24 May 2007

PROGRESS & PROMISE ON DR/AMI

Dr. Eric Woychik

Executive Consultant, Strategy Integration, LLC

APSC Workshop on DR and AMI

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Avoided Capacity Costs

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Successful Utility DR Programs in the U.S.

Utility Direct Load Control: Residential & Commercial

• Austin Energy

Long-Term Fully Outsourced DR Contracts

• Rocky Mountain Power

• SDG&E, ISONE, PG&E

Real-Time-Pricing and Time-of-Use Pricing

• Gulf Power

• WattSpot (ComEd)

Let’s discuss the what’s, why’s, and challenges

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A Some What’s, Why’s, & Challenges

• What’s are to define the technology used, customer acquisition, & communications • Technologies are Digital Control Units, Smart Thermostats,

optimizer controls, energy management systems … • Customers are acquired by marketing & incentives• Communications are by pager frequencies/VHF, AMI, and

web-based

• Why’s define the motivations for using DR• Expand the portfolio, meet reliability needs, locational

constraints, environmental concerns, preferred resource…

• Challenges are areas that need further focus & refinement• E.g., integration with supply-side dispatch, program design…

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Recap of the Why’s for Use of DR

• Provides, flexible, location-specific, dispatchable capacity, with certainty

• Adds portfolio diversity and reliability benefits

• Facilitates greater use of non-dispatchable resources

• Defer G + T + D + env. mitigation + congestion

• Provides lower market prices and market power mitigation

• Positive rate-impact measure (RIM) results

• Provides significant environmental benefits

• Provides greater customer choice

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Customer Response (Choice) Opportunity

DR as customer choice, an alternative to retail choice?

• DR options can be provided as a set of customer choices• Menu is possible• Hassle free options are preferred• Customer education for those that choose it

• Incentives and control over bills based on choice

• Less confusing than shopping for alternative electricity providers

• Some options: time-of-use/critical-peak pricing, direct load control, price response, and environmental dispatch

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Migrateable Technology Path

SuperStat™Direct Control Unit

EnhancedPremium

Migrateable Technolog Option Offers Direct Path to aPrice Resnsive Future

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Smart Thermostat (T-Stat) Program

• Allows for customer participation in temperature adjustment, web programming, and ultimately price adjustment

• Can be installed as a) customer management system, b) direct load control, c) emergency reliability option, d) price response

• Enables customer interface at simple levels

• Can be used to educate customers about price response

• Migration of T-Stat use to price response with or without AMI

• Enables customers to remotely program the T-State through web access

T-stats enable multiple options; facilitates customer participation

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Utility Direct Load Control Residential/Commercial

Austin Energy’s Smart-thermostat Program

What’s:

• Digital Control Units (DCUs) on AC

• Centralized Load Management System (LMS) control

• VHF communication and control to devicesWhys:

• Goals are set for DR and EE and loading order is ‘to be taken seriously” says CPUC President Mike Peevey

Challenges:

• Convincing generation dispatch to integrate DR resource

• Dialing in on the best cycling strategy

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Austin Energy

• Has 50 MW + installed

• Latest increment of DR uses Smart Thermostats

• Customer acceptance is very positive

• Program expansion is easily achieved

• T-Stats enable customers to lower overall electricity bills but be available for direct load control

Viable, economic, with customers engaged

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Long-Term Fully Outsourced DR Contracts

Rocky Mountain Power’s 90 MW residential program

What’s:

• Technology is Digital Control Units (DCUs) on AC in residential and commercial buildings

Why’s:

• Transmission and distribution constraints

• Non-spinning reserve (qualification)

Challenges:

• Next increments…

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Rocky Mountain Power (Utah Power)

• A 90 MW long term contract, provides dispatchable, direct load control

• Mitigates both transmission and distribution constraints

• Provides non-spinning reserve, economic peaking capacity, and emergency reliability

• Uses Digital Control Units (DCUs) under utility control

Viable, economic, excellent T & D constraint relief

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Long-Term Fully Outsourced DR Contracts

San Diego Gas &Electric 100 MW Res & Commercial

What’s:

• Technology is Digital Control Units (DCUs) on AC units in residential and small commercial

• Energy management systems for small commercial

Why’s:

• Dispatchable capacity for economics and reliability

Challenges:

• Flexibility in marketing to get enough customer touch

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San Diego Gas & Electric

• A 100 MW long term contract,

• 1st phase provides direct load control

• 2nd phase to provide broader services• Residential• Commercial• More aggressive cycling strategies• May incorporate other commercial customer options

• Aims to use Smart Thermostats to enable customer participation

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Long-Term Fully Outsourced DR Contracts

ISO New England 65 MW residential & commercial

What’s:

• Technologies are Digital Control Units (DCUs) on AC and Smart thermostats

Why’s:

• Transmission and distribution constraints

Challenges:

• Branding to achieve customer acceptance without using the local utility logo

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Long-Term Fully Outsourced DR Contracts

Pacific Gas & Electric 50 MW commercial & industrial

What’s:

• Technologies used are DCU’s, T-Stats, optimizer controls, electronic monitoring, and energy management systems• Convenience stores, fast-food chains, and industrial

Why’s:

• Loading order (priority), cannot build supply fast enough, hedge re. heat storms, and have transmission constraints

Challenges:

• Installing capacity fast enough & metering-data

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Time-of Use & Real-Time-Pricing

Gulf-Power’s Residential Program

What’s:

• Customer TOU and critical peak pricing

• Strong incentives to move load off-peak summer/winterWhy’s:

• Reduce G + T + D + environmental costs

• Increase load factor in both summer and winter

Challenges:

• Two-way communications costs

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Gulf Power’s Maingate System

• About 25 MW in place (going to 80 MW)

• Prices reflect the time-varying character of electricity supply cost

• Advanced residential energy management system

• Gives customers control over their energy costs• Allows customers to program their central heating and

cooling system, electric water heater, and/or pool pump • Enables automatic response to varying prices and critical

peak pricing

• Uses advanced T-Stats to enable customer participation

• Also controls water heaters, pool pumps, and other appliances via load control relays

Viable, economic, and customers heavily involved

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Price per kWh

Critical

Standard Residential Rate

HighMedLow

Time-varying Rate Design for Maingate

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Real-Time-Pricing (or Time-of-Use Pricing)

WattSpot (ComEd) Residential Program

What’s:

• Web-based, menu of technology and services

• Flow-through PJM real-time prices to customers

Why’s:

• Cost-effectively build out AMI and enable a menu of DR and EE services – maximize benefits & customer choice

Challenges:

• Broadening customer base to those less web-savy

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WattSpot Residential Program

• AMI sign-up on-line

• Customer education on all options

• Smart-thermostat (programmable on-line)

• Voluntary RTP pricing

• Customer noticing (using multiple modes)

• Rate Guard (automatic price response)

• Environmental Dispatch

• Bill analysis

• On-line energy related shopping

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Summary of DR Benefits

• Reduce overall system loads -- the EE effect• E.g., price response that is temporary or permanent

• Reduce system peak and locational loads – the DR effect• E.g., price response that is predictable and has some certainty

• Reduce existing and new generation needs• Provide dispatchability, ramping, and load following• Retire old plants and defer capital and operating costs

• Reduce existing and new transmission needs• Reduce congestion• Defer capital and operating costs

• Reduce existing and new distribution costs…• Reduce environmental mitigation costs• DR is faster to install and poses no NIMBY issues compared

to supply-side options

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• Upgradeable technology

• Customers save in real dollars

• Energy consumption is reduced

• Environmental benefits persist

• Customers have a choice in control decisions

• Satisfied consumers

Lasting Benefits