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March 30, 2004
CONFIDENTIAL
AMR Benefits and Costs – Benchmarks and ExamplesPresentation at CB Associates Seminar
Sanjoy [email protected](646) 732-2493
2Confidential –- March 30th, 2004
Today’s Discussion
• Types of business cases•Operational•Demand Response (e.g., CA)
• Benefits – Industry Experience and Benchmarks
• Cost Categories
3Confidential –- March 30th, 2004
Operational Business Case
Utility Operational
Savings
$ per meter per month
AMI Capital Investment
AMI Operations & Maintenance
NET SHAREHOLDER
BENEFITS
CostsBenefits
4Confidential –- March 30th, 2004
Demand Response Business Case
Utility Operational
Savings
$ per customer per month
Demand Response Savings
AMI Capital Investment
AMI Operations & Maintenance
NET RATEPAYER BENEFITS
CostsBenefits
5Confidential –- March 30th, 2004
Operational Benefits Beyond On-Cycle Meter Reading
6Confidential –- March 30th, 2004
Daily Usage Screen: Off-Cycle Reads and Customer Service
7Confidential –- March 30th, 2004
Revenue Mgmt: Unauthorized Usage Screens
8Confidential –- March 30th, 2004
Revenue Mgmt: Diversion Detection at KCPL
9Confidential –- March 30th, 2004
Other Revenue Management and Meter Operations
Discovery of electrical problems in field:•UI found significant increased revenue during the installation phase
Improved meter accuracy leads to revenue recovery•UE estimated meter accuracy improvement of 0.7% - older meter population than average
•KC Retrofit center tested 5000 random meters before and after retrofit process and found an average improvement in accuracy of 0.25%
•3-digit demand registration improvement
Identification of dead meters earlier leads to revenue recovery•KCPL has ~0.1% of its meters die in field every year & it takes 4 months to identify and replace
Reduce number of meters in inventory•Reduction in inventory costs•Less training•Reduction in meter repairs, manpower, and parts
10Confidential –- March 30th, 2004
T&D Operations: Real Time Read Screen
11Confidential –- March 30th, 2004
1 - Lights Out Call
2 - Query Meter
3 - Meter re
ports ON
4 - Assisted to check breakers
Customer CSR
Meter
Outage Management: Instrumenting the Distribution Network
12Confidential –- March 30th, 2004
Outage Restoration
Outage FlagOutage
Information System
WMS Dispatch
Trouble Crew
MeterRestoration Flag
NO
YESAuto-dialer
OutageEvent
13Confidential –- March 30th, 2004
Transformer Load Monitoring
Transformer LoadDuration Curve
+
+
14Confidential –- March 30th, 2004
Industry Benchmarks
Meter Reading• Labor• Supervision• Vehicles• Injuries• Equip and• new meters
UtilityOperational
Savings
Billing & Customer Service
• Call center• Re-reads• Cash flow
Revenue Protection
$0.70$0.26
$0.29
$2.87
Source: North American Advanced Metering AMR, Frost & Sullivan
Off-Cycle Reads
• Move-in/move-out
• Re-reads
Meter Operations
• Avoided testing
• Avoided replacement
• Accuracy
$0.56
$0.60
Outage Mgmt• Singe No-
Lights Trips• Restoration
$0.36
Gross savings in $ per meter per month
15Confidential –- March 30th, 2004
Demand Response Benefits
16Confidential –- March 30th, 2004
The Goal of Dynamic Pricing
Avoid the need to construct additional peaking power plants or to make expensive wholesale power purchases during price spikes
Top 1% of the hours in PJM
• Top 10% of demand
• Top 90% of prices
17Confidential –- March 30th, 2004
California Statewide Pricing Pilot – Background
•California joint agencies demand response proceeding–PUC, Energy Commission, and Power Authority –Rulemaking 02-06-001, begun June 2002–Establishing state policies for advanced metering and demand response
•Goal: avoid a repeat of the 2001 Energy Crisis
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2004 2005 2006 2007 2008 2009 2010
Year
Ope
ratin
g R
eser
ve
Projected Operating Reserve (1-in-2)
Projected Operating Reserve (1-in-10)
Target Operating Reserve
Stage 2 Emergency- Called whenreserves fall below 5%
Stage 3 Emergency- Called whenreserves fall below 1.5%
Source: Mike Messenger, California Energy Commission
Projected Reserve Margins
Rolling Blackouts
18Confidential –- March 30th, 2004
California Rulemaking Progress
• Three subgroups– WG1: Policy– WG2: Large customer programs (>200 kW)– WG3: Small commercial and residential programs
• Decisions to date – Mar 2003: Adopted statewide goal of meeting 5% of peak
demand via dynamic pricing by 2007– Jun 2003: Established regular dynamic pricing tariffs for
large customers– Jun 2003: Ordered implementation of Statewide Pricing
Pilot– Nov 2003: Ordered development of business case
methodology, including utility filings due March 31 regarding 2004 activities to meet 2007 goal
19Confidential –- March 30th, 2004
Statewide Pricing Pilot Overview
• Statewide– Pacific Gas & Electric, San Diego Gas & Electric, and Southern California
Edison– Sample of 2,500 customers statistically representative of the entire state– Residential and small commercial customers
• Goals– Measure peak demand reductions– Measure total consumption reductions– Assess customer preferences via participant experiences and market
surveys• Customers put in three primary treatment groups
– Time-of-Use (TOU)• Peak (2-7 pm weekdays) and off-peak• Peak to off-peak price ratio about 2:1
– Critical Peak Pricing-Fixed (CPP-F)• Peak (2-7 pm weekdays) and off-peak• Much higher price – about 5x higher – during critical peak period (2-7
pm) on up to 15 days a year, with day-ahead notification– Critical Peak Pricing-Variable (CPP-V)
• Three differences from CPP-F– Critical peak period varies from 1 to 5 hours from 2-7 pm– Notification varies from day ahead to 4 hours ahead– All customers have smart thermostat programmed for automated
response
20Confidential –- March 30th, 2004
Residential Dynamic Pricing Results: Price Elasticity
–Fifty-six analyses and projects in the past 25 years–Average of -0.30 own-price elasticity
• Equals 30% usage reduction for 100% price increase (off-peak to peak)–California’s pilot providing one more data point
Residential Own-Price Elasticities Recorded in Experiments/Programs
More
peak d
em
an
d
red
uctio
n
-0.9
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0
1975 1980 1985 1990 1995 2000 2005
Average result =-0.30
California data
U.S./international data
Source: King and Chatterjee, Public Utilities Fortnightly, July 1, 2003
21Confidential –- March 30th, 2004
Residential Dynamic Pricing Results: Peak Demand Reduction
–Results of 30 residential time-of-use and critical peak pricing programs–Results expressed as a percentage of customer’s total demand under non-time-based pricing
0%
10%
20%
30%
40%
50%
60%
70%
1975 1980 1985 1990 1995 2000 2005
Average reduction 24%
More
peak d
em
an
d
red
ucti
on
22Confidential –- March 30th, 2004
Statewide Pricing Pilot Results - Residential•Rates went into effect July 1, 2003•12 events called during summer 2003•Analysis by Charles River Associates (contractor to joint utilities) completed January 16, 2004 (draft report; final data may differ)
Performance Measure Average from the Literature
California SPP Result
Price elasticity (mean own price) -0.30 CPP-F: -0.27CPP-V: -0.53TOU: -0.24
Peak demand reduction – TOU 20% 24%
Peak demand reduction – CPP without automated response
24% 20%
Peak demand reduction – CPP with automated response
44% 49%
Total usage reduction (conservation effect) 4% CPP-F: 6%CPP-V: 28%TOU: 9%
23Confidential –- March 30th, 2004
Meters/Modules
Field Logistics
Network Equipment
Network Installation
IT Interface Design
Total Upfront Capital
System Operations
3rd Party Comm
Network Ops
Network Maintenance
Endpoint Replacement
Other Utility Costs
TCO
Meters and modules based on retrofit capabilities
Installation, retrofit, cross-dock
Network equipment and field installation, including site preparation (where needed)
Utility IT team to build interfaces to different deployment systems
Operating data collection systems, data management, process management, manual reads (where needed)Leased lines, wireless, telco, other backhaul
Engineers, Technicians, Site leases, energy costs
Maintenance, repairs and upgrades
Replacement of failed meters and modules in the field
Utility in-house project team, overhead, facilities, vehicles, G&A
*Sales taxes and property and use taxes ignored
Total Cost of Ownership (TCO) Categories*