Iowa Association for Energy Efficiency

Energy Efficiency Cost-Effectiveness Testing

The Midwest has a long and successful history of energy efficiency policies and programs. However, outdated cost-effectiveness testing approaches leave a lot of opportunities at the margins out of program portfolios. State regulators only approve efficiency programs that pass the state’s required cost-effectiveness test or tests, which measure the ratio of benefits to costs associated with an energy efficiency program.

Standardizing the methods and inputs for cost-effectiveness testing in a state helps to level the playing field among utilities, requiring them to count the same variables in the same way. The National Standards Practice Manual provides a framework for developing a primary test for a state or other jurisdiction from the regulator’s perspective that accounts for the energy policies and goals of that jurisdiction. This presentation will provide an analysis of existing Midwest cost-effectiveness tests, lost opportunities, the NSPM’s approach and case studies.


Nick Dreher serves as Midwest Energy Efficiency Alliance's Senior Policy Manager, responsible for advancing state energy efficiency policies while developing strategic relationships with decisionmakers and energy efficiency industry stakeholders. Nick earned a J.D. and a Master’s in Environmental Law and Policy at Vermont Law School and a B.A. in Rhetoric at the University of California, at Berkeley.

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