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AMR Benefits and Costs – Benchmarks and Examples

AMR Benefits and Costs – Benchmarks and Examples. Presentation at CB Associates Seminar Sanjoy Chatterjee schatterjee5@nyc.rr.com (646) 732-2493. Today’s Discussion. Types of business cases Operational Demand Response (e.g., CA) Benefits – Industry Experience and Benchmarks

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AMR Benefits and Costs – Benchmarks and Examples

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  1. AMR Benefits and Costs – Benchmarks and Examples Presentation at CB Associates Seminar Sanjoy Chatterjee schatterjee5@nyc.rr.com (646) 732-2493

  2. Today’s Discussion • Types of business cases • Operational • Demand Response (e.g., CA) • Benefits – Industry Experience and Benchmarks • Cost Categories

  3. $ per meter per month Operational Business Case Benefits Costs AMI Capital Investment Utility Operational Savings AMI Operations & Maintenance NET SHAREHOLDER BENEFITS

  4. $ per customer per month Demand Response Business Case Costs Benefits NET RATEPAYER BENEFITS AMI Operations & Maintenance AMI Capital Investment Utility OperationalSavings Demand Response Savings

  5. Operational Benefits Beyond On-Cycle Meter Reading

  6. Daily Usage Screen: Off-Cycle Reads and Customer Service

  7. Revenue Mgmt: Unauthorized Usage Screens

  8. Revenue Mgmt: Diversion Detection at KCPL

  9. Other Revenue Management and Meter Operations • Discovery of electrical problems in field: • UI found significant increased revenue during the installation phase • Improved meter accuracy leads to revenue recovery • UE estimated meter accuracy improvement of 0.7% - older meter population than average • KC Retrofit center tested 5000 random meters before and after retrofit process and found an average improvement in accuracy of 0.25% • 3-digit demand registration improvement • Identification of dead meters earlier leads to revenue recovery • KCPL has ~0.1% of its meters die in field every year & it takes 4 months to identify and replace • Reduce number of meters in inventory • Reduction in inventory costs • Less training • Reduction in meter repairs, manpower, and parts

  10. T&D Operations: Real Time Read Screen

  11. Outage Management: Instrumenting the Distribution Network Customer CSR 1 - Lights Out Call 4 - Assisted to check breakers 2 - Query Meter Meter 3 - Meter reports ON

  12. Outage Restoration Outage Information System Outage Flag Outage Event WMS Dispatch NO Trouble Crew Meter Restoration Flag Auto-dialer YES

  13. Transformer Load Monitoring + + Transformer Load Duration Curve

  14. Industry Benchmarks Gross savings in $ per meter per month $2.87 $0.60 $0.36 $0.29 $0.56 $0.26 $0.70 • Meter Reading • Labor • Supervision • Vehicles • Injuries • Equip and • new meters • Off-Cycle Reads • Move-in/move-out • Re-reads • Billing & Customer Service • Call center • Re-reads • Cash flow • Outage Mgmt • Singe No-Lights Trips • Restoration Revenue Protection • Meter Operations • Avoided testing • Avoided replacement • Accuracy Utility OperationalSavings Source: North American Advanced Metering AMR, Frost & Sullivan

  15. Demand Response Benefits

  16. Top 1% of the hours in PJM • Top 10% of demand • Top 90% of prices The Goal of Dynamic Pricing • Avoid the need to construct additional peaking power plants or to make expensive wholesale power purchases during price spikes

  17. California Statewide Pricing Pilot – Background • California joint agencies demand response proceeding • PUC, Energy Commission, and Power Authority • Rulemaking 02-06-001, begun June 2002 • Establishing state policies for advanced metering and demand response • Goal: avoid a repeat of the 2001 Energy Crisis Projected Reserve Margins Rolling Blackouts Source: Mike Messenger, California Energy Commission

  18. California Rulemaking Progress • Three subgroups • WG1: Policy • WG2: Large customer programs (>200 kW) • WG3: Small commercial and residential programs • Decisions to date • Mar 2003: Adopted statewide goal of meeting 5% of peak demand via dynamic pricing by 2007 • Jun 2003: Established regular dynamic pricing tariffs for large customers • Jun 2003: Ordered implementation of Statewide Pricing Pilot • Nov 2003: Ordered development of business case methodology, including utility filings due March 31 regarding 2004 activities to meet 2007 goal

  19. Statewide Pricing Pilot Overview • Statewide • Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison • Sample of 2,500 customers statistically representative of the entire state • Residential and small commercial customers • Goals • Measure peak demand reductions • Measure total consumption reductions • Assess customer preferences via participant experiences and market surveys • Customers put in three primary treatment groups • Time-of-Use (TOU) • Peak (2-7 pm weekdays) and off-peak • Peak to off-peak price ratio about 2:1 • Critical Peak Pricing-Fixed (CPP-F) • Peak (2-7 pm weekdays) and off-peak • Much higher price – about 5x higher – during critical peak period (2-7 pm) on up to 15 days a year, with day-ahead notification • Critical Peak Pricing-Variable (CPP-V) • Three differences from CPP-F • Critical peak period varies from 1 to 5 hours from 2-7 pm • Notification varies from day ahead to 4 hours ahead • All customers have smart thermostat programmed for automated response

  20. Fifty-six analyses and projects in the past 25 years Average of -0.30 own-price elasticity Equals 30% usage reduction for 100% price increase (off-peak to peak) California’s pilot providing one more data point Residential Dynamic Pricing Results: Price Elasticity Residential Own-Price Elasticities Recorded in Experiments/Programs 1975 1980 1985 1990 1995 2000 2005 0 -0.1 -0.2 -0.3 U.S./international data -0.4 California data -0.5 Average result =-0.30 More peak demand reduction -0.6 -0.7 -0.8 -0.9 Source: King and Chatterjee, Public Utilities Fortnightly, July 1, 2003

  21. Residential Dynamic Pricing Results: Peak Demand Reduction • Results of 30 residential time-of-use and critical peak pricing programs • Results expressed as a percentage of customer’s total demand under non-time-based pricing Average reduction 24% More peak demand reduction

  22. Statewide Pricing Pilot Results - Residential • Rates went into effect July 1, 2003 • 12 events called during summer 2003 • Analysis by Charles River Associates (contractor to joint utilities) completed January 16, 2004 (draft report; final data may differ)

  23. Total Cost of Ownership (TCO) Categories* Meters/Modules Meters and modules based on retrofit capabilities Field Logistics Installation, retrofit, cross-dock Network Equipment Network equipment and field installation, including site preparation (where needed) Network Installation IT Interface Design Utility IT team to build interfaces to different deployment systems Total Upfront Capital Operating data collection systems, data management, process management, manual reads (where needed) System Operations 3rd Party Comm Leased lines, wireless, telco, other backhaul Network Ops Engineers, Technicians, Site leases, energy costs Network Maintenance Maintenance, repairs and upgrades Endpoint Replacement Replacement of failed meters and modules in the field Utility in-house project team, overhead, facilities, vehicles, G&A Other Utility Costs TCO *Sales taxes and property and use taxes ignored

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