The District of Columbia has set an example as one of the nation’s most forward-thinking districts by installing advanced energy meters and requiring energy efficiency contracts to pass a societal benefit-cost test. We recently submitted comments to the District of Columbia Public Service commission (PSC) regarding their investigation of “technologies and policies that can modernize our energy delivery system.”
To inform its energy policy decisions, we suggest that the PSC should develop a societal cost-benefit analysis framework with proper granularity that can be used in decisionmaking for both demand-side and supply-side energy resources. Such a framework can capture the locational and temporal valuations of alternative energy resources, while quantifying and monetizing externalities as much as is possible. This framework should be used for all types of investment decisions.
In addition to modernizing the energy delivery system in a societally optimal way, we encourage the District of Columbia to implement a rate reform system that will allow for more dynamic tariffs. This can help create correct price signals, ensuring an efficient allocation of resources by directing distributed energy resource investments to where they are needed most.