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Demand Response

Implementing Demand Response andAMR / AMI Systems used by the Electric Cooperatives

of Arkansas

byForest Kessinger

Manager, Rates and Forecasting

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Three Requirements for the Cooperatives’ Demand Response

Program to Succeed

1. An economic incentive for members.

2. An information system which provides current load data to load managers.

3. A means of either directly interrupting loads or to confirm that loads have elected to interrupt (voluntary interruption).

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Requirement # 1

Economic Incentives

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Economic Incentives to the Member Cooperatives

Under Arkansas Electric Cooperative Corporation’s (“AECC”) wholesale rate design, the member cooperatives receive one of the following incentives to interrupt load:

1. By avoiding a portion of AECC’s peak, a reduced billing demand is charged to the member cooperative, thus reducing the member cooperative’s wholesale power bill from AECC.

or

2. The member cooperative receives an interruptible credit for allowing AECC to interrupt certain industrial retail load.

This credit is currently set at 52% of AECC’s demand charge.

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Economic Incentives to the Retail Members

Given AECC’s rate design, the member cooperative then designs retail rates which:

1. Offers the retail member a credit on his monthly bill for being interruptible.

or

2. Provides the retail member with a retail rate which mirrors AECC’s demand charge, i.e. if the retail member is off during AECC’s peak the retail member avoids the member cooperative’s coincident demand charge.

The member cooperative’s coincident demand charge is often coupled with a non-coincident demand charge to recover distribution costs.

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Advantages to all Members

1. A reduced cooperative investment in peaking generation facilities. This translates into lower long term costs.

2. A quick and efficient means of curtailing load during system emergencies.

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Requirement # 2

Information to Predict Peaks

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Time-based Metering

In 1978, AECC installed wholesale metering which recorded hourly kW demand by wholesale point of delivery. This hourly data could be processed into simultaneous hourly coincident totals for each member cooperative.

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Time-based Metering- Continued -

Data from the time based meters of that era were physically recovered at the end of each month.

Because instantaneous load data was not immediately available to load managers, there were inherent inefficiencies in the cooperatives’ demand response programs.

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Early SCADA

AECC’s first System Control and Data Acquisition (“SCADA”) system dedicated to providing instantaneous load data became operational on 1 June 1981.

SCADA information was initially provided to all member cooperatives. The data was eventually provided to any retail commercial and industrial loads willing to sign a confidentially statement.

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Value of the SCADA System

Load managers having actual instantaneous knowledge of AECC’s loads can do a more efficient job of forecasting peaks and calling for interruptions during periods when peaks are eminent.

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Protecting Load Data

This confidentiality prevents load information from being transferred to wholesale marketing entities.

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Requirement # 3

A Means of Interrupting Loads or to Confirm that Loads have

Elected to Interrupt

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Loads Controlled Directly by the Member Cooperatives

Currently approximately 107 MW of demand is directly controlled by the member cooperatives using radio tone load control switches.

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Voluntary Load Control by Commercial and Industrial Retail

MembersAs much as 80 MWs are voluntarily being shed by C&I retail members.

While the metering technology will vary by member cooperative, it is necessary for the member cooperative to demand meter these loads on an hourly basis to determine the retail member’s demand at the time of AECC’s peak.

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Approximately 550 MW of Industrial Load is Controlled Under AECC’s

IC Rider

A separate wholesale metering point is established for each retail load served under the IC Rider. Currently there are seven such loads constituting approximately 550 MWs.

The requested interruption is confirmed using AECC’s SCADA system.

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Member Cooperatives’Automatic Meter Reading

(“AMR”) & Automated Metering Infrastructure (“AMI”)

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AMR Advantages

Reduces estimated billing, enhances accuracy, and provides a better and more timely cash flow.

Reduces field staff.

Reduces customer premises problems.

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TWACS, Turtle, and Cannon all use Power Line Carrier Technology

Data or electrical signals are transformed into radio frequency or modified wave form data signals which are superimposed onto AC power lines by the sender and retrieved from the AC power lines by the receiver.

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The Advantage ofAMR Power Line Carrier

Technology

Best AMR technology for low customer density.

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AMR Power Line Carrier Disadvantages

Power line carriers are susceptible to electrical noise.

Filtering this noise is expensive.

Requires significant capital investment.

A more complex technology.

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Member Cooperatives’AMR & AMI Systems

Woodruff was the first electric cooperative to install an AMR system in 1997.

Currently eleven of Arkansas’ seventeen electric cooperatives are using some form of Automatic Meter Reading (“AMR”) system.

Using these systems, several Automated Metering Infrastructure (“AMI”) functions are also utilized.

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Distribution ControlSystem’s Inc.

“TWACS”Two Way Automated

Communications SystemsHunt Technologies

Turtle System

Cannon Power LineCommunications

System

First Woodruff Craighead

Ozarks Arkansas Valley

Ouachita

C&L

Clay

North Arkansas

South Central

Mississippi

AMR Systems Currently in Place by Electric Cooperative

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States with the Highest Percentageof Advanced Metering Penetration

Pennsylvania 52.5 %

Wisconsin 40.2

Connecticut 21.4

Kansas 20.0

Idaho 16.2

Maine 14.3

Missouri 13.4

Arkansas 12.9

Oklahoma 7.2

Nebraska 6.8

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Cooperatives are using AMR / AMI for Additional Functions

1. To confirm that radio controlled load switches are operating (pinging).

2. For reliability – to better locate outages determine the size of an outage, and to confirm repairs.

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Cooperatives are using AMR / AMI for Additional Functions

- Continued -

3. To assist with high bill complaints and energy efficiency by using hourly data to track a retail member’s usage.

4. To perform remote reads so that power is never shut off when one member moves out and another member moves in.

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Cooperatives are using AMR / AMI for Additional Functions

- Continued -

5. To remotely shut off a service.

6. To detect theft of services.

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Future AMI Possibilities

The cooperatives continue to use reliable and economical radio control switches for demand response but AMR systems are ultimately transitioning to AMI systems with demand response capabilities.

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Future AMI Possibilities- Continued -

Currently, at least one member cooperative is evaluating the possibility of installing an AMR / AMI system with demand response capabilities for water heating and space conditioning loads.

The AMR / AMI system might be in place as early as 2008.

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Questions ?