Common use of Portfolio Stipulations Clause in Contracts

Portfolio Stipulations. A. Overview 1. Will achieve the requirements that are identified in subsection (c) of Section 8-104, as modified by the spending screen identified in subsection (d); 2. Presents specific proposals to implement new building and appliance standards that have been placed into effect; 3. Presents estimates of the total amount paid for gas service expressed on a per therm basis associated with the proposed portfolio of measures designed to meet the requirements that are identified in subsection (c) of Section 8-104, as modified by subsection (d); 4. Presents a portfolio of energy efficiency measures proportionate to the share of total annual utility revenues in Illinois from households at or below 150% of the poverty level, including energy efficiency programs that are targeted to households with incomes at or below 80% of area median income, and procures a minimum of 10% of the energy efficiency measures in the portfolio from local government, municipal corporations, school districts, and community college districts; 5. Demonstrates that Nicor Gas’ overall portfolio of energy efficiency measures, not including low-income programs described in Section 8-104(e-5), are cost- effective using the total resource cost test and represent a diverse cross section of opportunities for customers of all rate classes to participate in the programs; 6. Includes a proposed cost recovery tariff mechanism to fund the proposed energy efficiency measures and to ensure the recovery of the prudently and reasonably incurred costs of Commission-approved programs; and 7. Provides for quarterly status reports tracking implementation of and expenditures for Nicor Gas’ portfolio of measures, an annual independent review, and a full independent evaluation of the multi-year results of the performance and the cost- effectiveness of Nicor Gas’ portfolio of measures and broader net program impacts and, to the extent practical, for adjustment of the measures on a going forward basis as a result of the evaluations. The resources dedicated to evaluation shall not exceed 3% of portfolio resources in any given multi-year period.1 The Parties agree to the Portfolio Stipulations set forth below, and seek to have the Commission adopt the Portfolio Stipulations in the Final Order approving the Company’s proposed EEP 2018-2021. B. Portfolio Stipulations

Portfolio Stipulations. A. OverviewOverview The Parties agree that the compromise positions memorialized in this Stipulation allow for Nicor Gas to achieve modified energy efficiency savings goals set out in Section 8-104(c) of the Act, while ensuring that expenditures remain within the spending limit established by Section 8-104(d). The Parties agree that the Company’s proposed EEP, inclusive of the compromise positions memorialized in this Stipulation, is consistent with and satisfies the statutory obligations listed in Sections 8-104(e-5) and (f) because it: 1. Will achieve the requirements that are identified in subsection (c) of Section 8-104, as modified by the spending screen limit identified in subsection (d); 2. Presents specific proposals to implement new building and appliance standards that have been placed into effect; 3. Presents estimates of the total amount paid for gas service expressed on a per therm basis associated with the proposed portfolio of measures designed to meet the requirements that are identified in subsection (c) of Section 8-104, as modified by subsection (d); 4. Presents a portfolio of energy efficiency measures proportionate to the share of total annual utility revenues in Illinois from households at or below 150% of the poverty level, including energy efficiency programs that are targeted to households with incomes at or below 80% of area median income, and procures a minimum of 10% of the energy efficiency measures in the portfolio from local government, municipal corporations, school districts, and community college districts; 5. Demonstrates that Nicor Gas’ overall portfolio of energy efficiency measures, not including low-income programs described in Section 8-104(e-5), are cost- cost effective using the total resource cost test and represent a diverse cross section of opportunities for customers of all rate classes to participate in the programs; 6. Includes a proposed cost recovery tariff mechanism to fund the proposed energy efficiency measures and to ensure the recovery of the prudently and reasonably incurred costs of Commission-approved programs; and 7. Provides for quarterly status reports tracking implementation of and expenditures for Nicor Gas’ portfolio of measures, an annual independent review, and a full independent evaluation of the multi-year results of the performance and the cost- cost effectiveness of Nicor Gas’ portfolio of measures and broader net program impacts and, to the extent practical, for adjustment of the measures on a going forward basis as a result of the evaluations. The resources dedicated to evaluation shall not exceed 3% of portfolio resources in any given multi-year period.1 period.1 B. Savings Goal 1. The Parties agree that it is highly unlikely that Nicor Gas could achieve the statutory savings requirements defined in Section 8-104(c) of the Act and also meet the requirement of Section 8-104(d) to limit the estimated average increase in the amounts paid by retail customers to no more than 2%. 1 220 ILCS 5/8-104(e-5), (f)(1-3), (5),(7-8). 2. To that end, the Commission should approve modified goals that reduce energy savings requirements for Nicor Gas from the statutory requirements of Section 8-104(c) to the Portfolio Stipulations following amounts: a) Savings of 14,059,426 annual net therms for each year of the Plan; and b) Savings of 56,237,705 annual net therms for the four-year Plan period. 3. Nicor Gas may comply with Section II.B.2.a of this Stipulation by meeting the total savings goal across the four years. The official approved savings goals will be those set forth belowin the completed Adjustable Savings Goal Spreadsheets, as those may be updated annually based on the Adjustable Savings Goals policy approved in Section 6.3 of the Illinois Energy Efficiency Policy Manual Version 2.0 (“Policy Manual”). 4. Nicor Gas shall operate and implement its energy efficiency programs in a manner that seeks to maintain fluidity in the delivery of measures and programs throughout the duration of the Plan and will not dismantle any program or measure due to simply reaching the approved savings goal. 5. The first-year annual net therm savings goals for 2022, 2023, 2024, and seek to have the Commission adopt the Portfolio Stipulations 2025, reflected in the Final Order approving completed Adjustable Savings Goal Spreadsheet filed with the EEP are each subject to change based upon the following adjustments, consistent with the Adjustable Savings Goals policy approved in Section 6.3 of the Policy Manual: a) Changes to savings algorithms defined in annual updates to the Illinois Energy Efficiency Technical Reference Manual (“IL-TRM”) b) Changes to net-to-gross (“NTG”) factors defined in annual updates to the Illinois NTG Policy. Adjustments for NTG changes will be limited by a NTG “collar”, as defined in Section 6.3 of the Policy Manual, for the following programs and offerings: i. For the following programs and offerings, which account for 10 percent or more of Portfolio Plan annual savings, adjustments will only be made for NTG changes outside of a collar of ten percentage points: (a) Home Rebates offering within the Home Energy Efficiency Rebates (“HEER”) program; (b) Advanced Thermostats (“Tstats”) offering within the HEER program; (c) Business Rebates offering within the Business Energy Efficiency Rebates (“BEER”) program; and (d) Business Optimization Program (“BOP”) offering within the BEER program. ii. For the following offerings, which represent Income Qualified (“IQ”) offerings, adjustments will be made for NTG changes outside of a collar of zero percentage points: (a) IQ Weatherization, including all offerings; (b) Public Housing Authority (“PHA”); (c) Affordable Housing New Construction (“AHNC”); and (d) IQ Energy Saving Kits (“ESK”). 6. While Nicor Gas retains the flexibility, as documented in the Policy Manual, to shift resources between programs and measures, Nicor Gas agrees that it will not exercise this flexibility in a way that significantly lowers the portfolio weighted average measure life (“WAML”), consistent with the following provisions: a) Nicor Gas will maintain a portfolio WAML that does not decline by more than 1.0 year from the portfolio WAML calculated in the filed Plan (“Target WAML”). b) WAML will be calculated as the sum of the net lifecycle savings for all measures delivered in the portfolio divided by the sum of net first- year savings for all measures delivered in the portfolio. c) The Target WAML is 11.85 years in the filed Plan. d) The Target WAML is subject to change for 2022, 2023, 2024, and 2025 based upon changes to effective useful lives defined in annual updates to the IL-TRM. e) The Target WAML will be adjusted on an annual basis to align with changes to measure lifetimes defined in the annual update to the IL- TRM and as approved by the Commission. This adjustment will rely on applying the new measure lives to the original Plan quantities of measures to produce the new WAML target that would have been set if all measure life changes had been known at the time of the 2022- 2025 Plan development. This new adjusted WAML value will then set the baseline from which any deviations are measured. The Company will file an updated WAML target within the updated adjustable savings goal spreadsheet that is filed with the Commission. 7. Nicor Gas will file the completed gas adjustable savings goal spreadsheet with its 2022-2025 Plan filing. 8. To enable efficient annual review by the evaluators of the adjustable savings goal spreadsheet in accordance with Section 6.3 of the Policy Manual and to ensure accuracy in the IL-TRM calculations, Nicor Gas will have its Independent Evaluator verify the accuracy in the IL-TRM calculations used to derive the measure savings that form the initial savings goals in the initial adjustable savings goal spreadsheet in advance of filing the completed adjustable savings goal spreadsheet in its 2022-2025 Plan docket. Nicor Gas agrees to file its completed adjustable savings goal spreadsheet in its 2022- 2025 Plan docket by April 15, 2021. In advance of filing its completed adjustable savings goal spreadsheet, Nicor Gas will consult with Ameren Illinois Company d/b/a Ameren Illinois (“Ameren Illinois”), The Peoples Gas Light & Coke Company (“Peoples Gas”), and North Shore Gas Company (“North Shore”) on a consistent statewide adjustable savings goal template to use, and will leverage to the greatest extent possible the transparent structure of the statewide adjustable savings goal template used for the last Plan. 9. Nicor Gas will not use any efficiency dollars to pay for the cost of or marketing that references customer conversion from a fuel other than natural gas to natural gas. However, any conversion customer shall still be eligible for rebates for efficiency upgrades, just like existing gas customers. C. Cost Effectiveness 1. The Company agrees to present joint Total Resource Cost (“TRC”) and Program Administrator Cost (“PAC”) test results for each program and its portfolio as part of its 2022-2025 Plan filing. Results will be combined gas/electric results for programs saving both fuels. Results will include benefit-cost ratios as well as the net present value (“NPV”) of benefits, costs and net benefits. To the extent there are delays in receiving the joint program cost-effectiveness details from other utilities, Nicor Gas may file the joint TRC and PAC test results after the initial Plan filing, but no later than April 15, 2021. 2. As part of the Company’s proposed EEP 20182022-20212025 Plan filing and any ex post cost- effectiveness results reported for 2022-2025, the Company agrees to present TRC and PAC results both with and without non-energy impacts (“XXXx”). Measure-specific XXXx defined in the IL-TRM will be included in both sets of calculations. B. Portfolio Stipulations3. The Company agrees to present portfolio TRC and PAC test results both with and without income qualified programs as part of its 2022-2025 Plan filing.