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Real-time Pricing for Illinois Consumers

Real-time Pricing for Illinois Consumers. Anthony Star Community Energy Cooperative Demand Response Coordinating Committee Webinar December 15, 2006. Energy-Smart Pricing Plan (2003-2006) Key Details. 1,500 participants representing a wide range of demographics Utility Role

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Real-time Pricing for Illinois Consumers

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  1. Real-time Pricing for Illinois Consumers Anthony Star Community Energy Cooperative Demand Response Coordinating Committee Webinar December 15, 2006

  2. Energy-Smart Pricing Plan (2003-2006) Key Details • 1,500 participants representing a wide range of demographics • Utility Role • ComEd remains the supplier and bills the participant • Interval meters, read by traditional meter readers • Consumers pay hourly, market based prices (pass through of PJM hourly price) • Cooperative Role • The Cooperative provides an intermediary role providing outreach, consumer education, high price notifications, etc.

  3. Helping Consumers Manage Prices • Information about hourly energy prices • Education about general price shapes by season, • Access to each day’s prices via a website or phone call-in number. • Notification of high price days of over 13 cents/kWh • By telephone or email, issued the previous evening • Access to web-based tools to view charts and graphs of energy use, price and cost down to the hourly level • Online and printed summaries of energy use, costs and comparable flat rate bills • Educational materials on energy efficiency and how to reduce usage during peak times

  4. ESPP Has Seen A Variety of Prices and Weather

  5. Average Energy Prices Paid 2003-2006

  6. Bill Impacts Consistently high retention rate, even in 2005, despite a very hot summer, and high power prices driven by natural gas costs (Does not include participants who moved during the year)

  7. Its Not Hard to Do:Participating In ESPP Has Been…

  8. How do Customers Respond to Price Signals? • Evaluations by Summit Blue and our own internal research have demonstrated price response measured in several different ways: • Elasticity of demand across summer hours • Peak demand reductions • Conservation and energy efficiency awareness and actions

  9. Evaluation:Elasticity of Demand • Elasticities have ranged from .042 to .08. • Impacted by weather and price each year • Central Air Conditioner cycling increased elasticity by as much as 50% • We found elasticities on all summer days, not just high priced ones – this goes beyond just cutting peak and implies load shapes improving • Success in notifying participants of next day’s price improves their response

  10. Evaluation:Conservation and Energy Awareness • ESPP participants’ overall monthly summer energy (kWh) usage suggests a conservation effect • Reduction in usage of 3% to 4%, relative to what their usage was estimated to be had they not received hourly electricity prices. • Participants report buying ENERGY STAR rated appliances at a high rate and feel more “energy aware”

  11. 2006 Initial Results • August heat wave led to 35¢/kWh peak prices • Elasticities still being calculated, but preliminary observations: • Higher than in 2005 • Air conditioner cycling cut demand by an additional 0.7 kW • Price spikes were short lived and did not significantly change overall summer savings • PriceLight pilot program tests new notification method • Participants love it • Preliminary results are that it increases elasticity of demand

  12. Expanding the Energy-Smart Pricing Plan Beyond the Pilot • In 2007 and beyond, Illinois retail prices will be determined by a New Jersey-style auction • RTP default service for large C&I • All customers have an option to take RTP • 1997 deregulation framework did not envision the information, education and programmatic support needed to make RTP work for residential customers • Legislation enacted spring, 2006: • Creates a residential RTP program and specifies roles for the utility and others • Creates a framework for justifying including costs in overall rate base

  13. Political and Policy Climate for Expansion • Like other states, legislators concerned about the failure of a competitive (or any) retail market for small customers to emerge • ComEd flat rates to increase 22-26%, Ameren rates by 40-50% in 2007 • Experience of the ESPP pilot program showed savings for participants and benefits to the system through demand response • Legislators, consumer advocates and other public interveners have given support to RTP as a rate option to provide consumer choice and reduced costs • Criteria for the success of residential RTP is to document projected system benefits

  14. Assessing The Potential Benefits of RTP • Illinois legislation required assessment of net benefits to consumers from program, including consideration of: • Improvements to system reliability and power quality • Reduction in wholesale market prices and price volatility • Electric utility cost avoidance and reductions • Market power mitigation, and • Other benefits • Citizens Utility Board filed testimony by Bernie Neenan (Utilipoint) and Lynne Kiesling (Northwestern University) to support this finding

  15. $80 85% increase C&I Customer Benefits $70 over mid case Other Residential Benefits $60 RTP Participants 112% increase over mid case $50 (Millions per Year) $40 178% increase $30 239% increase over mid case over base case 121% increase $20 over base case 3% increase over $10 base case $0 Base Case Mid Case High Case Weighted Average Annual Benefits (ComEd) .047 Elasticity Assumes 10% of residential customers participate. Program cost approximately $16 million per year (including metering using today’s technologies and costs) [Adapted from CUB/City of Chicago Exhibit 3.5, Testimony of Bernie Neenan in ICC Docket 06-0617]

  16. The Impact of Improving Response (ComEd) Non Participant benefits rise more than participant benefits! [Adapted from CUB/City of Chicago Exhibit 3.6, Testimony of Bernie Neenan in ICC Docket 06-0617]

  17. 35% ComEd 30% 25% Ameren 20% 15% 10% 5% 0% definitely possibly possibly definitely probably probably Fixed Rate Variable Rate Gauging Customer Interest in Real-time Pricing Would You Be Interested In A Fixed Or Variable Rate Plan? [Summer 2006 Survey. 282 ComEd, 399 Ameren households]

  18. Illinois Next Steps • Full evaluation of 2006 pilot program will be available in early 2007 • Final Order in ComEd and Ameren rate cases will set details for expanded program • Goal is to enroll 110,000 participants ComEd and at least 20,000 in Ameren over the next four years • Illinois will lead the way in moving beyond a pilot to full implementation of residential RTP

  19. For More Information Community Energy Cooperative 2125 W North Ave Chicago, IL 60647 773/269-4017 astar@cnt.org www.energycooperative.org

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