Honey, I’m Home - How Are Electricity Prices for Tomorrow?
Lawrence KotewaProject Manager, Community Energy Cooperative
April 13, 2005
Community Energy Cooperative at the Center for Neighborhood Technology2125 West North Avenue, Chicago, IL • 1-773-486-7600 • www.energycooperative.org
Key characteristics of ESPP’s Real Time Pricing for Residential
Customers
Unique consumer/utility partnership Straight-forward program Provides pricing and information It’s low tech and low cost People are saving money People are changing behavior People like it!
Purposes of Program
To incent efficient use of energy and reduction of peak demand
To provide benefit to small customers from deregulation
To provide options that can significantly reduce energy costs for households
The Conventional Wisdom: Why Retail Real-Time Pricing For Mass Market Customers Won’t
Work
The market is too volatile and risky There is no value for mass market
consumers The meters are too expensive Mass market consumers won’t respond to
price signals, are unable to manage risk and volatility and need to be protected
….Our experience to date runs counter to each of these
Community Energy Cooperative
The Energy-Smart Pricing PlanSM
Community Energy Cooperative
Formed in 2000 by the Center for Neighborhood Technology
Supported by ComEd and other funders
The Cooperative has developed and managed a range of community-based demand reduction pilot programs
Energy Pricing
Rate RHEP: distribution charge plus variable energy charge based on wholesale prices
Models bundled rate/market rate differential in Illinois’ post-2006 environment
Day-ahead prices and RTO load shape used to create next day hourly prices
Cooperative created price cap at $0.50/kwh for energy
Number of Hours in Price Bins
16,557
15,326
7,952
4,104
2,354
1,132
524
281
206
435
119
43
47
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000
below $0.02
$0.02 - $0.03
$0.03 - $0.04
$0.04 - $0.05
$0.05 - $0.06
$0.06 - $0.07
$0.07 - $0.08
$0.08 - $0.09
$0.09 - $0.10
$0.10 - $0.20
$0.20 - $0.50
$0.50 - $1.00
above $1.00
Number of Hours
January 1, 1999 through August 6, 2004 Total Hours = 49,080
49,080 Hours Of Market Prices
89.5% of hours are below 5¢/kWh. Average Price is 2.51¢/kWh
98.5% of hours are below 10¢/kWh. Average Price is 2.86¢/kWh
Program Components
Interval recording meters Prices available through web and
phone Energy management/price response
tools Information about usage Instructions and tips on how to reduce
usage during peak periods Ongoing energy efficiency information
High price alerts via phone, e-mail
Web Access to Detailed Energy Use Data
Participant Demographics
750 participants in 2003; 1100 in 2004 A variety of air conditioning types:
40% Window air conditioning 40% Central air conditioning 20% No air conditioning
56% from the city of Chicago, rest suburban 10% speak Spanish 80% single-family homes and two-unit
buildings (average monthly use 658 kWh) 20% multi-family homes (average monthly use 406 kWh)
Hourly Prices
$0.00
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
Date
Pri
ce (
$/k
Wh)
One Member’s Response: Changing Thermostat Set Point In
Response To Price Notification
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1:00 AM 5:00 AM 9:00 AM 1:00 PM 5:00 PM 9:00 PM
kW
6/23/2003
6/24/2003
6/25/2003
56% Peak Demand Reduction Compared To Previous Day
Central Air Conditioner Users Respond To Price Alerts
0
0.5
1
1.5
2
2.5
3
August 26, 2003 August 27, 2003 August 28, 2003 August 29, 2003
kW
Control GroupParticipantsPrice Alert
Sent. 24% Reduction of Peak Demand Price Alert
Sent. 19% Reduction of Peak Demand
No Price Alert Sent. No Reduction of Peak Demand
Key Findings
1. Participants respond to peak period prices Price elasticity of .042 across full range of prices Over half of all participants showed significant
response to high price notifications Vast majority of participants showed some
response Aggregate demand reduction was as high as 25%
during notification period Over 80% of participants modified their AC use Over 70% of participants reported modifying
their clothes-washing patterns
Key Findings, cont.
2. Participants liked the program Found it easy to understand and manage
82% said program was “quick and easy” Participants were happy with the financial
results of the program—average savings to date are approximately 12%
In addition to saving money, participants valued:
Bill control Environmental impact Greater understanding of energy use
Other Findings
Lower income participants were disproportionately represented in “high responder” group
Households with window ACs maintained their price-responsive behavior better across multiple high-priced hours
2004—overall price responsiveness increased; notification response reduced (likely due to weather effects)
Contrary to conventional wisdom--
Simple, understandable RTP program for residential customers is possible
Residential customers can and do respond to price signals.
For further information
www.energycooperative.org
Lawrence Kotewa, Project Manager [email protected]