Transcript Subtle Accents

Can Residential Customers
Respond to Dynamic Pricing?
NANCY BROCKWAY
Multi-Utility Sector Chief
National Regulatory Research Institute
A presentation to the
Kansas Corporation Commission Workshop on Energy Efficiency
Topeka, Kansas
March 25, 2008
What I’ll cover
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Residential customer responses
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Load reductions - Percents or Elasticities
Broken down by socioeconomic variables
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Low use
Low income
Presence of Central Air, Smart Thermostats, etc.
Results of major pilots of dynamic pricing
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California Special Pricing Pilot
Energy Smart™ Pilot Program
Ontario Smart Pricing Pilot
See NRRI AMI Paper reading list for results of other pilots
Nancy Brockway, NRRI
March 2008
2
What I won’t cover
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Bill impacts – At least not in detail, nor definitively
Costs of implementing dynamic pricing
System savings achieved by reducing peak demands
Alternative approaches to reducing peaks,
• And their costs.

These are important questions,
• on which a lot has been written.
• See reading list Appendix to NRRI Report 08-03
• http://nrri.org/pubs/multiutility/advanced_metering_08-03.pdf
Nancy Brockway, NRRI
March 2008
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Overview of Presentation
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Describe pricing options considered
Summarize arguments pro and con
For each pilot
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Describe pilot design briefly, and
Discuss average results for different pricing options
Discuss results for low use and low-income
Discuss some methodological issues
Conclusions
Nancy Brockway, NRRI
March 2008
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Pricing Types Defined
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Static – Set in advance; don't change w/ changing system costs
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Flat $/kWh
Time of Use (TOU) – Seasonal/Diurnal/other
Dynamic – Change to match actual system costs
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Real Time Pricing (RTP)
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Prices updated at least daily, typically on an hourly basis
Pacific NW – pilot interactive pricing
Critical Peak Pricing (CPP) or Critical Peak Rebates
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Very high prices for 2-5 hours, 80-100 hrs/year
Days with highest system peak → highest system cost
Day-ahead or hours-ahead notification of customer
Nancy Brockway, NRRI
March 2008
5
Chart of CPP/TOU/Flat Rate Prices
on a Critical Peak Day
Cents/kWh
Hours
Nancy Brockway, NRRI
March 2008
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“Just say no”
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Benefits don't justify costs:
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“Most residentials cannot save”
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Cannot shift load to off-peak hours
Cost of metering will eat up savings
Big problem for low-use and low-income customers
These customers will suffer
“Those residentials who can save, won't”
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Have enough money to pay the peak prices
Will just buy through, so no system benefit
Effects will not persist, but costs will
Nancy Brockway, NRRI
March 2008
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Just say “Yes”
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Benefits claimed:
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Reduce peaks/Reduce need for expensive, risky new capacity
Align customer rates with cost-causation
Gives customers control over their usage and bills
Spurs efficiency behavior, and thus lowers emissions
Drawbacks addressed:
• Small and low-income customers can and will switch
• Bills will be reduced, not increased
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System costs will go down
Low use have better load profile
Rate design can help mitigate impact of new metering costs
• Can address specific adverse impacts
• Make it voluntary (opt in or opt out)
Nancy Brockway, NRRI
March 2008
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Let's look at the facts
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Three recent pilots with controls/evaluations
California Special Pricing Pilot
tm Pricing Pilot – Chicago
 Energy Smart
 Ontario Energy Board Smart Price Pilot
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Nancy Brockway, NRRI
March 2008
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California Special Pricing Project
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July 2003 – September 2004
All participants given interval meters
3 pricing approaches - TOU, 2 CPP groups
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TOU – off peak, shoulder, on-peak
Critical peak pricing:
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12 summer and 3 winter Critical Peak events (+/- 75 hrs)
$/kWh averaged 3X normal on-peak, 6X off-peak
Low-Income
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w/ and w/out community energy education
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Urban residents – MF, little A/C
Nancy Brockway, NRRI
March 2008
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CA SPP: 2 CPP Groups,
Fixed Notice and Variable Notice
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No PCT → CPP-F
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PCT → CPP-V
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5 hour CPP events
Day ahead notice of CPP event
5-hour CPP events and 2-hour CP events.
Day of (4 hour) notice of CP event
And PCTs signaled at beginning of CP event
All =
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SFH with central A/C, and
Use > 600 kWh/mo.
PCT = Programmable Communicating Thermostat
Nancy Brockway, NRRI
March 2008
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CA SPP
Ave. CP response of CPP-F, by bundled temp. bands*
Source: Herter, et al, Table 2
10%
50 - 54.9
55 - 59.9
50 - 64.9
65 - 69.9
70 - 74.9
75 - 79.9
80 - 84.9
85 - 89.9
90 - 94.9
95 - 99.9
100 - 104.9
5%
0%
% Load Change
-5%
-10%
-15%
-20%
Nancy Brockway, NRRI
March 2008
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CA SPP
Ave. CP response of CPP-V by temperature bands
Source: Herter, et al., Table 2
0%
-5%
-10%
-15%
70 - 74.9
75 - 79.9
80 - 84.9
85 - 89.9
90 - 94.9
-20%
-25%
-30%
-35%
-40%
-45%
5 Hr. CP
Nancy Brockway, NRRI
2 Hr CP
March 2008
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Energy
TM
Smart Pricing
Pilot
• Chicago, Illinois area, 2003-2006
• Community Energy Cooperative + ComEd
• Residential customers
• Coop members invited; by 3rd year, 1400 joined
• Hourly Day-ahead RTP, with “High Price” Notification
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Advance notice of next day prices
Some days = ”high price” days (> 10¢/kWh energy) special notice
Interval meters installed
2 pricing groups: RTP and RTP w/ DLC
• Relatively low-tech
• Smart Thermostats offered
 57 participants fitted with DLC on A/C from yr 2
• Phone, email, fax notice of upcoming critical peak
Nancy Brockway, NRRI
March 2008
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ESPP Results:
Weather & PCTs Make a Difference
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2003 (cool summer)
• Price elasticity = 4.2 on average
• Responses “decayed” over time, but were “recharged” with time
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2004 (cool summer):
• Price elasticity = 8 on average over all hours
• But on average, no significant response to “high price” days
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On average, increased load 8% late on one “high price” day
• A/C w/DLC – reduced as much as 9% & 11%
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2005 (very hot summer):
• Price elasticity = 4.7 on average
 Big response to high price days
 PCT with DLC increased price elasticity about 1/3 (to 6.9)
Nancy Brockway, NRRI
March 2008
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Ontario Smart Pricing Pilot
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Ottawa, August 2006 - February 2007
• 3 Pricing Groups and a Control
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TOU – from 3.5 cents off-peak to 10.5 cents on peak
CPP – 30 cents on CPP (w/ lower off-peak price)
CPR – 30 cent rebate for below-baseline CPP usage
Up to $75 incentive payment if reduce load during pilot
• Those with interval meters invited to join.
• Participants disproportionately:
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SFH
Newer housing
Central air
More education
Higher income
Nancy Brockway, NRRI
March 2008
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OSPP load responses
by rate and time of use
CPP
CPR
Summer Critical
Peak Hours
Summer,
All Peak Hours
-25.4%
-11.9%*
-17.5%
-8.5%
*Note –
During summer non-CPP peaks, CPP participants increased load 10.8%
Nancy Brockway, NRRI
March 2008
17
CA SPP
Impact of Usage on CPP Responses
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Low-Use households
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f (methodology)
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Per Herter
No statistically significant response to CPP
regardless of income level
Per CRA analysis
low-use hhlds reduced @ CPP 9% - 12%, on average
High-Use households
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Yes, statistically significant responses to CPP
• No statistical differences between income groups
• Per Herter analysis
Nancy Brockway, NRRI
March 2008
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CA SPP:
CPP-F % Ave. Reduction in Peak Usage
by Usage Level and End-Use *
*Source: CRA, SPP Evaluation, Summer 2003, Table 5-9; CRA, Final Report, Table 4-19
0%
Year 1
-2%
-4%
-6%
-8%
-10%
-12%
Central A/C
Single-Family
High Use
-14%
Single-Family
High Use
High Use
Low Use
Single-Family
Multi-Family
Central A/C
No Central A/C
-16%
Central A/C
-18%
-20%
Nancy Brockway, NRRI
March 2008
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ESPP Elasticities
by housing type, space conditioning devices
12
10
8
6
Single Family
4
Multifamily
2
0
SF, n
o
W
Ce
M
W
Ce
A/C indow A/C ntral A/C F, no A/C indow A/C ntral A/C
Nancy Brockway, NRRI
March 2008
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CA SPP
Low Income load response
Source: M.Cubed and Charles River Associates,
Statewide Pricing Pilot Track B: Evaluation of Community-Based Enhancement Treatment.
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Lower income participants reduced less:
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On average, “Track B” load response = 2.6%
• But a small # of participants pushed up the ave. response
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Statewide, <$40K groups reduced critical peak use by 10.9%*
CARE – reduced critical peak use by 2.9%*
Bill savings before adding incremental metering costs.
• For lowest-income/low-use group = 2.7% reduction
• for lowest-income/high-use groups = zero
* Per Brattle Group analysis
Nancy Brockway, NRRI
March 2008
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CA SPP vs. ESPP
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The more the people in
the hhld, the less the
response
SFH hhlds with CAC
had the strongest %
response
Hhlds w/highest
incomes had strongest
responses to CP events.
Nancy Brockway, NRRI
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The more the people at
home, the more the
response
MF households w/out
A/C had the strongest %
response
Lower income hhlds had
stronger response to
“high price” days
March 2008
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OSPP Bill Impacts
Not counting incremental metering costs
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CPP
•
83% paid lower bills
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100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
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CPR
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73% paid lower bills
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CPP
CPR
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% pay % pay Ave. % Max
less
more savings savings
Max.
loss
Average savings = 4.2%
Greatest loss = 9.1%,
Greatest savings = 10.7%
Overall (including TOU)
•
•
•
Nancy Brockway, NRRI
Average savings = 4.2%
Greatest loss = 13.8%,
Greatest savings = 7.6%
75% of participants saved $, but
In August, CPP participants saw
higher bills
In January, CPP participants saw
higher bills
March 2008
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CA SPP - Mean Annual % Change in Bills
by Usage and Income (Without AMI Costs)
Source – Herter, Figure 5
1%
es
Al
l in
co
m
+
0K
$5
$2
5-4
9.9
K
0-
$2
4.9
-1%
-2%
K
0%
-3%
Low Use
High Use
-4%
-5%
-6%
Nancy Brockway, NRRI
March 2008
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Participation Rate Problem
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Proponents claims:
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20% take TOU/CPP if opt-in
80% take if opt-out
But where is data?
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SPP – opt in – 10% by end of pilot
Washington State – 90% opt in BUT
• Entire program eliminated after public outcry
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Self-selection bias important on this issue
Nancy Brockway, NRRI
March 2008
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Better Persistence Today?
• Peaks can be more narrowly defined
• High prices can be limited to 80 – 100 hours
• PCTs can automate response
• Off-peak, non-critical peak prices are reduced
• Cost of hedging for flat pricing effects can be eliminated
• Renewed public interest in lowering energy costs
Nancy Brockway, NRRI
March 2008
26
Conclusions
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Many residential customers can & do respond to CP/RTP
pricing.
• Benefits system greatly, by avoiding new capacity
• CP Rebates can be attractive option
• Can be done without full AMI, where AMI not cost-effective
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But jury is still out on
• Steady-state participation rates
• Persistence
• Bill impacts
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Low-use customers can benefit from CPP --- better load profile
• Even if they don’t reduce load
• Many did reduce load in pilots
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High-use/Low-Income customers are at risk
• Need to identify, and direct bill and DSM assistance here
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PCTs produce dramatic results
Nancy Brockway, NRRI
March 2008
27
For more information
http://nrri.org/pubs/multiutility/advanced_metering_08-03.pdf
Nancy Brockway
Chief, Multi-Utility Section
NRRI
10 Allen Street
Boston, MA 02131
617-645-4018
[email protected]
Nancy Brockway, NRRI
March 2008
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