2. The ESKOM Pilot Testing and Findings of the Residential Time-of-Use Tariff (Homeflex) Project by Vashna Singh and Marcus Dekenah 17 October 2006

3. Contents Objective of Homeflex Background Market Drivers Pilot Objectives Pilot Testing Pilot Results Conclusions Questions

4. The Objective The objective of the Homeflex Pilot Project is to develop and introduce a residential time-of-use tariff that will penetrate the market and provide incentives and benefits to customers which will ultimately result in the optimization of the country’s peak demand curve profile.

5. Background Eskom identified the need for Residential Time- of Use tariff. A tariff (Homeflex) was developed, various pilots were run - less than 5% load shift. Various other load management & efficiency strategies were studied during this period - not integrated with the tariff. Changing environment - WEPS, ISEP, ESI, EDI - tariff become outdated. A revised Business Case was proposed and accepted by Distribution Group Sales - recommended piloting of tariff with load management technologies.

6. Market Drivers The continued increase in Eskom’s peak demand and requirements for increased capacity decisions that need to be made. A requirement for increased sales in off-peak times. The Energy Policy White Paper and DME’s Electricity Pricing Policy stipulations for time-of- use tariffs, cost reflective tariffs, differentiated capacity charges and sophisticated tariffs for the upper market. Increased customer needs for flexibility and lower costs - increase in customer service due to reduced bills and more value adding options.

7. Market Drivers Load shifting in an all electric market reduces the Distributor’s purchase costs and increase profitability. Better alignment to WEPS - increased incentive to shift load, resulting in improved net contribution for the Distributor. A target market exists for medium to high residential consumers who have ability to shift load. Major market for Homeflex lies in municipal areas (still benefit Eskom Generation).

8. Pilot objectives Primary aim: to determine whether a TOU pricing signal would encourage customers to shift their electricity consumption from peak to off peak periods. Other aspects tested: Customer’s acceptance of and response to the tariff and load management technologies. The Distributor’s support structures required for the implementation of Homeflex e.g. Metering, Billing, Contact Centre, Field Services.

9. Pilot Testing Pilots funded by Eskom’s DSM. Revised pilots were launched at eThekwini Electricity and Sandton, Tableview was a new site. Three pilots were run - Tableview, Sandton and Durban Metro. Each Pilot sample was made up of –50 Test customer on 2 Part Homeflex tariff, –50 Test customers on 3 Part Homeflex tariff, –50 Control customers (on Homepower ) An ABB Load Research installed at each together with current domestic meter.

10. Pilot Testing Durban Metro pilot (customer controlled load management - timers used), pilot is closed. Tableview Pilot (utility controlled load management - Flexicon system used), pilot is closed. The Sandton pilot is still in operation to test other metering options.

11. Pilot Results Source: NRS/TSI LR projects 1994-2003 Who has a geyser? Customers over 500kwh/mth

12. Who is the target? Analysis of C1,C2,C3 sales Y2002

13. Load shift: Sandton Avg. Winter weekday, 2002 Mid-range customers only

14. Load shift: Tableview Avg. Winter weekday, 2002 Mid-range customers only

15. Modeled response to TOU Avg. Winter weekday

16. Summary of load shift* AM 07h00-10h00 PM 18h00-20h00 Sandton0.9 kW/hh (-17%) 0.5 kW/hh (-7%) Tableview0.7 kW/hh (-30%) 0.9 kW/hh (-29%) Eskom target market 0.76 kW/hh (-23%) -86MW 0.72kW/hh (-18%) -82MW *Avg. high season weekday per model. Highest mean saving per time-interval in PSO peak-slot shown.

17. Summary (Contd.) TOU2/TOU3 does not affect consumption. Profile of TOU2/TOU3 the same. Profile of TOU2/3 different from Homepower control. Geyser control is profile modifier. Difference between local/remote load control. Elasticity not modelled.

18. Outputs Statistical conclusions based on 200 consumers. Annual hourly profile model with household (C, TOU2/3) and network (WEPS) sales and load. TOU Tariffs can be tested on model. Profile model can be applied to each Accops.

19. Implementation Strategies Pilot testing proved that Eskom’s Distribution support structures can adequately handle Homeflex. Lessons from pilot test show that the metering technologies and integration with billing system needs further refinement in order to develop a more feasible and cost effective package for roll out. A request for a metering, load management and data management solution was sent out to the market. The Request for Proposal is currently being evaluated. Chosen technologies will be tested for suitability, implementation readiness and customer acceptance in a Proof of Concept Phase later this year.

20. Conclusion Homeflex may be usefully practiced on consumers using more than 500kWh/month. Response to a 2 part or 3 part tariff is not distinguishable, but was distinguishable from the control groups. The introduction of the tariff did not change the levels of consumption. The tariff may be the “glue” that keeps the load shedding devices in place, operating normally and untampered.

21. Conclusion To make load management strategy most successful, the customer must see direct benefits. A time-of-use tariff is an extremely effective strategy which provides immediate incentives for customers to do load shifting, hence reaping direct benefits.

22. Questions?