1. DR Measurement & Verification
Common sense, practicality, and lessons from experience

2. When and why do we need baselines?
Baselines are necessary when customer is being incentivized by a means different than paying for metered load.
Time-based pricing does not require a baseline
Uptake is slow; volumes often don’t warrant the accounting costs
Requires painfully high prices to induce behavior
Difficult to reliably plan the system around voluntary behavior – leads to inefficient overbuilds.
Supply-side DR requires calculation of a baseline.
DR programs are more popular than dynamic pricing with customers
Requires proving a negative: the counterfactual proposition of what the customer did not consume.
Baselines are important because operators rely upon the resource and resources are paid for performance.

3. Attributes of a quality baseline from a practitioner’s perspective
Attributes of a quality baseline from a practitioner’s perspective ACCURACY
Accuracy
Baseline should not overestimate or underestimate “but for” consumption.
May need different baselines for variable loads
RRMSE Test for customer load variability
Need a different baseline for weekends and holidays
Baseline should be seeded with recent consumption data with similar days of consumption
Discard outliers – dispatch days and days that deviate from normal consumption excluded
Differences between “10 of 10”, “High 4 of 5”, “Middle 6 of 10”
Weather adjustments – addresses inherent bias of most baselines

4. Attributes of a quality baseline from a practitioner’s perspective
Attributes of a quality baseline from a practitioner’s perspective INTEGRITY
Baseline “gaming” must be avoided
Rules that permit customer to inflate performance artificially is cheating
DR is vulnerable to accusations of gaming because performance is based upon the counter-factual
Gaming is sort of unnatural for customers, which makes it generally rare
Most forms of gaming have been identified and there are best practices to avoid them
Locking in a stale baseline
Overconsuming prior to event start
Inflating peak load contribution
Rules should be adopted with an eye toward limiting gaming potential
Vigilance and enforcement and serious consequences for abuse is better than trying to stamp out all possible forms of gaming.

5. Attributes of a quality baseline from a practitioner’s perspective
Attributes of a quality baseline from a practitioner’s perspective SIMPLICITY
Baseline is the basis for customer payment. Customers do care about baselines.
Must be simple enough to explain to the customer how performance is measured.
Must be simple enough for customer to calculate to verify performance/settlements.
Should be determinable in advance of event so that real time performance can be managed.
Must be administrable
Needs to be based upon enough data to calculate an accurate baseline, but not so much data that baselines become burdensome to calculate or susceptible to errors.
Compliance is a paramount concern.
Data is more complex, noisier and contains more errors than most realize.
Data set used to calculate baselines for settlement must be validated carefully.
There is major overhead and compliance risk associated with verification of complex baselines that increase program costs.

6. Attributes of a quality baseline from a practitioner’s perspective
Attributes of a quality baseline from a practitioner’s perspective ALIGNMENT
Different types of baselines should be considered depending upon goals of the DR program.

7. Two basic types of baselines

8. Attributes of a quality baseline from a practitioner’s perspective
Attributes of a quality baseline from a practitioner’s perspective ALIGNMENT
Different types of baselines should be considered depending upon goals of the DR program.
Guaranteed Load Drop is often utilized in economic and/or reliability DR programs where it is important to know how much energy the demand response is intended to replace.
Firm Service Level may be fine for programs built a reliability program around resource planning needs where it is important to know the level of customer consumption rather than the amount of reduction
May need both types in a program due to variable patterns of customer consumption

9. GLD vs. FSL from a nomination and performance perspective.
Guaranteed Load Drop
Firm Service Level

10. Attributes of a quality baseline from a practitioner’s perspective
Attributes of a quality baseline from a practitioner’s perspective ALIGNMENT
Different types of baselines should be considered depending upon goals of the DR program.
Guaranteed Load Drop is often utilized in economic and/or reliability DR programs where it is important to know how much energy the demand response is intended to replace.
Firm Service Level may be fine for programs built a reliability program around resource planning needs where it is important to know the level of customer consumption rather than the amount of reduction
May need both types in a program due to variable patterns of customer consumption
Ancillary Service programs with short duration dispatches may be better served by a Meter Before/Meter After type of measure.
Meter Before/Meter After doesn’t work with long duration dispatches.
More lead time leads to broader participation – Meter Before/Meter After generally requires short lead time.

11. Final Thought
Baseline design is local utility or regulatory decision, but serious consideration should be given to standardization in order to attract innovation to serve customers and utilities on a regional basis.

12. Kenneth D. Schisler Vice President of Regulatory Affairs 410-725-1462