2001 western conference of public service commissioners
DESCRIPTION
2001 Western Conference of Public Service Commissioners. Real-Time Electricity Pricing in Regulated and Non-Regulated Environments Monday, June 4, 2001 William S. Weaver President & Chief Executive Officer. Rationale for Real-Time Pricing. - PowerPoint PPT PresentationTRANSCRIPT
2001 Western 2001 Western Conference of Conference of Public Service Public Service
CommissionersCommissioners
Real-Time Electricity Pricing in Regulated Real-Time Electricity Pricing in Regulated and Non-Regulated Environmentsand Non-Regulated Environments
Monday, June 4, 2001 Monday, June 4, 2001
William S. WeaverWilliam S. WeaverPresident & Chief Executive OfficerPresident & Chief Executive Officer
Rationale for Real-Time PricingRationale for Real-Time Pricing Failure to give end-use electric customers Failure to give end-use electric customers
proper price signals encourages:proper price signals encourages: Wasteful use of energyWasteful use of energy Unnecessary high costsUnnecessary high costs Bad habitsBad habits
Giving proper price signals results in:Giving proper price signals results in: Efficient use of energyEfficient use of energy Lower costsLower costs A sustainable energy ethicA sustainable energy ethic
Annual Costs Avoided by Implementing Annual Costs Avoided by Implementing Real-Time Pricing in the United StatesReal-Time Pricing in the United States
$5.5
$7.9
Large C&I (37% of Total)
Small/Medium C&I (10% of Total)
Residential (53% of Total)
Source: Chartwell; Frost and Sullivan; RDI; McKinsey Analysis
$14.8 Billion
$1.4
Reducing Demand by 10% Lowers the Reducing Demand by 10% Lowers the Marginal Cost by 25%Marginal Cost by 25%
Source: Brattle Group
Price
Demand
Wholesale Supply Curve
D' D
Real-Time Pricing Requires Integrating Several Key Technologies
RealTimePricingData
RealTimeUsageData
ConsumerLinXConsumerLinX(Customer Information
System)
Portal
Matching Current Use With Real-time Pricing
Success in the Distribution BusinessSuccess in the Distribution Business
Best ServiceBest Service ReliabilityReliability Customer choiceCustomer choice Customer Customer
convenienceconvenience
Lowest CostLowest Cost Utility cost Utility cost
reductionsreductions Revenue from Revenue from
others to offset utility others to offset utility costscosts
Best Service: ChoiceBest Service: Choice
Price / Supplier / Fuel choices Billing options Payment options Additional service choices
– Outage / leak / flood alert– Usage alert– Remote load control– Tailored supply programs
Best Service: ConvenienceBest Service: Convenience One consolidated bill Payment convenience Internet / phone access to
account and usage information Remote load control Internet / phone access to
real time outage / restorationinformation
Remote disconnect / reconnect
Lowest Cost: Utility Cost ReductionsLowest Cost: Utility Cost Reductions Meter reading (scalable) Billing (scalable) Payment/cash processing (scalable) Supply costs Disconnect/reconnect costs Targeted distribution system capital
and maintenance program Outage restoration costs System planning and operations
Lowest Cost: Utility Revenue EnhancementLowest Cost: Utility Revenue Enhancement
Provide services to others, leveraging technology investments and utility experience: Network wireless meter reading,
products and services Call center services Web-based customer services Billing services Payment processing services
Personal Energy Management Personal Energy Management InformationInformation
Education and promotionEducation and promotion Electric-only customersElectric-only customers 412,000+ customers (residential & 412,000+ customers (residential &
commercial)commercial) 4-month timeframe4-month timeframe Initially informational (not billing)Initially informational (not billing) Enable customer to access potential Enable customer to access potential
savingssavings Four-block pricingFour-block pricing Survey customer and modify if necessarySurvey customer and modify if necessary
PEM Survey MethodPEM Survey Method
Telephone interviews by Market TrendsTelephone interviews by Market Trends 809 Residential respondents809 Residential respondents 619 Business respondents619 Business respondents Fielded March 22 - April 11, 2001Fielded March 22 - April 11, 2001
Major Findings of PEM SurveyMajor Findings of PEM Survey
Customers believe the NW faces an Customers believe the NW faces an electricity shortage that will get worse electricity shortage that will get worse this summerthis summer
High level of program awarenessHigh level of program awareness Most customers have taken some Most customers have taken some
actions to change energy useactions to change energy use Residential customers more receptive Residential customers more receptive
than Business customersthan Business customers Low level of Website usageLow level of Website usage
Awareness of PEM ProgramAwareness of PEM Program
47%
21%
44%
51%
0%10%20%30%40%50%60%70%80%90%
100%
Residential Business
PromptedTop-of-Mind
91%
72%
Most Important Thing that Customers Most Important Thing that Customers Concluded from PEMConcluded from PEM
33%
26%
21%
9% 8%5%
8%
23%
34%
6%
17%
10% 10%
14%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Need t
o con
serve
energ
y
How en
ergy u
sed by
TOD
Need t
o shif
t to o
ff-pe
ak
How to
save
/shift
energ
y
PSE's co
sts va
ry by
TOD
Will
save m
oney
Not lea
rned a
nythi
ng
ResidentialBusiness
Steps Taken by Customers After Steps Taken by Customers After Reviewing PEM InformationReviewing PEM Information
59%
38%
3%
79%
49%
21%
5%
70%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Discuss withfamily/employees
Discuss outsidehome/business
Contact PSE for moreinfo.
Take actions to alterenergy use
ResidentialBusiness
Actions Taken by Customers to Manage Actions Taken by Customers to Manage Energy UseEnergy Use
43% 41%
4%1% 1%
16%20%
4%
45%
6%1% 0%
16%
37%
0%5%
10%15%20%25%30%35%40%45%50%
ResidentialBusiness
How PEM Has Changed Customer How PEM Has Changed Customer Opinions of PSEOpinions of PSE
8%19%
71%
1% 1%3%14%
81%
2% 1%0%
10%20%30%40%50%60%70%80%90%
ResidentialBusiness
Personal Energy Management PricingPersonal Energy Management Pricing
Approval: Approval: April 25, 2001 - Washington Utilities and April 25, 2001 - Washington Utilities and
Transportation Commission approved Transportation Commission approved PSE’s time-of-use rate proposal. PSE’s time-of-use rate proposal.
Strategy:Strategy: Give customers information and tools to Give customers information and tools to
better manage energy usage and costsbetter manage energy usage and costs Provide financial incentive for using off-Provide financial incentive for using off-
peak electricitypeak electricity
Personal Energy Management PricingPersonal Energy Management Pricing
Eligibility:Eligibility: Time-of-day rates apply to the 300,000 Time-of-day rates apply to the 300,000
residential customers already receiving PEM residential customers already receiving PEM informationinformation
Customers can opt-out of the program by Customers can opt-out of the program by calling PSE’s customer service linecalling PSE’s customer service line
Duration:Duration: Pilot program running from May 1, 2001 to Pilot program running from May 1, 2001 to
September 30, 2001September 30, 2001
Personal Energy Management PricingPersonal Energy Management Pricing
Pricing:Pricing: Rates separated into two Rates separated into two on-peakon-peak and and
two two off-peak off-peak blocks of timeblocks of time Midday price block is set to PSE’s Midday price block is set to PSE’s
current residential fixed ratecurrent residential fixed rate
Note that this customer’s use is Note that this customer’s use is primarily in primarily in expensiveexpensive time periods time periods
Customers on Customers on the pilot get the pilot get personal online personal online reports of reports of energy use. energy use.
(Other customers (Other customers also get also get information)information)
But, after a But, after a few weeks...few weeks...
Web CapabilitiesWeb Capabilities
05
101520253035404550
Fri Sat Sun Mon Tues Wed Thu
Usa
ge (K
Wh)
Expensive (6am to 10 am )
Economy (10am to 5pm)
Expensive (5pm to 9pm)
A Bargain (9pm to 6am)
7 Day Prior Usage Chart
This customer has This customer has shifted use to a shifted use to a more more regularregular pattern – reducing pattern – reducing the need for PSE the need for PSE to buy from more to buy from more expensive, expensive, less efficient less efficient generation sourcesgeneration sources
05
101520253035404550
Fri Sat Sun Mon Tues Wed Thu
Usa
ge (K
Wh) Expensive (6am to 10 am )
Economy (10am to 5pm)
Expensive (5pm to 9pm)
A Bargain (9pm to 6am)
7 Day Prior Usage Chart
am
05
101520253035404550
Fri Sat Sun Mon Tues Wed Thu
Usa
ge (K
Wh) Expensive (6am to 10 am )
Economy (10am to 5pm)
Expensive (5pm to 9pm)
A Bargain (9pm to 6am)
7 Day Prior Usage Chart
am
Web CapabilitiesWeb Capabilities
Home Comfort Control PilotHome Comfort Control Pilot
To manage load, utility sets back To manage load, utility sets back household thermostats; households can household thermostats; households can override the setback or receive paymentoverride the setback or receive payment
Across 10 weeks, 104 volunteer Across 10 weeks, 104 volunteer households in Kent, Washington households in Kent, Washington experience 45 random two-hour experience 45 random two-hour setbackssetbacks
Purpose
Premises AutomationPremises Automation
Programs build on Home Comfort pilotPrograms build on Home Comfort pilot Next generation technologyNext generation technology Multiple pilots in 2001Multiple pilots in 2001 Production deployment 4th quarterProduction deployment 4th quarter
www.pse.com