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2001 Western Conference of Public Service Commissioners

2001 Western Conference of Public Service Commissioners. Real-Time Electricity Pricing in Regulated and Non-Regulated Environments Monday, June 4, 2001 William S. Weaver President & Chief Executive Officer. Rationale for Real-Time Pricing.

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2001 Western Conference of Public Service Commissioners

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  1. 2001 Western Conference of Public Service Commissioners Real-Time Electricity Pricing in Regulated and Non-Regulated Environments Monday, June 4, 2001 William S. WeaverPresident & Chief Executive Officer

  2. Rationale for Real-Time Pricing • Failure to give end-use electric customers proper price signals encourages: • Wasteful use of energy • Unnecessary high costs • Bad habits • Giving proper price signals results in: • Efficient use of energy • Lower costs • A sustainable energy ethic

  3. Annual Costs Avoided by Implementing Real-Time Pricing in the United States $14.8 Billion $5.5 Large C&I (37% of Total) Small/Medium C&I (10% of Total) $1.4 Residential (53% of Total) $7.9 Source: Chartwell; Frost and Sullivan; RDI; McKinsey Analysis

  4. Reducing Demand by 10% Lowers the Marginal Cost by 25% Wholesale Supply Curve D' D Price Demand Source: Brattle Group

  5. Real-Time Pricing Requires Integrating Several Key Technologies RealTimePricingData RealTimeUsageData Portal Matching Current Use With Real-time Pricing ConsumerLinX (Customer Information System)

  6. Best Service Reliability Customer choice Customer convenience Lowest Cost Utility cost reductions Revenue from others to offset utility costs Success in the Distribution Business

  7. Best Service: Choice • Price / Supplier / Fuel choices • Billing options • Payment options • Additional service choices • Outage / leak / flood alert • Usage alert • Remote load control • Tailored supply programs

  8. Best Service: Convenience • One consolidated bill • Payment convenience • Internet / phone access toaccount and usage information • Remote load control • Internet / phone access toreal time outage / restorationinformation • Remote disconnect / reconnect

  9. Lowest Cost: Utility Cost Reductions • Meter reading (scalable) • Billing (scalable) • Payment/cash processing (scalable) • Supply costs • Disconnect/reconnect costs • Targeted distribution system capital and maintenance program • Outage restoration costs • System planning and operations

  10. Lowest Cost: Utility Revenue Enhancement • Provide services to others, leveraging technology investments and utility experience: • Network wireless meter reading, products and services • Call center services • Web-based customer services • Billing services • Payment processing services

  11. Personal Energy Management Information • Education and promotion • Electric-only customers • 412,000+ customers (residential & commercial) • 4-month timeframe • Initially informational (not billing) • Enable customer to access potential savings • Four-block pricing • Survey customer and modify if necessary

  12. PEM Survey Method • Telephone interviews by Market Trends • 809 Residential respondents • 619 Business respondents • Fielded March 22 - April 11, 2001

  13. Major Findings of PEM Survey • Customers believe the NW faces an electricity shortage that will get worse this summer • High level of program awareness • Most customers have taken some actions to change energy use • Residential customers more receptive than Business customers • Low level of Website usage

  14. Awareness of PEM Program

  15. Most Important Thing that Customers Concluded from PEM

  16. Steps Taken by Customers After Reviewing PEM Information

  17. Actions Taken by Customers to Manage Energy Use

  18. How PEM Has Changed Customer Opinions of PSE

  19. Personal Energy Management Pricing Approval: • April 25, 2001 - Washington Utilities and Transportation Commission approved PSE’s time-of-use rate proposal. Strategy: • Give customers information and tools to better manage energy usage and costs • Provide financial incentive for using off-peak electricity

  20. Personal Energy Management Pricing Eligibility: • Time-of-day rates apply to the 300,000 residential customers already receiving PEM information • Customers can opt-out of the program by calling PSE’s customer service line Duration: • Pilot program running from May 1, 2001 to September 30, 2001

  21. Personal Energy Management Pricing Pricing: • Rates separated into two on-peak and two off-peak blocks of time • Midday price block is set to PSE’s current residential fixed rate

  22. 7 Day Prior Usage Chart But, after a few weeks... Note that this customer’s use is primarily in expensive time periods Web Capabilities Customers on the pilot get personal online reports of energy use. (Other customers also get information)

  23. 7 Day Prior Usage Chart This customer has shifted use to a more regularpattern – reducing the need for PSE to buy from more expensive, less efficient generation sources am 7 Day Prior Usage Chart am Web Capabilities

  24. Home Comfort Control Pilot Purpose • To manage load, utility sets back household thermostats; households can override the setback or receive payment • Across 10 weeks, 104 volunteer households in Kent, Washington experience 45 random two-hour setbacks

  25. Premises Automation • Programs build on Home Comfort pilot • Next generation technology • Multiple pilots in 2001 • Production deployment 4th quarter

  26. www.pse.com

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