1. Overview of Residential Pricing/Advanced Metering Pilots Charles Goldman Lawrence Berkeley National Laboratory SMPPI Board Meeting August 3, 2005

2. Residential Pricing Pilots: Recent & Current Examples California Statewide Pricing Pilot (SPP) Puget Sound Energy’s Personal Energy Management program Gulf Power Residential Service Variable Pricing (RSVP) Community Energy Cooperative’s Energy Smart Pricing Plan PSE&G Energy Information Control Network

3. California: Statewide Pricing Pilot (SPP) Three investor-owned utilities: PG&E, SCE, and SDG&E Representative Sample of 2,500 residential and small commercial customers Three primary treatment groups –Time-of of-Use (TOU) Use (TOU) On-to-off-peak price ratio about 2:1 –Critical Peak Pricing-Fixed (CPP-F) Critical Peak, Peak (2-7 pm weekdays) and off peak period Critical Peak Prices much higher - 5:1 – on up to 15 days a year Day-ahead notification by phone, fax, email, pager –Critical Peak Pricing-Variable (CPP-V) Critical peak period varies from 1 to 5 hours from 2-7pm These customers have smart thermostat programmed for automated response

4. SPP Background / Design CA SPP: Objectives 1.Estimate usage (kWh) and demand (kW) impacts from different time-differentiated rate forms. 2.Estimate price elasticities and develop econometric models to examine the effects of weather, customer usage and a other customer characteristics. 3.Estimate customer preference for dynamic and current rate forms.

5. SPP Residential Rates: TOU & CPP CPP-V Tariff- (high)TOU Tariff- (high) 75 Hours Per Year (Maximum) 1,425 Hours Per Year 7,260 Hours / Year $0.73 $0.23 $0.089 0 10 20 30 40 50 60 70 Cents per kWh Existing Avg. Summer Price 13.4 ¢/kWh 1500 Hours Per Year 7,260 Hours/ year $0.26 $0.10 2:00-7:00pm Weekdays Other Weekday & Weekend hours 2:00-7:00pm Weekdays Other Weekday & Weekend hours Dispatched Varies 2:00-7:00pm PeakOff-Peak Peak Off-Peak Critical Peak SPP Background / Design

6. Price Elasticity's – Load Impacts CRA Econometric Model 2003CEC Engineering Method Source: R. Levy -13.4 -12.5 -11.0 -16.0 -12.0 -17.1 - 9.6 - 8.4 1.0 -16.0 -20 -15 -10 -5 0 5 Zone 1 Coastal Zone 2 Inland Zone 3 Inland Hot Zone 4 Desert Hottest Statewide Average % Change In kWh Climate Zone CRA Econometric Model 2004 - 8.2 - 10.9 -16.3 -17.2 -14.4 CPP-F Customers: Percent Change In Peak Period Energy Use

7. Source: R. Levy and Statewide Pricing Pilot, Summer 2003 Impact Analysis, CRA, August 9, 2004, Table 5-9, p.90 Residential 2003 CPP Response by Attribute Percent Reduction in Peak Period Usage 0 2 4 6 8 10 14 16 18 20 Percent Reduction 12 High vs. Low User 200% Average Use 50% Average Use 17.2% 9.79% Central AC Ownership YES NO 12.8% 12.3% Pool Ownership YES NO 19.2% 12.1% Income > $100,000 < $40,000 15.1% 12.1% Single vs. Multi-Family Single Family Multi-family 13.5% 9.8% State-wide Average 12.5% Price Elasticity's – Load Impacts

8. CA SPP: Residential Customers – Utility Bill Impacts CPPVCPPF-ATOU Participants (%) 71.1%73.7%70.0% Average Monthly Savings (%) 5.1%5.5%4.5% Average Monthly Savings ($) $6.81$3.89$3.25 Participants (%) 28.9%26.3%30.0% Average Monthly Increase (%) 4.0%6.2%3.0% Average Monthly Increase ($) $5.03$4.93$3.32 2003 Customers With Bill Savings Customers With Bill Increases Source: Statewide Pricing Pilot, Shadow Bill Results, WG3 report, June 9, 2004 and Joint Utility Bill Analysis, January 12, 2004. CPPVCPPF-ACPPF-BTOU 71.9%74.1%93.7%65.7% 5.8%6.2%8.3%4.0% $8.46$4.89$4.12$3.15 2004 28.1%25.9%6.3%34.3% 2.9%6.0%2.9%1.6% $5.32$5.62$0.68$0.47 Customer Bill Impacts CPPF-A Statewide Representative Sample CPPF-B Residential Low Income, SF Hunters Point

9. Puget Sound Energy: Personal Energy Management Program First and largest residential RTP effort Advanced meters (leased) for all gas and electric customers 300,000 electric customers on TOU rates Narrow price differential (see figure)

11. Puget Sound Energy: Results Year 1 Implemented amidst the West Coast Energy Crisis of 2000-2001 Very positive initial customer response 5-6% peak reduction 5% conservation savings Crisis begins to abate Year 2-3 Stakeholders begin questioning Rate differential is narrowed Puget sends out customer reports Media fans the flames Puget pulls program A collaborative process around residential time- differentiated pricing continues

12. Gulf Power’s Residential Service Variable Pricing (RSVP) Standard Residential Customer Charge applies: $8.07 per month RSVP Participation Charge: $4.53 per month Prices per kWh (includes energy charge, fuel, various adders) – Low 3.5 cents/kWh – Medium 4.6 cents/kWh – High 9.3 cents/kWh – Critical 29.0/kWh Standard Residential Rate: 5.7 cents/ kWh

14. RSVP Program Results CPP rate plus TOU – 5:1 differential 6000 customers paying $14.95/month Summer Peak Reduction - 40% Annual energy savings – 1400 kWh Average annual bill savings – 15% High customer satisfaction

15. Community Energy Cooperative: Energy Smart Pricing Plan Started in January 2003 as a pilot project with Commonwealth Edison Day-ahead hourly prices posted on web page: first residential RTP tariff –Prices capped at 50 cents/kWh Utility installed interval meters to record hourly energy use Participants notified of high price days via phone or email Extensive customer outreach & education on managing energy use patterns

16. Energy Smart Pricing Plan: Results 1500 participants (June 2005) from ethnically diverse urban & suburban Chicago Evaluation found that: –Participants respond to peak period prices (in summer 2003) but not much in 2004 –Participants saved money: –Although Participants of all incomes benefited, low- income households responded more to high prices Pattern of increased investments in energy efficiency noted

17. PSE&G’s Energy Information Control Network (EICN) Overview –Experimental real-time pricing and TOU tariffs plus enabling and display technology and load control offered to 2,000 residential and commercial customers Objective: Test capabilities and customer acceptance of smart metering devices paired with price signals and two-way communications Cost: $4.4 million Duration: 18 months

18. PSE&G EICN Experimental Design Control group: –“Blind” customer group receives interval meter but remains on flat rate TOU/CPP Education: –Customers receive TOU + CPP, along with education materials & day-ahead CP notification TOU/CPP Technology: –Customers receive TOU + CPP + education materials + visual display and energy management technology Day-ahead RTP Technology: –Customers receive day-ahead hourly prices + educational materials + virtual display and energy management technology Load Management: –Direct control switches activated by the utility w/ 2-way communications

19. EICN Scope and Budget EICN Program SegmentsSample Size Budget Management, Mkt Research, Systems Integration $1.3 million Control Group 450$1 million TOU/Critical Peak Pricing – Education only 450 TOU/Critical Peak Pricing – Education plus Technology 450$1.4 million Day Ahead Hourly Pricing - Technology 450 Load Management Segment 100$0.7 million Total ~$4.4 million