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UTILITY DSM IN COLORADO: PAST, PRESENT AND FUTURE

UTILITY DSM IN COLORADO: PAST, PRESENT AND FUTURE. PAUL C. CALDARA, P.E . Engineer, Energy Section Colorado Department of Regulatory Agencies Public Utilities Commission 1560 Broadway, Suite 250 Denver, CO 80202. PRESENTER’S BACKGROUND. STAFF, COLORADO PUC, 2008 TO PRESENT

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UTILITY DSM IN COLORADO: PAST, PRESENT AND FUTURE

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  1. UTILITY DSM IN COLORADO:PAST, PRESENT AND FUTURE PAUL C. CALDARA, P.E. Engineer, Energy Section Colorado Department ofRegulatory AgenciesPublic Utilities Commission1560 Broadway, Suite 250Denver, CO 80202

  2. PRESENTER’S BACKGROUND • STAFF, COLORADO PUC, 2008 TO PRESENT • MANAGER, UTILITY SERVICES, UNIVERSITY OF COLORADO AT BOULDER, 2000 – 2008 • ENGINEER, MARKETING, XCEL ENERGY, 1990 – 2000

  3. WHO OR WHAT IS “STAFF” ANYWAY? • PER COMMISSION RULE 1007, STAFF CAN BE EITHER… • ADVISORY • TRIAL ADVOCACY

  4. ADVISORY STAFF • PROVIDES ADVICE AND RECOMMENDATIONS DIRECTLY TO COMMISSIONERS • DSMCA APPLICATIONS AND ADVICE LETTERS

  5. TRIAL ADVOCACY STAFF • CONSIDERED A PARTY TO A PROCEEDING, THEREFORE CANNOT TALK WITH COMMISSIONERS OR ADVISORY STAFF ABOUT DOCKETS BEING LITIGATED • STAFF DOES NOT HAVE A “DOG IN THE FIGHT,” THEREFORE DOES NOT SERVE A PARTICULAR SPECIAL INTEREST.

  6. BY THE WAY…. • ONLY THE COMMISSION SPEAKS FOR THE COMMISSION. FINE PRINT: I DON’T SPEAK FOR THE COMMISSION.

  7. THE DSM JOURNEY SO FAR • HOUSE BILL 07-1037. IOU’S TO PURSUE ENERGY EFFICIENCY (DEMAND-SIDE MANAGEMENT)

  8. THE DSM JOURNEY SO FAR • COMMISSION COMMENCES GAS DSM RULEMAKING. GAS DSM RULES ARE PROPOUNDED.

  9. THE DSM JOURNEY SO FAR • THERE ARE NO COMMISSION RULES FOR ELECTRIC DSM PLANS. • THEREFORE, PLANS ARE USUALLY LITIGATED, WITH SETTLEMENT AGREEMENTS BEING THE TYPICAL OUTCOME.

  10. THE DSM JOURNEY SO FAR • UTILITIES FILE DSM PLANS • LITIGATED • SETTLED • APPROVED

  11. THE DSM JOURNEY SO FAR • SECOND NOPR TO REVISE GAS DSM RULES TO DEFINE “DISCOUNT RATE” AND TO CLARIFY BONUS STRUCTURE.

  12. THE DSM JOURNEY SO FAR • UTILITIES FILE DSM ANNUAL REPORTS AND APPLICATIONS FOR BONUSES.

  13. THE DSM JOURNEY SO FAR • PER STATUTE, THE COMMISSION PROVIDES THE COLORADO GENERAL ASSEMBLY WITH AN ANNUAL DSM REPORT.

  14. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM

  15. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM

  16. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM

  17. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM

  18. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM

  19. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM

  20. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM

  21. 2010 REPORT TO THE COLORADO GENERAL ASSEMBLY ON DSM • The total 2009 benefit of six gas DSM programs was $38,972,152; Total cost was $29,228,088 which nets a benefit of $9,744,064. • For each $1 invested in gas DSM, $1.33 in benefits resulted. • The total 2009 benefit of the electric DSM program was $320,729,203; Total cost was $78,817,691 which nets a benefit of $241,911,512. • For each $1 invested in electric DSM, $4.07 in benefits resulted.

  22. THE PRESENT DSM MODEL • DSM IS DRIVEN BY STATUTE • MUST BE COST EFFECTIVE • REBATES REDUCE OR BUY DOWN THE INCREMENTAL COST OF IMPLEMENTING EE MEASURES • INCENTIVES ARE PAID TO UTILITIES FOR MEETING DSM GOALS • COSTS ARE BORNE BY UTILITY CUSTOMERS

  23. THE PRESENT DSM MODEL • PRESENT MODEL PROVIDES A VEHICLE FOR UTILITIES TO STAY CLOSE TO THEIR CUSTOMERS • BRANDING • GOOD PR • GOOD WILL • CORPORATE IDENTITY

  24. THE PRESENT DSM MODEL • SOME UTILITIES MAY NOT HAVE THE RESOURCES OR DESIRE TO IMPLEMENT DSM – PREFER TO STAY WITHIN CORE BUSINESS • A NATURAL EVOLUTION OF SOME UTILITIES TOWARDS PROGRAM COLLABORATION?

  25. PRESENT DSM MODEL: POTENTIAL ISSUES • THE PRESENT DSM MODEL, BY ITS VERY NATURE, BRINGS UP FUNDAMENTAL QUESTIONS AND ISSUES THAT ARE NOT EASILY ADDRESSED.

  26. PRESENT DSM MODEL: POTENTIAL ISSUES • THE PRESENT MODEL REQUIRES MEASUREMENTS • ARE POTENTIAL STUDIES, DEEMED SAVINGS, TECHNICAL ASSUMPTIONS, NET-TO-GROSS AND M&V ACCURATE?

  27. PRESENT DSM MODEL: POTENTIAL ISSUES • HOW SHOULD UTILITY INCENTIVES BE DETERMINED? WHAT SHOULD INCENTIVES INCLUDE? WHAT SHOULD INCENTIVES DO? • MOTIVATION TOWARDS A CERTAIN BEHAVIOR • RECOVERY OF LOST MARGINS • COMPENSATION FOR DIRECTING FOCUS AWAY FROM TRADITIONAL UTILITY BUSINESS PRACTICES • PROVIDE OPPORTUNITY TO BE MORE PROFITABLE • NOT RAISE RATES MORE THAN NECESSARY • AS SOME HAVE SUGGESTED, SHOULD THERE EVEN BE AN INCENTIVE TO MEET A STATUTORY REQUIREMENT?

  28. PRESENT DSM MODEL: POTENTIAL ISSUES • THE EFFECT ON COST-EFFECTIVENESS FROM THE REDUCTION IN THE PRICE OF NATURAL GAS. • HOW IS THE IMPACT OF STIMULUS MONEY MEASURED?

  29. PRESENT DSM MODEL: POTENTIAL ISSUES • CAN BENEFITS BE ACCURATELY APPORTIONED TO FUNDING SOURCES, ESPECIALLY IN LIGHT OF STIMULUS FUNDING? • ARE UTILITIES HAVING TO COMPETE FOR DSM IN A SHRINKING MARKET? HOW DOES THAT AFFECT GOAL SETTING?

  30. PRESENT DSM MODEL: POTENTIAL ISSUES • WHAT IS DSM? • DEMAND SIDE MANAGEMENT MEANS THE IMPLEMENTATION OF PROGRAMS OR MEASURES WHICH SERVE TO SHIFT OR REDUCE THE CONSUMPTION OF, OR DEMAND FOR, NATURAL GAS. RULE 4751 (d) • “DEMAND-SIDE MANAGEMENT PROGRAMS” OR “DSM PROGRAMS” MEANS ENERGY EFFICIENCY, CONSERVATION, LOAD MANAGEMENT, AND DEMAND RESPONSE PROGRAMS OR ANY COMBINATION OF THESE PROGRAMS. C.R.S 40-1-102 (6)

  31. PRESENT DSM MODEL: POTENTIAL ISSUES • SHOULD ANYTHING THAT REDUCES ENERGY CONSUMPTION OR DEMAND COMPARED TO A BASELINE BE CONSIDERED DSM, COUNTED TOWARD DSM GOALS AND INCENTIVIZED?

  32. PRESENT DSM MODEL: POTENTIAL ISSUES • ARE THESE DSM? • RATE DESIGN (INVERTED BLOCK, SEASONAL, TIME OF USE, CRITICAL PEAK PRICING, REAL-TIME PRICING) • REDUCING DISTRIBUTION ENERGY LOSS BY INCREASING DISTRIBUTION CONDUCTOR SIZE • PROJECTS THAT INCREASE GENERATION EFFICIENCY • WHO PAYS FOR IT? • WHO IS BENEFITED? • WHAT IS CONSIDERED BUSINESS AS USUAL?

  33. PRESENT DSM MODEL: POTENTIAL ISSUES • DO THESE TECHNOLOGIES SUPPLEMENT DSM OR WILL THEY REPLACE DSM? • FEEDBACK STRATEGIES (Opower, IN-HOME DEVICE PILOT PROGRAM) MAY CHANGE THE WAY CUSTOMERS CHOOSE TO CONSUME ENERGY • SMART GRID, OTHER TECHNOLOGIES THAT PROVIDE IMMEDIATE ENERGY CONSUMPTION FEEDBACK LEADING GREATER CHOICES IN THE CONSUMPTION OF ENERGY

  34. PRESENT DSM MODEL: POTENTIAL ISSUES • SHOULD WE CONTINUE ALONG THIS PATH? • MARKET TRANSFORMATION OR NATURALLY OCCURRING EE MAY SHRINK THE POTENTIAL DSM MARKET FOR UTILITIES • REDUCTION OF MARKET SHARE AT THE SAME TIME THAT GOALS ARE INCREASING • CAN OR SHOULD MUNI’S, REA’S, GEO BE INCORPORATED INTO THIS MODEL? • WHAT IS THE BEST MEANS OF GETTING FROM HERE TO THERE?

  35. INVESTIGATION • A LOT OF QUESTIONS… • ARE THERE ANSWERS?

  36. DSM DOCKETS • 07A-420E PSCo Electric DSM • 08A-366EG PSCo Electric and Gas DSM Plan • 09A-796E: PSCo Smart Grid Pricing Pilot • 10M-070EG DSM Repository • DSM Plan Applications: 08A-425G, 08A-431G, 08A-433G, 08A-436G, 08A-518E, 08A-541G, 10A-082G, 10A-278G, 10A-273G, 10A-286G, 10A-294G

  37. DSM RULE MAKING DOCKETS • 07R-371G Initial gas DSM rulemaking • 09R-222G Discount Rate, Acknowledgment of Lost Revenue

  38. DSM DOLLAR PER THERM • DOCKETS: 09V-901G, 09V-908G, 09V-913G, 09V-914G, 09V-917G, 09V-918G

  39. SMART GRID DOCKETS • 09A-299E: PSCo Rate Case • 10A-124E: PSCo Smart Grid CPCN • 09A-796E: PSCo Smart Grid Pricing Pilot • 09I–593EG: Smart Grid Data Privacy • 10I-099EG: Smart Grid Investigation

  40. DEMAND RESPONSE DOCKETS • 06S-642E RECOVERY OF ISOC CREDITS • 07S-521E NEW ISOC SERVICE OPTIONS • 07A-469E FORT ST. VRAINCPCN • “We find, however, that significant expansion of existing DSM, ISOC and Saver’s Switch programs is feasible, as is a third-party aggregation DR progam.” Decision No. C08-0369 • Required PSCo to issue an RFP for a third party demand aggregator(s) for its Colorado service territory.

  41. DOCKET NO. 10M-070EG • REPOSITORY DOCKET FOR INFORMATION MATERIALS CONCERNING CERTAIN DSM TOPICS

  42. DOCKET NO. 10M-070EG • ITEMS DISCUSSED SO FAR: • MARKET TRANSFORMATION • UTILITY FINANCIAL INCENTIVES • NET-TO-GROSS RATIOS • UNDERSTANDING MARKET POTENTIAL STUDIES • TRI-STATE EE POTENTIAL STUDY

  43. DOCKET NO. 10M-070EG • THE COMMISSION RECEIVED INFORMATION ON SUCH FUNDAMENTAL QUESTIONS AS: • CAN DSM TRULY BE CONSIDERED A RESOURCE? • HOW SHOULD DSM BE CONSIDERED IN RESOURCE PLANNING? • HOW MUCH UNCERTAINTY IS THERE IN DSM? • CAN DSM BE EVALUATED AND ASSESSED ACCURATELY? • HOW CAN UTILITIES BE MOTIVATED TO PROVIDE DSM?

  44. DOCKET NO. 10I-099EG • AN INFORMATION DOCKET FOR THE COMMISSION TO: • EXPLORE THE POTENTIAL FOR SMART GRID AND SMART METERING TECHNOLOGIES TO IMPROVE THE PERFORMANCE OF COLORADO’S ELECTRIC SYSTEM • FOUR COMMISSION INFORMATION MEETINGS: • SMART GRID AND RESPONDING TO CLIMATE CHANGE • ADVANCED METERING, DYNAMIC PRICING AND CUSTOMER BEHAVIOR • SMART GRID AND EVOLVING MARKET STRUCTURES • SMART GRID AND TECHNOLOGICAL SPECIFICATIONS

  45. DOCKET NO. 10I-099EG • TWO OF SEVERAL PRELIMINARY CONCLUSIONS: • DEMAND RESPONSE IS A FOUNDATIONAL ELEMENT OF SMART GRID AND IS COMPRISED OF INCENTIVES-BASED DEMAND RESPONSE AND TIME-BASED RATES. • TWO SMART GRID TECHNOLOGIES ENABLE CONSUMER ENERGY FEEDBACK EFFICIENCY: FEEDBACK TO CUSTOMERS AND TIME-BASED PRICING. (CPUC DECISION NO. C10-1077)

  46. DOCKET NO. 10I-099EG • “We believe that this [EPRI] methodology will assist the utilities in presenting costs and benefits of smart grid projects for purposes of cost recovery for the associated benefits.” • “We find that the positive externalities potentially attributable to smart grid investments should be factored into the Commission decision-making.” (CPUC DECISION NO. C10-1077)

  47. DOCKET NO. 10I-099EG • “We find that meter-supported time variable rates can benefit electric systems in term of more efficient operations and deferring capital investments in generation.” (CPUC DECISION NO. C10-1077)

  48. THIRD PARTY DSM ADMINISTRATOR STUDY • FUNDED THROUGH NARUC • IS THERE EVEN AGREEMENT, CONSENSUS OR A NEED FOR THIRD PARTY ADMINISTRATION? • OR, ARE THERE OTHER ALTERNATIVES THAT SHOULD BE EXPLORED? • OR, PICK AND CHOOSE, OR LEAVE WELL ENOUGH ALONE?

  49. DISCUSSION • EXCHANGE IDEAS • COMPARE NOTES

  50. THANK YOU

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