California Statewide Pricing Pilot-------------------

Lessons Learned

Roger Levy

Demand Response Research Center

NARUC Joint Meeting

Committee on Energy Resources and the Environment

Committee on Electricity

August 2, 2006

No more rotating outages – EVER !1

Efficiency and demand response fully integrated under a unified default tariff / incentive structure.

Demand response is a condition of service.

All customers, all load participates.

2

Major appliances come “DR Ready” from the factory.

All buildings are “DR Enabled” .3

Full automated system integration between the ISO, utilities and customers.

4

Demand Response – the Vision

August 2, 2006

California Statewide Pricing Pilot

August 2, 2006

State Demand Response Objectives

Integrate energy efficiency with demand response

Economic Response – Let the customer decide.

Reliability Response – Provide the utility with

control.

All customers – not just a select few.

August 2, 2006

Summary Conclusions

Residential CPP rates can, within five years of deployment reduce California’s peak load by 1,500 to over 3,000 MW.

System Impacts

Dynamic rates encourage greater conservation and peak demand impacts than conventional inverted tier or time-of-use rates.

Conservation and Peak Load

Impacts

Residential and small to medium commercial and industrial customers understand and overwhelmingly prefer dynamic rates to existing inverted tier rates.

Customer Acceptance

August 2, 2006

Source: Statewide Pricing Pilot Summer 2003 Impact Analysis, Charles Rivers Associates, August 9, 2004, Table 1-3, 1-4,.

Time of Use TOU

Critical Peak Impacts By Rate Treatment

0%

10%

20%

30%

40%

50%

Pe

ak

Lo

ad

Re

du

cti

on

Critical Peak Fixed

CPP-F

4.1%

Critical Peak

Variable With

Automated Controls

CPP-V

34.5%

12.5%

Critical Peak

Variable With

Automated Controls

CPP-V

47.4%

Average Critical Peak Day – Year 1Hottest Critical

Peak Day *

Residential Load ImpactsRate and

Technology

August 2, 2006

Time of Use TOU

0%

10%

20%

30%

40%

50%

Pe

ak

Lo

ad

Re

du

cti

on

Critical Peak Fixed

CPP-F

0.6%

Critical Peak

Variable With

Automated Controls

CPP-V

27.2%

13.1%

Critical Weekday – Inner Summer Year 2

Critical Peak Impacts By Rate Treatment

Residential Load ImpactsRate and

Technology

Source: Impact Evaluation of the California Statewide Pricing Pilot, CRA, March 16, 2005, Table 1-1, 4-3.

August 2, 2006

Residential SPP Impacts

Source: 1. Statewide Pricing Pilot Summer 2003 Impact Analysis, Charles River Associates, Table 1-3, 1-4, August 9, 2004. Hottest day impacts on page 105.2. Private communication, residential pilot study, May 2005.3. Results of the Pilot Residential Advanced Energy Management System, Gulf Power, November 1994.4. Levy Associates case study report, July 1994.

0%

10%

20%

30%

40%

50%

Pe

ak

Lo

ad

Re

du

cti

on

Three Tier TOU with

Dispatched CPP

Midwest Pilot 2

2004

Three Tier TOU with

Dispatched CPP

35.0%

Two Tier TOU with

DispatchedCPP

Gulf Power Pilot 3

1992-1993

California Pilot 1

2003

34.5%34.8%

Average Critical Peak Day

Two Tier TOU with

DispatchedCPP

47.4%

Hottest Critical Peak Day *

California Pilot 1

2003

Three Tier TOU with

Dispatched CPP

AEP Pilot 4

1991

41.0%

Consistency

August 2, 2006

Residential SPP Impacts

Residential Response with Automation: Participation Incentive vs. Critical Peak Rate

kW

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Noon 2:30 7:30

Critical Peak Rate

Participation Incentive

Control Group

Midnight

CPP Event

Hot Day, August 15, 2003, Average Peak Temperature 88.50

Incentives

August 2, 2006

Residential SPP Impacts

Source: Statewide Pricing Pilot, Summer 2003 Impact Analysis, CRA, August 9, 2004, Table 5-9, p.90

Percent Reduction in Peak Period Usage (CPP-F) Year 1

0

2

4

6

8

10

14

16

18

20

Pe

rce

nt

Re

du

cti

on

12

High vs. Low User

200% A

verage U

se

50% A

verage U

se

17.2%

9.79%

Central AC Ownership

YE

S

NO

12.8%12.3%

Pool Ownership

YE

S

NO

19.2%

12.1%

Income

> $100,000

< $40,000

15.1%

12.1%

Single vs. Multi-Family

Sin

gle F

amily

Mu

lti-family

13.5%

9.8%

State-wide Average

12.5%

Demographics

August 2, 2006

Source: Statewide Pricing Pilot, Summer 2003 Impact Analysis, CRA, August 9, 2004, Table 5-9, p.90

Percent Reduction in Peak Period Usage (CPP-F) Year 2

0

2

4

6

8

10

14

16

18

20

Pe

rce

nt

Re

du

cti

on

12

High vs. Low User

200% A

verage U

se

50% A

verage U

se

14.7%

12.2%

Central AC Ownership

YE

S

NO

17.4%

8.1%

Pool Ownership

YE

S

NO

15.8%

13.0%

Income

> $100,000

< $40,000

16.2%

10.9%

Single vs. Multi-Family

Sin

gle F

amily

Mu

lti-family

14.0%

11.8%

State-wide Average

13.1%

Residential SPP Impacts Demographics

August 2, 2006

0

2

4

6

8

10

14

Pe

rce

nt

Re

du

cti

on

12

Small C/I Load ImpactsRate and

Technology

Critical Peak Impacts Enabling Technology Impacts

With

Tech

no

log

y

< 20 kW

0.8%

13.2%

No

Tech

no

log

y

With

Tech

no

log

y

> 20 kW

4.9%

9.6%

< 20 kW

6.6%

> 20 kW

5.5%

August 2, 2006

SPP – Customer Rate Preferences

Original Inverted Tier Rate

Pilot Rates

Res

iden

tialCPP-V

CPP-F

TOU

80%

81%

20%

23%

19%

Co

mm

erci

al

CPP-V

TOU

77%

71%

70%

2040 20 40 60 80

30%

29%

060

August 2, 2006

Contact Information

Demand Response Research Center (DRRC)

Mary Ann Piette, Director

Phone: 510 486-6286

email: mapiette@lbl.gov

Roger Levy

Program Development and Outreach

Phone: 916-487-0227

email: RogerL47@aol.com

August 2, 2006

Demand Response Defined.

1. Demand Response applies rate designs, incentives and technology to induce changes in customer demand. 1

2. Demand Response is the action taken to

reduce load in response to:2

a) Contingencies that threaten the supply-demand balance and/or

b) Market conditions that raise supply costs.

1. CPUC definition, Demand Response Settlement, Draft Decision 03-06-032, March 2006

2. Demand Response Research Center, presentation, December 2005.

August 2, 2006

CPP Tariff- (high)TOU Tariff- (high)

$0.7336

$0.2336

$0.0886

0

10

20

30

40

50

60

70

80

Ce

nts

pe

r k

Wh

Existing RatesAvg. Summer Price

13.36 ¢/kWh

$0.2596

$0.1026

2:00-7:00pmWeekdays

Other Weekday & Weekend hours

2:00-7:00pmWeekdays

Other Weekday & Weekend hours

Dispatched2:00-7:00pm

1,500 hrs/yr 7,260 hrs/yr Maximum 75 hrs/yr 1,425 hrs/yr 7,260 hrs/yr

Critical Peak

Summer Peak

Summer Off-Peak

Residential SPP Rates Rate Design

August 2, 2006

CPPV CPPF TOU Info Only

Participants (%) 71.1% 73.7% 70.0% 79.0%

Average Monthly Savings (%)

5.1% 5.5% 4.5% 5.4%

Average Monthly Savings ($)

$53 $35 $29 $19

CPPV TOU

80.3% 58.2%

12.2% 9.6%

$1,521 $869

Participants (%) 28.9% 26.3% 30.0% 21.0%

Average Monthly Increase (%)

4.0% 6.2% 3.0% 10.0%

Average Monthly Increase ($)

$39 $44 $30 $9

19.7% 41.8%

5.0% 10.0%

$224 $600

ResidentialCommercial /

Industrial

Bill Savings

Bill Increases

Source: Statewide Pricing Pilot, Shadow Bill Results, WG3 report, June 9, 2004.

SPP Bill Impacts

Average Bill Impacts (summer / winter 2003)