Demand Response from a Retailer Perspective

1
Demand Response
from a Retailer Perspective

• Ronnie Chahal
• Centrica
• March 18, 2003

2
Capacity Price

• The price of capacity and energy can be lowered
  and made less volatile through load response
• Average Daily Balancing Energy for February 24
  25, 2003
• Price 2/24/03 2/25/03

Note Prices are subject to revision by ERCOT
3
Average Hourly Balancing Energy Prices
(by Congestion Zone From 02/21/02 to 02/20/03)

4
Commodity Price Cycle

ERCOT Historical Implied On-Peak for 2002 2003

• Descriptive statistics for implied heat rate
  during 2002
• Mean 8807
• Standard Deviation 390.5
• Lower bound _at_ 95 8163
• Upper bound _at_ 95 9452
• Current implied heat rate 8451

5
IDR Metered Customers

• Load participates as a resource in ERCOT
• With configuration, ancillary services can be
  provided by interruptible load
• Greater price spikes will provide further impetus
  to demand response contracts with load

6
Retail Offerings

• Price to Beat
• Month-to-Month contract at regulated rate
• Indexed to Natural Gas
• Competitive Supplier
• Fixed price / fixed term
• Price Certainty 3 year fixed price does not
  change with gas

7
Demand Response Retail Proposition

• Needs protocols to allow for statistical
  verification of demand response ERCOT not there
  yet
• Economics of demand response In general not
  enough spikes to justify costs however, economics
  change quickly due to magnitude of spikes.

8
Case Study
Interruptible Program in Houston Area

• Background Approximately 50,000 residential
  customers representing 50MW of interruptible load
  fitted with equipment
• Cost Energy Partners Program offered customers
  32/year for right to interrupt
• Potential benefit Intrinsic value of most
  expensive 344 hours in year worth 8.55 per year
  per customer assuming 1 KW of interruptibility
• Settlements Likely to involve costly IDR meters
  to some sample set of customers for retailer to
  replicate this type of program
• Other Issues Back office costs