[Code of Federal Regulations]
[Title 10, Volume 3]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 10CFR455.63]

[Page 485-486]
 
                            TITLE 10--ENERGY
 
                    CHAPTER II--DEPARTMENT OF ENERGY
 
PART 455_GRANT PROGRAMS FOR SCHOOLS AND HOSPITALS AND BUILDINGS OWNED 
 
Subpart E_Technical Assistance Programs for Schools, Hospitals, Units of 
             Local Government, and Public Care Institutions
 
Sec. 455.63  Cost-effectiveness testing.

    (a) This paragraph applies to calculation of the simple payback 
period of energy conservation measures.
    (1) The simple payback period of each energy conservation measure 
(except measures to shift demand, or renewable resource measures) shall 
be calculated, taking into account the interactions among the various 
measures, by dividing the estimated total cost of the measure, as 
determined pursuant to Sec. 455.62(d)(3)(ii), by the estimated annual 
cost savings accruing from the

[[Page 486]]

measure (adjusted for demand charges), as determined pursuant to Sec. 
455.62(d)(3)(vi), provided that:
    (i) At least 50 percent of the annual cost savings used in this 
calculation shall be from the cost of the energy to be saved or a higher 
percent if required by a State in its State Plan pursuant to Sec. 
455.20(u)(3); and
    (ii) No more than 50 percent of the annual cost savings used in this 
calculation shall be from other cost savings, such as those resulting 
from energy conservation maintenance and operating procedures related to 
particular energy conservation measures, or from changes in type of fuel 
used, or a lower percent if required by a State in its State Plan 
pursuant to Sec. 455.20(u)(3).
    (2) The simple payback period of each renewable resource energy 
conservation measure shall be calculated, taking into account the 
interactions among the various measures, by dividing the estimated total 
cost of the measure, as determined pursuant to Sec. 455.62(d)(3)(ii), 
by the estimated annual cost savings accruing from the measure taking 
into account at least the annual cost of the non-renewable fuels 
displaced less the annual cost of the renewable fuel, if any, and the 
annual cost of any backup non-renewable fuel needed to operate the 
system, adjusted for demand charges, as determined pursuant to Sec. 
455.62(d)(3)(vi).
    (3) The simple payback period of each energy conservation measure 
designed to shift demand to a period of lower demand and lower cost 
shall be calculated, taking into account the interactions among the 
various measures, by dividing the estimated total cost of the measure, 
as determined pursuant to Sec. 455.62(d)(3)(ii), by the estimated 
annual cost savings accruing from the measure taking into account at 
least the annual cost of the energy used before the measure is installed 
less the estimated annual cost of the energy to be used after the 
measure is installed, adjusted for demand charges, as determined 
pursuant to Sec. 455.62(d)(3)(vi).
    (b) This paragraph applies, in addition to paragraph (a) of this 
section, if the State plan requires the cost effectiveness of an energy 
conservation measure to be determined by life-cycle cost analysis or if 
the applicant requests such an analysis.
    (1) A life-cycle cost analysis, showing a savings-to-investment 
ratio greater than or equal to one over the useful life of the energy 
conservation measure or 15 years, whichever is less, shall be conducted 
in accordance with the requirements set forth in the State Plan pursuant 
to Sec. Sec. 455.20(u)(2), 455.20(u)(3) and Sec. 455.64.
    (2) The resulting savings-to-investment ratio shall be used for the 
purpose of ranking applications.