Demand Response in D.C.: It Pays to Save
The smart grid vision, on paper, tends to draw both intuitive affirmation – “this is brilliant, it’s gotta work” – and healthy skepticism, as in “show me the money.”
Results announced last week from a smart grid/smart meter pilot program in Washington, D.C., appear to answer the latter question. The pilot, according to its participants, demonstrated that consumers with the right tools and the right information and an opportunity to save money can do so. (Do questions remain? Of course.)
The study, dubbed the PowerCentsDC program, involved 800 to 900 residential customers of Pepco DC., who received a smart meter, a smart thermostat (if desired and the residence qualified) and one of three energy price plans.
Participants reduced summer peak demand by up to 50 percent and those who saved money saved an average of $44 per year. The greatest reductions in energy use occurred when dynamic prices were combined with automated air conditioner control via smart thermostats.
The price programs included critical peak pricing, critical peak rebate and hourly pricing.
The study gives this explanation of its pricing options:
“Time-based pricing was designed so that, on average, participants who made no changes in their energy use would pay the same bill on PowerCentsDC as on the Pepco Standard Offer Service (their current electricity price). Participants faced the risk of paying more over the course of the year, while others paid less. The amount of savings participants achieved depended on how much they reduced their electricity usage during the critical peak periods or during high-cost hours, their overall usage and wholesale market prices. Also, some participants received incentive payments (customers on the critical peak pricing and hourly pricing plans).”
(Those incentive payments were $50 up front and $50 at the program’s end.)
The study became “news” when program participants last week reported to President Obama’s Interagency Smart Grid Task Force and other executive branch players.
The pilot sponsor was the Smart Meter Pilot Program, Inc. (SMPPI), whose members include the D.C. Consumer Utility Board, District of Columbia Public Service Commission, the International Brotherhood of Electrical Workers Local 1900, the D.C. Office of the People’s Counsel, and Pepco D.C. The PowerCentsDC program was managed by eMeter Strategic Consulting and overseen by SMPPI.
“The two big headlines were, ‘Here’s a smart meter success story – reduced peak demand, money saved and customers pleased,’” said Chris King, eMeter’s chief regulatory officer. “And low-income residents signed up at a higher rate than other groups.”
Typically, low-income residents face hurdles in making such programs pay due to living in apartment buildings that don’t allow them to switch to a smart thermostat and they tend to use less energy to begin with, so savings are harder to come by, according to King.
What was the reaction of the audience receiving the study’s results?
“George Arnold, co-chair of the Interagency Smart Grid Task Force, said ‘I wish we could bottle this and send it to the states,’” King said. (Arnold’s other role is national coordinator for smart grid interoperability at the National Institute of Standards and Technology.)
“What are the implications?” King echoed, in response to a question. “This study shows that with the right approach, consumers can save energy and costs and stakeholders can get together over the right program.”
One other surprise: participants preferred a monthly report on energy usage inserted with their monthly bill, over web portals or other means of receiving information.
What’s next?
Pepco D.C. will rollout a full-scale program for its 200,000 metro customers in September, estimating that it can achieve 75 megawatts peak load reduction.
The pilot program began nearly two years ago and ran for two summers (2008, 2009) and one winter (2008-2009). To ensure sound experimental design, the program used a Stanford economics professor, Frank Wolak, to design it. (Sound design means replicable results, which ought to be the purpose of a pilot.)
Two questions remain in my mind, not covered by this pilot.
The issue of “persistence” asks whether positive behaviors (i.e., willingness to remain engaged in energy-saving behavior) will persist over time. King said other studies answer that question in the positive. Another question is whether, in a more free market environment, in this example an average of $44 per year in savings is enough to motivate mainstream homeowners to be involved, particularly if they need to pay for a smart thermostat that costs three to four times one’s annual energy savings.
But for a large group of stakeholders in a very summer-peak climate, including low-income participants, the aforementioned study seems to have produced positive results.
Anyone who’d like to chime in, please do so.
Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757
