1. Benefit Cost Framework for Energy Efficiency Programs

2. Overview NH B/C Framework Uses the TRC Formula TRC = Benefits / Costs Benefits: – Energy-related costs avoided by the utility – Capacity-related costs avoided by the utility, including generation, transmission and distribution – Additional resource savings (oil, propane, kerosene, wood, water and gas) Costs: – Utility costs including program installation costs, overhead costs, incentives, administration, EM&V and performance incentives – Customer costs – i.e., program installation costs not covered by incentives and other incremental costs such as safety-related costs 2

3. Source of Data Benefits – Avoided Energy Supply Cost in New England: 2015 Report, prepared by TCR Costs – NH Statewide CORE Energy Efficiency Plans 3

4. Illustration Eversource – Year 2016 NH Statewide Energy Efficiency Plan – Energy Star® Homes Program Benefits, Page 36:$4,239,162 Benefits, Page 36 Costs, Page 35:$1,124,100 Costs, Page 35 B/C Ratio, Page 35 3.77 B/C Ratio, Page 35 4

5. Least Cost Integrated Planning requirements in the State of New Hampshire

6. Definitions, PUC 310.01 Least cost integrated resource planning (LCIP) means, in the case of an electric utility, those standards set forth in RSA 378:38 and a planning and selection process for new energy resources that evaluates the full range of alternatives, including new generating capacity, power purchases, energy conservation and efficiency, cogeneration and district heating and cooling applications, and renewable energy resources, in order to provide adequate and reliable service to its customers at the lowest system cost

7. Four New Hampshire statues provide guidance concerning the regulatory treatment of Least Cost Planning Energy Policy: Section 387:37 Submission of Plans to the PUC: Section 387:38 Commission Evaluation of Plans: Section 378:39 Plans required: Section 378:40

8. Least Cost Energy Planning; Section 387:37 New Hampshire Energy Policy. The general court declares that it shall be the energy policy of this state to meet the energy needs of the citizens and businesses of the state at the lowest reasonable cost while providing for the reliability and diversity of energy sources; to maximize the use of cost effective energy efficiency and other demand side resources; and to protect the safety and health of the citizens, the physical environment of the state, and the future supplies of resources, with consideration of the financial stability of the state's utilities. Source. 1990, 226:1, eff. Jan. 1, 1991. 2014, 129:1, eff. Aug. 15, 2014.

9. Least Cost Energy Planning; Section 387:38 Submission of Plans to the Commission. Pursuant to the policy established under RSA 378:37, each electric and natural gas utility, under RSA 362:2, shall file a least cost integrated resource plan with the commission within 2 years of the commission's final order regarding the utility's prior plan, and in all cases within 5 years of the filing date of the prior plan. Each such plan shall include, but not be limited to, the following, as applicable: Forecast of future demand for the utility's service area. An assessment of demand-side energy management programs, including conservation, efficiency, and load management programs. An assessment of supply options including owned capacity, market procurements, renewable energy, and distributed energy resources. An assessment of distribution and transmission requirements, including an assessment of the benefits and costs of "smart grid'' technologies, and the institution or extension of electric utility programs designed to ensure a more reliable and resilient grid to prevent or minimize power outages, including but not limited to, infrastructure automation and technologies. An assessment of plan integration and impact on state compliance with the Clean Air Act of 1990, as amended, and other environmental laws that may impact a utility's assets or customers. An assessment of the plan's long- and short-term environmental, economic, and energy price and supply impact on the state. An assessment of plan integration and consistency with the state energy strategy under RSA 4-E:1.

10. Least Cost Energy Planning; Section 387:38-a 378:38-a Waiver by Commission. The commission, by order, may waive for good cause any requirement under RSA 378:38, upon written request by a utility. Source. 1997, 298:14, eff. June 20, 1997. 2014, 129:1, eff. Aug. 15, 2014.

11. Least Cost Energy Planning; Section 378:39 Commission Evaluation of Plans. The commission shall review integrated least-cost resource plans in order to evaluate the consistency of each utility's plan with this subdivision, in an adjudicative proceeding. In deciding whether or not to approve the utility's plan, the commission shall consider potential environmental, economic, and health- related impacts of each proposed option. The commission is encouraged to consult with appropriate state and federal agencies, alternative and renewable fuel industries, and other organizations in evaluating such impacts. The commission's approval of a utility's plan shall not be deemed a pre-approval of any actions taken or proposed by the utility in implementing the plan. Where the commission determines the options have equivalent financial costs, equivalent reliability, and equivalent environmental, economic, and health-related impacts, the following order of energy policy priorities shall guide the commission's evaluation: I. Energy efficiency and other demand-side management resources; II. Renewable energy sources; III. All other energy sources. Source. 1990, 226:1. 1994, 362:5, eff. June 8, 1994. 2014, 129:1, eff. Aug. 15, 2014.

12. Least Cost Energy Planning; Section 378:40 Plans Required. No rate change shall be approved or ordered with respect to any utility that does not have on file with the commission a plan that has been filed and approved in accordance with the provisions of RSA 378:38 and RSA 378:39. However, nothing contained in this subdivision shall prevent the commission from approving a change, otherwise permitted by statute or agreement, where the utility has made the required plan filing in compliance with RSA 378:38 and the process of review is proceeding in the ordinary course but has not been completed. Source. 1994, 362:6, eff. June 8, 1994. 2014, 129:1, eff. Aug. 15, 2014.

13. Practical experience with implementation List of dockets addressing LCIP directly since December 2012 Resolved: 1.DE 12-347 Granite State Electric, d/b/a Liberty Utilities 2.DE 13-177 Public Service of New Hampshire 3.DE 13-195 Unitil Energy Systems Order clarifying waiver of LCIRP requirements 1.DE 15-248 Eversource Energy Underway: 1. DE 16-097 Liberty Utilities( Granite State Electric) Corp 1.DE 16-463 Unitil Energy Systems

14. Order No. 25,625: DE 12-347, Granite State Electric, d/b/a Liberty Utilities Reviewed the following : 1.How transmission and distribution systems are maintained to meet state and federal requirements 2.Administration of energy mkt by ISO-NE and how the markets are structured to procure adequate supply and demand resources to meet reliability objectives at lowest cost 3.T&D planning process adopted by utility to ensure reliable operations of the electrical grid 4.Role of demand response and distributed generation resources in the electrical markets and how the utility incorporates them into its transmission and distribution planning process 5.The utility’s participation in the Core program and how it relates to the utility’s resource planning Comment : Due to the absence of own utility generating assets, LCP filing was silent on matters relating to the Clean Air Act Amendment of 1990 and National Energy Policy Act pf 1992, requested and received waiver under 378;38. Staff recommended greater detail in development of distribution planning, better integration of actual enterprise planning with its LCIRP process and detailed distribution planning process model; more detail on how demand side and supply side options are integrated into the LCIRP and how environmental, economic and health related impacts inform the decision-making process Commission concurred with Staff recommendation on enhancements to next LCIRP to increase usefulness of document and in approving the filing ordered the following : Additional details on required elements of LCIRP filing; Detailed methodology of how utility intends to engage in distribution planning Better integrate actual enterprise planning with LCIRP Detailed planning BPM Additional detail on how environmental, economic and health related impacts inform planning and decision making. Discussion on how utility assesses non wires alternatives in distribution planning Detail on how demand side and supply side options are integrated in the planning process

15. Order No. 25,659: DE 13-177, Public Service Company of New Hampshire Reviewed the following: 1.Planning period established at 5 years from 2013-2017 2.Distribution detail included the following: methodology used to develop engineering forecast to estimate peak load; planning process for construction of electric facilities based on peak load requirements; joint planning activities with neighboring utilities; use of conservation and load management measures; distributed generation; reliability enhancement program. 3.Transmission: Key driver is regionally coordinated plan, thus utility transmission requirements are considered within ISO NE conducted process. Utility local transmission planning employs methodologies resembling regional planning process i.e. assesses and develops solutions to address reliability needs Comment: Commission directed utility to limit its 2013 LCIRP filing to transmission and distribution planning Intervener recommended consideration of Smart Grid Infrastructure as part of distribution planning process; move customer meters into the distribution planning process and include communication functions and IT functions in planning process A partial settlement agreement was reached which provided for the following additions to the next LCIRP report: detailed description of methodology for distribution planning,; BPM and accompanying description indicating how utility integrates least cost objectives in planning process; updated assessment of DSM programs including conservation and energy efficiency ; consideration of upgraded distribution automation technologies Commission noted the following needs to be addressed by a LCIRP: demand forecast; assessment of demand side energy management including conservation, efficiency and load management; integration of demand side and supply side options; environmental impacts ; transmission. Commission found that all above elements had been adequately addressed.

16. Order No. 25,651: DE 13-195, Unitil Energy Systems, Inc. Reviewed the following: 1.In support of its LCIRP, the utility provided the following detail: distribution planning and design guidelines; separate evaluations of two separate distribution planning locations located in Concord and the Seacoast ;load history and 10 year forecasts for both regions; two separate reliability studies; a demand side management report 2.The utility indicated that planning activities include distribution system planning on an annual basis as part of a 5 year forward looking process to evaluate circuits and substations with recommendations for system modifications; electric system planning to evaluate sub transmission facilities and system supply points; joint system planning to evaluate the external delivery system that provided the utility access to regional transmission and generation resources as well as demand side resource planning. Comment: Arising from a partial settlement agreement, the utility agreed to the following: A more detailed description of the of the methodology used in conducting distribution planning; a BPM to illustrate how the utility integrates least cost objectives into its planning process; an updated assessment of demand side management programs including conservation, efficiency improvement and load management programs. The Commission took note of the terms of the settlement agreement when finding that the utility had met the requirements of RSA 378:38 and was adequate in meeting the expectations of 378:39

17. Conclusions NH PUC focused on the following LCIRP components: Forecast of future demand, Assessment of : Demand side energy management programs Supply options Distribution and transmission requirements Plan integration and compliance Long & short term environmental, economic, energy price and supply impact Plan integration and consistency with state energy strategy At present Staff focused on strengthening transparency with respect to: Methodology of how utility intends to engage in distribution planning, Better integration of actual enterprise planning with LCIRP Detailed planning BPM Greater detail on how environmental, economic and health related impacts inform planning and decision making. How utility assesses non wires alternatives in distribution planning How demand side and supply side options are integrated in the planning process