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Advanced Metering InfrastructureIs It Worth the Investment?

A Case Study of Two Pilot Programs

Presented by Cheryl BaloughEnergy Law, Spring 2009

Chicago-Kent College of Lawcbalough@kentlaw.edu

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What Is AMI?

“A metering system that records customer consumption (and possibly other parameters) hourly or more frequently and provides for daily or more frequent transmittal of measurements over a communication network to a central collection point”

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2008 U.S. Penetration of AMI

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2008 U.S. Penetration of AMI

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• Operational savings and revenue enhancements

• Service improvements to customers

• Resource cost savings

• Environmental benefits

Goals of AMI

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Operational Savings and Revenue Enhancement

• Automated meter reading

• Shorter billing cycles & bill accuracy

• Remote disconnection/reconnection

• Rapid identification of outages

• Decreased energy theft

• Reduced congestion and delivery costs

• Add-on revenue-generating services

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Customer Service Improvements

• Real-time usage and billing information �

ability to manage usage

• Fewer billing disputes

• Less aggravation with meter reading

• Quicker restoration of electricity after outages

• Improved voltage stability

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Resource Cost Savings

Demand response �

Decreased critical peak usage �

Deferred investment in generation capacity

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Uses of AMI in 2006 and 2008

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California Statewide Pricing Pilot

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Primary Goal of CA-SPP

Determine the type of dynamic pricing that will help meet CA’s goal of 5% reduction by 2007 in critical peak demand

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Design of CA-SPP

Timing

• Summer 2003 – Summer 2005

• Maximum of 15 critical peak periods per summer

• Peak periods no longer than 2 – 7 pm

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Design of CA-SPP

Participant Selection

• Recruited by mail and phone

• Paid an appreciation fee

• Some customer turnover/replacement during pilot

• Participants were representative CA customers by climate zone, housing type, & energy usage

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Design of CA-SPP

Rate designs tested:

• Time of use (TOU)

� Statewide sample of customers

• Critical peak pricing – fixed (CPP-F)

� Statewide sample of customers

• Critical peak pricing – variable (CPP-V)

� Two tracks in SDG&E territory

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CA-SPP Overall Results

Pricing Group Peak Usage Reduction

CPP-V 13% (average)

CPP-F 27% (average)

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CA-SPP Results by Temperature

Response of CPP-F subgroup with PCTs increased as temperature increased during CPP periods

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CA-SPP Results by Temperature

Results are more variable for all pilot participants

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CA-SPP Results by Climate Zone

Energy reduction is greater with CPP in hotter climate zones

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CA-SPP Results by Energy Usage

Reduction during critical peaks increased with overall energy usage, A/C, & single-family homes

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CA-SPP Results by HH Income

HH income significantly impacts demand response

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CA-SPP Results by HH Income

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Critique of CA-SPP

• More evaluation of low-income groups needed

• The two lowest income groups of high-use participants experienced no bill impact

• Those who cannot afford PCTs exhibit less DR

• Difficulty in attracting participants to the study suggests DR on a large scale may be elusive

• Evaluators ignored the cost of the smart meters in estimating bill impacts

• Pilot was too short to project persistence of DR

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Current Status of AMI in California

California is not meeting DR goals (2.2 vs. 5%), but the smart meter rollout moves forward

•PG&E: 5 million electric + 4 million gas customers

Cost of nearly $2 billion

•SDG&E: 1.4 million electric + 900,000 gas customers

Cost of $570 million

•SCE: 5.3 million electric meters

Cost of $1+ billion

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Proposed ComEd AMI Pilot (SMP)

• Oct 2007 – ComEd proposes a customer surcharge to implement smart grid technologies

• Sep 2008 – Illinois Commerce Commission (ICC) approves SMP pilot contingent on collaborative study to determine costs and benefits

• Dec 2008 – Collaborative study begins

• Mid-2009 – ComEd to file docket with ICC

• Late-2009 through 2010 – installation of meters

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Proposed ComEd AMI Pilot (SMP)

• Scope

• Customer participants

• Functionality of meters

• Applications to be tested

• Costs and funding

• Unanswered questions

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SMP Scope

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SMP Proposed Size

• Without stimulus funding = 115,000 meters

– 95,000 meters in Maywood Operating Center

– 15,000 meters in Chicago

– 10,000 meters in other areas

• With stimulus funding = 200,000 meters

– 95,000 meters in Maywood Operating Center

– 100,000 meters in Chicago (location TBD)

– 10,000 meters in other areas

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SMP Customer Participants

Evaluated groupings of contiguous towns that are:

• In a single ComEd operating center

• Near ComEd’s Tech Center � AMI staging area

• Similar to demographics of ComEd’s total customer base

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Current Perceptions of JudgesSMP Customer Participants

Variables evaluated include:

• HH income

• Income below poverty

• Education level

• Language spoken

• Age of population

Did not evaluate energy usage of home

• Race

• Home value

• Multi-unit residences

• Housing units in structure

• Age of home

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SMP Customer Participants

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SMP Meter Functionality

• Collection of energy usage data at 30-minute intervals

• Remote provision of data at least daily to ComEd and customer-accessible web portal

• Capture of voltage and other premise-level data

• Remote-controlled disconnect switches

• Capability to support PCTs and HANs

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SMP Application –Energy Data Services & Displays

Purpose: Provide customers with access to usage data

and other information measured at meter

Options:

•Customer data web application

•Customer data web interface

•Customer data widget/gadget

•In-home display basic

•In-home display advanced

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SMP Application – Dynamic Pricing

Purpose: Provide price signals to customers, especially

during times of system peaks

Options:

•Flat rate – cost education and alerts

•Time of use – energy pricing

•Critical peak pricing – applied

•Critical peak pricing – marketed

•Peak time rebate – basic information

•Peak time rebate – advanced information

•Peak time rebate – advanced information + technology

•RRTP promotions

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SMP Costs and Funding

ComEd’s cost estimates:

January 2008: $668 million

April 2008: > $1.4 billion

Capital* = $1.1 billion

Accelerated depreciation = $207 million (Jan 2008)

Additional O&M = $50+ million (Jan 2005)

* Includes support for HANs and PCTs but not the devices

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SMP Operational Savings

ComEd’s cost savings estimate:

March 2008: $136 million

O&M = $74 million

Reduction in purchased energy = $62 million

ComEd’s estimated payback period = 16 years(excluding accelerated depreciation)

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SMP Cost-Benefit to ComEd

ComEd’s proposed investment in AMI and DR can neither:

“(1) produce revenues that can allow ComEd to recover its investment costs nor

(2) reduce ComEd’s other costs of service rapidly or significantly enough to offset the cost of investment.”

Terence R. Donnelly

Senior VP, Transmission & Distribution, ComEd

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SMP Unanswered Questions

• Who will pay for the initial investment? HANs?

• What will the pricing structures be? Will they be optional or mandatory?

• What cost savings can customers expect?

• If there is customer DR, will it persist?

• What will be the impact on the disadvantaged?

• Will privacy be sacrificed?

• Will ComEd try to “sell” add-on services?

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SMP – Is It Worth It?

“ComEd could continue to meet its obligation to provide safe, adequate, and reliable service . . . without investing in these Smart Grid technologies.”

Terence R. Donnelly

Senior VP, Transmission & Distribution, ComEd

But . . .

Are we willing to pay more for something that might be better than the status quo? How much?