Pricing, Metering, and Default Service Reform

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• Pricing, Metering, and Default Service Reform
• Paul Gromer
• Peregrine Energy Group

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Pricing and Metering Working Group

• Recommendations developed by working group.
• Working group ably supported by NEDRI consultants
  Rick Weston and Jim Lazar.
• Working group included representatives of
• Metering companies
• Utilities
• Regulators
• Low income customer advocates
• Competitive retail suppliers
• Environmental advocates
• Demand response providers

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A series of collegial meetings
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And one on one discussions
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Producing a happy consensus
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Issues

• Its the price, stupid.
• In most markets, customers dont get paid not to
  use. Instead, they pay the full cost of what
  they do use.
• The evidence is that electric customers do
  respond to price signals.
• Just like all other customers.
• However, flat, fixed prices are the norm in the
  industry. Those prices create no incentive to
  shift load.
• No, its the meter, you moron.
• You cant price what you dont meter.
• Dumb, kWh meters do not support anything but
  flat, fixed prices.
• No, its the cost, idiot.
• Im not paying for all those fancy new meters.
• No, its the politics, you bozo.
• Im not instituting time of use rates for default
  customers. My predecessor did that. Thats why
  Im here and hes not.

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Strategy Set One Improving pricing for customers
to allow price-induced DR

• PM-1 PUCs should investigate time-sensitive
  pricing for default service customers
• PUCs should bite the bullet and take a hard look
  at this.
• Pricing may vary by customer size and by
  availability of metering
• Options to consider include
• Real-time pricing
• Critical peak pricing
• Inverted block rates

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Strategy Set Two Support Demand Response in the
mass market

• PM-2A PUCs should investigate wide scale
  deployment of advanced meters for mass market
  customers, and the associated rate designs those
  meters would enable.
• Investigations should examine
• Costs
• Benefits (including, but not limited to, demand
  response benefits)
• Metering deployment options
• Method of deployment has a big impact on cost
• Answers will be state specific
• NEDRI offers a protocol for these investigations

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Strategy Set Two (cont.)

• PM-2B For customer classes for which advanced
  metering is not cost effective, utilities should
  conduct load research, and establish load
  profiles to support DR without new meters.
• PM-2C Target efficiency to peak load uses

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Strategy Set Three Cross-cutting Efforts

• PM-3A Price default service to cover all
  relevant costs
• Premise Competitive retail suppliers are better
  suited to provide DR services to customers than
  are utility default service providers.
• NEDRI consensus regarding large customers
  differing views regarding small.
• Default service pricing that covers all relevant
  costs will encourage customer migration to
  competitive suppliers, which in turn will foster
  demand response.

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Strategy Set Three cont.

• PM-3B Share DR revenues between customers and
  utility DR providers to ensure adequate
  headroom for independent DR providers.
• PM-3C Remove distribution company disincentives
  to deliver aggressive DR programs.
• Mechanisms could include incentives, lost revenue
  adjustments, revenue capped PBR.

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