Total Resource Cost Test

The total resource cost (TRC) test is one of many ways used to measure the cost-effectiveness of an energy conservation program.  Utility costs are considered in the utility cost (UC) test of cost-effectiveness, which measures the net impact of acquiring a demand side management (DSM) resource based on the utility costs of the program.

For both the TRC and UC tests, the benefit side of the equation reflects the value of the energy and capacity saved (i.e. avoided costs). The results of these tests can be expressed as benefit-cost ratios (benefits divided by costs, in net present value), or as net benefits (benefits minus costs, in net present value).

Energy conservation is less expensive than building new generation plants. For these types of programs, individual participating customers are motivated to contribute a portion of the resource cost because they realize a direct return from that investment in the form of bill savings.