The California Business Case Framework for Advanced Metering Roger - - PowerPoint PPT Presentation

Levy Associates

The California Business Case Framework for Advanced Metering

Roger Levy

Levy Associates 2805 Huntington Road Sacramento, CA 95864 Phone: 916-487-0227 Email: RogerL47@aol.com

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My Presentation

The Conclusion Why the interest in Advanced Metering What is Advanced Metering A Business Case Economic Framework California’s Regulatory Perspective The Future

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Evidence suggests that utility

• perating savings alone justify the

investment in advanced metering.

The Conclusion

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Why the interest in Advanced Metering ?

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$20-$50 Billion in customer

• utage costs

$20 Billion in added long- term energy costs One Major utility bankruptcy

California Energy Crisis 2000-2001

California Energy Costs

($Billions)

1999 2000 2001

$7 $32.5 $70

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“Ultimately price is the most effective means of reducing demand.” * “..if ….. rates were linked to actual energy costs, and floated based on input prices, residents would tend to conserve most when prices were highest (in other words, demand would respond to tight supply conditions).” *

Need for Better Pricing

* The Bay Area – A Knowledge Economy Needs Power, A Report on California’s Energy Crisis and its Impact on the Bay Area Economy, April 2001.

Metering Pricing Demand Response

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Demand Response Results - AutoDR

202 33 45 219 71 78 61 61 18 111 52

Avg kW Savings

15% 10% 10% 12% 10% 25% 16% 21% 5% 2% 20%

Avg % Savings

$4,510 Chabot $12,000 $3,312 $375 $5,050 $7,500 $3,620 $2,000 $2,000 $1,614 $12,824

Setup Cost

Target USPS Oracle Gilead IKEA Echelon 2530 Arnold 50 Douglas B of A ACWD

Company

Summary 951 kw 13.4% $57.62 / kW *

Large Commercial Customers

• Customer automates

response.

• Internet-based price and

reliability signals.

• Linked into the facility

EMS control systems.

• Strategies ‘optimize’ load

reduction, economics and customer acceptance.

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Demand Response Results - SPP

Source: Statewide Pricing Pilot Summer 2003 Impact Analysis, Charles Rivers Associates, August 9, 2004, Table 1-3, 1-4,.

Time of Use TOU 0% 10% 20% 30% 40% 50% Peak Load Reduction Critical Peak Fixed CPP-F 4.1% Critical Peak Variable With Automated Controls CPP-V 34.5% 12.5% Critical Peak Variable With Automated Controls CPP-V 47.4%

Average Critical Peak Day – Year 1 Hottest Critical Peak Day *

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What is Advanced Metering ?

Levy Associates Smart thermostats In-home displays Appliance controllers

None None Enables Other Technology Justification Data recording Data collection Meters Features Hybrid or solid-state Hybrid or solid-state Electromechanical

• r digital

Remote access daily or more often Drive-by, monthly cycle Manual, monthly cycle Time-based intervals Total consumption Total consumption

Pricing options Customer options Utility operations Demand response

Reduce Reading Costs Reduce Reading Cost Automatic Meter Reading (AMR) Advanced Metering Infrastructure (AMI) Traditional Accumulating Meter

Advanced Metering – Is Information

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Source: Private communication, California municipal AMI business case completed February 2005.

Payback (yrs)

2 4 10 8 6 $92 6.5

AMR

Unit Installed Cost

$25 $125 $100 $75 $50

AMI

$107 6.5 kWh Usage kW Interval Data Dispatchable Rates Tamper Detection Outage Monitoring Read on Demand Selectable Billing Dates Customer Usage Profiles Dynamic Load Research

NO YES

Functions

Functions Supported

Advanced Metering – Is AMI

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A Business Case Economic Framework

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Purpose Establish a framework to evaluate the economic, customer service and value of

• verall system opportunities provided by

advanced metering infrastructure (AMI).

The Business Case

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Conventional Framework Expanded Framework

Demand Response Customer Impacts Functional Focus Scope of Benefits Methodology

Demand response, innovative pricing and customer education included as

• ptions.

Demand response not considered. Customer impacts included. Customer impacts not considered. Metering considered part of an integrated suite of utility applications. Metering assumed independent of other systems and applications. Focus on system wide net benefits. Focus on utility revenue requirement. Net Present Value of Costs and Benefits Net Present Value of Costs and Benefits.

The Business Case Framework

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Utility AMI Deployment Drivers

WE Energies PPL IPC JEA UI Exelon IPL PSE NSP KCPL Ameren

Operating Costs Improved Accuracy Theft Detection Distribution Service Rate Options Billing Options Internet Access Outage Response Service Quality Customer Service Demand Response Operational Efficiency

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Eliminates meter reader Reduced Meter Reading Cost Remote read at connect/disconnect Logical Connects / Disconnects Theft / Diversion detection function Eliminate Meter Locks One-time improvements Reduced Meter Testing Digital over electro-mechanical Improved Meter Accuracy Remote reads and monitoring Reduced Problem Investigations

FIELD SERVICE BENEFITS

Remote reads eliminate estimates Reduced Estimated Bills Streamlined data collection Improved Accounting Flexible billing cycle option Reduced uncollectibles Further automate bill process Improved Bill to pay time Reduced read to bill prep. Improved Read to bill time Meters detection capability Reduced Theft / Diversion

BACK OFFICE ADMINISTRATIVE BENEFITS

Eliminates estimated bills Energy information Support billing inquiries Reduced Call Center Inquiries Value of demand reductions System Value of Demand Side Management More timely T&D and system information Improved Capacity Management

CUSTOMER SERVICE BENEFITS

Automatic outage reporting Outage Reporting Reduced outage duration Reduction in Lost Outage Sales Detect / dispatch more efficiently / effectively Improved Outage Management

SYSTEM OPERATING BENEFITS

What are the Benefits?

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California’s Regulatory Perspective

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1

Advance Metering System wide Revised Outage Management

3

1. Facilitate pricing. 2. Support customer education.

Policy Purpose

Critical Peak Pricing as the default tariff

2

1. Integrate efficiency and demand response – common economics. 2. Demand response - a condition of service for all customers. 1. ‘Partial outages’ in lieu of full rotating outages. 2. Demand response - a condition of service for all customers.

California Policy Initiatives

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A Business Case Framework

• Adopts Business Case

Analysis Framework for Advanced Metering Infrastructure.

• Requires California IOU’s to

file by October 15, 2004.

Source: CPUC, CEC, CPA Joint Proceeding (CPUC R.02-06-001, CEC DR-01)

CPUC Ruling July 28, 2004 AMI Business Case Framework

• Cost benefit analysis
• Utility operations and customer

service.

• Quantifiable and non-

quantifiable impacts

• Full vs. targeted implementation.
• Demand response / tariff

scenario analysis.

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PG&E Business Case - Reasonableness

CPUC – DRA Reasonableness Review

System meets the CPUC functional requirements. Technology choice one of several that are reasonable. System provides functionality to justify ratepayer investment. Costs are comparable with other similar utility projects. Operational and customer benefits not recognized or quantified would bridge the benefit-cost gap. Interests of ratepayers are not well served by delaying implementation. System meets the CPUC functional requirements. Technology choice one of several that are reasonable. System provides functionality to justify ratepayer investment. Costs are comparable with other similar utility projects. Operational and customer benefits not recognized or quantified would bridge the benefit-cost gap. Interests of ratepayers are not well served by delaying implementation. “… AMI appears cost-effective relying on operational savings alone, without the need to rely on relatively uncertain demand response benefits”.

Source: Testimony on PG&E’s Application No. 05-06-028, January 18, 2006, Chapter 1, Executive Summary, page 1-2, line 5-7.

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PG&E Business Case - Evaluation

PVRR ( $ millions ) $2,000 $3,000 $1,000 System Costs $2,265 Operational Benefits $2,024 $2,209

DR Benefits

$3,416

PG&E Testimony

Low Scenario High Scenario System Costs $1,999 Operational Benefits $2,675 $2,764 $2,984

CPUC DRA Testimony

Low Scenario High Scenario

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PG&E AMI Business Case - Decision

PG&E Approved Costs

(millions)

$2,258.3 Total Costs

(PVRR)

290.1 O&M $1,968.2 Deployment PG&E Approved Benefits

(millions)

$2,362.2 Total Benefits

(PVRR)

338.0 Demand Response $2,024.2 Meter System

CPUC Unanimous Decision July 20, 2006

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The Future

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Three Key Issues

System Integration Standards and interoperability Network security and privacy