What Works in DR Program Design

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What Worksin DR Program Design

• NPCC Demand Response Workshop
• February 24, 2006

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Contents

• PGE DR Capability
• What Works
• Level of Control
• Customization vs. Mass Market design
• Marketing Education
• RDD for the Future of DR

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Portland Generals Demand Response Capability

• Load Control
• Large Customers
• Dispatchable Standby Generation - 30 MW online,
  10 MW under construction.
• Custom peak load curtailment contracts available
  for large customers.
• Residential and Small Non-Residential Customers
• Experience with direct control of space heat and
  water heat.
• Pricing
• Large Customers
• Demand Exchange (DBB) for large customers - 30 MW
  enrolled, 4 MW likely.
• Large customer programs supported by Energy
  Information Services (EIS) - 500 bills.
• RTP pilot available for large customers.
• Residential and Small Non-Residential Customers
• TOU for residential and small non-residential -
  1,800 customers.
• Active Demonstration Projects
• Fuel cells, microturbines, and combined heat
  power (CHP).

• Justification for implementation measured against
  total resource cost effectiveness, reliability,
  dispatchability, avoided supply side capacity
  costs, and environmental impact.

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1 - Degree of Utility Control

• Win-Win
• Dispatchable Standby Generation
• Number of controllable hours is specified
  contractually.
• It doesnt interfere with customers schedule.
• Power marketers have put DSG on reserve
  frequently in last 6 months.
• So-So
• Demand Exchange (DBB)
• The range is broad, and is not firm resource.
• Reduction is based not only on price, but on the
  customers priorities at the time.
• Direct control of water heat.
• Customers reported they liked it.
• Timing of when water heater on may not coincide
  with system need.
• Who Knows
• Direct control of space heat.
• Not comparable to AC results heat tolerances are
  narrower.
• First hour of reduction is more reliable than
  subsequent hours, due to overrides.
• TOU for residential and small non-residential
• Takes 1-2 years of history and data collection to
  determine amount of likely shift.
• Need large volume to realize large reductions.

Im not going to have anyone telling me how to
use electricity l have to use it when I need
it in order to keep my business running.
Its so convenient for me to not have to worry
about when my water heater is on or not. Im
sure Im saving energy and money!
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What Works Degree of Utility Control

• High Degree of Utility Control works WHEN
• It doesnt interfere with customers schedule,
  AND
• Number of controllable hours is specified
  contractually.

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2 - Customer-by-Customer Negotiations and Mass
Market Implementation

• Customary Approach - Pragmatic
• Large customers require a customized approach.
• Opened RFP for customized mandatory contract.
  Responding customers negotiated one-by-one.
• Even with mass market approach, via rate design
  or tariffs, large customers tend to work
  one-on-one with the utility, e.g., DBB needs
  baseline per account.
• Mass Market design is most cost effective with
  small and residential customers.
• Need to show the benefit to varying customer
  groups, e.g. spectators/converts/teammates,
  purchase classifications such as country
  traditionals/young moderns, business SICs.

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What Works One-on-One vs. Mass Market Design

• Higher Customer Interest WHEN
• It doesnt interfere with customers schedule,
  AND
• Customers see an economic benefit.

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3 - Marketing/Education SDGE

• Non-Participants offer the best insight
• SDGE learned customers shy away from programs
  that
• Are not a mainstream concept
• Are complex and technical
• They believe will result in higher bills
• Dont have an advantage for the customer

• Improved their response rate when
• Simplified the materials
• Mailed direct mail, twice
• Telephone follow up
• Targeted likely customer group
• 4,000 letters, mailed twice 744 responses

Information from SPP CPP-V Track A Redeployment,
JC Martin, June 9, 2004
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3 - Marketing/Education

• SDGE used a brief letter and simple brochure in
  recruiting for their residential thermostat
  program.
• They highlighted that customers receive a free
  thermostat, a 100 value in addition to cash
  incentives.
• They also recruit new customers where technology
  has already been installed

Get a new digital thermostat like this one
installed in your home for free And earn
some cash back too!
Dear Customer Did you know that the thermostat
in your home can earn you up to 100 this year.
Your home is equipped with a state of the art,
programmable smart thermostat.
Information courtesy of Lela Manning, SDGE.
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3 - Marketing/Education - LIPA

• LIPA is aggressive in recruiting and retaining
  customers in contracted CI program and
  residential load control.
• Community
• Compensation
• Communication

• Community - Appealed to the sense of helping the
  sense of economic development for the community,
  alliance with McDonalds through the school
  program. Contests and Prizes.
• Compensation Always provided a monetary
  incentive absence of penalties helps. Customers
  business or lifestyle come first. Power Perks
  Loyalty Card for discount shopping. Tickets to
  Islanders hockey games.
• Communication Requires multiple means, e.g.
  brochures, direct mail, community events, school
  pizza parties, a mascot, pre-curtailment
  notification, post-curtailment follow up, status
  of impact made by customers/communities (helps
  with retention).

Information courtesy Bill Jackson, April 2005.
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3 - Marketing/Education City of Anaheim

• City of Anaheim rewards customers with a high
  value credit for energy not used during peak
  hours.
• A rebate driven DR program
• Education/Information/Incentive and Technology
• Technology is a key enabler in success of DR
  programs.

• Recruitment through Direct Mail 150
• Fact sheets, refrigerator magnet
• Reports sent to participants after each event
• Positive Incentive, not a pricing program, no
  rate reduction, no penalties
• 0.35/kWh rebate at end of season
• Measured against control baseline
• Regular rate is 0.11/kWh

Information from Linda LeDuc presentation
September 2005.
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What Works Marketing/Education

• Higher Customer Interest WHEN messaging includes
• It doesnt interfere with customers schedule,
  AND
• Customers see an economic benefit.
• Tactics
• Brief letters
• Clear Direct Mail brochures
• Telephone follow up
• Free technology
• Monetary benefit
• Appeal to community benefit
• No penalties
• Visual reminders mascots and magnets
• Follow up reports help retention

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Vision for the End State

• PGEs Vision is for Market Transformation
• DR and other Distributed Generation will reach
  critical mass.
• Smart Homes and Smart Businesses, with smart
  appliances, will become common.
• Appliance manufacturers will find ways to build
  intelligence into their production line
  appliances or it will be driven by standards.