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Efficiency
Energy for the Future
Joint CEC/CPUC Proceeding on Advanced
Meters, Dynamic Pricing, and Demand Response
in California.
Connecting Wholesale and Retail Electricity.
Denver CO, April 4, 2003
Arthur H. Rosenfeld, Commissioner
California Energy Commission
916 654 4940
www.Energy.CA.gov
2Efficiency
Energy for the Future
California Legislature authorized $ 32 million for
15-minute interval meters
23,000 meters for customers with loads >200kW,
(if a building, floor area > ~40,000 sq.ft. )
5,000 customers >500 kW already on Time-of-
Use (TOU) rates
so 18,000 new customers, many new to TOU
now cover 1/3 of California’s peak load
Starting 2001, during the California Electricity Crisis
3Efficiency
Energy for the Future
Cal ISO Daily Peak LoadsJanuary 1, 2000 - December 31, 2000
20
25
30
35
40
45
50
Jan-00 Feb-00 Mar-00 Apr-00May-00Jun-00 Jul-00 Aug-00Sep-00 Oct-00 Nov-00Dec-00
GW
Peak Day August 16 - 43.5 GW
Commercial AC
Residential AC
4Efficiency
Energy for the Future
Top Ten California Peak Energy Uses/Sectors(assumes a 50,000 MW peak)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Com A
C
Res A
C
Assem
bly In
dustr
y
Com L
ight
Com M
isc
Res M
isc
TCU Buil
dings
Ag & W
ater
Pum
ping
Proce
ss In
dustr
y
Res R
efrig
erat
or
End-Use/Sector
Me
ga
wa
tts
15% 14%
11% 11%
7% 6%
4% 4% 4% 4%
5Efficiency
Energy for the Future
Actual ISO Load 2000 and 2001Sorted Highest to Lowest in a Load Duration Curve
Highest 1000 Hours
30,000
32,000
34,000
36,000
38,000
40,000
42,000
44,000
46,000
1 101 201 301 401 501 601 701 801 901
hours
MW
2000
2001
Top 50 Hours
6Efficiency
Energy for the Future
ISO Actual Loads -- Three SummersHighest 50 Hours of Load in Each Summer
38,000
39,000
40,000
41,000
42,000
43,000
44,000
45,000
46,0001 3 5 7 9 11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
mw
summer 1999
summer 2000
summer 2001
summer 2000 if nocurtailments (estimated)
2001
2000
1999
7Efficiency
Energy for the Future
Loads and Estimated End Use Consumption Highest 50 hours of a Year
25,000
30,000
35,000
40,000
45,000
50,000
1 3 5 7 911 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
Commercial AC
Residential AC
Commercial Lighting
100%
89%
78%
67%
56%
1999 ISO Loads
8Efficiency
Energy for the Future
Price Duration Curve Full 8,760 Hours ISO's Real Time Price in Northern California
-100
0
100
200
300
400
500
600
700
1 1001 2001 3001 4001 5001 6001 7001 8001
$/MWh
1999
2000
$500/MWh Price Cap
$250/MWh Price Cap
9Efficiency
Energy for the Future
Average Costs of a New CT1 -- $/MWh including debt service
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0 50 100 150 200 250 300
hours of operation
$/MWh
1 - CT cost data taken from Appendix Table B-2 CEC Staff Draft of California Energy Outlook, 8/22/01
10Efficiency
Energy for the Future Source: Ed Hamzawi, SMUD, Oct. 20, 2000
0
0.5
1
1.5
2
2.5
3
3.5
4
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24Hour
Lo
ad
(k
W/1
00
0 S
qu
are
)
Baseline
Curtailment
IMPACTS / 1000 sf :
Avg . kW (1-5PM) = 1.0, = 30% of Baseline a-c
Measured Hourly Average A/C Loads - at SMUD Office Bldg .
Curtailment = Setpoint + 4 Degress (1 to 5 PM) + Dimmed Lights
11Efficiency
Energy for the Future
Simulation (DOE-2) Medium Office - Hot Day (Max. 100 Deg.) in Sacramento
Load Control = Basecase + 4 Deg. & 30% Lighting Reduction (1 to 5 PM)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour
Total Load (kW/1000 square feet)
65
70
75
80
85
90
95
100
105
110
115
Temp. (deg. F)
IMPACTS / 1000 sf:Avg. Kw (1-5PM) = 1.5First Hour kW (1PM) = 2.7Daily kWh = 6.1
KW Base Case
Temp Inside Base
Temp Inside Curtail
Temp Outside
KW Curtailment
12Efficiency
Energy for the Future
CEC Experience with Peak Load Reduction
In 2000 and 2001, the California legislature allocated to the Energy Commission funds for peak load reduction programs
The Energy Commission offered grants, loans and rebates. Specifically, $ 21 million for “enhanced automation”
Due to problems with electricity supply in California during 2000 and 2001, these programs were designed and implemented in a very fast manner before any dynamic tariffs were provided (e.g. CPP, RTP)
The next two slides provide a summary of program results during 2001
13Efficiency
Energy for the Future
CEC Contracts for Peak Reduction Summer 2001% Load Curtailed
0% 5% 10% 15% 20% 25%
Staples
Foothill College
Hewlett-Packard
Doubletree Hotel
Macanan Investments
Specific Case Histories
All 1,800 Projects
14Efficiency
Energy for the Future
CEC Contracts for Peak Reduction Summer 2001 Cost per kW curtailed
$0 $200 $400 $600 $800 $1,000 $1,200
Staples
Foothill College
Hewlett-Packard
Doubletree Hotel
Macanan Investments
Specific Case Histories
All 1,800 Projects
15Efficiency
Energy for the Future
TOU Pricing vs. Dynamic Pricing (CPP & RTP)
Time-of-Use (TOU) is typically 3 time blocks published in advance for entire season– Peak, Shoulder, Off-Peak
– Cannot address unforeseen weather or equipment failures
Critical Peak Pricing (CPP) is a high price imposed on a few days a year when energy is expensive or system conditions are critical or near critical– Non-CPP hours are less expensive as a result
– Customer pays the critical price when invoked by the utility• day-ahead forecast of CPP offers added time for response
Real-Time Pricing (RTP) is the hourly marginal cost of a kWh– Reflects hot weather, scarcity, or equipment failure
• day-ahead forecast of RTP offers added time for response
16Efficiency
Energy for the Future
CEC/CPUC Vision: Dynamic Prices & Choice
Always TOU or Better if digital meters available and if economic “CPP” is an extension of TOU Residential and Small Commercial
– Default = CPP
– Hedge = TOU
Intermediate Size Customers (perhaps 200 kw to 1 MW)– Default = CPP
– Hedge = TOU
– Option = RTP (voluntary)
Large (perhaps > 1 MW)– Default = RTP
– Hedges to CPP or perhaps TOU Goal of an additional 1% of Load Response per year
17Efficiency
Energy for the Future
Gulf Power GoodCents Select Tariff2000 homes in Pensacola FL
Reduces need during critical or near critical periods (emergencies -- present or expected --, very high prices)– Summer Peak Load Reductions of 2.1 kW per house (1st
hour)
– Winter Peak Load Reduction of 2.7 kW per house (1st hour)
4-hour reduction roughly 1 kW 96% Customer Satisfaction Rating
– Cost savings, greater control and better information
Improves competitive position of Gulf Power in wholesale markets
18Efficiency
Energy for the Future
Critical Peak Pricing (CPP)e.g. Gulf Power residential GoodCents Select tariff with
a limit of 87 hours per year of CPP prices
0
5
10
15
20
25
30
35
Pri
ce (
cen
ts/k
Wh
)
Standard TOUCritical Peak PriceStandard Rate
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
19Efficiency
Energy for the Future
Gulf Power
Residential
July 2002
20Efficiency
Energy for the Future
Georgia Power’s Voluntary 2-part RTP Program
Customer bill = Part 1 + Part 2– Part 1 based on historical load profile (customer baseline load --
CBL). CBL is a list of hourly loads for entire year
– Part 2 based on price responsive departures from load profile
Part 1 is the CBL x TOU tariff– What you expect to pay if you don’t respond to real-time price
Part 2 is the hourly departures from CBL– Enables customer to buy additional kWh when prices are low
– And sell back kWh when prices are high
Saves 17% of participant’s load at ~$1/kWh on hot afternoons
21Efficiency
Energy for the Future
Example of Incremental EnergyCharges (Relative to Baseline)
MWh
1 24
Actualload
Customer “sells” load at high RTP prices
Customer “buys” load at lowRTP prices
CBL
Hour of Day
22Efficiency
Energy for the Future
Real Time Pricing at Georgia Power
1,650 commercial and industrialcustomers, totaling 5,000 MW
Two-part, day-ahead and hour-aheadhourly pricing
High customer satisfaction; lowturnover
Up to 1,000 MW of load responseduring critical high-price conditions
Related risk management products called Price Protection Policies
23Efficiency
Energy for the Future Source: Steve Braithwait, Christensen and Associates
Hour Ahead, Large Customers(Summer weekdays, hours 14 - 21)
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
-1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00
ln(P/Pg)
ln(Q/Qg)
$0.21 $0.6 $2
$1/kWh
Price /kWh
24Efficiency
Energy for the Future
Day Ahead Industrial(Summer weekdays, hours 14 - 21 )
-0.20
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
-1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00
ln(P/Pg)
ln(Q/Qg)
$0.23 $1 $0.70
Price per kWh
Source: Steve Braithwait, Christensen and Associates
25Efficiency
Energy for the Future
Day Ahead Commercial(Summer weekdays, hours 14 - 21 )
-0.20
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
-1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00
ln(P/Pg)
ln(Q/Qg)
$0.23 $1 $0.70
Price per kWh
Source: Steve Braithwait, Christensen and Associates
26Efficiency
Energy for the Future
California’s Energy Agencies Promote Demand Response to Retail Price
Beginning in the Summer of 2002, the Energy Commission, Public Utilities Commission, and the Power Authority began a joint proceeding to promote demand response to retail prices and tariffs
Divided into three parts:
– Working Group 1: Policy Issues
– Working Group 2: Large Customers
– Working Group 3: Small Customers Decisions regarding how to proceed are being made
– Initially, regarding tariffs for large customers and experimental design to assess response to price from small customers
27Efficiency
Energy for the Future
Working Group 2: Large Customers (>200 kW)Coordinator, Mike Jaske ([email protected])
Original goal was a “quick win” to take advantage of the interval meters already in place through tariffs or programs for Summer 2003
Products will include: dynamic tariffs (this summer, 2003), demand bidding tariffs (also this summer), and a group is formulating a two-part RTP (Real Time Price) tariff.
A CEC objective was to include commercial buildings since these were the ones where the customers getting advanced metering systems.
The initial utility proposals discriminated against “peaky” commercial buildings, so WG2 modified its approach and developed CPP tariff proposals.
28Efficiency
Energy for the Future
Joint Utility CPP Tariff Applied to PG&E Summer A 10
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
0:00
1:00
2:00
3:00
4:00
5:00
6:00
7:00
8:00
9:00
10:0
0
11:0
0
12:0
0
13:0
0
14:0
0
15:0
0
16:0
0
17:0
0
18:0
0
19:0
0
20:0
0
21:0
0
22:0
0
23:0
0
hour of day
$/K
Wh
Prices on CPP Days
Prices on non-CPP days
TOU Prices
29Efficiency
Energy for the Future
Joint Utility CPP Tariff Applied to PG&E Summer A 10
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
8:309:009:3010:0010:3011:0011:3012:0012:3013:0013:3014:0014:3015:0015:3016:0016:3017:0017:3018:0018:3019:0019:3020:0020:3021:00hour of day
$/KWh
Prices on CPP Days
Prices on non-CPP days
TOU Prices
30Efficiency
Energy for the Future
Working Group 3: Small CustomersCoordinator: Mike Messenger ([email protected])
Scope– All three IOU service territories in California
– Residential, small commercial & industrial <200kW
Goals– Identify information needed to decide whether
deployment of advanced meters is cost-effective
• for all or some subset(s) of small customers
– Collect existing and new data needed to allow educated decisions on meter and tariff policy by early 2004
31Efficiency
Energy for the Future
Working Group 3: Small CustomersStatewide Pricing Pilot
Sample– 2,060 participants (after 20% opt-out)
• 1,520 residential; 540 commercial
Treatments– TOU & CPP rates; information & technology types
Objectives– Short-term price elasticities
– Customer acceptance and preferences
Cost: ~ $10 million
32Efficiency
Energy for the Future
Concluding Remarks
Price responsive demand will enhance the competitiveness of electricity markets
A direct link between wholesale and retails markets is essential However, other types of electrical system emergencies may require
instantaneous load response California had a separate proceeding dealing with interruptible load
programs We plan to merge price-sensitive demand response and interruptible
programs
– For example, one approach could involve a curtailment signal that a customer would not have the option to over ride.
– The next graph illustrates how this might work
33Efficiency
Energy for the Future
Critical Peak Pricing (CPP)with additional curtailment option
0
5
10
15
20
25
30
35
40
Pri
ce (
cen
ts/k
Wh
)
Standard TOUCritical Peak PriceStandard Rate
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
Extraordinary Curtailment Signal
Price Signal
?
34Efficiency
Energy for the Future
For more details see
PUC R.02-06-001– http://www.cpuc.ca.gov/static/industry/electric/demand/index.htm
CEC 02-Demand Response-01– http://www.energy.ca.gov/demandresponse/documents/index.html
Dynamic Pricing, Advanced Metering and Demand Response in Electricity Markets– The Hewlett Foundation Energy Series Foundation monograph by
Severin Borenstein, Mike Jaske and Art Rosenfeld, September 2002
– http://www.energy.ca.gov/commission/commissioners/rosenfeld. html, http://www.ef.org/energyseries_dynamic.cfm
How and Why Customers Respond to Electricity Price Variability: A Study of NYISO and NYSERDA 2002 PRL Program Performance
– Neenan, B., et.al., January 2003 http://certs.lbl.gov/PDF/NYISO.pdf