Background for Demand Response in PNW Pacific Northwest Demand Response Project May 2, 2007 Ken Corum

2 History - 1 Institutions  Regulated monopolies  Average cost pricing  Shared w/ rest of country < mid-90s

3 History - 2 Physical features of Hydro system  Variable flows  Year-to-year  Season-to-season  Relatively little storage (~1/3 ave flow)  Generation capacity sized to capture energy from high flows  Capacity available for load following  Historically, PNW more concerned w/ annual energy than peak load

4 Present and Future  Institutions  Mostly still regulated monopoly in retail, but very active wholesale market  Physical features of power system  Hydro system built out  Continuing load growth  Environmental constraints on hydro  New demands on hydro (e.g. integrating wind)  New generators non-hydro (~ rest of country)

5 Implications for Value of DR  Physical changes increase cost of meeting peak loads  Institutional changes make peak loads’ costs more transparent  Both changes increase interest in DR

6 What about DR costs, performance, potential?  Info on DR similar to energy efficiency in 1980 – “bigger than a breadbox, but…”  Analytical problem for DR different  EE ~ “engineering” question  DR ~ “consumer behavior” question  NEED MORE EXPERIENCE