Madison, S.D., keeps demand response simple for success

The city of Madison built this 10-MW powerplant as part of an agreement with Basin Electric Power Cooperative. The facility provides stand-by generation for the municipality and emergency power to Basin. (Photo by Madison Electric Utility)

Hot summer afternoons and cold winter mornings are a fact of life in Madison, S.D., and for many residents, so is the periodic—and barely noticeable—interruption of their water heaters, air conditioners and electric furnaces during those peak demand times.

The small municipal utility, a Western hydropower customer, has managed its load since 1984 to minimize expensive supplemental power purchases. Although the automated control system was upgraded in 2001, the program targeting residential consumers is a classic example of a demand response program, and a success. "And it is one of the few voluntary demand response programs around," added Load Management Operator Tess Nelson.

Incentives reward customers

Almost half of the utility's 3,800 electric customers participate in the program, and it was presented as a case study at one of Western's demand-side management webcasts in 2007. A key factor in the program's popularity is that Madison Electric Department shares the savings with participants. Customers who allow the utility to control one of the targeted appliances receive the following incentives:

• Water heaters–$0.00500/kilowatt-hour (kWh) on monthly use between 50 kWh and 800 kWh with a maximum of $3.75 per customer.

• Air conditioners–$0.0125/kWh on monthly use from July through September between 300 kWh and 1200 kWh with a maximum of $11.25 per dwelling unit on 220-volt air conditioner.

• Electric heat–$0.02813/kWh on monthly use from December through February between 1,000 kWh and 1,400 kWh, with a maximum of $11.25 per dwelling unit (4-kW electric heating system required).

• Off-peak use rates–$0.0329/kWh for use that can be interrupted at the convenience of the city without advance notice to the customer.

A "dual fuel" incentive is also available to customers with an auxiliary heat source other than electric. This part of the program has seen the greatest increase in enrollment in the last year, likely due to rising natural gas costs. Most customers choose electric resistance heating systems, though air-source heat pumps are becoming more popular. "We don't control those because they are too efficient, and the back-up furnace will be working on the coldest days anyway," explained Nelson, who has one of the units at her own home.

Motives for participating

Program enrollment remains steady with only bill stuffers, newsletter ads and word of mouth to promote it. The large number of rental units in the city is part of the reason, said Nelson. "Landlords who pay the utilities appreciate it, and the apartments that receive heating assistance are required to participate."

The program has recently experienced an influx of new participants, noted Nelson. "People are looking to save money any way they can, and demand response is a painless way to control your energy costs," she said.

Of course, no program is right for every customer, so Madison Electric makes it easy for residents to pull out if they find load control to be too disruptive to their lifestyle. There is no contract between the utility and the customer, so the customer only has to call to discontinue participation. "It doesn't happen much," Nelson acknowledged. "People are very open to the idea of load control, especially when it saves them money and helps to keep electricity rates from going up."

New control system, local vendor

Any program needs to be updated occasionally if it is to continue to succeed, especially after 25 years in operation. Madison Electric gave its demand response program a technological facelift in 2001.

The auto-control system is based on set points, and operates around the clock to shed without manual intervention. "It's all standard, off-the-shelf, load-management technology, intertwined with SCADA (supervisory control and data acquisition)," Nelson said.

On the consumer end, the equipment consists of radio control load switches and remote transmitter controllers from Comverge Technologies Inc. With the help of contractors, the utility installed the switches over the course of about two years. A local company, Internet Energy Systems, handled the remote system, software and antenna design. Service wasn't much of an issue, recalled Nelson, since IES does work all over the country. "But it's comforting to know the vendor is right around the corner if something does go wrong," she admitted.

The city leaders were no doubt happy to keep a portion of the major purchase within the community, however. The $275,000 price tag on the new system was a big investment for a small town, but a wise one. In 2007 alone, load management saved the city of Madison more than $105,000. Even with about half of that money paying for customer incentives, the system has more than paid for itself.

Lessons learned

The strong vendor relationship that has worked so well for Madison Electric is limited to the automated control system. Unlike many utility incentive programs, Madison's demand response program does not promote or rebate specific consumer appliances or systems. "At this time, the overhead would just be too high for us to absorb," said Nelson. "We are doing some studies to see if it might be a possibility in the future."

And there is no hurry to fix a program that is already working well for the city and its residents. With a quarter of a century of load management experience, the city of Madison has learned its lessons: Share the rewards with your customers, develop strong trade allies and, above all, keep it simple.

Resources

Basin Electric Power Cooperative

Madison, S.D.

Introduction to Demand-side Management webcasts

Madison Electric Department

Comverge Technologies Inc.

Internet Energy Systems

People

Tess Nelson

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