1. NAESB Wholesale Electric Demand Response Measurement & Verification Standards
Eric Winkler, Ph.D., ISO-New England
Donna Pratt, New York ISO
Paul Wattles, ERCOT
January 14, 2009

2. Wholesale Demand Response Standards Overview

3. Goals/Guidelines
Consolidate standards for existing and proposed Demand Response (DR) products and Performance Evaluation methodologies
Define Common Terms
Ensure compliance with tariffs, market rules, operating procedures, protocols and manuals
Collaborate with ISO/RTOs, IRC, Retail Leadership and NAESB Stakeholders

4. Standards Approach
Measurement and Verification (M&V) standards are intended to facilitate Demand Response in wholesale electricity markets by providing a common framework for:
Transparency
Accessible and understandable M&V requirements for Demand Response products
Accountability
Criteria that will enable the System Operator to accurately measure performance of Demand Response resources
Consistency
Standards applicable across wholesale electricity markets

5. Standards Applicability
These standards do not establish requirements related to the compensation, design, operation, or use of Demand Response services
System Operators are not required to offer these Services and may not currently offer each of these Services
For purposes of these wholesale M&V standards, Demand Response does not include M&V of energy efficiency or permanent Load reduction

6. Standards Scope and Impact
Scope Limitation
Proposal is limited to M&V aspects of DR products
No product eligibility characteristics or other participation features are defined in these standards
Impact on Existing Products
All current ISO/RTO demand response products are consistent with the proposed standards
Local differences may be covered under clauses such as “System Operator shall specify” or “unless otherwise specified by the System Operator”, so long as transparency requirements are met

7. Tariff & NERC Standards Conflicts
System Operator’s Tariffs, market rules, operating procedures, protocols or manuals have precedence in the event of any conflict.
Terms defined in the Definition of Terms section are critical to understanding the applicability of these M&V standards, but do not modify or supersede market rule or tariff definitions that apply to the compensation, design, operation, or use of Demand Response services.
All entities supplying Demand Response Services shall comply with NERC reliability standards.

8. Consistency w/ NERC Interest in Demand Side Management

9. Wholesale Demand Response Standards Structure and Content

10. Definitions of Terms
Definition of Terms was developed to clarify specific meanings of terms while providing consistency and conformance to:
ISO/RTO Standard Reference
FERC
NERC
Terms Areas
Demand Response Event Timing
General Terms

11. Demand Response Event Timing

12. General Terms Adjustment Window Highly-Variable Load
After-the-Fact Metering
Load
Aggregated Demand Resource
Maximum Base Load ‡
Baseline #
Meter Before / Meter After ‡
Baseline Adjustment
Meter Data Recording Interval
Baseline Type-I (Interval Metered)‡
Meter Data Reporting Deadline
Baseline Type-II (Non-Interval Metered)‡
Metering Generator Output‡
Baseline Window
Performance Window
Capacity Service*
Ramp Rate
Demand Response Provider
Regulation Service*
Demand
Reserve Service *
Demand Reduction Value
System Operator #
Demand Resource#
Telemetry
Demand Response #
Telemetry Interval
Energy Service*
Validation, Editing and Estimation
* Product Types, ‡ Performance Methodologies, # Key Terms

13. Demand Response Products
Energy Service
A type of Demand Response service in which Demand Resources are compensated based solely on Demand reduction performance.
Capacity Service
A type of Demand Response service in which Demand Resources are obligated over a defined period of time to be available to provide Demand Response upon deployment by the System Operator.
Reserve Service
A type of Demand Response service in which Demand Resources are obligated to be available to provide Demand reduction upon deployment by the System Operator, based on reserve capacity requirements that are established to meet applicable reliability standards.
Regulation Service
A type of Demand Response service in which a Demand Resource increases and decreases Load in response to real-time signals from the System Operator. Demand Resources providing Regulation Service are subject to dispatch continuously during a commitment period. Provision of Regulation Service does not correlate to Demand Response Event timelines, deadlines and durations.

14. Product Standards Overview
General
Advance Notification
Deployment Time
Reduction Deadline
Release/Recall
Normal Operations
Demand Resource Availability Measurement
Aggregation
Transparency of Requirements
Telemetry
Telemetry Requirement
Telemetry Accuracy
Telemetry Reporting Interval
Other Telemetry Measurements
Communication Protocol
Governor Control Equipment
On-Site Generation Telemetry Requirement
After-the-Fact- Metering
After-the-Fact Metering Requirement
Meter Accuracy
Details of Meter/Equipment Standards
Meter Data Reporting Deadline
Meter Data Reporting Interval
Clock/Time Accuracy
Validating, Editing & Estimating (VEE) Method
On-Site Generation Meter Requirement
Performance Evaluation
Rules for Performance Evaluation

15. Performance Evaluation
A performance evaluation methodology is used to determine the Demand Reduction Value provided by a Demand Resource. The standards include descriptions of acceptable Baselines and alternative performance measurements.
Maximum Base Load
Meter Before / Meter After
Baseline Type-I
Baseline Type-II
Metering Generator Output

16. Evaluation Methodologies
Maximum Base Load
A performance evaluation methodology based solely on a Demand Resource’s ability to reduce to a specific level of electricity consumption or demand, regardless of its electricity consumption or demand at Deployment.
Meter Before / Meter After
Metering Before Deployment vs. Metering After Reduction Deadline is a performance evaluation methodology where electricity consumption or demand over a prescribed period of time prior to Deployment is compared to similar readings during the Sustained Response Period.

17. Evaluation Methodologies
Baseline Type 1 (Interval Metered)
A Baseline model based on a Demand Resource’s historical interval meter data which may also include but is not limited to other variables such as weather and calendar data.
Baseline Type 2 (Non-interval Metered)
A Baseline model that uses statistical sampling to estimate the electricity consumption of an Aggregated Demand Resource where interval metering is not available on the entire population.
Behind-The-Meter Generation
A performance evaluation methodology, used when a generation asset is located behind the Demand Resource’s revenue meter, in which the Demand Reduction Value is based on the output of the generation asset.

18. Evaluation Standards Overview
Baseline Information
Baseline Window
Calculation Type
Sampling Precision and Accuracy
Exclusion Rules
Baseline Adjustments
Adjustment Window
Event
Information
Use of Real-Time Telemetry
Use of After-the-Fact Metering
Performance Window
Measurement Type
Special Processing
Highly-Variable Load Logic
On-Site Generation Requirements

19. Performance Evaluation Criteria
Rules for Performance Evaluation
Applicable Performance Evaluation methodologies
Performance
Evaluation Type
Service Type
Energy
Capacity
Reserves
Regulation
Maximum Base Load 
Meter Before / Meter After
Baseline Type-I
Baseline Type-II
Metering Generator Output

20. Wholesale DR Standards Informal Comment Overview

21. Informal Comments
October 2nd ISO/RTO work group presentation of recommendation
October 6th – October 22nd Informal Comment period open to all interested parties regardless of membership status.
October 24th NAESB posts informal comments to website.
November 4th NAESB compiled comments received by ISO/RTO.
November 25th ISO/RTO work group submits reply comments and revised Recommendation.
December 2nd DSM-EE Subcommittee meeting considers comments and revised Recommendation.

22. Informal Comment Responders
American Electric Power Service Corporation
Arizona Public Service
BGE
ConEdison
E on U.S.
Efficiency Valuation Organization
ELCON
EnerNOC
EPRI
IRC – Standards Review Committee
Kansas City Power and Light
National Rural Electric Cooperative Association
Portland General Electric
Southern Company
TVA

23. Informal Comment Categories
Baseline representation
Concern over the amount of flexibility given to the System Operator
Concern regarding the standards’ effect on retail
Definitions
Flexibility is Important in the Standards
General Comments
Greater Clarity
Request for Examples
Specific Comments on the Standards
Standards Clarification
Suggested Additions to the Standards
Suggested Deletions
Suggested Rewording
Support
The application of the standards on negotiated contracts
The draft is a framework, not standards

24. Informal Comment Details
90 Comments from 14 responders
90 Responses provided in late comments from ISO/RTO
18 Agreeing responses with no changes recommended
8 Agreeing responses with language changes
8 Clarifying responses with no changes recommended
37 Disagreeing responses with no changes recommended
19 Responses indicating no clear action may be taken based on comment
180 Revisions to Recommendation

25. Informal Comment Details
Category
Agree no change
Agree language change
Clarify no change
Disagree no change
Unclear no change
Grand Total
Baseline representation 1
Concern over amount of flexibility given to the System Operator 3 2 5 10
Definitions
Flexibility is Important in the Standards
General Comments 4 6
Greater Clarity 7 23
Request for Examples
Specific Comments on the Standards 19
Standard Clarification
Suggested Additions to the Standards 8
Suggested Rewording
Support
The application of the standards on negotiated contracts
The draft is a framework, not standards 18 37 90

26. Informal Comment Details
Company
Agree no change
Agree language change
Clarify no change
Disagree no change
Unclear no change
Grand Total
American Electric Power Service Corporation 1 3 2 6
Arizona Public Service
BGE 10
ConEdison 5 8
E on U.S. 4 7
Efficiency Valuation Organization
ELCON
EnerNOC
EPRI
Entergy 15
Kansas City Power and Light
National Rural Electric Cooperative Association
Portland General Electric
Southern Company
TVA 18 36 20 90

27. Response Highlights Request for Examples
Comments asking for application of the standards to existing or proposed programs.
Concern: Want to be careful not to imply a higher degree of technical specificity at this time.
Response: “A working document supporting the responder’s request for clarity from an example is to be provided.”
Implications: Additional work needs to be done by ISO/RTO group to generate examples of application of the standards to existing standards.
NYISO DR Regulation program tentatively identified as possible example program.

28. Response Highlights All Categories
Comments that were positive or negative that did not contain a suggested change.
Concern: No action can be taken as a result of the comment without specificity.
Response (Positive): Agree
Response (Negative/Neutral): “The responder is free to submit a request with enough specificity to generate a change to the recommendation. The request could be considered now or may be addressed once the standards are approved.”
Implications: Potential work for ISO/RTO if a specific comment comes in during formal comment period.

29. Response Highlights Framework Versus Standards
Comments raised regarding the lack of specificity in Standards.
Concern: Specific approach by ISO/RTO was to find common ground versus develop detailed technical standards. Specific reference to the term Framework on Performance Evaluation led to comments suggesting overall standards were a framework. However, the term “framework” implies program design which is not the intent.
Response (General): Commonality in technical requirements does not preclude a minimum set of standards that may be unique to product application but common to product type. Standards require transparency and thereby affect the product use and uniformity.
Implications: ISO/RTO may be requested to develop technical standards in the future.

30. Response Highlights Requests for greater clarity
Comments addressing numerous areas requiring greater clarity, additional specifications, disagreement on standards practices

31. Recommendation Changes
Enhanced definition of Regulation Service
Modified language of Tariff Conflict and NERC Standards
Modified Telemetry terminology and Standards
Added clarifying language to Demand Response Event Definition
Refined After-the-Fact Metering Performance Measurement terminology
Refined Applicability
Refined Aggregation Standard
Refined Meter Accuracy Standard
Addition of exclusion rules under Baseline Type-I & II
Added applicability of Maximum Base Load to Reserve Service
Corrected consistency of active/passive voice usage

32. Recent DSM/EE Sub Committee Activity
December 2, 2008 – The group met in Birmingham hosted by Alabama Power to review comments and vote on the recommendation for Wholesale Electric Quadrant standards for M&V characteristics for DR products and services. After considerable discussion, and several votes to amend the recommendation the recommendation with the amendments put forward by the ISOs and RTOs and three separate amendments addressing titling, applicability, and additional specificity for the definition of Baseline, the motion to adopt the revised recommendation was approved with significant support with 86.5 percent approval by balanced vote. All WEQ segments were present and voting. The revised recommendation will go out for a thirty day comment period and is now considered a work product of the WEQ EC. The abbreviated update report was given for the Retail market effort. The Retail group plans to use the WEQ revised recommendation as a foundation for their work.

33. Change to Title of Standards
“Business Practices for a Framework for Measurement & Verification of Wholesale Electricity Demand Response” 33

34. Change to Applicability
Applicability of Measurement and Verification Standards:
ISO/RTO Administered Markets
These standards were developed by the Independent System Operators (ISO) and Regional Transmission Organizations (RTO) in North America through the North American Energy Standard Board (NAESB) stakeholder process. These standards are applicable only to Independent System Operator-Regional Transmission Organization administered markets in North America. The standards reflect business practices applicable to measurement and verification of wholesale market Demand Response services including the following four product/service categories1:
Non-ISO/RTO Markets:
These standards do not apply in markets administered by non-ISO/RTOs. Wholesale Demand Response standards applicable to non- ISO/RTO markets will be developed when required.

35. Change to Baseline Definition
A Baseline is an method of estimating estimate of the electricity that would have been consumed by a Demand Resource in the absence of a Demand Response Event. The Baseline is compared to the actual metered electricity consumption during the Demand Response Event to determine the Demand Reduction Value. Depending on the type of Demand Response product or service, Baseline calculations may be performed in real-time or after-the-fact. The System Operator may offer multiple Baseline models and may assign a Demand Resource to a model based on the characteristics of the Demand Resource’s Load or allow the Demand Resource to choose a performance evaluation model consistent with its load characteristics from a predefined list. A baseline model is the simple or complex mathematical relationship found to exist between Baseline Window demand readings and Independent Variables. A baseline model is used to derive the Baseline Adjustments which are part of the Baseline, which in turn is used to compute the Demand Reduction Value. Independent variable is a parameter that is expected to change regularly and have a measureable impact on demand. Figure 2. below illustrates the concept of Baseline relative to a Demand Response Event.

36. QUESTIONS