National Standard Practice Manual

The NSPM principles serve as a foundation for conducting DER BCAs. Developed and informed by DER industry stakeholders, they can play a critical role in guiding regulators and others in the assessment of DER cost-effectiveness. The principles: 

• are policy-neutral (in that they do not prescribe specific BCA tests), are technology-neutral, and are in line with sound economic practices; 
• Provide guidance on how to select relevant categories of benefits and costs for a jurisdiction to include in its primary (and any secondary) BCA test, whether in cases where a new primary BCA is being developed, or updating an existing BCA practice; 
• Can guide the selection and application of analytical methods used to quantify BCA impacts, as well as any complementary analyses (such as rate and bill impact analyses); and 
• If applied broadly, can help to increase consistency in valuing DERs across a broad range of regulatory and other contexts. 

1. Align with Applicable Energy Policy Goals 

Jurisdictions invest in DERs to meet a variety of energy goals and objectives. Accounting for the associate benefits and costs in a jurisdiction’s primary BCA test helps to ensure that least-cost investments are used to achieve the goals and objectives. 

2. Treat DERs as a Utility System Resource 

DERs are energy resources that can help meet utility system needs. Using consistent BCA tests, valuation methods, and assumptions when comparing DERs to traditional resources, or to other DERs, avoids bias across resource investment decisions. 

3. Account for all Relevant and Material Impacts 

The relevance and materiality of impacts can vary depending on the DER type or use case. Accounting for all relevant and material impacts, even when difficult to quantify or monetize, ensures DERs are appropriately valued and avoids biased investments. 

4. Ensure Symmetry in the Treatment of Benefits and Costs 

DER investments produce benefits to the utility system and to customers. Treating benefits and costs symmetrically in BCA tests, such that benefits and costs are both either included or excluded, avoids biased results and uneconomic investments. 

5. Conduct Forward-Looking, Long-Term, Incremental Analyses 

BCAs address how benefits and costs will differ in the future because of a specific resource investment relative to what would have occurred absent the investment. This ensures that sunk costs do not influence investment decisions. 

6. Avoid Double-Counting Impacts 

Some BCA benefits and costs can potentially be captured in more than one impact category. Clearly documenting the way in which a BCA includes all impacts in helps to avoid double-counting and either over- or under-estimating the value of DERs. 

7. Conduct BCAs Separately from Other Complementary Analyses 

BCAs address whether total economic benefits exceed total economic costs of a specific resource investment. Depending on a jurisdiction’s policy goals, separate analyses that address different questions, such as a rate and bill impact analysis, may be warranted. 

8. Ensure Transparency 

Clear documentation of the rationale for decisions on BCA tests, complementary analyses, and associated methods, inputs, and results supports transparency. Transparency enables engagement and instills confidence in resource decision-making processes. 

Virginia (2024-25) 

In accordance with Chapters 794 and 818 of the 2024 Virginia Acts of Assembly, the Virginia State Corporation Commission (“Commission”), per case number PUR-2024-00120, established a stakeholder process to develop testing standards for assessing the cost-effectiveness of energy efficiency programs implemented by utility companies within its jurisdiction. Led by commission staff with support from an independent monitor, the stakeholder group was tasked with developing regulations that include a single, consistent cost-effectiveness test by which all electric utility-sponsored energy efficiency programs will be measured. The Commission directed its Staff, per the legislative requirements of Chapter 794, to refer to the benefit-cost analysis framework and process outlined in the NSPM for DERs during the stakeholder process and regulation development. A comprehensive report documenting the stakeholder process, facilitated by Keystone Policy Group with technical support from Energy Futures Group and E4TheFuture (NESP), was submitted alongside Draft Regulations in March 2025. In a September 2025 Order, the Commission adopted the JST as the single cost-effectiveness test to be used by investor-owned electric utilities in Virginia beginning with the 2029 energy efficiency plans and thereafter. 

NSPM – VA Case Study authored by NESP (October 2025) 
Order Initiating Stakeholder Process (July 2024) 
Final Report and Draft Regulations (March 2025) 
Order Establishing Rulemaking (May 2025) 
Staff Report (August 2025) 
Order Adopting Regulations (September 2025) 

Michigan (2021-25) 

Starting in 2021, the Michigan Public Service Commission (MSPC) addressed cost-effectiveness testing for distributed energy resources in Case U-20898 as part of the MI Power Grid New Technologies and Business Models workgroup. This culminated in an October 2023 Order adopting a jurisdiction specific test (JST) developed by the state’s utilities—DTE Electric Company and Consumers Energy—followed by extensive stakeholder input. Using the NSPM framework and guidance, the development of the new cost-effectiveness test for Michigan applies to all DERs including energy efficiency, demand response, distributed generation, distributed storage, EVs, and building electrification. With application of the NSPM, Michigan’s jurisdiction specific test (JST) accounts for benefits and costs that align with state’s energy policies, including safety, reliability, affordability, resiliency, environmental justice and equity, and decarbonization of the electricity system. 

NSPM – MI Case Study authored by NESP (January 2025) 

Maryland (2020-24) 

Maryland BCA efforts have been guided by the NSPM in several applications, starting first with developing an electric vehicle BCA methodology, then for energy efficiency, and ultimately to develop a consistent (or unified) BCA to apply to all DERs. 

Unified BCA (UBCA) Docket (2023-24) 
NSPM Maryland Case Study authored by NESP (Dec. 2024) 
Cover Letter – UBCA Work Group Final Report 
Maryland UBCA Work Group Final Report 
Final Order No. 91424 

BCA for EV and EE (2020-2022) 
This NSPM – Maryland Case Study authored by NESP (June 2022) summarizes the development of the EV BCA methodology and, separately, the EMPOWER EE BCA process, both of which led to the commission opening a new docket for the state to develop a unified BCA test for all DERs. 

Relevant documents include: 
EV BCA Methodology Report (Nov. 2021) 
PSC Letter Approving EV BCA Framework (Dec. 2021) 
Future Programming Work Group Final Report (April 2022) 
PSC Order No. 90261 (June 2022) 

Minnesota (2022-23) 

The Minnesota Department of Commerce (DOC) applied the NSPM BCA framework to develop a new cost-effectiveness test for evaluating the state’s energy efficiency programs (referred to Conservation Improvement Programs or CIPs).  A comprehensive report and proposed decision were prepared by the DOC staff and its consultants –including a description of the NSPM process, stakeholder comments/positions, and staff recommendations, and submitted to the DOC commissioners for review in early 2023. A final decision issued in March 2023 requiring use of the new Minnesota Cost Test (MCT) to be applied to the utilities’ 2024-2026 Conservation Improvement Program (CIP) Triennial Plans. 

NSPM – MN Case Study authored by NESP (June 2023) 
 
Commission Order filed March 31, 2023: MN Dept of Commerce Final Decision Deputy Commissioner’s Decision in the Matter of the 2024-2026 CIP Cost-Effectiveness Methodologies for Electric and Gas Investor-Owned Utilities  (Docket Number 23-46) 

Washington DC (2021-23) 

The Clean Energy DC Omnibus Amendment of 2018 charges the DC Public Service Commission with evaluating the effects of utility proposals on global climate change and achievement of the District’s commitments to reduce GHGs. In undertaking its charge, the Commission initiated the proceeding Case No. GD-2019-04-M and directed that a “Clean Energy Act Implementation Working Group” (CEIWG) be convened to seek guidance on a range of issues including the development of a Benefit-Cost Analytical (BCA) Framework. The PSC Staff convened and facilitated the CEIWG from fall of 2020 through October 2021, where technical advisor Karl Rábago (Rábago Energy) and NESP project coordinator Julie Michals provided technical assistance to the PSC Staff team throughout the CEIWG process to develop a report with a recommended BCA Framework to the Commission. After a series of stakeholder meetings and extensive CEIWG input to develop a BCA test for the District using the NSPM guidance, the commission staff filed a 325-page majority consensus report with the Commission for review and a decision. The Commission issued a final decision in December 2023 adopting the consensus recommendations in the report, and opened a Phase II process to develop methodologies for quantifying certain impacts (in process). 

2018-2020 

Note: the cases below apply to EE resources where states used the 2017 NSPM for EE. 

New Hampshire 
NSPM – NH Case Study authored by NESP (January 2019: NSPM for EE) 
NH PUC Order 26,322 (December 31, 2019) 
Synapse Report for the NH EM&V Working Group (October, 2019) 

Arkansas 
NSPM – AR Case Study authored by NESP (May 2019: NSPM for EE) 
PWC Case Study Report to Arkansas PSC, Appendix A, and Appendix B 
Presentation 
Arkansas PSC decision on adopting PWC recommendations (May, 2019) 

Rhode Island 
NSPM – RI Case Study authored by NESP (December 2018: NSPM for EE) 
2020 Rhode Island Test (October, 2019) 
Synapse Report on Methodologies for Developing Inputs for DERs (October, 2018) 

Minnesota 
NSPM – MN Case Study authored by NESP (December 2018, NSPM for EE) 
Synapse Report to MN Dept. of Commerce (September, 2018)  
Presentation