# DSM Plan

- **operation:** document
- **citation:** 4 CCR 723-4 Rule 4753
- **title:** DSM Plan
- **source type:** regulation
- **agency:** Colorado Public Utilities Commission
- **status:** current
- **official:** true
- **published on:** Not available
- **effective on:** Not available
- **summary:** Each utility shall file, in accordance with paragraph 4752(e), a prospective gas DSM plan that covers a DSM period of two years, unless otherwise ordered by the Commission. The plan shall demonstrate how the utility will meet or exceed the energy savings goals established by the Commission pursuant 
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- **app url:** https://regulus.evalyn.ai/document/co-ccr-4-723-4-4753
- **source url:** https://www.sos.state.co.us/CCR/DisplayRule.do?action=ruleinfo&ruleId=2260&deptID=18&agencyID=96&deptName=Department%20of%20Regulatory%20Agencies&agencyName=Public%20Utilities%20Commission&seriesNum=4%20CCR%20723-4
**body:**

Each utility shall file, in accordance with paragraph 4752(e), a prospective gas DSM
plan that covers a DSM period of two years, unless otherwise ordered by the
Commission. The plan shall demonstrate how the utility will meet or exceed the energy
savings goals established by the Commission pursuant to these rules through the
implementation of DSM programs and should also be consistent with the utility’s most
recent clean heat plan approved by the Commission pursuant to rule 4732. The plan
shall include the following information:
(a) the utility’s proposed expenditures by year for each DSM program, by budget
category, in accordance with the Commission’s order addressing the utility’s
most recent strategic issues proceeding application;
(b) the utility’s estimated gas energy savings and avoided greenhouse gas
emissions over the lifetimes of the measures implemented in a given annual
DSM program period, expressed in dekatherms per dollar of expenditure, and
presented for each DSM program proposed for Commission approval; this
represents the utility’s proposed savings target required by § 40-3.2-103(2)(b),
C.R.S.;
(c) the anticipated units of energy to be saved annually by a given annual DSM
program, which equals the product of the proposed expenditure target and
proposed savings target; this product is referred to herein as the energy target;
(d) anticipated design peak demand savings, as applicable to individual DSM
programs and to the portfolio as a whole;
(e) the estimated dollar per therm value that represents the utility’s annual fixed
costs that are recovered through commodity sales on a per therm basis;
(f) the utility shall include in its DSM plan application data and information sufficient
to describe the design, implementation, oversight and cost effectiveness of the
DSM programs. Such data and information shall include, at a minimum, program
budgets delineated by year, estimated participation rates and program savings
(in therms), and the greenhouse gas emissions avoided from each program;
(g) the utility’s plans to comply with the labor standards in § 40-3.2-105.5, C.R.S.;
and

(h) in the information and data provided in a proposed DSM plan, the utility shall
reflect consideration of the factors set forth in the Overview and Purpose, rule
4750. At a minimum the utility shall provide the following information detailing
how it developed its proposed DSM program:
(I) descriptions of identifiable market segments, with respect to gas usage
and unique characteristics;
(II) a comprehensive list of DSM measures that the utility is proposing for
inclusion in its DSM plan;
(III) a detailed analysis of proposed DSM programs for a utility’s service
territory in terms of markets, customer classes, anticipated participation
rates (as a number and a percent of the market), estimated energy
savings and cost effectiveness;
(IV) a ranking of proposed DSM programs, from greatest value and potential to
least, based upon the data required in subparagraph (f)(III);
(V) proposed marketing strategies to promote participation based on industry
best practices;
(VI) calculation of cost effectiveness of the proposed DSM programs using a
modified TRC test. Each proposed DSM program is to have a projected
value greater than or equal to 1.0 using a modified TRC test, except as
provided for in paragraph 4753(g);
(VII) an analysis of the impact of the proposed DSM program expenditures on
utility rates, assuming a 12-month cost recovery period;
(VIII) the best available values for gas leakage during the extraction,
processing, transportation, and delivery of gas by the utility, categorized
by each stage, as well as leakage from piping or other equipment on
customer premises, and any relevant data and emissions accounting
methodologies developed by the Air Pollution Control Division regarding
methane leakage rates and the appropriate global warming potential of
methane, for the purpose of calculating the cost of methane emissions;
and
(IX) a narrative discussion showing that the DSM measures and programs,
particularly in new construction, do not discourage otherwise economic
beneficial electrification.
(i) In its DSM plan, the utility shall address how it proposes to prioritize DSM
services and programs for income-qualified customers and customers in
disproportionately impacted communities.

(I) The utility may propose one or more DSM programs for income-qualified
customers or customers in disproportionately impacted communities that
yield a modified TRC test value below 1.0.
(II) For a utility with 50,000 or more full-service customers, no less than 25
percent of annual residential DSM expenditures shall be targeted on one
or more DSM programs or measures for income-qualified residential
customers.
(III) For a utility with fewer than 50,000 full-service customers, no less than 15
percent of annual residential DSM expenditures shall be targeted on one
or more DSM programs or measures for income-qualified residential
customers.
(IV) On or after January 1, 2026, the Commission may commence
proceedings to adjust the percentages set forth in subparagraphs
4753(i)(II) and (III) so long as the resulting percentages represent a
significant portion of DSM program expenditures and continue to make
progress toward achievement of the State of Colorado's energy efficiency
and greenhouse gas emission reduction goals.
(j) In proposing an expenditure target for Commission approval, the utility shall
comply with the following:
(I) the utility’s annual expenditure target for DSM programs shall be
consistent with the estimated budget for DSM program expenditures
established by the Commission in the utility’s most recent strategic issues
proceeding; and
(II) funds spent for education programs, market transformation programs and
impact and process evaluations and program planning related to gas DSM
programs may be recovered without having to show that such
expenditures, on an independent basis, are cost-effective; such costs shall
be included in the overall benefit/cost ratio analysis.
(k) The utility shall propose a budget to achieve the expenditure target proposed in
paragraph 4753 (a). The budget shall be detailed for the overall DSM plan and
for each program for each year and shall be categorized into:
(I) planning and design costs;
(II) administrative and DSM program delivery costs, including labor costs
reflecting compliance with all applicable labor standards set forth in § 40-
3.2-105.5, C.R.S.;
(III) advertising and promotional costs, including DSM education;
(IV) customer incentive costs;

(V) equipment and installation costs;
(VI) measurement and verification (M & V) costs; and
(VII) miscellaneous costs.
(l) The budget shall explain anticipated increases/decreases in financial resources
and human resources from year to year.
(m) A utility may spend more than the annual expenditure target established by the
Commission up to 25 percent over the target, without being required to submit a
proposed DSM plan amendment. A utility may submit a proposed DSM plan
amendment for approval when expenditures are in excess of 25 percent over the
expenditure target.
(n) As a part of its DSM plan, each utility shall propose a DSM plan with a
benefit/cost value of unity (1.0) or greater, using a modified TRC test.
(o) For the purposes of calculating and reviewing a modified TRC, the following
components shall be included. Forecasted DSM costs and benefits are used to
estimate the cost-effectiveness of DSM measures to develop a cost-effective
DSM portfolio.
(I) Benefits shall include, but are not limited to, as applicable: the utility’s
avoided transmission and distribution capital cost savings associated with
reductions or limited growth in design peak demand; energy costs; the
participant’s avoided operating and maintenance costs; the valuation of
avoided greenhouse gas emissions; and non-energy benefits, as set forth
in this rule 4753. The valuation of avoided greenhouse gas emissions
shall include the social cost of carbon dioxide and the social cost of
methane, consistent with rule 4528.

(II) Costs shall include utility and participant costs. The utility costs shall
include the net present value of costs incurred in accordance with the
budget set forth in rule 4753. For comparative purposes, in addition to this
base case calculation of cost-effectiveness, the utility may also provide a
case that does not include the social costs of carbon dioxide and
methane. Forecasted DSM costs and benefits are used to estimate the
cost effectiveness of DSM measures to develop a cost-effective DSM
portfolio.
(III) The initial TRC ratio, which excludes consideration of societal benefits,
shall be multiplied by a factor established by the Commission in the
utility’s strategic issues proceeding to reflect the value of the societal and
non-energy benefits. The result shall be the modified TRC. A utility may
propose for approval a different factor for societal impacts, but must
submit documentation substantiating the proposed value.
(IV) A determination of cost-effectiveness using the modified TRC test by the
Commission will ultimately be measured at the DSM portfolio level.
(V) For purposes of evaluating a gas DSM program or measure that
incorporates innovative technologies with the potential for significant
impact, such as energy-saving technologies that go beyond what is
achievable using energy efficiency measures alone, the Commission may
find the program or measure cost-effective, even if its initial benefit-cost
ratio is not greater than 1.0 when calculated using currently available data
and assumptions.
(p) Measurement and verification (M & V) plan. The utility shall describe in complete
detail how it proposes to monitor and evaluate the implementation of its proposed
programs. The utility shall explain how it will accumulate and validate the
information needed to measure the plan’s performance against the standards,
pursuant to rule 4755. The utility shall propose measurement and verification
reporting sufficient to communicate results to the Commission in a detailed,
accurate and timely basis.
(q) If a utility files an application to open a DSM strategic issues proceeding pursuant
to rule 4761, its subsequent DSM plan application shall include programs and
measures to, at a minimum, meet the energy savings targets and policy goals
established by the Commission in the strategic issues proceeding.

(r) As a part of its DSM plan, each utility shall describe its consideration of
incentives for customers to utilize behind-the-meter thermal renewable resources
as defined in § 40-1-102(1.1), C.R.S. If the utility proposes to include such
incentives in its DSM plan, the cost of such incentives shall be reflected in the
budget proposed under subparagraph (j)(IV) above.
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