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Comments on California’s Evaluation Methods for Distributed Energy Resources

We recently submitted comments to the California Public Utilities Commission (CPUC) on their proposal to develop a more robust societal cost test to evaluate the cost-effectiveness of distributed energy resources (DERs). California has been a national leader in addressing the challenges associated with DER integration, and this proceeding will help the state to reform their cost-effectiveness framework.

We support California’s decision to use the societal cost test, and want to help ensure it reflects the best available analysis. We recommend that the CPUC use the societal cost test as its primary test whenever it evaluates DER programs, and that it use a low societal discount rate for this test. We also recommend that the PUC use the damage cost approach in determining the value of pollution abatement, and apply the social cost of carbon, which reflects the best available science and economics and has been developed through a transparent process. Finally, our comments recommend that the analysis include the full range of reasonably quantifiable externalities, rather than just including climate damages.