24 May 2007 PROGRESS & PROMISE ON DR/AMI Dr. Eric Woychik Executive Consultant, Strategy Integration, LLC APSC Workshop on DR and AMI

l Avoided Capacity Costs

l 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

l 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…

l 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

l 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

l Migrateable Technology Path SuperStat™ Direct Control Unit Enhanced Premium Migrateable Technolog Option Offers Direct Path to a Price Resnsive Future

l 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

l 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 devices Whys: 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

l 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

l 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…

l 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

l 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

l San Diego Gas & Electric A 100 MW long term contract, 1 st phase provides direct load control 2 nd 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

l 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

l 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

l 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/winter Why’s: Reduce G + T + D + environmental costs Increase load factor in both summer and winter Challenges: Two-way communications costs

l 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

l Price per kWh Critical Standard Residential Rate HighMedLow Time-varying Rate Design for Maingate

l 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

l 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

l 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

l 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