3. The Current SDP Program and the Proposed Modifications
To assess SCE's proposed revisions to its SDP program, it is necessary to review the major features of the program as it exists today.
SCE's current SDP program uses a special radio-triggered switch on the air conditioning circuit to curtail energy usage during periods designated as emergencies by the CAISO. The SDP can be invoked between June 1 and September 30. Currently, there are two program options available: a base program, in which curtailments are limited to 15 events per summer, and an enhanced program, in which there is no limit to the number of curtailments in a summer. All curtailments are limited to six hours per day.24
Program participants have three options for load control - 100% cycling (or full interruption of the air conditioner operation during the curtailment period); 67% cycling (the air conditioner operates one-third of the time during the curtailment period) or 50% cycling (the air conditioning operates half the time during the curtailment period). The load control switch is under SCE's direct load control via a broadcast radio signal that triggers all switches in a specific area.25
In return for participating in the SDP program, customers receive an annual credit on their electric bill. For those in the enhanced, 100% cycling option, the current credit is $198 if the customer has a 4.5 ton central air conditioning unit.26 The exact customer credit varies with the size of the air conditioning unit. SCE applies the credit to the participants' summer bill statements as a daily credit.27
Currently, 73% of the SDP program participants have chosen to maximize the incentives that they receive by choosing the enhanced program and electing 100% cycling.28 Curtailments under the current program, however, occur rarely, in part because it is a goal of the CAISO to avoid system emergencies. The SDP program had two service territory disruptions in 2010, none in 2009, 2008, 2007 or 2006, but three in 2005. Therefore, despite the common customer choice of a program that would permit extensive interruptions, few customers have much experience with such disruptions.
To transition customers from the current summer discount plans onto a new price-responsive program that is triggered frequently throughout a year, SCE identified various challenges. The challenges include the size of the current SDP program, the widespread employment of radio-triggered load control switches, and customer expectations that the program will be triggered rarely - that SCE offers a discount on the electric bill for virtually no sacrifice.
SCE noted that the current SDP program is the largest in the state and one of the largest in the country.29 In the Application, SCE argued that:
In arriving at the plan described in this application, SCE considered the challenges associated with changing a program with high enrollment, high customer satisfaction, and extensive infrastructure investment. SCE examined options to find the best way to transition existing SDP residential customers from a rarely-used emergency program to a redesigned price-responsive DR program that will be called frequently without causing customer attrition and stranded infrastructure costs. SCE also sought the best way to structure the SDP program for wholesale market use so as to provide the most benefit based on its characteristics - a flexible, limited-use, quick-response resource available on the hottest days.30
The Application then argued on behalf of its proposal that:
SCE's proposed SDP program effectively addresses these challenges and balances the need for market integration, customer retention and satisfaction and both emergency and price-responsive capacity. The modified SDP program also minimizes costs by continuing to leverage the existing program and technology infrastructure investments. Further, allowing SDP to convert to a price-responsive program and function in the CAISO market will assist SCE in meeting the terms of the Settlement and meet the Commission's objective to incorporate DR into market design protocols.31
SCE's application sought approval for an SDP that differs greatly from the current program. The revised SDP can be called at any time throughout the year, but with a maximum of 90 event-hours during a calendar year (the new program would not be just for the summer). There would be a single program for customers to select (unlike today where customers can choose an "enhanced" or "base" plan). During the course of a day, there could be multiple events, but the total interruptions in a single day will be capped at six hours.
Unlike the current plan, where the utility always has control over the air conditioner switch, the customer would have a choice between a switch that gives utility control over the air conditioner (the case today) or the choice of a switch with an override capability that would allow customers who press a button to opt-out of a particular curtailment event. Under the proposed revised SDP, a customer who elects the opt-out plan could opt out of five events per year (by pressing a button on a new load-control switch).
The new plan would also have two cycling options - 50% cycling, or 100% (total shutdown) - instead of the three options in the current plan.
The incentive payments to customers would depend on the cooling capacity of their air conditioner (i.e. the size of the air conditioner), the cycling strategy, and the override choice. For those with a 4.5 ton air conditioner who elect 100% cycling with no override, the incentive plan would provide a payment of $198 - the same payment that most SDP participants receive today.
There will, however, be a major difference in the operation and dispatch of the SDP. SCE plans to submit bids into the CAISO market on days where the price of energy will be high. If the price bid by SCE is reached, the CAISO will call on SCE's DR program to reduce demand, and SCE will interrupt electric service to air conditioners. Most importantly, instead of interrupting service only in emergency situations - which have occurred only five times in the last six years on a system-wide basis - a goal of this new program would be to avoid the cost of buying high-priced energy in periods of high demand. As a consequence, the program managers expect to interrupt air conditioning service several times each year.32
Thus, the SDP program will produce a major change for the customers who participate in this program. Specifically, the SDP program will change from one in which customers had little expectation of service disruption to one in which customers will expect service disruptions and will experience several a year.
24 SCE Opening Brief at 6.
25 Id.
26 Id. at 5.
27 Id. at 6.
28 Id. at 4.
29 SCE Opening Brief at 2.
30 Id. at 2.
31 Id.
32 Although there is no announced policy, the program's evaluation methodology has a confidential forecast that indicates that the program will be managed to produce multiple uses of this DR asset over the course of a year.
