DISPUTES & INVESTIGATIONS • ECONOMICS • FINANCIAL ADVISORY • MANAGEMENT CONSULTING

NSTAR Smart Energy Pilot UpdatePresented to the MA DPU Grid Modernization Working Group

May 22, 2013

Smart Grid Communications and Enabled Capabilities

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Existing AMR meters allow “drive-by” meter reads

NSTAR is now intercepting the AMR signal and sending load data back to the utility using the internet

NSTAR can provide organized billing information back to the customer

DR events can also be called via broadband; and evaluated with the available customer data

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This pilot is testing customer reaction to rates and near real-time information, comparing results from 4 treatment groups

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Group Smart Thermostat / Direct Load Control

Target Number of Customers

1 Enhanced Information No 878

2 Peak Time Rebate 323

3 Time-of-Use (TOU) Rate plus Critical Peak Pricing (CPP)

309

4 No 917

Total 2,427

Access to Web Portal

•View and manage household energy consumption online

•Receive messages from NSTAR

•Analyze historical usage patterns

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In Home Display

Programmable Thermostat

Internet Gateway / HAN

•Zigbee device

•Real-time power demand

•Billing period electricity consumption & cost

•Price of electricity

•Up to 4 programmable set points per day

•Controllable over the Internet via the Web Portal

•Critical Event management and control

•Home Area Network (HAN) to enable two-way communication between the customer and NSTAR

All Participant Groups Load Control

All participants received real-time information on usage and cost

1,594Currently Enrolled

3600Customers Enrolled

2,700Customers Installed

53,000Customer contacts

6.7% Response

25% Dropout prior to Install

40% Dropout after install

Challenging to convert “interest” to “install” and to sustain interest long- term

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Peak Period Savings Up to 16% for TOU Rate

» TOU rate saved ~0.15 kW (summer afternoons and winter late afternoons/evenings)

» TOU savings: 10 -16% depending on customer loads» Non-TOU summer savings of ~4%

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* Findings based on 9 months of data, may not be indicative of results at pilot end

0.00

0.05

0.10

0.15

0.20

0.25

0.30

Group 1:Enhanced Info

Group 2:Rebate+LC

Group 3:TOU/CPP+LC

Group 4:TOU/CPP

Ave

rage

Loa

d R

educt

ion (k

W)

Average Impacts, 90% Confidence Interval

Summer

Winter

Load reductions during summer events vary with the rate and technology

» Load control reductions ~0.5kW during summer events (~20-25%)

» Predicted baseline usage closely matches actual loads

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-20%

-10%

0%

10%

20%

30%

40%

Group 1:Enhanced Info

Group 2:Rebate+LC

Group 3:TOU/CPP+LC

Group 4:TOU/CPP

Ave

rage

Loa

d R

educt

ion (%

)

Average Impacts, 90% Confidence Interval

Customers generally report that they are satisfied but are not using technology in significant numbers

» According to our mid-point survey, the majority of participants have characterized their pilot experience as positive› 75% rated their experience as “somewhat positive” or “very positive”› TOU participants are more satisfied that non-TOU participants

» Customers in the TOU participant group have indicated that the in-home display has helpful

» Participants rarely if ever take advantage of the web-portal

Key findings to date

» Load and Energy Impacts› Load reductions of ~0.5 kW during summer events with load control› 10-16% peak reduction from TOU rates (control group difficult to match

without pre-pilot interval data)› Energy impacts (kWh) are modest (0-6%) but not statistically significant as

of the last analysis

» Technology Usage› Customers are not using technology in significant numbers› Newer pilots use mobile devices and push-messaging

» Participation › Significant drop out rate – even among a sample of relatively “engaged”

customers› May not work for all customers

U.S. Experience with Time Based Rates

Navigant interviewed 9 utilities to learn why pilots have or have not progressed to implementation

» Questions focused on…› Rate design and technologies offered› Reasons why the pilot was or wasn’t offered permanently› Customer enrollment and satisfaction› Regulator response to the rate› Type of metering used (AMI vs. AMR)

» Interviews were 20-60 minutes by phone» Utilities were selected that have recently ran time-based rate

pilots (TOU, CPP, VPP, PTR, RTP)

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Status of the 9 pilots vary

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Only pilots that demonstrate a strong business case and achieve stated goals move on to full rate deployment

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Pilots that moved forward

Pilot ResultsRationale for Decision to

Move ForwardDeployment Experience

(post-pilot)

• Large pilot participation

• Understanding of customer response to time-based rates

• BG&E customers preferred PTR rate options that provided higher benefits

• Strong regulatory support

• High participation rates in pilot

• CA utilities used pilot results to make the business case for AMI investments

• BG&E received ARRA grant for AMI deployment

• Future enrollment is uncertain– Commonwealth

Edison system-wide customer enrollment for the permanent program is 1% even though there was large pilot participation

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Pilots that have not gone forward

Pilot ResultsRationale for Decision to Not

Move Forward

• Understanding of customer response

• Communication technology proof-of-concept

• Customers seldom visited web portal

• Following initial enrollment for web portal, customers’ usage dropped off

• Understanding how customers used smart thermostats that were offered

• Ratepayer opposition• Customer enrollment and

engagement costs are high• Unattractive business case

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Only a few programs have achieved significant participation rates over the past decade

Page 16Data Source: FERC. Assessment of Demand Response & Advanced metering, 2006 report.

These are the 9 highest subscribed residential TOU programs in the US based on 2006 FERC data

Conclusions

» Cost-benefit analysis must demonstrate benefits to customers› Understand whether additional benefit is gained by installing AMI if

AMR is already in place» Complexity of rate design affects customer response and

satisfaction› Utility staff training is needed to support customers› Customer education is needed to enhance their response

» Customer engagement is a crucial element of successful time-based rate pilots

» Low enrollment during deployments suggests that high customer interest during pilot phases may be misleading

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Contact

Doug Horton

NSTAR

(781) 441-8046Douglas.Horton@nstar.com

Stuart Schare

Navigant

(303) 728-2504stuart.schare@navigant.com

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David Walls

Navigant

(781) 270-8436DWalls@navigant.com