14. Proposed Pilot Programs for 2010-2011
In the utilities' were directed to develop and propose pilot programs to explore several possible uses of demand response and permanent load shifting. Some pilot proposals to provide Participating Load under the CAISO's new markets were approved in D.08-12-038 for operation in 2009; the pilots not approved in that decision are addressed here. The utilities may continue the pilots approved in D.08-12-039 during 2010 and 2011 at the already-approved funding levels, as reflected in the adopted budgets in Section 24, below.
14.1. PG&E
In addition to the pilots approve in D.08-12-039 PG&E proposed three pilots for 2009-2011: a Small Customer Load Aggregation Pilot, the Commercial and Industrial (C&I) Base Intermittent Resource Management Pilot, and the Plug-in Hybrid Electric Vehicle/Electric Vehicle (PHEV/EV) Smart Charging Pilot. The objective of the first pilot is to assess the load reduction potential of small customers provided with enabling technologies. The goal of the other two pilots is to understand the Demand Response storage capabilities of different technologies, including thermal energy storage and batteries, in order to provide demand response products that can vary with load (so-called "load following" and "ramping" products) that may assist in managing expected future increases in the amount of electricity provided by renewables that provide energy on a variable or intermittent basis, such as wind turbines.115
14.1.1. Commercial and Industrial Intermittent
Resource Management Pilot
Under the C&I Base Intermittent Resource Management Pilot proposal, PG&E would work with the Demand Response Resource Committee to conduct a two-phase pilot. Phase 1 would consist of a scoping study that would examine the potential for use of thermal storage systems to assist with the integration of intermittent load from renewable sources. This phase would examine requirements for communication, automation, and other issues, and the development of a plan for conducting a field study. The second phase of this pilot would consist of field testing; during Phase 2, PG&E would install energy storage equipment in actual sites and evaluate the equipment's potential to assist CAISO in balancing energy supply and demand in order to safely integrate intermittent resources into the state's power grid.
TURN, Ice Energy and CAISO made comments on PG&E's C&I Intermittent Resource Pilot. Ice Energy suggests that PG&E should provide greater specificity in how it will integrate permanent load shifting with its renewable resources pilot.
TURN objects to this PG&E pilot proposal, arguing that the Commission should not authorize funding for PG&E's C&I Intermittent Resource Pilot because the utility has been integrating its existing resources into the grid for decades without demand response.116 In addition, TURN argues that the utilities do not yet know how to integrate demand response with CAISO markets while ensuring ratepayers do not pay twice for the same megawatts, once as demand response and a second time as load to meet resource adequacy requirements.117
CAISO supports this pilot, asserting that efforts to understand how to integrate intermittent renewable energy sources using load shifting and storage should be expanded in anticipation of the possibility of increasing the state goal for energy from renewable sources to 33% of all energy by 2020. CAISO further suggests that as the amount of wind generation increases, the variability of wind turbine output could become greater than the variability of the load to be served, compounding costs and problems associated with integrating this load into the power grid. Finally, CAISO argues that it would cost less to investigate these issues now rather than to wait and attempt to address them through a later pilot.118
Ice Energy raises concerns about the lack of specificity on the uses of thermal energy storage technologies in the proposal for this pilot. The proposal does provide for a scoping study as a key element of Phase One, and notes specifically that the scoping study will include an examination of thermal energy storage features.119 TURN objects to the study on the grounds that renewables that provide variable or intermittent load have been operating for years without creating difficulties for the power grid. CAISO disagrees with this statement, pointing out that the proportion of electricity provided by renewables is increasing rapidly, and that as the amount of power provided through renewables rises, the challenges of balancing supply with demand increase. We are persuaded that the challenge of keeping the power grid in balance grows as the amount of intermittent resources grows, and that it is advisable to study technologies and strategies that may assist with this integration before the electricity provided by intermittent resources increases enough to threaten the reliability of the grid.
To address the Ice Energy concern about the lack of specificity for this pilot, we direct the utility to use the planned scoping study as an opportunity to provide a greater level of specificity to demonstrate how it will integrate permanent load shifting technologies with the renewables pilot. PG&E shall include a full discussion of permanent load shifting technologies and their potential for assisting with the integration of intermittent resources in the study to be prepared after the first phase of the pilot. With this requirement, we approve the C&I Intermittent Resources Pilot at the requested funding level of $1,764,000.
The PHEV/EV Smart Charging Pilot proposed by PG&E would test "Smart Charging" technology to charge electric vehicles without using electricity at times of peak demand or high energy prices. According to PG&E, the Smart Charging Technology integrates dedicated-electric or hybrid electric vehicles with their chargers, Advanced Metering Infrastructure networks, and Home Area Network Communications systems to determine when to charge vehicles. This so-called "intelligent charging system" would determine when to charge based on price signals or grid load requirements. This will help to ensure that such vehicles are charged efficiently and at relatively low cost, without increasing burdens on the power grid at peak times. PG&E requests $1,010,000 for this pilot.
TURN's and CAISO's comments on this pilot largely echo those made by the same parties on the C&I Intermittent Resources Pilot.
As discussed in Section 14.2.1.1.2, above, we are persuaded that the challenge of keeping the power grid in balance grows as the amount of intermittent resources grows, and that it is advisable to study technologies and strategies that may assist with this integration before the electricity provided by intermittent resources increases enough to threaten the reliability of the grid. Smart Charging technology that could assist customers in keeping efficient electric or hybrid electric vehicles charged without increasing peak system load is a promising method for moving electricity demand away from peak times, without creating inconvenience for customers. We approve the PHEV/EV Smart Charging Pilot with the requested funding of $1,010,000.
The purpose of PG&E's proposed Small Customer Load Aggregation Pilot is to promote demand response enabling technologies for small customers in the commercial mass market sector. Specifically, PG&E proposes to equip small customers with switches and other controllable devices that can be triggered through a communication system in order to reduce load in end use devices. Although the project will not require customers to have interval meters, the utility explains that results gathered from the pilot will advance small customer participation in demand response after the utility's advanced meters, SmartMeters, are rolled out.120 PG&E proposes to begin the pilot in 2009 with a request for proposals (RFP) to identify implementation and marketing vendors, and select technology. In 2010, the pilot will continue with customer acquisition, device installation, scheduled curtailments and monitoring. Following the pilot, PG&E intends to evaluate load drop and customer satisfaction of customers enrolled in the Pilot. The utility forecasts a total of $2.595 million for this pilot during the 2009-2011 budget cycle.121
PG&E emphasizes that its proposed Small Customer Load Aggregation Pilot focuses on enabling technologies. This is unlike a previous load aggregation pilot focusing on small customers, which concentrated on outreach and understanding the needs and behavior of smaller customers. The utility notes that the budget for the pilot includes funding for the acquisition and installation of the enabling technologies to be tested in the pilot. PG&E also asserts that its pilot will prepare small commercial customers to move to dynamic pricing.122
SF Power originally argued that this pilot is unnecessary, and proposed that as an alternative, the Commission should authorize $675,000 for SF Power to extend its existing Small Customer Aggregation Pilot.123 As discussed in Section 22, below, on March 25, 2009, PG&E and SF Power filed a motion for approval of a Settlement Agreement requesting that the Commission approve a continuation of the existing PG&E/SF Power Small Commercial Aggregation Pilot. In accordance with the terms of this settlement agreement, SF Power withdrew its opposition to PG&E's Small Load Aggregation pilot.124
This proposal by PG&E is consistent with direction provided in the Guidance Ruling, which recommended that the utilities consider or propose a small load aggregation pilot in their 2009-2011 Demand Response applications. However, the Small Customer Load Aggregation Pilot, as proposed, is duplicative of two other proposals in PG&E's 2009-2011 demand response application, and therefore does not appear to offer additional value sufficient to justify the large expenditures requested. Specifically, PG&E proposes funding for enabling technologies similar to those used in this pilot in two other programs: Emerging Technologies and Automated Demand Response. The Emerging Technology proposal focuses on assessing hardware, software, design tools, strategies and services that may support demand response, including smart thermostats, smart appliances, energy storage, advanced lighting, advanced energy management systems, and technologies compatible with advanced metering infrastructure and home area networks (AMI/HAN). This list is substantially similar to the enabling technologies that PG&E proposes testing in this pilot.
Similarly, the Auto Demand Response Program (discussed in Section 12, above) is described as providing program participants with electronic, internet-based price and reliability signals that are linked to facilities' energy management control systems. Signals can be used to automate the response to dynamic pricing (such as the Critical Peak Pricing program) or demand bid options. Many of these technologies are appropriate for use by small commercial customers. The utility explained that in 2006-2008, only 10% of the Automated Demand Response came from the commercial sector. Though neither of Emerging Technology nor Automated Demand Response is specifically targeted to small commercial customers, the funding available through these programs could be available to such customers.
PG&E raises an important point that it may be beneficial to provide small commercial customers with opportunities and education to assist them in taking advantage of automated technologies;125 this element of the pilot could be what sets it apart from the utility's Enabling Technology and Auto Demand Response proposals. Such a pilot could help prepare this customer class prepare for SmartMeter implementation, so that these customers will have the competence to choose to participate in a demand response program. However, in its proposal features section, the utility does not mention how it will provide education or technical help to customers and instead focuses on end use devices, control of devices and enrollment of customers. Further, the utility lists education as one element that bidders for RFPs should address, but provides no guidance.126
Based on PG&E's description included in the application, it is not clear that this pilot could meet the utility's objective to educate customers. It is also unclear whether or how this pilot would leverage information gathered from SF Power's final report on the existing Small Commercial Aggregation Pilot. PG&E also does not provide an explanation of why the activities contemplated for this pilot should not be funded through another source, perhaps the utility's budget for AMI deployment or the funds requested for Enabling Technologies or Automated Demand Response. For these reasons, we are not persuaded that PG&E should receive additional funding at this time for the proposed Small Commercial Load Aggregation Program, and the request for $2.595 million is denied. PG&E may conduct the activities described here through its approved Enabling Technology or Automated Demand Response budgets. PG&E and the other utilities are encouraged to submit a more specific proposal for a small load aggregation pilot addressing issues such as education and outreach, if appropriate after the results of the ongoing Small Commercial Aggregation Pilot are finalized.
14.2. SCE
D.08-12-039 approved one Participating Load Pilot program proposed by SCE. This decision considers three additional proposals that would leverage the company's AMI system, Edison SmartConnect, "to enhance customer experience."127 These three proposals are the Smart Thermostat Customer Experience Pilot, the Tier Alert Program, and the Optional Programmable Communicating Thermostat Program. SCE requests a total of $4,810,273 for these programs in 2009-2011.
SCE proposes a Smart Thermostat Customer Experience Pilot to assist with the planned transition of its Summer Discount Program from an air conditioning direct load control program, utilizing one-way communication to activate simple on-off switches in return for a monthly credit, to a program that achieves load reduction through use of two-way communication with a smart thermostat, and pays participants for their actual load reductions. SCE intends to gather information from this pilot to prepare the utility for roll out of its advanced meters, Programmable Communicating Thermostats and default Peak Time Rebate tariff for residential customers. SCE proposes this pilot to help gain an understanding of program structure and operation issues such as customer Programmable Communicating Thermostat installation that could impact demand response or cause unnecessary program spending. The utility explains that 450 of the 500 customers needed for the pilot were already recruited prior to Resolution E-4169128 and therefore many already have a Programmable Communicating Thermostat, and that some already have an interval meter. SCE forecasts spending $549,750 on this pilot for 2009 and 2010.
SCE explains that the SmartConnect infrastructure will include a web portal that uses data from meters to inform customers of their electricity usage, including the rate tier129 applicable to the customer's usage at a given time. The utility proposes the Tier Alert program to notify customers up to three times per billing cycle when their level of usage is about to move the customer into the next rate tier for that month. SCE argues that this program will increase customers' awareness of energy usage and, as a consequence, energy conservation efforts.130 The total forecast cost of this program is $3,459,849.
Through its Optional Programmable Communicating Thermostat Proposal, SCE intends to assess the impact of use of a Programmable Communicating Thermostat on the load reductions of residential and small commercial customers enrolled in Critical Peak Pricing. SCE explains that it will use usage data to compare load reductions of these two customer groups during Critical Peak Pricing events. It appears that program activities would include solicitations, working with focus groups, and developing and evaluating survey instruments to evaluate and compare usage with and without Programmable Communicating Thermostats. SCE forecasts $780,674 for this activity in 2010 and 2011.131
TURN argues that the Commission should reject all three of the SmartConnect Enabled programs "based on the fact that Edison's AMI project has already been fully vetted and authorized through the AMI proceeding [A.07-07-026]."132 TURN asserts that SCE's SmartConnect enabled programs should be reviewed in the context of the funding and programs that were already approved through D.08-09-039, which authorized activities and funding related to SCE's AMI deployment proposal. TURN contends that funding for SmartConnect was authorized based on an analysis of its estimated costs and benefits, and that authorizing additional money, would inappropriately undermine the earlier analysis by adding costs and benefits that have not been analyzed within the original business case framework.
TURN argues that the Optional Programmable Communicating Thermostat Proposal should be rejected because SCE did not meet the requirement in Resolution E-4169 that SCE present a well-designed research plan for this pilot.133
In addition to a similar objection to any program utilizing SmartConnect (or any other already-approve AMI system), CLECA expresses concerns about SCE's Tier Alert program. CLECA asserts that the goal of Tier Alert is to increase energy conservation, not to reduce peak energy usage, meaning that it is not a true demand response program. CLECA also objects to the Tier Alert program because it is targeted at residential customers only, arguing that the program should be funded by residential customers.134
TURN suggests that these three SCE proposals should have been reviewed in the AMI proceedings. In D.08-09-039, which adopted the SmartConnect system, the Commission recognized that additional programs and services may be made possible by AMI in the future and may revisit future Commission policy decisions.135 We anticipated that additional programs made possible by SCE's AMI might be proposed and approved in future Commission proceedings. It is not reasonable to deny funding to this pilot because it was not anticipated during a past proceeding. Instead, it is not only reasonable but in fact desirable to explore ways to leverage the ratepayers' investment that may provide additional benefits beyond those foreseen when the AMI project was approved. Therefore, we review the merits of each proposal individually.
TURN asserts that this proposal should be rejected due to the lack of an adequate research plan. However, SCE has improved its Programmable Communicating Thermostat proposal since it was initially submitted in SCE Advice Letter 2233. Appendix L of SCE's Amended Testimony includes a research plan for this proposal, and the current proposal reduces the cost of the program significantly. It is likely that information from this pilot will enable the utility to more effectively and efficiently provide customers with Programmable Communicating Thermostats and information needed to utilize that equipment more effectively. We approve this pilot at the requested funding level of $549,750 for 2009 and 2010.
As noted by CLECA, the Proactive Residential Tier Alert proposal focuses solely on energy conservation, and is unlikely to result in any actual demand response. SCE has not made a persuasive argument that this program should be funded as a demand response program, and it is unclear whether the program would be cost effective. For these reasons, we deny SCE's request for approval and funding of its Tier Alert proposal. SCE may resubmit this proposal in a more appropriate proceeding, such as an application related to energy efficiency activities.
D.08-09-039 authorizing SCE's SmartConnect deployment approved $58.1 million for Programmable Communicating Thermostats.136 This application requests an additional $780,674 for related activities in 2010 and 2011 to assess the effectiveness of Programmable Communicating Thermostats in increasing demand response. This program appears to be, essentially, a pilot to improve understanding of how customers that takes advantage of enabling technology, such as a Programmable Communicating Thermostat, perform on a Critical Peak Pricing rate. The requested funding is intended to support activities such as outreach and enrollment in the program, work with focus groups, and the development and evaluation of survey instruments to evaluate and compare usage with and without Programmable Communicating Thermostats. This proposal will leverage the $58.1 million already approved for Programmable Communicating Thermostats in order to improve understanding of customers' behavior. The information gained from this program may assist utilities in targeting distribution of Programmable Communicating Thermostats and improving consumer education related to use of Programmable Communicating Thermostats. This pilot should also improve understanding of customer behavior, and improve understanding of customer behavior.
We approve this proposal at the requested funding level of $780,674 as a pilot for the purpose of improving understanding of the impact of customer acceptance and behavior when given access to enabling technology such as Programmable Communicating Thermostats. In order to ensure that this information becomes publicly available, we require SCE to file a report on the pilot results with Energy Division not later than January 21, 2011.
14.3. SDG&E Residential Automated Controls Technology Pilot
SDG&E proposes a single pilot, the Residential Automated Controls Technology Pilot to test, implement, and evaluate enabling technologies that may assist in achieving load reduction during periods of peak energy use. The utility proposes testing energy management systems, programmable communicating thermostats, online curtailment tools, smart appliances and load control devices in conjunction with the deployment of the SDG&E Smart Meter (AMI) system. In order to enroll, customers will be required to have Smart Meters and electric appliances that may be curtailed in times of high use, and an average summer electricity usage of 700 kilowatt-hours per month.137 SDG&E proposes to enroll up to 1,500 residential customers in this pilot,138 focusing primarily on those with residences built before 1987. Participants will receive real-time energy usage information, as well as information on demand response events, and may participate in periodic surveys. Enrolled customers that maintain enabling technologies tested in this pilot will receive a bill credit of $1.25 per kilowatt-hour reduction achieved during SDG&E Peak Time Rebate events. SDG&E proposes a budget of $1,689,671 for the 2009-2011 budget cycle.139
According to SDG&E, the Residential Automated Controls Technology pilot differs from existing enabling technology pilots in that it focuses on commercially available technologies (not testing of newly developed technologies). In addition, SDG&E suggests that the Residential Automated Controls Technology pilot will be larger than many previous pilots, and it will continue for a longer period of time, which SDG&E suggests will enable it to better evaluate customer acceptance, customer persistence, and customer preferences.140
TURN opposes the Residential Automated Controls Technology pilot, asserting that SDG&E already received funding for "all of its AMI- related programs, tariffs, and outreach programs."141 TURN argues that "much of SDG&E's request [in this application] is inappropriate because it apparently seeks funding for programs that were, or should have been, authorized in SDG&E's AMI application."142 TURN asserts that it is inappropriate for SDG&E to seek additional funds for its AMI project when that project's reasonableness was determined based on the costs and benefits submitted in A.05-03-015, and further, that SDG&E should be held to its claim made in testimony in that proceeding that AMI would result in lower spending on demand response programs beginning in 2009. In response, SDG&E argues that the savings estimates given in the earlier AMI proceedings are no longer relevant due to delays in both its Smart Meter deployment and the implementation of its Peak Time Rebate tariff.
In addition, TURN argues that several previous studies related to Smart Thermostats have found high override rates and show limited success is demand reduction from in-home display devices.
The Residential Automated Controls Technology pilot, as described, is designed to answer specific questions related to the willingness of residential customers to install enabling technologies that facilitate load reduction, as well as curtailment devices that allow the utility to control certain appliances. The pilot should also provide SDG&E with information that will allow the company to understand the information and support needs of customers, and evaluate how access to enabling technologies and increased information will affect residential customers' behavior, and the persistence of any behavioral changes and associated load reductions over time. Little information is currently available on which technologies best enable and encourage residential customers to engage in load reductions during demand response events, and the Residential Automated Controls Technology pilot could help provide this information.
We approved the settlement agreement in A.05-03-015 based on the best information available at that time. It is not reasonable to deny funding to this pilot because it was not anticipated during a proceeding that concluded two years ago, or because experience has shown that the reality of deployment does not perfectly match the estimates used in the approving decision. The Commission used the best information available in making that decision, and should not summarily dismiss new proposals that may build on the approved investment; new proposals should be judged on their own merits.
In D.07-04-043, which approved the Settlement for SDG&E's AMI application, the Commission recognized that AMI will support future technological advances. It would be misguided to limit the application of an investment to activities that were foreseen at the time the investment was approved. Instead, it is not only reasonable but in fact desirable to explore ways to leverage the ratepayers' investment in infrastructure such as the Smart Meter program, in an attempt to provide additional benefits beyond those foreseen when the project was approved.
The Residential Automated Controls Technology pilot is expected to provide information about residential customers' behavior, use of load control technologies, and willingness to participate in load management programs. Unlike many previous studies, the Residential Automated Controls Technology pilot will compare commercially available technologies and focus on their relative success, as well as the persistence of effects over a longer period of time. For these reasons, we approve the Residential Automated Controls Technology pilot and its associated budget of $1.7 million.
115 PG&E Exhibit 201, Chapter 2, pp. 51 and 55.
116 TURN Exhibit 418, p. 18.
117 TURN Opening Brief, p. 34.
118 CAISO Opening Brief, pp. 2-3.
119 Exhibit 205, Appendix 2C, p. 1 of Pilot 2a - C&I Based Intermittent Resource.
120 PG&E Exhibit 201, Chapter 2, p. 2-58.
121 PG&E Exhibit 201, Chapter 2, pp. 58-60, and budget on p. 1-13 listed as Small Customer Enabling Technology Pilot.
122 SF Power Reply Brief, p. 38.
123 SF Power Reply Brief, p. 23.
124 Settlement Agreement Between PG&E and SF Power, (see Attachment B for this decision) p. 9.
125 PG&E Exhibit 201, Chapter 2, p. 58.
126 PG&E Exhibit 205, Appendix 2D, pp. 1-3, Draft RFP Specifics for the Small Customer Load Aggregation Pilot.
127 SCE Amended Testimony Volume 1, p. 120.
128 Resolution E-4169 is the resolution prepared to address SCE Advice Letter 2233-E, in which SCE had first proposed a similar pilot. In the original Advice Letter, SCE focused on conducting a behavioral study of its customers. The Advice Letter was rejected in this resolution because the Commission believed the proposal as designed would not provide the desired information. In addition, the advice letter was submitted too late for timely approval of the pilot for summer 2008.
129 Utility electricity rates are structured in "tiers," with rates per unit increasing as the amount of electricity used per month increase. SCE has five rate tiers.
130 SCE Exhibit 1, p. 121.
131 SCE Exhibit 1, p. 124.
132 TURN Opening Brief, p. 40.
133 TURN opening brief, p. 41
134 Testimony of Barbara Barkovich, p. 53.
135 D.08-09-039, Decision Approving Settlement on SCE's AMI Deployment, September 22, 2008, p. 18.
136 D.08-09-039, p. 51.
137 SDG&E Exhibit 102A, p. 37.
138 SDG&E Exhibit 102A, p. 35.
139 SDG&E Exhibit 102A, pp. 37-43.
140 SDG&E Exhibit 102A, p. 41.
141 Turn Opening Brief, p. 49.
142 Turn Opening Brief, p. 47.
