1. Load Management SMUD & Demand Response Jim Parks CEC Load Management Standards Scoping Workshop March 3, 2008

2. SMUD SMUD System Load Highest 50 hours responsible for 500 MW System load projected to grow by 15% over next 10 years (including EE) Resource gap projected in 2012 and beyond due to expiring bilateral and renewable contracts

3. SMUD SMUD Customer Policies Preservation of local decision-making and control are vital to ensure public power systems can provide solutions that best meet the needs of their customers  The District is primarily accountable to its customer-owners  Community citizens have a direct voice in utility decisions Compact with the Customer ―To meet anticipated load growth while balancing environmental and customer service goals, SMUD must implement:  Integrated EE programs which focus on peak  A robust AMI infrastructure  Rates which reflect time-differentiated costs  Strong and active dispatchable LM programs  Construction of clean, renewable plant Held series of ~40 focus groups around compact with customer concepts with all customer classes August – November 2007

4. SMUD AMI Activities December 2005: Completed initial AMI Business Case March 2006: Presented AMR drive-by strategy December 2006: Board approved AMR contract January 2007: Began converting routes to AMR January 2007: Board requested AMI Business Case Update May 2008: Presented AMI Business Case Update May 2008: SMUD embarked on AMI project

5. SMUD AMI Requirements Two-way communications Communications protocol agnostic Robust, secure, and scalable Interval data and TOU capabilities Home Area Network agnostic Enables programmable communicating thermostat control and in home displays Enables end-to-end system efficiencies―from generator to end use

6. SMUD AMI Project Timeline AMI RFP – 2 nd Quarter 2008 AMI Selection – 4 th Quarter 2008 AMI Acceptance Test – 2 nd Quarter 2009 Full Deployment – 2009 - 2012

7. SMUD SMUD Rates Policy District’s rates will be designed to balance and achieve the following goals:  Reflect the cost of energy when it is used  Reduce use on peak  Encourage energy efficiency and conservation  Minimize “sticker” shock in the transition from one rate design to another  Offer flexibility and options  Be simple and easy to understand  Meet the needs of people with fixed incomes and severe medical conditions  Equitably allocate costs across customer classes

8. SMUD Rate Concepts Under Consideration Large Commercial (1> MW)  Basic TOU – 4-month summer, 3 pricing period TOU rate that is energy only  TOU Demand – Same as Basic TOU with addition of a super-peak demand charge  Critical Peak Pricing – Basic TOU with a risk discount and a critical peak price on call days  Real Time Pricing – Hourly energy prices on a day-ahead basis Medium Commercial (300 kW – 999 kW)  Basic TOU  TOU Demand  Critical Peak Pricing Small Commercial (<300 kW)  Basic TOU  Critical Peak Pricing Residential  3-Tier Increasing Block – Standard rate with price risk premium  TOU/Tier – Standard tier rate with 3-hour super peak period  Critical Peak Pricing – TOU/Tier with risk discount and critical peak price on call days

9. SMUD Focus Group Findings on Rates General:  Customers readily understood that SMUD’s cost of supplying energy is higher in the summer, especially in very hot weather  Customers understood that they would pay higher rates over fewer summer months and lower rates over more winter months  Most like a narrow (3-hour) super peak period Commercial:  Customers who find it difficult to shift load and/or have flat load prefer a demand charge, and vice versa  Customers want a minimum of 24-hour notice for CPP  Prefer fewer CPP hours with higher prices vs. more hours with lower prices Residential:  Customers with flexible lifestyles said they will shift activities off peak  Want energy savings (from TOU vs. Tier) shown on bill  Basically like the idea of having pricing choices

10. SMUD Focus Group Findings on LM/DR General:  Most customers said they would respond to public pleas for energy conservation during periods of peak demand  Customers want the ability to override DR events  Generally more receptive to temperature reset than to AC cycling Commercial:  Small and medium customers want education on DR—more likely to participate in DR when it was explained to them  Some find it challenging to curtail/shift energy usage during peak periods due to industry type or business situation  Customers were creative in finding ways to adjust their business operations around peak periods  Many want event notification by cell phone or email Residential:  Households with ill or elderly members said personal control of their AC is critical  Renters find DR challenging because they don’t own the AC or have window AC units  Responses were mixed regarding preference for manual controls vs. “set it and forget it” controls

11. SMUD Current LM and DR Programs Curtailment contracts―14 MW Temperature-Dependent Rate―8 MW Demand Bid―5 MW Used only in emergencies:  Voluntary Emergency Curtailment Program―~45 MW  Peak Corps (residential AC cycling)―97 MW cycling, 135 MW shed Total dispatchable load = 111 to 149 MW  Using AC cycling, and special curtailment contracts Total non-dispatchable load = 0 to 58 MW  Using Temperature-Dependent Rate, Demand Bid and VECP

12. SMUD Proposed LM and DR Offerings Currently being evaluated in IRP process Designed to be used for active LM and DR Residential Customers  Air conditioning cycling  Air conditioning temperature reset  Choice of time-of-use rates, critical peak pricing  Public appeal to reduce electrical load Commercial Customers  Air conditioning temperature reset (<300 kW)  Aggregator program (300 kW – 999 kW)  Special curtailable contacts with the largest accounts (1> MW)  Choice of time-of-use rates, critical peak pricing, real time pricing  Technical assistance to evaluate demand response potential  Technology incentives for enabling equipment  Public appeal to reduce electrical load

13. SMUD LM/DR Program Redesign Timeline Develop new program concepts – 4 th Quarter 2007 Initial program screening – 1 st Quarter 2008 Evaluate programs through resource planning model – 3 rd Quarter 2008 Determine LM/DR resource mix and goals for next 10 years – 4 th Quarter 2008 Implement programs – 2009 - 2012

14. SMUD SMUD Position on PCT Standard Participation in programs should be voluntary (opt-in and/or opt-out) Override capability should be offered to participants in cycling and temperature reset programs SMUD prefers PCT standard because:  Offers customers more energy control options  Reduces costs of SMUD’s t-stat programs  Provides potential for greater participation with temperature reset option  Grows programs faster with opt-out for new construction and dwellings/buildings with existing equipment Opt-out retention rate of 60%-70% over 3 years Opt-in growth rate of 1.5%-2.5% annually, total of 5%-8% over 3 years  Reduces price of t-stats with bulk purchase power and lower installation costs in new construction  Increases control functionality and integration through greater sales  Grows DR infrastructure faster