF-supplied standardized values Prioritized sources Resale of on-site generation » Not specified Marketing and public relations » Not specified Not specified Absenteeism » » Attracting and retaining top tenants and employees » Not specified » » Not specified » Not specified » Not specified » Not specified » Not specified » Not specified » Not specified Productivity Occupant comfort Occupant illness Indoor environmental quality Utility - Reduced customer calls, shutoffs, and reconnections for delinquency Utility - Reduced cost collection activity Reduced arrearages / reduce carrying costs on arrearages Income generated from measure installation Avoided costs for unemployment benefits Not specified Not specified 33 Category Sub-Category Element Reduced heat island effect (e.g., cool roof) Element types RTF-supplied standardized values Prioritized sources » Not specified 34