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Demand side management pilot scores points

UTILITIES HAVE A COMPELLING STORY TO TELL ABOUT THEIR efforts in grid modernization, but that story has to reach their customers and ring true. In a February Intelligent Utility Realities webcast on utility best practices in customer engagement, Angie Thoma, Colorado Springs Utilities' smart grid project manager, discussed her utility's Appaloosa Pilot Program, a capital deferrment project that relied heavily on consumer support.

Colorado Springs Utilities is a public, four-service utility company covering about 491 square miles, which includes almost 213,000 electric accounts, 189,000 gas accounts, and 135,000 water accounts. (The utility also services wastewater, which is not a metered service.)

Here, edited for length, are excerpts from her comments.

We automated all of our meters over the course of a five-year time period, which was completed in 2010. Our electric system provides retail services for the cities of Colorado Springs and Manitou Springs, and we also deliver a special contract power to four local military installations in the area.

We currently have system capacity to meet our projected customer demand until 2028, given we achieve some of our DSM (demand side management) goals. So, given our current capacity, our real opportunity to divert capital investment was at the distribution level. We have areas of town where the distribution system is close to its feeding design guide limits, therefore our pilot project focused specifically on one curcuit that was overloading during the peak month of the year. We call it the Appaloosa Project.

Achieving cost avoidance
As a municipality, we wanted to take the smart grid initiative at a slow and steady pace so that we're not putting our ratepayers at risk of incurring unnecessary costs.

So the goal of the capital deferrment project was to achieve cost avoidance through the deferrment of capital investment by identifying highly loaded circuits, in which customer peak load could be shifted to nonpeak times.

So the Appaloosa Project leveraged AMI technology, demand side management tools and pilot rate options, partnered with customer behavior, as an additional low cost to defer these capital investments of the electric system.

Our hope was to not only learn more about customer behavior, but also to reduce the peak demand by spending less on customer options than it would cost us to upgrade our distribution system. We looked at the net present value of the capital upgrade as our starting point of the amount we could spend on the effort to achieve the required demand reduction. In this case, it was $105,000.

Analyzing customer-circuit demographics
Once we knew how much capital we could defer, we started analyzing the customer demographics of the circuit. The Appaloosa Circuit is 98 percent residential and less than 2 percent small and medium commercial.

We knew our opportunity was primarily with the residential market. However, there was almost 10 percent of the circuit loading that was contributed to the commercial sector, as well.

So, using market studies, we determined that the best potential candidates for the DSM and rate options would be our residential consumers who had central air conditioning that could be cycled off during peak times. We identified and surveyed customers who used over 800 kWh during the hot summer months.

Customer surveys provided valuable information
We conducted a pre-project survey for residential customers in early 2010. When we asked customers how much they would need to save each month in order to participate in a time-of-day rate option, the response was varied. We learned that 57 percent were willing to shift usage and over 65 percent were willing to shift for a savings of $20 to $40 per month. So, using this information, we modelled different types of pilot rate options.

We asked customers how much they would need to save in a load-cycling program in which they could not opt out of utility-called events. We found that 87 percent of the customers on the circuit did, in fact, have central air conditioning, 43 percent with the central air would participate in an incentive-based load cycling program, and over 47 percent would participate for $25 per month. So we chose the $25 price point for our pilot.

Our load cycling program is called Energy Cooling Optimization. We implemented a variation of our normal program, in which the customers could not override curtailment events. In return, we paid customers $25 per month for June, July and August.

The second pilot we implemented was a Circuit Time of Day rate. The circuit peak is from 5:30 p.m. to 7:30 p.m. every day of the week, Monday through Sunday. The peak months are June, July and August. And this particular circuit also had a winter peak in December and January. In return for participating in this pilot rate, we offered to give customers a reduced rate for all circuit off-peak hours, and (offered) to e-mail their 15-minute interval usage graphs so that they could monitor their consumption.

Because of the circuit peak in the winter as well, we figued lighting was a key contributor, so we also offered a CFL exchange program, which was marketed to elementary schools and a community center that resided on the circuit.

For Colorado Springs Utility's first-year pilot results, and to hear the rest of the webcast, go to




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