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Demand response keeps electricity reserves up, costs down

Simply using less electricity is one way to save kilowatts. Another is to reduce power use when the demand is highest and electricity is most expensive.

The advantages of this type of conservation include relieving generation and transmission constraints, reducing the severity of wholesale price spikes and ultimately lowering overall energy prices for consumers. Those benefits are worth enough to utilities that many are willing to reward customers who agree to reduce or cut off their power consumption when reserve margins are low. This is called demand response, and the Northern California Power Agency and its member utilities have used this strategy for a number of years.

The California energy crisis focused the spotlight on demand response, recalled NCPA Member Services Manager John Berlin. “The state and the Independent System Operator offered financial incentives, but most of our members’ activities started with voluntary programs for their largest customers, and these have since continued,” he said.

Some activities involve sophisticated advanced electronic metering and making real-time, interval data available to customers. Others are tried and true measures like offering incentives to install high-efficiency air conditioners, or switching to back-up generators during peak demand. “If a utility uses the technology to help customers control their energy consumption, that’s great,” Berlin said. “It only enhances demand response efforts.”

Advanced metering shows Palo Alto customers detailed usage
What is necessary is customer cooperation, as two NCPA member programs demonstrated. The City Of Palo Alto Utilities’ current program began with asking large customers to voluntarily reduce consumption during electricity shortages. “If a business curtailed its use when we asked, we removed it from the rolling blackout list,” explained CPAU Key Accounts Representative Bruce Lesch.

To make sure participants were cutting back and to give them more information about their electricity use, CPAU retrofitted some of the customers with advanced meters. “We had installed a few before the energy crisis in anticipation of deregulation and to allow automated meter reading,” Lesch said. “We realized it could be a good tool for showing customers how they use energy.”

The system records 15-minute interval energy use data in either real time or day-plus-one load profiles, reflecting the previous day’s use. Customers can access their profiles on the Internet.

CPAU currently has 70 advanced electric meters placed with large customers along with a few gas meters. Lesch says the utility is looking at using automated meters to manage smaller loads in the future. Connecting the meters to the city’s fiber optic network would give customers instant access to detailed energy use information without a phone line charge for downloading.

Honor system expedites program
Although it uses advanced electronic meters, Silicon Valley Power’s program is based on community and the old-fashioned handshake, insisted Larry Owens, SVP customer services division manager.

In June 2000, transmission constraints forced the Santa Clara municipal utility to turn off two circuits for two hours. “Our large commercial accounts hated it and they wanted to keep these rolling blackouts from ever happening again,” he explained. “It brought big, international corporations together in a lifeboat atmosphere.”

Initially, a group that included Intel, Applied Materials, Sanmina and the Santa Clara University met to discuss emergency load reduction strategies and best practices. Within three weeks, more than a dozen participants delivered plans to cut consumption by up to 10 percent for four hours whenever the ISO called a power shortage emergency—projecting an operating reserve shortfall within the hour.

In return for their efforts, the companies were exempted from rolling blackouts. NCPA and the utilities agreed that reliability was a far greater incentive to customers than financial incentives. “There are a lot of information hubs in our service territory, a lot of corporations with world headquarters here,” said Owens. “No financial incentive we could offer would be as important as keeping the lights on.”

Taking money out of the equation allowed SVP to launch its demand response program quickly. “Where there’s money involved, there are contracts, and it would have taken months to negotiate with each account,” Owens asserted. “By basing the plan on trust, we had it up and running in a few weeks. It was more of an emergency response program,” he added.

Matching load to resources, adding renewables ensures reliability
Like all NCPA members, Silicon Valley supported California’s Flex Your Power Now campaign during Summer 2004. However, Owens pointed out, the utility had more than enough power to meet its demand because of its varied portfolio. “Our power mix is 26 percent eligible renewable energy,” he said. “It comes from geothermal and small hydro generation.”

NCPA members have done a good job of matching resources to loads, noted Berlin, and all have done a good job with their public benefits energy efficiency programs and voluntary demand response programs. “Under NCPA’s agreement with the ISO,” he said, “NCPA pool members don’t have to follow ISO loads, and have had more flexibility to apply conservation measures when needed.”

Even so, NCPA and its members will continue to support California’s successful conservation efforts. Electricity is a dependent resource—its availability fluctuates with a variety of circumstances—so it is necessary to look at costs and benefits, he maintains. “Demand response has been and will continue to be a key management strategy.”