ACELA Analysis Methodology

Introduction
The American Clean Energy Leadership Act of 2009 (ACELA), which passed through the Energy and Natural Resource Committee on June 18, 2009, includes important energy efficiency provisions. ACEEE produced several preliminary, national-level analyses of the various iterations of ACELA as the bill worked toward passage. We update our assessment of the national impacts of the energy efficiency provisions in ACELA. This document explains the construction of the Excel model used in this analysis and presents the key assumptions that were made in this analysis.

Methodology
The foundation of this model is an assessment of each of the energy efficiency provisions in ACELA at the national level. This analysis projected the aggregate energy, carbon, and economic savings for the bill as a whole.

ACEEE's analysis focuses on provisions from the Clean Energy Technology Deployment (Title I) and Enhanced Energy Efficiency (Title II) titles in ACELA. The approach used to model each provision was developed by research leads at ACEEE.

The next sections provide details on key aspects of the analysis, identifying key assumptions and data sources used.

Federal Legislative Scoring Methodology
For each of the policies mentioned below, this analysis estimates energy savings in 2020 and 2030. Estimates were calculated for electricity use, peak energy demand, natural gas use, oil savings (including motor gasoline, diesel, and home fuel oil), and all energy sources together. This analysis also estimates federal, state/utility, and consumer costs, as well as gross consumer savings (based upon dollar savings from unused energy) and net consumer savings. In general, EIA's Annual Energy Outlook 2009 (EIA 2009) was used as the reference case. A number of key assumptions were taken from this document. These assumptions included projected energy prices and consumption by sector and by fuel type, power plant heat rates, and carbon dioxide emissions per unit of fuel saved. To estimate peak demand savings, we used the ratio of peak demand savings per unit reduction in electricity sales from an EIA study of demand-side management (EIA 2000).

A few sections of the bill authorize the establishment of a specific program, sometimes with an accompanying funding level. However, these authorizations must be followed by an explicit appropriation of funds, handled by the House and Senate Appropriations Committees. Because we are unsure what amount will be appropriated, where programs require substantial spending, we use funding authorizations, or in absence of a specific authorization, assume continuation of spending at prior levels through 2030.

Interest Rates Used
To calculate annualized net consumer investment values, we amortized consumer investments for each provision in a given year (and in years with savings from prior investments) using a real interest rate of 4.5% and measure lives in Table D-1. 4.5% reflects the average utility cost of capital used in DSM filings and plans excluding the effects of inflation (Nadel 2004). We exclude inflation because all of our financial figures are in constant 2007 dollars. These amortized net investment values were subtracted from the gross savings to calculate net savings.