Electricity Demand Response and Advanced Metering for Integrated Utilities Arkansas Public Service Commission Lonni Dieck AEP May 24, 2007

AEP-SWEPCO Arkansas SWEPCO has TOU rate for industrial customers having loads of 800 kW or greater SWEPCO also offers a curtailable service rider for customers who contract for not less than 1000 kW Limited customer participation

Existing AEP DSM Tariff Offerings (excluding interruptible offerings)

AMI Benefits Offer customer options Improved customer service Demand response – lower peak through potential for load control Pre-pay metering Improved customer service Reduction of estimated bills, First call resolution Outage & restoration reporting from meters Better customer satisfaction, reduced outage time & costs Assist improvements in reliability Improved circuit information to better target preventive maintenance spending Increased service quality Voltage data on all meters, transformer loading Assists in energy theft and tamper detection Reduce field visits Read ins/outs, remote reconnects/disconnects, etc.

AMI Challenges AMI not only requires sophisticated metering with two-way capabilities, but also involves a substantial infrastructure investment that includes costs of implementation, billing, IT system modifications, communication costs, etc. AMI technology is in a state of evolution. AEP/SWEPCO currently evaluating available technologies Protocols and open standards are still being developed Implementation of AMI must be cost-effective: Potentially more applicable for urban areas/ not as well suited for sparse installations More cost-effective at large-scale deployment due to economies of scale Customer acceptance is an unknown AMI is a useful tool, but is not an alternative to the expansion of transmission and the construction of the generation facilities needed in the future. DR programs enabled by AMI, may postpone investments in transmission and generation facilities.

Cost Recovery Regulatory cost recovery of AMI and associated infrastructure needs is crucial. Must recognize all costs, including implementation, billing, IT system modifications, communication costs, etc. Sharing costs and benefits of AMI between participants and non-participants is a issue to be resolved.