1 / 13

APSC Workshop on DR and AMI

REGULATORY MECHANISMS TO ENCOURAGE DR/AMI Dr. Eric Woychik Executive Consultant, Strategy Integration, LLC. APSC Workshop on DR and AMI. Overview. DR/EE offerings Some limitations due to regulatory process Cost recovery and rate base Loading order and preference policies

Télécharger la présentation

APSC Workshop on DR and AMI

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.


Presentation Transcript

  1. REGULATORY MECHANISMS TO ENCOURAGE DR/AMIDr. Eric WoychikExecutive Consultant, Strategy Integration, LLC APSC Workshop on DR and AMI

  2. Overview • DR/EE offerings • Some limitations due to regulatory process • Cost recovery and rate base • Loading order and preference policies • Conditions precedent • How DR/EE May Be Considered

  3. DR/EE Options • Technology (equipment) for utility implementation of DR • Digital Control Devices (e.g. for AC cycling) • Smart Thermostats (e.g., White-Rogers, simple to complex) • Two-way communications, e.g. Gulf Power TOU Pricing • Energy Management System (EMS) applications • TOU-based WattSpot web-based gateway services • TOU pricing – like Gulf Power • Dispatchable DR –direct load control • “Rate-guard” service (price-triggered response from SPP) • Environmental dispatch (“soft dispatchable DR) • “Turn-Key” DR handing of off management & control • Fully-outsourced DR program

  4. Limitations Due to Regulatory Process • Bifurcated proceedings => separation of goals and responsibilities • Short-term funding (e.g., for GRC funding of DR/EE) • Lack of resource integration and full consideration of long-term contracts • RTO/ISO responsibilities vs. state responsibilities • RTOs/ISOs and utilities are about reliability, balancing needs, and ramping – more focused on capacity needs • State planning proceedings focus more on long-term supply-demand balance, so may ignore ramping & capacity needs

  5. Cost Recovery and Rate Base • Traditional cost recovery of expense and capital costs • In what proceeding, covering what time frame, for DR/EE • Longer-term treatment recognizes long-term benefits • Rate-base treatment • DR/EE installation & capital costs are traditionally rate-based • With 3rd party contracting DR/EE assets can still be owned by the utility • Incentive Rate-or-Return (ROR) may be appropriate • Financial implications for utilities • Rate-base reductions for long-term DR/EE contracts lower investment levels for G + T + D + environmental mitigation

  6. Loading Order or Resource Preference Policies • Benefits of changing the presumed preference for traditional supply–side resources • Recognizes G + T + D + environmental + market mitigation • Recognizes DR/EE are environmentally beneficial • CA policy recognizes these benefits & difficulty of detailed cost-effectiveness given multiple benefits • Has relaxed need for formal cost-effectiveness if competitive RFP procurement process is used • NC approach requires a specific amount of DR/EE… • Environmental adders – create preference for DR/EE • Cost-effectiveness with all benefits defined – similar result

  7. North Carolina Utilities Commission Orders Re. Proposed Coal Plants & Green Power • One 800 MW state-of-the art coal plant approved • Duke commitment to invest 1% of annual electricity sales revenue in energy efficiency and demand-side programs • EE/DR to back out MW-for-MW retired coal plants • Must account for actual load reductions realized • EE/DR need is contingent on system reliability need • Collaborative workshops to commence • Green Power authorized if $25,000 or more of Renewagle Energy Credits (RECs) are purchased and applied to renewable generation

  8. Conditions Precedent to New Resources • Conditions imposed on ComEd’s AMI rollout – WattSpot • Make DR/EE cost effective by offering a menu (scope) • Ensure cost effectiveness and ratepayer benefits • Require specific results (e.g., with Standard Practice Tests) • Locational Resource Adequacy Requirement • Risk allocation using 3rd party contracts • Pay-for-Performance • Rigorous Measurement & Performance

  9. 3rd Party Risk with Fully Outsourced DR • DR program risks include the following: • Marketing, customer acquisition, and customer churn • Hardware and equipment (warranty) • Software upgrades and customer call center • Operations and maintenance • Measurement & verification • Performance – dispatchable MWs when called upon • Stranded investment (if not used) • Customers and Utilities Can Be Free of These Risks • Utah, ISONE, SDG&E, and PNM examples

  10. How DR/EE May be Considered N. Carolina • If at least one half of the 1% of annual electricity sales revenue was allocated to DR • At $.05/kWh this may amount to about $1.3 B annually. • To ensure performance we recommend performance-based DR with rigorous Measurement & Verification (M&V) to account for actual load reductions realized • This may depend on system reliability need and on use of a reference costs for capacity ($/kW-year) • DR may qualify for Green Power RECs if M&V shows savings to reduce emissions, comparable to renewables?

  11. How DR/EE May be Considered in Arkansas • Use competitive RFP procurement process • Ask for specific DR or DR/EE services to enable apples-to-apples comparisons • Consider not just new baseload resources but retirement of old, inefficient, polluting facilities held for reserves • Integrate benefits/costs of G + T + D + environmental + market price/mitigation + hedging/insurance/portfolio • Design a menu to provide more DR/EE services, for more benefits, customer acceptance, and customer choice • Place risks for customer acquisition, hardware, installation, performance, & financing on DR/EE providers

  12. Fully Examine Plant Expansion and Deferral • Define the menu of DR/EE needed to meet needs at least cost, taking account the shifts in uses of generation • Compare reliability, ensure outage rates are comparable, and define both T&D deferral and environmental benefits • Define lowest life-cycle cost peaking capacity, including flexibility, market price impact, & market power mitigation • Consider the flexibility benefits with DR/EE during the power plant planning and construction cycles • Plant is lumpy, may be partially stranded, requires T&D • DR/EE is not lumpy, can be increased/decreased based on locational needs, does not require T&D • Compare the hedging/insurance benefits & costs of both

  13. Discussion… Follow-Up Suggested…

More Related