Demand Response

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Demand Response

• A 28 Year History of Demand Response Programs for
  the Electric Cooperatives of Arkansas
• by
• Forest Kessinger
• Manager, Rates and Forecasting

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Why do Utilities / Consumers Engage in Demand
Response?

• To gain an economic advantage in their bill.
• To avoid a short-term capacity shortage.
• To avoid a long-term capacity investment.
• Thought - In the long-run, if your pricing
  signal (rate) encourages demand response,
  objective number 3 is met through a reaction to
  that pricing signal.

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Currently, AR Cooperatives have Approximately 730
MWs of Demand Response -This is Achieved by

• Direct control by the member cooperatives.
• 2. Voluntary control by a retail consumer using
  cooperative supplied instantaneous and hourly
  load data.
• Direct control of industrial loads by AECC.
• Voltage Reduction during peak periods.

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Arkansas Co-op. Demand Response Quantified

• Controlled by Member Cooperatives 107 MW
• Voluntary Retail Peak Avoidance 80 MW
• Controlled by AECC
  550 MW
• 
  
• Total Demand Response 737 MW

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Load Controlled by Member Cooperatives 4
CI Voluntary Control 3
Load Controlled by AECC 20
Firm Load 73
Note AECCs 2006 firm load 1,971 MW
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How did Demand Response Begin for the Electric
Cooperatives?
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Category 1Direct Load Control by the Member
Cooperative

• It is all economics

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Time-based Metering

• In 1978, Arkansas Electric Cooperative
  Corporation (AECC) installed wholesale metering
  which recorded hourly kW demand by wholesale
  point of delivery. This hourly data could be
  processed into simultaneous hourly coincident
  totals for wholesale points of delivery for each
  member cooperative.

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Coincident Peak Rate Design

• Further, AECCs Board of Directors approved a
  wholesale rate design which included billing
  demands based on the member cooperatives
  contribution to AECCs simultaneous summer
  peak(s). Billing demands established during the
  peak(s) were charged until the new peak(s) was
  set the following summer.

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Cost-of-ServiceCost Allocation Methodology

• At the same time, AECCs Board of Directors
  adopted a cost of service approach which placed
  its fixed costs in the demand charge while
  variable costs flowed through the energy charge
  and fuel adder.

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By 1985, AECCs Wholesale Rates were as Follows

• Demand Charge 12.14 / kW / month
• Energy Charge 0.0199 per kWh

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The Short-term Reward for Control

• Needless to say, the reward for controlling peak
  was great. If there was potential for a member
  cooperative to control its annual peak, a load
  control system might economically be justified.
  The reward to the member cooperative was a
  reduced demand billing for the following year.

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The Long-term Reward for Control

• The long-term reward for controlling peaks is
  also great. All (even those who do not have
  demand response capabilities) benefit through
  AECCs ability to avoid building future peaking
  plants.

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Early Target Loads for Demand Response

• Irrigation Water Pumping
• (a) row crop,
• (b) field flooding (rice), and
• (c) catfish farming
• Residential
• (a) air-conditioning, and
• (b) water heating

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Means of Control

• The member cooperatives control 107 MW of peak
  demand using approximately 40,000 radio control
  switches.
• Twelve of Arkansas seventeen member
  cooperatives currently engage in direct load
  control.

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Reported Member Load Control
1979 1,962 kW under Control
1985 58,869
1995 153,217
2000 159,285
2004 147,706

All numbers represent reported installed control. Achieved control will always be less. All numbers represent reported installed control. Achieved control will always be less. All numbers represent reported installed control. Achieved control will always be less. All numbers represent reported installed control. Achieved control will always be less. All numbers represent reported installed control. Achieved control will always be less.
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Estimated Achieved Load Control by Cooperative
Craighead 4,382 kW Mississippi 10,817 kW
First 17,235 Ozarks -
Farmers 2,977 North AR 9,219
Southwest - Ouachita -
AR Valley - Petit Jean 2,946
Woodruff 47,490 So. Central 2,838
Carroll 3,846 Ashley-Chicot 4,431
CL 2,254 Rich Mt. -
Clay 1,659

Total 107,117 kW
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Category 2Retail Voluntary Load Control

• In the 1990s, member cooperatives began
  offering CI retail members rate designs that
  mirrored AECCs wholesale firm rate.
• If the retail member avoided AECCs peak, then
  the member cooperative passed along its wholesale
  savings to the retail consumer.

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Requirements

• A communications system that allows the retail
  consumer instantaneous load data so that the
  consumer might evaluate potential peak periods.
• Time based retail hourly metering so that the
  distribution cooperative can confirm that the
  retail consumer actually avoided AECCs billing
  peaks.

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Participation

• Currently, at least ten member cooperatives
  offer some type of voluntary peak avoidance rate
  to their retail CI consumers.
• There are probably in excess of 29 CI consumers
  taking advantage of voluntary peak avoidance
  rates.
• AECC believes that voluntary control provides at
  least 80 MW of peak avoidance.

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Category 3Loads Controlled by AECC

• The retail member must be 5 MW or larger.
• AECC places the load within an assigned block.
• The retail load has three hours notice of
  interruption.
• ½ of the hours may be interrupted for any reason.
  
• ½ of the hours may be interrupted only to avoid
  the interruption of firm load (for capacity
  shortage).
• The member cooperative implements AECCs IC Rider
  with a retail tariff or special rate contract.
• Note Interruptions for any reason will not
  begin until 1 Jan 2008.

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Interruptible Load Blocks
Load Limit Maximum Annual Interruption
Block - 12 674,001 kW to 714,000 kW 1,200 hours
Block - 11 574,001 kW to 674,000 kW 993 hours
Block - 10 529,001 kW to 574,000 kW 933 hours
Block - 9 489,001 kW to 529,000 kW 804 hours
Block - 8 444,001 kW to 489,000 kW 724 hours
Block - 7 409,001 kW to 444,000 kW 633 hours
Block - 6 369,001 kW to 409,000 kW 555 hours
Block - 5 329,001 kW to 369,000 kW 481 hours
Block - 4 289,001 kW to 329,000 kW 408 hours
Block - 3 249,001 kW to 289,000 kW 340 hours
Block - 2 209,001 kW to 249,000 kW 274 hours
Block - 1 0 kW to 209,000 kW 200 hours
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Supplemental Service /Buy-through

• While AECC may interrupt a load served under the
  IC Rider, AECC and the member cooperative will,
  if available, offer supplemental service to
  prevent the interruptible load from physically
  being interrupted.

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Supplemental Service /Buy-through- Continued -

• When available from the market, AECC will offer
  interruptible supplemental service to member
  cooperative for their interruptible retail
  members.
• Supplemental service is offered at an
  incremental market price plus a small adder. The
  retail member may accept or decline the
  supplemental offer.
• Interruptions for fuel economics, when combined
  with supplemental service, also introduces an
  element of critical time pricing.
• Note Interruptible supplemental service has a
  five minutes interruption notice.

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Category 4Voltage Reduction

• Currently, Southwest Arkansas Electric
  Cooperative Corporation is using a voltage
  reduction measure to reduce their peak(s) by
  approximately one MW.
• When Southwests voltage reduction measures are
  fully implemented, Southwest estimates that they
  will reduce their peak(s) by as much as 5 MW.

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Issues to Consider

• Dont allow the interruptible rate or
  interruptible credit to overcompensate the member
  cooperative or retail member for peak avoidance.
• 2. It is best to interrupt your interruptible
  loads.

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AR Public Service CommissionDocket No.
06-004-REnergy Efficiency

• One of the goals of the EERs is Permanent Peak
  Demand Reduction.

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Questions ?