NAESBMEASUREMENT AND VERIFICATION

MODEL BUSINESS PRACTICERETAIL ELECTRIC DEMAND RESPONSE

5/29/09 update

Activities

• 11 - Conference calls/WebEx—One every other week—Good participation form group members

and industry experts Two day meeting in Baltimore

—Discuss approach and matrix 1 WEQ Leadership/NAESB Board meeting

Approach for Retail Standard• Determine that the RTO draft

recommendation could apply to the retail draft recommendation with proper wording changes

• Determine that the RTO draft recommendation provides a framework for the retail draft recommendation, but more detail is necessary

• Determine that the retail draft recommendation needs to be more prescriptive than the wholesale draft recommendation.

Model Business Practice

Measurement and Verification (M&V) standards are intended to facilitate Demand Response in retail electricity markets by providing a common framework for the following:• Transparency: accessible and understandable

M&V requirements for Demand Response products

• Accountability: criteria that will enable the Program Administrator to accurately measure performance of Demand Response resources

• Consistency: standards applicable across retail electricity markets

• Comprehensive: strives to cover all forms of Demand Response

Applicability

• Model Business Practices should cover Dispatchable and non-Dispatchable programs

• Dispatchable– Capacity Programs:

• Direct Load Control• Firm Service Level• Guaranteed Load Drop• Critical Peak Pricing

– Ancillary Service Programs:• Spinning Reserve• Non Spinning Reserve• Regulation Services

– Energy Service Programs • Dispatched for economic reasons

• Non Dispatchable – need to define

Coordination

• Working closely with– Wholesale standards group to maintain

consistency with current approved standard– NERC to insure consistency with reliability

standards– AEIC as they develop load research

standards with regards to M&V – Industry groups and Market Participants

involved in providing or evaluating demand response programs such as EPRI, EnerNoc, Comverge, GoodCents

Scope

• Limited to Demand Response programs only:– Does not include Measurement and Verification of

energy efficiency programs or for permanent load reductions.

– Confined to the retail markets. If a utility has programs that are bid into and operate in the wholesale markets then the wholesale standard will take precedence.

– Standards are voluntary across state jurisdictions. They can be adopted by individual state regulators

– Program Administrator has significant flexibility to adopt more stringent requirements in most areas to meet regional needs.

Product Categories

• Wholesale group developed model business practice for each of 4 Product types:– Energy Services– Capacity Services– Reserve Services– Regulation Services

• Retail group is developing one model business practice to cover all Demand Resource products in the retail space

NERC Diagram

Demand-Side Management

DemandResponse

EnergyEfficiency

Dispatchable Non-Dispatchable

Reliability Economic

Capacity RegulationEnergy-

VoluntaryReserves

Direct Control LoadManagement

Interruptible Load

Critical Peak Pricing(CPP) with control

Load as a Capacity Resource

EmergencySpinning Reserves

Non-Spinning Reserves

Energy-Price

Demand Bidding& Buy-Back

Time-Sensitive Pricing

Time-of-Use (TOU)

Critical Peak Pricing (CPP)

Real-Time Pricing(RTP)

System Peak ResponseTransmission Tariff

(4CP Response)

Figure 2: Categorized Demand Response

Demand-Side Management

DemandResponse

EnergyEfficiency

Dispatchable Non-Dispatchable

Reliability Economic

Capacity RegulationEnergy-

VoluntaryReserves

Direct Control LoadManagement

Interruptible Load

Critical Peak Pricing(CPP) with control

Load as a Capacity Resource

EmergencySpinning Reserves

Non-Spinning Reserves

Energy-Price

Demand Bidding& Buy-Back

Time-Sensitive Pricing

Time-of-Use (TOU)

Critical Peak Pricing (CPP)

Real-Time Pricing(RTP)

System Peak ResponseTransmission Tariff

(4CP Response)

Demand-Side Management

DemandResponse

EnergyEfficiency

Dispatchable Non-Dispatchable

Reliability Economic

Capacity RegulationEnergy-

VoluntaryReserves

Direct Control LoadManagement

Interruptible Load

Critical Peak Pricing(CPP) with control

Load as a Capacity Resource

EmergencySpinning Reserves

Non-Spinning Reserves

Energy-Price

Demand Bidding& Buy-Back

Time-Sensitive Pricing

Time-of-Use (TOU)

Critical Peak Pricing (CPP)

Real-Time Pricing(RTP)

System Peak ResponseTransmission Tariff

(4CP Response)

Figure 2: Categorized Demand Response

Performance Evaluation

A performance evaluation methodology is used to determine the Demand Reduction Value provided by aDemand Resource. The standards include descriptionsof acceptable Baselines and alternative performancemeasurements.

• Maximum Base Load• Meter Before / Meter After• Baseline • Metering Generator Output

Note: Eliminated the distinction of Type I and Type II for Baseline

Definition of Terms

• Definition of Terms was developed to clarify specific meanings of terms while providing consistency and conformance where possible to:

– Wholesale Standard– FERC– NERC– AEIC• Currently working through the NAESB

glossary committee to adopt definitions – may take several more meetings to complete

Demand Response Event Timing

DEPLOYMENT PERIOD

RECOVERYPERIOD

RE

DU

CT

ION

DE

AD

LIN

E

DE

PL

OY

ME

NT

RAMPPERIOD

SUSTAINED RESPONSEPERIOD

RE

LE

AS

E/R

EC

AL

L

NO

RM

AL

OP

ER

AT

ION

S

DEMAND RESPONSE EVENT

AD

VA

NC

E N

OT

IFIC

AT

ION

(S)

Key Definitions

• Demand Resource: A Load or aggregation of Loads capable of measurably and verifiably providing Demand Response.

• Demand Response: Changes in electric use by demand-side resources from their normal consumption patterns in response to changes in the price of electricity, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.

Key Definitions

• Program Administrator: An investor owned utility, governmental or cooperative utility or independent aggregator of demand response programs who has responsibility for developing and operating demand response programs identified in this standard. The Program Administrator shall have regulatory reporting responsibility to the utility regulatory body in the jurisdiction of the retail load and reporting responsibility to NERC

Key Definitions

• Baseline: A method of estimating the electricity that would have been consumed by a Customer or Demand Resource in the absence of a Demand Response Event. It may be calculated using interval metering and/or statistical sampling techniques. The figure below illustrates the concept of Baseline relative to a Demand Response Event.

Baseline Conceptualization

General Characteristics

• Advance Notification (remote switch vs no switch)

• Deployment Time• Reduction Deadline• Ramp Period determined by Program

Administrator• Release/Recall• Normal Operations• Demand Resource Availability Measurement• Aggregation• Transparency of Requirements

After-The-Fact Criteria

• After-the-Fact Metering Requirement• Meter Accuracy• Details of Meter/Equipment Standards• Meter Data Reporting Deadline• Meter Data Reporting Interval• Clock / Time Accuracy• Validating, Editing & Estimating (VEE)

Method• On-Site Generation Meter Requirement

Performance Evaluation Methodologies

• Maximum Base Load• Meter Before / Meter After

• Baseline • Metering Generator Output

Maximum Base Load:

A performance evaluation methodology based solely on a Demand Resource’s ability to reduce to a specified level of electricity Demand, regardless of its electricity consumption or Demand at Deployment.

Maximum Base Load:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Reduction 8.0 8.0 9.0 10.0 9.0 7.0 8.0 8.0 8.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 9.0 10.0 9.0 3.0 2.0 2.0

Normal Use 8.0 8.0 9.0 10.0 9.0 7.0 8.0 8.0 8.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 10.0 9.0 3.0 2.0 2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

kW

Hour

Maximum Base Load

Customer required to reduced load by 2 kWfor Sustained Response Period

Deployment

Meter Before / Meter After: A performance evaluation methodology

where electricity Demand over a prescribed period of time prior to Deployment is compared to similar readings during the Sustained Response Period.

Meter Before / Meter After:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Data 80 80 90 100 90 70 80 80 80 40 40 40 40 40 40 40 40 40 60 90 90 90 90 80

20

30

40

50

60

70

80

90

100

110

kW

Meter Before/Meter After

Demand ResponseMeter Before

Meter After

Customer reduced load by ~40 kW during Sustained Response Period

Deployment

Baseline:

A method of estimating the electricity that would have been consumed by a Customer or Demand Resource in the absence of a Demand Response Event. It may be calculated using interval metering and/or statistical sampling techniques. The figure below illustrates the concept of Baseline relative to a Demand Response Event.

Baseline:

Metering Generator Output:• A performance evaluation methodology,

used when a generation asset is located behind the Demand Resource’s revenue meter, in which the Demand Reduction Value is based on the output of the generation asset.

Next Steps

• Complete the glossary committee definition review – estimate 2 meetings

• Review document for consistency— Move information and graphics in definition

section to appropriate section in the document— Remove any unused definitions— Review document flow

• Plan is to present Model Business Practice at the next NAESB meeting in July