Dynamic pricing set to expand in Illinois

Scaling up real-time pricing approved by regulators

Phil Carson | Jul 23, 2012

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Two dynamic pricing programs involving 22,000 customers in Commonwealth Edison's and Ameren Illinois' service territories are set to expand as the two utilities roll out advanced metering infrastructure (AMI).

The Ameren program has been branded as "Power Smart Pricing," which provides day-ahead prices for residential electricity including alerts via text, voicemail and email, with information also available by phone and online. The cost is $2.25 per month. (Here is an FAQ on the program.) The ComEd program is the Residential Real-Time Pricing (RRTP), which provides real-time hourly prices for residential electricity and also includes alerts and phone and online price information. The cost is $0.39 per month. (Here is an FAQ for the ComEd program.) 

The Illinois Commerce Commission (ICC) just gave its blessing to the expanded program, which essentially signifies that dynamic pricing enables customer options, consumers can save energy and, thus, energy-related costs and meters have a role in this scenario. 

On average, those 22,000 opt-in customers saved 25 percent on the electric supply portion of their bills or about 15 percent on their overall bill, I'm told by Anne Evens, CEO of CNT Energy, a nonprofit which is administering the pricing project.

(CNT Energy is a nonprofit group dedicated to energy conservation and is an affiliate of the Center for Neighborhood Technology, established in 1978. The Center created the Community Energy Cooperative in 2000 to allow the latter to develop a local, feeder-level focus on electric reliability issues. The Cooperative was renamed CNT Energy in 2007.)

CNT Energy has administered the Ameren Illinois Power Smart Pricing program since 2007 and has co-administered ComEd's RRTP program with Comverge, Inc., since 2007.

The ICC determined that its criteria for maintaining and expanding the ComEd project had been met. Those criteria included whether the net benefits to customers exceeded the costs incurred by ComEd, an assessment of direct and indirect benefits to participating customers and society at large, and the associated cost of marketing and education. 

According to a third-party assessment by Navigant Consulting, Inc., "during the first three years of the program, the estimated net benefits to residential customers were negative. [A ComEd representative] testified that this was largely due to the investment needed to develop the processes and information technology systems required to commence the program, and the cost of recruiting new customers into the program." 

The impact of fixed start-up costs diminished after two years, however, "when net benefits increased as more customers enrolled in the program, resulting in positive net benefits in 2010," the Navigant report stated.

Customer savings came in two categories, according to Evens. One was a drop in overall energy use over the monthly billing cycle and the other was a drop in peak use. The outcomes included the customer savings on their bill, a high rate of customer satisfaction and a change in customer behavior that can benefit the utility. She also noted that changes in customer behavior persisted over the course of the four-year study. (CNT Energy and Navigant looked at results in the 2007-2010 timeframe.) 

All this is being accomplished by actively engaged customers without using automation, Evens pointed out. 

"We're developing a measure of how responsive to price customers are," Evens told me. "The goal is behavior change. We believe you have to engage customers if you want behavior change. We provide tips on how to do that. Some customers in the program are adopting pre-cooling strategies. Some are changing the hours in which they charge their electric vehicle. 

"And most are not using technology like automation," she added. "Most get a general education on price patterns and how they can shift aspects of their lifestyle to off-peak periods."

That said, CNT Energy has tested a "Price Light," which provides a color-coded signal when prices spike. Though the project also is testing programmable thermostats, in-home displays and other approaches aimed primarily at a household's breadwinner, the Price Light appeared to be effective at engaging the entire household, Evens said. 

The demographics of project participants so far have been skewed toward older families with 2.4 residents to a household, according to Evens. Typically, someone is home most of the day, thus participating households had the ability to take steps in real time without automation, such as pre-cooling a house and turning up the thermostat a few degrees during peak hours when electricity prices are high. 

As for the original driver of improving local, feeder-based reliability, Evens pointed out that the 22,000 customers in the Power Smart Pricing program are geographically scattered across Illinois, thus reliability impacts have to be modeled. When ComEd and Ameren Illinois begin their AMI rollouts, CNT Energy will apply the dynamic pricing program to neighborhoods in the wake of interval meter installations, which will allow direct measurement of any impacts on grid reliability. 

Naturally, CNT Energy has received a lot of interest in its program, including from the city of Philadelphia, the state of Connecticut and the province of Ontario. 

We may revisit the ICC order giving the program a green light to continue, as it spells out costs and benefits and details that may be pertinent to other utilities and jurisdictions. 

Phil Carson 
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

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