DOE Smart Grid Investment Grant Program: Dynamic Pricing & Consumer Behavior Studies

1. DOE Smart Grid Investment Grant Program: Dynamic Pricing & Consumer Behavior Studies Chuck Goldman Lawrence Berkeley National Laboratory National Town Meeting on Demand Response and Smart Grid June 24, 2010 Washington DC

2. Dynamic pricing pilots & AMI deployment • Dynamic Pricing pilots: Past experience • Experimental designs of varying quality and with differing objectives (e.g., technology trials, customer acceptance) • Small sample size for some/many pilots • Focused on answering a limited set of questions • How much peak demand savings occurs? Net energy savings? • What role does enabling technology play in increasing peak demand savings? • How satisfied are customers with particular rate designs? • “Business case” for AMI may depend on benefits from dynamic pricing; yet results from prior studies are often viewed skeptically by PUCs & stakeholders

3. Deeper questions remain unanswered about the transforming capabilities of AMI New studies should investigate the power of AMI in seamlessly integrating pricing, technology, and information feedback to induce a change in behavior

4. SGIG: Advancing our understanding of customer response & acceptance of dynamic pricing • June 2009: DOE issued Funding Opportunity Announcement (FOA) for Smart Grid Investment Grant (SGIG) program • DOE interested in advanced metering projects that involve dynamic pricing within the framework of a controlled experiment • Focus on dynamic pricing tariffs that come closest to aligning customer incentives with true costs of providing power (i.e., RTP, CPP) • Emphasize the need for randomized control trial in the experimental design • Provide highly granular customer-level consumption and demographic data to DOE at end of project

5. Role of dynamic pricing in retail service offerings • Changes in retail pricing required to capture full value of AMI • DOE SGIG FOA clearly states preference for making dynamic pricing the required default service offering • Not all jurisdictions will immediately embrace this strategy • DOE expects the results of these studies will help make the case for transitioning there over time • Approaches to rate offerings such as “opt-out” or “opt-in” are viable alternatives that will require a different experimental design than those prescribed in the FOA

6. SGIG Dynamic Pricing Projects: Role of Technical Advisory Group (TAG) • DOE selected ~10 projects where utilities proposed dynamic pricing with consumer behavior study • DOE (LBNL) established TAG to work with each utility: • Review and provide feedback on proposed Consumer Behavior Study Plan • Work collaboratively with utilities to ensure well-designed, methodologically sound studies consistent with FOA guidelines • Review interim and final evaluation studies • TAGs comprised of industry experts • National Lab: LBNL • Consultants: FSC Group, The Brattle Group, KEMA, Regulatory Assistance Project, Theresa Flaim, Roger Levy, Karen Herter • Academics: UC Berkeley Energy Institute at Haas, Dr. Ben Hobbs (John Hopkins), Dr. Richard Feinberg (Purdue University)

7. SGIG Dynamic Pricing Projects:Data Collection and Reporting • Utilities conducting consumer behavior studies on their dynamic pricing projects will collect & provide: • Project Data • Customer-level hourly interval consumption data • Customer characteristics • Historical Data • Hourly (or monthly) customer-level data • Ideally covers period 12-18 months prior to commencement of study • Benefits and Metrics Data • Customer-level (or customer-cohort level) impact metrics • Customer (or customer-cohort) characteristics

8. SGIG Dynamic Pricing Projects: Evaluation Studies • Each participating utility will produce consumer behavior study of their dynamic pricing project • DOE will also prepare Report that provides meta-analysis of all projects • Goal is to provide policymakers and regulators with set of studies that are methodologically sound and rigorously evaluated • Better understand what may drive common results across projects, regions, customers (e.g., low-income, seniors) • Better explain unique results of individual projects • DOE intent is to create publicly accessible database (with appropriate controls for masking customer identity) • Allow academics, consultants & industry stakeholders to access thisrich data set to analyze issues/questions

9. SGIG Dynamic Pricing Projects:Likely timeframe for Evaluation Studies • Most utility dynamic pricing projects have proposed to: • Get into the field by or during 2011 • Run for two summers (i.e., summer 2011 & 2012) • Provide DOE with interim report & final evaluation study (by early 2013) • DOE Reports on SGIG dynamic pricing projects • Meta-analysis of results from SGIG Dynamic pricing projects: Interim report (2012) and Final Report (Late 2013) • Targeted studies (e.g. role of enabling technologies and information feedback, customer acceptance by targeted populations) • Customer-level data will be made publicly available commensurate with the release of DOE Evaluation studies