1 Wal-Mart’s View on Demand Response Program Design Anoush Farhangi Angela Beehler

2 Metering Concerns  A cornerstone of deregulation is advanced metering. Without measuring consumption in finer intervals it is not possible to verify participation in demand response programs.  The cost of advanced metering should be lowered by removing unreasonable regulation, and promoting competition and innovations.  Customers should be allowed to install their own advanced meters given that they are in compliance with the standards set by the regulatory authority.  Customers should receive full credit for meter ownership.  Customers or their authorized representative should have full, frequent and easy access to their own meter data.  The data should be made available to customers in a standard format set by the regulatory authority.  The customer should not bear any cost for access to their own meter data.

3 Identify Target Market  The highest priority of the Commission should be the development of rules, regulations and incentive plans that would encourage Demand Response among all customers.  Rules should not be developed for the benefit of a handful of market participants.  Large industrial customers that are the sole beneficiaries of the current regulations could engage in one on one contracts with Ercot.

4 Terms and Conditions  Customers or their authorized representative should be able to directly participate in demand response programs without having to go through a third party aggregator and without having to pay any participation fees.  Paperwork, and program terms should be kept simple and standard across TDSP’s and systems.  A customer should be able to aggregate its entire load from multiple sites in one system or zone.  Minimum per site requirement is discriminatory and prevents the full participation of commercial customers.

5 Market Reforms  Market data should be available to all customers in a timely basis.  Market should be transparent. After the fact changes to market data should be kept to a minimum.  Price signals should be accurate and allocated to specific intervals in which the cost occurs.  Balancing accounts, uplift charges, etc. that apply to load ratio shares not to hourly prices distort market signals and should be minimized.  Customers must be made aware of severe market conditions well ahead of time to prepare for full load participation.

6 Incentives Reform  There should be a parity between demand and supply alternatives.  Reliability pay should be proportional to the response time, not to size. A customer able to reduce one KW in 10 minutes should get paid more than a customer able to reduce 1 KW in 30 minutes. A customer able to reduce load by 10,000 KW in 10 minutes should get the SAME rate per KW as the customer that can reduce 1 KW in 10 minutes.  Demand Resources can be used to reduce load, shift load, provide reliability support or to lower system ramp rate.  Demand resource deployments can result in shifting load from high heat rate periods to low heat rate periods, or in conservation.  In addition to providing reliability benefits, demand resources provide environmental attributes as well.  The Commission should consider providing to the customers environmental incentives for deployment of demand resources such as RECS or White Tags.

7 Base Line Development  Calculation of baseline energy should be based on the conditions at the time of interruptions and not based on historical data.

8 Experiments

9 Connecticut Experiment 8/1/2006 and 8/2/2006 The Experiment resulted in around 3 MW of load reduction in 35 facilities in CT in two critical periods in the Northeast.

10 Light Dimming Experiment in Alice Texas Lights were dimmed to take advantage of natural daylight Spikes in lighting load as cloud cover reduced natural daylight Direct effect: Significant reduction in lighting load around 70KW Indirect effect: Reduction in Air Conditioning load around 40 KW Currently, over 100 stores in Ercot are equipped with the dimming technology.

11 Pre Cooling Experiment, Tyler Texas The store was pre cooled in the early morning hours. Set point was returned to normal at 7 am. 250 kwh increase in AC, 120 KWH reduction in Refrigeration, a net of 130 KWH gain. Can be used to lower system ramp rate.

12 Texas 4/17 and 4/18 load Significant reduction on 4/18 after AC set point was raised by 3 degrees

13 Baseline estimated from historical data is not an accurate measure of savings