Efficiency Energy for the Future Joint CEC/CPUC Proceeding on Advanced Meters, Dynamic Pricing, and Demand Response in California. Connecting Wholesale

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

[email protected]

www.Energy.CA.gov

2Efficiency


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Gulf Power

Residential

July 2002

20Efficiency


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


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


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


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


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


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


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


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


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


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


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


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


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


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

Documents

Efficiency Energy for the Future Joint CEC/CPUC Proceeding on Advanced Meters, Dynamic Pricing, and Demand Response in California. Connecting Wholesale