U.S. capital gives thumbs-up to active energy savings
Pepco tests successful price-responsive structures
Published In: Intelligent Utility Magazine May/June 2011
AMONG RECENT SMART-GRID PILOT PROJECTS, PEPCO Holdings Inc.'s PowerCentsDC--featuring volunteer customers from all eight wards of the District of Columbia, with an additional “control” group of customers to help verify findings--stands out, if for no other reason, because it represents a pioneering study highlighting multiple pricing structures.
The collected information indicates that electric customers across a broad range of incomes in a U.S. Eastern/urban environment—specifically, the District of Columbia—may lend hearty support to price-response infrastructure if customers see quantifiable cost of energy as well as other benefits, all adding up to a real chance to significantly and favorably influence their electric bills.
Critical peak behavioral changes
Limited to Pepco’s District of Columbia constituency (through its operating subsidiaries, Pepco also serves extensive geographies in Maryland and Delaware), PowerCentsDC was designed to test the willingness of an urban cross-section of customers who have had smart meters installed at their houses, condos or apartments to change their energy-use patterns during criticalpeak events.
Those critical-peak events were to occur both under winter conditions (a total of three winter events) and during two different yearly summer periods (six events each of the two summers, for a total of 12 summer events).
The three price-response plans, pre-assigned to program volunteers who were selected randomly across D.C., included a peak-energy pricing incentive, a peak-energy rebate plan and an hourly pricing structure tied to the PJM next-day wholesale-energy-cost projection.
One of the most eye-opening indications from PowerCentsDC is the overwhelming stamp of approval given to the program by its participants, many of whom appeared, at best, to have started out feeling somewhat ambivalent about the whole undertaking. As PowerCentsDC proceeded, participants seemed to largely embrace the opportunity to positively influence their electric bills.
“The results and learnings are pretty bold,” said Steve Sunderhauf, manager of Pepco’s program design and evaluation. “After the study, one of the questions we asked of program participants was, ‘Would you recommend the PowerCentsDC electricity project to your friends and family?’ And 89 percent said, ‘Yes.’
“And we asked, ‘Which price plan would you prefer: your former pricing plan, or the PowerCentsDC plan?’
“Ninety-three percent of those who responded liked the new plan, regardless of which of the three variations they were on. Ninety-three percent. Now, that’s really pretty remarkable.”
To what factors can such an overwhelming percentage of positive reactions be attributed?
“Honestly, there was a lot of skepticism by some of the customers when they first joined in the rate,” said Sunderhauf. “And they got all the messaging, and they began to see some sense of savings—and the fact that they could actually influence their bill.
“I think all of that drove a very high satisfaction level with the rate design— plus, I think people like doing something new. They like feeling that they’re doing something for the environment—many of them, anyway. And they like the challenge of trying to save energy.”
Numerous organizations cooperated to make PowerCentsDC happen.
“Smart Meter Pilot Program Inc. is a nonprofit corporation we created involving all of the project partners,” Sunderhauf said. “These parties are usually in opposite camps—the consumer advocate and the commission staff. Then you had the Consumer Utility Board, and you had the union, IBEW.
“So you’ve got this weird mix of stakeholders. PowerCentsDC basically allowed people to come behind the curtain and see what’s involved in putting programs of this type out,” he said.
Conducted over about a 15-month time frame from July 2008 through October 2009, data and numbers from PowerCentsDC have been analyzed to the nth degree, as published in a September 2010 report.
“I get a real kick out of things people did in response to the critical-peak events,” Sunderhauf said. “One of the clever things was you could pre-cool your living space just a little bit prior to one of the summer events—and make yourself more comfortable—or put more fans in the house, and don’t use appliances. And other people probably didn’t act as aggressively.
“Then there were those who took the family to the museum. The museums are free in the District, and while you’re out during the peak-energy event, you could reduce the level of the air-conditioning at your residence. Or you basically were willing just to do things a little bit differently: turn off some lights, or turn off the air-conditioning when you’re at work.”
Program participants who had central air conditioning units received an offer to try “smart” thermostats, which could be set to automatically adjust thermostat temperatures during peak periods.
In messages transmitted and read on the thermostats, Pepco conveyed bill-to-date and kilowatt-hours-used statistics, as well as information regarding the next critical-peak event. This information was eventually made available to all program participants on the PowerCentsDC Web site, and was also mailed to participants.
Peak-load savings were significant
Subsequent questions relating to results and ramifications of PowerCentsDC have drawn pointed responses. “One of the commissioners in another of our jurisdictions said, ‘Well, how do we know price matters?’ That kind of caught me off-guard,” said Sunderhauf. “I mean, isn’t this America?
“Price does matter. PowerCentsDC proved prices work. People do react to price signals. People do take action. And people were much more enthusiastic about this rate compared with their prior rate. But I think the results also show that we can be much more aggressive in both pricing and rebate plans in the future.”
PowerCentsDC applied pricing of about 80 cents per kilowatt/hour for the critical-peak pricing events, and a similar level for critical-peak rebates.
“Going forward, we think we can provide an even more robust price signal—in the range of about $1.25 per kilowatt/hour reduction,” Sunderhauf said. “In one of our markets, we’ve just calculated what customers’ rebates could be—and it’s up over $1.60 per kilowatt/hour.”
Sunderhauf also noted the much greater percentage of load reduction under PowerCentsDC on a 97-degree day (43 percent) than on an 85-degree day (26 percent). Obviously, the higher temperature drew a considerably more telling response from participants.
“When some of those load reductions were coupled with automated controls, we were getting up around 50 percent reductions,” said Sunderhauf. “Just think about the impact that could have on peak load and the need for generation resources.
“It’s pretty staggering.”