Demand Response at Dairyland Power Cooperative

1. Ed West, Director, Telecom & Control June 3 2008 National Town Meeting On Demand Response Demand Responseat Dairyland Power Cooperative

2. Dairyland Power Cooperative 25 Member Co-ops 19 Municipals 256,000 Customers 1,200 MW Generation 3,134 Miles of Transmission Lines 330 Substations 44,500 Square Mile Service Area 886.9 MW Peak 7/06 25 Member Cooperatives that are integral to the discussion today - Without their imput and support we couldn't do what we will be talking about 44,500 Square Miles - Much of which is the un glaciated area meaning hilly 887 MW peak25 Member Cooperatives that are integral to the discussion today - Without their imput and support we couldn't do what we will be talking about 44,500 Square Miles - Much of which is the un glaciated area meaning hilly 887 MW peak

3. Dairyland Power System Extends from Lake Superior in the North To Northwest Illinois in the South And From the Wisconsin River in the East To West of Albert Lee in Minnesota And Northeast Iowa (where politicians roam)Extends from Lake Superior in the North To Northwest Illinois in the South And From the Wisconsin River in the East To West of Albert Lee in Minnesota And Northeast Iowa (where politicians roam)

4. Why Is Load ManagementA Good Investment? Keep demand for electricity below our ability to generate or economically buy electricity Keep the demand for electricity on all power lines to safe levels Reduce or eliminate the need to purchase expensive electricity from other suppliers Replace lost generation (or power purchase) for a short period of time Dairyland goes well beyond the usual seasonal peak load reduction We use load control for economic dispatch, as low cost short run time peaking power plant Also, Dairyland is in a constrained transmission area and we control load rather than redispatch generators for periods of time. Next slideDairyland goes well beyond the usual seasonal peak load reduction We use load control for economic dispatch, as low cost short run time peaking power plant Also, Dairyland is in a constrained transmission area and we control load rather than redispatch generators for periods of time. Next slide

5. Why Is Load ManagementA Good Investment? Reduce the impact of rapid changes in demand (daily & seasonal peaks) Reduce load during system emergencies Provide rate alternatives to member consumers Shed Load During Substation Work Our Members Demand That We Have Programs Until they run out of hot water From our distribution cooperative perspective, it allows them to offer rate alternatives to their members More and More, we are controlling load for our distribution cooperatives while maintenance is being performed on substations – this allows subs to be worked on by tying other subs together and the members don’t have to endure an outage. Again, our member cooperatives are integral to the success of the program. Just a note, control of water heaters will identify bad elements, be prepared to fix the water heaters and let the end use members From our distribution cooperative perspective, it allows them to offer rate alternatives to their members More and More, we are controlling load for our distribution cooperatives while maintenance is being performed on substations – this allows subs to be worked on by tying other subs together and the members don’t have to endure an outage. Again, our member cooperatives are integral to the success of the program. Just a note, control of water heaters will identify bad elements, be prepared to fix the water heaters and let the end use members

6. Load Management System System went live in 1982 GE REMS Transmitters and Load Receivers In 1990 Switched to Scientific Atlanta Model 105 DCU’s – (Now Comverge) In 2000 68 Glenayre Transmitters were installed to cover 44,500 square mile service area Provide both digital (305) and analog (105/205) messages and paging Now installing model 305 DCU’s Dairyland was doing load control with time clocks and a ripple system even before the current system went live in 1982 We have had a long time to work out how we use the system… You can learn from our experience in moving forward. The original GE transmitters were failing and in 2000 we installed a new Glenayre paging transmitter system. This system allowed us to utilize new load receiver technology that allows our member cooperatives to manage and change the control that members see over the air. They no longer have to visit a home to change address or what is interrupted and they can stop control for individual members who are experiencing problemsDairyland was doing load control with time clocks and a ripple system even before the current system went live in 1982 We have had a long time to work out how we use the system… You can learn from our experience in moving forward. The original GE transmitters were failing and in 2000 we installed a new Glenayre paging transmitter system. This system allowed us to utilize new load receiver technology that allows our member cooperatives to manage and change the control that members see over the air. They no longer have to visit a home to change address or what is interrupted and they can stop control for individual members who are experiencing problems

7. Load Management System 82,000 Residential electric water heaters 30,000 Residential dual fuel heating systems 15,000 Residential Air Conditioners 8,000 Residential heat storage systems 380 commercial and industrial generators 170 Peak Alert voluntary load reduction (C&I) 220 Irrigation Systems 190 Agricultural grain dryers. 6 C&I bulk interruptible under direct control Dairyland has a lot of loads controlled. For the economic dispatch control that brings so much value to Dairyland, the most important end uses are Water Heaters Interruptible (dual fuel) heating systems And increasingly Air ConditionersDairyland has a lot of loads controlled. For the economic dispatch control that brings so much value to Dairyland, the most important end uses are Water Heaters Interruptible (dual fuel) heating systems And increasingly Air Conditioners

8. Load Management At Dairyland Power Why Does It Work? Integrated Into System Operations Generation Desk Provides Supplemental Operating (fast start) reserves Load exceeded capacity of inexpensive resources 1,500 hours last year (17% of the year) Then have to rely on market, peakers or municipal diesels This should drop to 10% this year due to a new plant Dairyland’s distribution cooperatives (and their members) are involved in ongoing program direction I think that the most important moves someone getting into load management can do are: Involve Operations in utilizing load control If you can, use load control for reserves If you are a G&T, the distribution cooperatives need to be involved in program design. At Dairyland, we exceeded our low cost generation resources over 1500 hours last year and are anticipating even more hours this year due to all the ethanol plants coming on line or expanding. While load management can’t replace all market purchases, it certainly helpsI think that the most important moves someone getting into load management can do are: Involve Operations in utilizing load control If you can, use load control for reserves If you are a G&T, the distribution cooperatives need to be involved in program design. At Dairyland, we exceeded our low cost generation resources over 1500 hours last year and are anticipating even more hours this year due to all the ethanol plants coming on line or expanding. While load management can’t replace all market purchases, it certainly helps

9. Summer Control Capability C&I Peak Alert / Irrigation 5 to 10 MW C&I Generators 10 to 20 MW Residential Water Heaters 20 to 30 MW Dairy Water Heaters 2 to 4 MW Air Conditioners 5 to 10 MW Grain Drying / Handling 2 MW Interruptible Industrial Loads 10 MW Irrigation Systems 0 to 10 MW Total Summer Controllable Loads = 50 to 80 MW In Addition, 5 MW of storage heat water heaters are held off the peak daily This slide shows the range of summer control that Dairyland has. You can see that weather and time of day play a large role in how much load reduction when we operate the system. For economic dispatch, the important loads are water heaters and Air Conditioners since they can be used for avoiding market purchases or provide operating reserves on a daily basis. We are looking at how our C&I members might participate in the operating reserves for Dairyland… The risk is that we may have to interrupt them more often, but we could offer them some additional rate incentives.This slide shows the range of summer control that Dairyland has. You can see that weather and time of day play a large role in how much load reduction when we operate the system. For economic dispatch, the important loads are water heaters and Air Conditioners since they can be used for avoiding market purchases or provide operating reserves on a daily basis. We are looking at how our C&I members might participate in the operating reserves for Dairyland… The risk is that we may have to interrupt them more often, but we could offer them some additional rate incentives.

10. Summer Load Control

12. Winter Control Capability C&I Peak Alert 10 to 15 MW C&I Generators 10 to 20 MW Residential Water Heaters 30 to 40 MW Agricultural Grain Dryers 2 to 4 MW Interruptible Heat 30 to 60 MW Interruptible Industrial 10 MW Total Winter Controllable Loads = 92 to 140 MW In Addition, 35 MW of storage heat is held off the peak daily This slide shows the range of Winter control that Dairyland has. Again you can see that weather and time of day play a large role in how much load reduction when we operate the system. Also, historically, Dairyland was a winter peaking system and the original load management system was designed for winter. Dairyland is now a summer peaking system and we are working hard to add summer load control. For economic dispatch, the important loads are water heaters and Interruptible heating systems since they can be used for avoiding market purchases or provide operating reserves on a daily basis. This slide shows the range of Winter control that Dairyland has. Again you can see that weather and time of day play a large role in how much load reduction when we operate the system. Also, historically, Dairyland was a winter peaking system and the original load management system was designed for winter. Dairyland is now a summer peaking system and we are working hard to add summer load control. For economic dispatch, the important loads are water heaters and Interruptible heating systems since they can be used for avoiding market purchases or provide operating reserves on a daily basis.

13. Winter Load Control

14. Winter Load Control

15. Notification To End Use Members Web Automated Phone Notification Emails Text Messages Alert Devices Paging We provide many forms of notification for our control events Web – specific pages for cooperative staff and end use members Phone notification to C&I members Emails and Text messages by load type for both residential and C&I members Special alert devices for anyone who needs one. These are especially handy in noisy industrial environments or offices where staff need to be involved in the load reduction Paging to both Dairyland specific pagers or any commercial pagerWe provide many forms of notification for our control events Web – specific pages for cooperative staff and end use members Phone notification to C&I members Emails and Text messages by load type for both residential and C&I members Special alert devices for anyone who needs one. These are especially handy in noisy industrial environments or offices where staff need to be involved in the load reduction Paging to both Dairyland specific pagers or any commercial pager

16. Value Of Load Management Load Management Savings Over The Last 12 Months Replacement Power $1.8 Million Operating Reserves $.5 Million Capacity Savings $7.9 Million Total Annual Value $10.2 Million The Energy Value Does not anticipate what the next increment from the market would have cost To sum it up, Dairyland has a load management system because it brings us value. You can see the value for the last year on this slide. However, this value was calculated very conservatively. One example is that the market value is always the observed value for avoided market purchases. What we don’t know and thus can’t use is the price if this load had to be served by the market. We firmly believe that we are moderating the market by using load control.To sum it up, Dairyland has a load management system because it brings us value. You can see the value for the last year on this slide. However, this value was calculated very conservatively. One example is that the market value is always the observed value for avoided market purchases. What we don’t know and thus can’t use is the price if this load had to be served by the market. We firmly believe that we are moderating the market by using load control.

17. Future Plans Participate in Ancillary Services Market? Not sure how to participate at this time Member Initiated Load Control (CPP) Similar to GoodCents Must Be Automatic Can be overridden Must Utilize Multiple AMR Systems Dairyland sees that the future of load control will be in member initiated load reduction We think that our member cooperatives will be implementing Critical Peak Pricing in the future. To that end, we have begun working the AMR vendors used by our distribution cooperatives to coordinate our load control with their automatic meter reading system to accomplish this. We like the GoodCents program, however our member cooperatives are already primarily installing meter reading systems from Hunt and Cannon Dairyland sees that the future of load control will be in member initiated load reduction We think that our member cooperatives will be implementing Critical Peak Pricing in the future. To that end, we have begun working the AMR vendors used by our distribution cooperatives to coordinate our load control with their automatic meter reading system to accomplish this. We like the GoodCents program, however our member cooperatives are already primarily installing meter reading systems from Hunt and Cannon