Transcript Document 7413121

Metering and Retail Pricing
New England Demand Response Initiative
Rick Weston
2 May 2002
The Regulatory Assistance Project
50 State Street, Suite 3
Montpelier, Vermont 05602
Tel: 802.223.8199
Fax: 802.223.8172
Website:
http://www.rapmaine.org
[email protected]
177 Water St.
Gardiner, Maine 04345
Tel: 207.582.1135
Fax: 207.582.1176
Purpose and Challenge
• To better align behavior in the retail and
wholesale markets, what policies need to be
implemented and what metering and
communications technologies deployed to
encourage customer demand-response?
– What can be done to reveal to customers and
LSEs the value (cost) of energy savings
(consumption) during times of high loads or
system constraints?
Background: The Pricing
Continuum
• Energy-only rates
– 100 years of consumption metering:
• Fundamental purpose: collect revenues
• Multi-part and time-of-use
– 2nd half 20th century: Boiteaux, Bonbright and
Kahn and the goal of economic efficiency
• Real-time pricing
– Wholesale competition and the uncertainty of
supply
Pricing and Metering:
Energy Only
• Per kWh, by billing period (e.g., monthly)
–
–
–
–
Flat, energy-only rates
Seasonal differentiation
Block rates: inclining or declining
No time-differentiated pricing with billing
period
– After the fact data collection
• No information about customer usage patterns
Pricing and Metering:
TOU and Multi-Part
• Additional metering capabilities
– Special TOU, capacity, or interval metering
• Per kWh and per kW
– Time-of-use, typically time-of-day
– Multi-part: energy and demand
• Measures customer non-coincident demand
– Useful for distribution planning, though not system
– After the fact data collection
• Some information about customer usage patterns
Pricing and Metering:
Real-Time Pricing
• Different retail prices for different hours of
the day and for different days, usually based
on some measure of short-term power costs
• Hourly differentiation of prices
– Advanced metering and communications
• The other side of the RTP coin: Interruptible
programs
Pricing and Metering
Rate Designs
Type of Meter
System
System Features
Capabilities for Rate Design





Energy-only
TOU
Demand and
energy
Seasonally
differentiated

Conventional
Manual /
Electronic
Keypad

Requires meter reader to
cover a fixed route
Meter values key-entered
or electronically
downloaded via port to
hand-held recorder










Energy-only
TOU
Demand
Seasonally
differentiated
Remote Meter
Reading




All of the
above
Real-time
pricing
Automated
Meter Reading

Requires meter reader to
cover a fixed route
Van-based drive by or
hand-held systems that
use low power radio to
transmit meter reading
over short distances
Meters connected to a data
repository by telephone,
PCS, paging, satellite,
fiber, or other
communication
technology
Stored meter reading can
be collected on a fixed
schedule or on demand






Typically limited to a single kWh usage
value each billing cycle
TOU meter for TOU rates
Demand meter required for multi-part
rates
Cannot economically or logistically
support the collection of time varying
kW interval data
Data only available once each billing
cycle or with special read
Can support the collection of multiple
kWh register values used in standard
TOU rates
Demand meter required for multi-part
rates
Communication methods cannot
economically or logistically support
the collection of time varying kW
interval data
Data only available once each billing
cycle or with special read
Preferred methodology for collecting
interval data
Full complement of interval and other
meter data generally available on
demand
Accessibility varies by technology
Advanced Metering and
Communications
• Technologies that record, process, and
transmit time-specific information about a
customer’s electricity usage
– Interval metering
– Advanced meter reading
• Frequent polling for time-specific usage data
– Two-way communications for real-time pricing
Capabilities of
Advanced Metering
• Pricing and billing
• Customer service
– Billing inquiries, mass marketing, outages,
emergencies, service calls, customer habits,
diagnostics
• Energy services
– Discos, LSEs
• Meter maintenance
Capabilities of
Advanced Metering 2
• System operations
– Dispatch, demand response, identifying losses,
settlements, load research and forecasting
• Planning
– Distributed utility, transmission, or IRP
• Information for developing improved
building and appliance standards
Meters and Networks
• What kinds of systems can support demand
response and dynamic pricing?
• Considerations:
–
–
–
–
–
Usage measured: demand or energy
Interval length
Data storage capacity
Remote communications
Meter architecture
Meters and Networks 2
• Where should the intelligence reside in the
network?
– “Smart meter, dumb network”
• Sophisticated meter, public network, infrequent
polling
– “Dumb meter, smart network”
• Less meter functionality, dedicated network
elements, frequent polling
– Two-way communications
Determining Loads and
Settling LSE Obligations
• Load profiling
– Average load profile by customer type
– Total class usage in period fitted to load profile
– Class loads and profiles summed to establish
aggregate load and profile for each LSE
– Aggregate profiles used to establish each LSE’s
responsibility for system dispatch
• Interval metered load
– On basis of actual, hourly metered data
Drawbacks of Load
Profiling
• Individual customer’s actual demand is not
directly relevant to the settlement process
– But it is highly relevant to the actual costs that
were incurred to balance the system)
– To the extent that a customer’s actual load
profile differs from the class average, the LSE
sees neither the savings nor the costs
• No incentive for load management, end-use
efficiency, or dynamic pricing
Pricing Experience
• Vermont, Maine
– Seasonally differentiated TOD rates
• Puget Sound Power
– TOD, four periods: morning, mid-day,
afternoon, and night
– Remote meter reading, frequent polling
• California inclining block rates
Pricing Experience 2
• RTP and Load Management
– Georgia Power: Two-Part RTP
• Baseline usage based on historic demand, priced at embedded
rates
• Incremental usage and decremental savings priced at RTP,
calculated as sum of marginal energy costs, line losses, a “risk
recovery factor” (a fixed adder), and, at peaks, marginal
transmission costs and outage cost estimates
• Two options: day ahead and hour ahead
• 1,600 customers, 5,000 MW of load
Pricing Experience 3
• RTP and Load Management
– Georgia Power, continued
• Interruptible for some customers, penalties for failure to
interrupt
• Price protection products: variable customer baselines (up or
down), caps, collars, indexing
– Duke Power: Two-Part RTP
• Similar to Georgia Power
– TVA: One-Part RTP
• Surplus energy at off-peak times, interruptible
Pricing Experience 4
• RTP and Load Management
– Gulf Power, TOD and RTP
• Residential TOD, four periods
– Low, Medium, High, and Critical
– Times for Low, Medium, and High are set
– Critical periods occur when wholesale market conditions
dictate
• Customer programmable “Superstat” controls
heating, cooling, pool pumps, water heating
– Customer’s willingness to pay determines usage
Lessons Learned
• Seasonal, TOD, multi-part, block
– Long-term improvements in efficiency: higher
load factors, smaller needle peaks, increased
end-use efficiency, greater price stability, and
lower total system costs
– No short-term dispatchability (interruptibility)
and only generalized signals of the actual costs
of production
Lessons Learned 2
• RTP and Load Management
– Significant load shifting benefits, mostly from a
relatively small number of customers
– Those with on-site generation and discrete
production processes most likely to respond
– Customers motivated by saving $
– Customers dislike price volatility
– Customer education critical to program success
Barriers to Innovative
Pricing
• Costs
– Metering, education, admin, telemetry
– Cost-effectiveness: perceptions and testing
• Customer
– Risk aversion, price volatility
– Elasticity, identifying responsive customers
Barriers to Innovative
Pricing 2
• Utility/LSE
– Revenue loss, load profiling, billing and
collection, gaming of customer baselines
• Regulatory and Legislative
– Perceptions of customer elasticities, concerns
about fairness, other pricing policies (e.g., price
caps), lack of coordination with DSM
programs, default service
Barriers to Innovative
Pricing 3
• Technological
– Lack of requisite metering and communications
equipment, integration with existing systems,
lack of customer energy management
capabilities
Policy Issues: Pricing
• Purpose: What are we trying to achieve?
• Dynamic pricing: mandatory or optional?
– Free-ridership, impacts on inelastic users
• Low-volume v. high volume consumers
– Threshold for mandatory dynamic pricing?
• Utility net lost revenues
– Disincentives to efficient solutions? Policy
responses?
Policy Issues: Pricing 2
• Potential benefits
– What are the costs and benefits of more
dynamic pricing? How are they measured?
• Retail competition and default service
– How does the existence of default service
promote or inhibit demand responsiveness?
• Load profiling and settlement
– Alternatives to interval-metered data?
Policy Issues: Metering
• Purpose: What are we trying to achieve?
• Cost-effectiveness
– What are the costs and benefits of alternative
approaches to metering?
• Current state of interval metering and AMR
in region?
– How will this affect policy choices?
Policy Issues: Metering 2
• Should advanced metering be provided
competitively? Who should own the meter?
– Who should should pay?
• Large scale or targeted deployment?
– Threshold? Affected by pricing objectives.
• Smart meter, dumb network? Or opposite?
• Information control, access, and format