EAI is calculating the projected 2012 LCFC in a manner consistent with the direction provided by the Commission in Order No. 14 in Docket No. 08-137-U. The projected LCFC calculation uses the 2012 projected energy savings developed for the Three-Year Plan. The projected energy savings is adjusted for the NTG ratio of 80% as ordered by the Commission, then an additional adjustment is applied based upon the First Year Monthly Curve Ratio developed from the timing of measures installed throughout a calendar year from industry, best practice programs. The adjustment based upon the First Year Monthly Curve Ratio is used to reduce the potential for over-collection of LCFC associated with all Energy Efficiency Program measures being installed throughout the first calendar year. The resulting adjusted projected energy savings are then multiplied by the rate class lost contribution rate (“LCR”). The LCR is the base rate revenues less customer charge revenues, calculated on a dollar per kWh basis, using the Company’s most recently approved base rates. EAI’s 2011 projected LCFC is $1.3 million.
EAI will true up the projected LCFC each year based upon energy savings achieved, adjusted based upon independent EM&V review. The true up energy savings are prorated the first year and last year of installation based upon the install date of each measure by program. The LCR applied to the true up LCFC is the seasonal rate schedule base rates less customer charges.
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The projected LCFC in years beyond 2011 also will include the cumulative impact of energy savings associated with energy efficiency measures installed between rate cases, taking into consideration the measure life. The projected LCFC for a filing year would be subject to true-up in the next filing year.
For EAI, the 2011 true up, pro-rated Lost Contribution to Fixed Costs, or LCFC was calculated using the following formula:
Where:
LCFC = Lost Contribution to Fixed Costs kWh (NTG) = kWh saved respective of NTG RR = Realization Rate
PF = Proration Factor
Rate = Entergy’s rate for electricity usage
The various components to this calculation are explained thusly:
kWh (NTG) is a way to account for free ridership and any additional
spillover a program may contain. EAI used an .80 NTG factor for its programs. Essentially, then, any savings realized by an installation could only be counted up to 80% of its measures savings quantity.
The Realization Rate is the number in the equation that allows the
calculation to account for such factors as evaluated gross savings. In essence, calculating LCFC requires a true-up at the end of the year as most measures are not installed on the first day of the program year for the first year of a particular measure. This is where the Proration Factor comes into play. For Lighting and Appliances, this is a simple proration of how long in the given calendar year the measure was installed. However, for non-lighting and appliances measures, obtaining a proration factor becomes more complex. Consequently, there are a few more factors to consider as it pertains to calculating the proration factor:
Standard Industrial Classification (“SIC”) Code:
This code is measure specific (i.e. ceiling insulation) and determines which Heating/Cooling/Heating-Cooling degree day table to use for the
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proration factor. The SIC Code also informs if the residence is total electric or not unless field information provides better data.
Heating/Cooling/Heating-Cooling Table:
These tables measure the amount of heating degree or cooling degree days that were recorded for a given program year. For the purposes of this calculation, a given calendar day’s recorded values were taken as a percentage of the overall calendar year. For instance, 1/1/2011 would correspond to a value of 0 on a cooling degree day table as the temperature was not above 65o F.
Once the SIC Code, and Matching Table data are culled, the proration factor can be determined. The date of the installation of the measure determines the initial look up on the appropriate heating/cooling/ heating-cooling degree table. Each day’s values from that point forward are summed and the proration factor is achieved for that particular installation.
Finally, seasonality in the form of the different rate structures is the last component in the LCFC calculation. EAI accounted for seasonality by applying its summer lost contribution rate to the summer period (June 1 – September 30) and the other period lost contribution rate to the non-summer period (January 1 - May 31 and October 1 – December 31). This is accomplished by taking the above proration factor for the applicable summer and other periods. The resulting factors are multiplied by the appropriate seasonal rates and the rest of the LCFC calculation is carried out as usual.
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Table 5.2
Lost Contribution to Fixed Cost
Program Name 2011 2012 2013 2011 2012 2013
Lighting & Appliances 12,142,519 $ 121,233 Arkansas Weatherization Program 1,991,412 $ 63,262 Energy Efficiency Arkansas 0 $ - Home Energy Solutions 6,670,978 $ 187,280 Energy Solutions Multi-Family 0 $ - Energy Solutions for Manufactured (Mobile) Homes 0 $ - Energy Star New Homes 0 $ - Efficient Cooling Solutions 1,565,107 $ 35,510 Residential Benchmarking Pilot 0 $ - Residential Direct Load Control 0 $ - C&I Prescriptive 6,605,699 $ 86,923 C&I Custom Solutions 10,288,528 $ 80,856 Small Business 1,262,392 $ 19,765 City Smart 1,566,776 $ 46,526 Agricultural Energy Solutions 0 $ - Agricultural Irrigation Load Control 0 $ - Demand Response 0 $ - Program 18 0 $ - Program 19 0 $ - Program 20 0 $ - 641,354 $ $ - $ - 13,413,739 $ $ - $ - 4.8% - -
Lost Contribution to Fixed Cost (LCFC)
LCFC Energy Savings MWh
LCFC ($)
LCFC Total:
Total Actual Portfolio Expense: LCFC as a % of Portfolio Total: