Government’s Evolving Role in Resource Planning and Environmental Protection Arthur H. Rosenfeld, Commissioner California Energy Commission April 19, 2002.

Government’s Evolving Role in Resource Planning and Environmental Protection

Arthur H. Rosenfeld, CommissionerCalifornia Energy Commission

April 19, 2002

(916) [email protected]

2

Percent of Air Emissions in the U.S. from Fossil Fuel Use

98%91%

97%

52%

85%

0%

20%

40%

60%

80%

100%

120%

CO2 SO2 NO2 VOC COSource: U.S. EPA 1998 Emissions Trends Report and U.S. DOE-EIA Emissions of Greenhouse Gases in the U.S.

3

Emission Rate for NOx from Selected Plants Less than 100 MW -- August 2001 Source: Federal EPA Acid Rain Program, Continuous Emissions Monitoring System

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

lbs

of N

Ox

per M

Wh

Subset of units in California, ranked in order of NOx emission rate

4

ISO Load Duration Curves for The Past Two Years

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Hours in the year

MW

2000

2001

5

The Cost of Meeting the Peak

15,000

20,000

25,000

30,000

35,000

40,000

45,000

All Hours in the year

MW

0

100

200

300

400

500

600

700

800

900

1000

$/M

Wh

Total Cost of Production per MWh (including debt service and operating cost)

ISO Load Duration Curve (MW)

Simple Cycle Combined Cycle

6

The Cost of Meeting the "Super Peak"

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Top 10% of Hours in the year

MW

0

200

400

600

800

1000

1200

1400

1600

1800

2000

$/M

Wh

Total Cost of Production per MWh (including debt service and operating cost) from Simple Cycle Turbine

ISO Load Duration Curve (MW)

7

Cal ISO Daily Peak LoadsJanuary 1, 2000 - December 31, 2000

20

25

30

35

40

45

50

Jan-00

Feb-00

Mar-00

Apr-00

May-00

Jun-00

Jul-0

0

Aug-00

Sep-00

Oct-00

Nov-00

Dec-00

GW

Peak Day August 16 - 43.5 GW

Commercial AC

Residential AC

8

Electricity Use in California

• 2/3 of all electricity (kWh) is used in buildings• 50% of buildings in PG&E are in “Block 50” (exempted

from rolling blackouts)• 40% of Peak Demand is due to Air Conditioning plus

Lighting

9

Top Ten Peak Energy Uses/Sectors

(assumes a 50,000 MW peak)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Com A

C

Res AC

Assembly

Indu

stry

Com Ligh

t

Com M

isc

Res Misc

TCU Buil

dings

Ag & W

ater P

umpin

g

Process

Indu

stry

Res Refr

igerat

or

End-Use/Sector

Meg

awat

ts

15% 14%

11% 11%

7% 6%

4% 4% 4% 4%

10

CEC has Two Types of Regulatory AuthorityRelated to Demand Response

• Building and Efficiency Standards– Title 20 and 24 Update with adoption in 2003 and implementation in 2005– Everything from efficient air conditioners to white roofs

• Load Management Powers– New buildings -- first priority– Then most existing buildings

• CEC feels responsible for the 23,000 interval meters installed with state funds– 16,000 meters are in; 7,000 more by summer– Covers 25% of the peak load of the state– However, only Time-of-Use tariffs in widespread use

• Concerns regarding non-specific nature of TOU – Same price in all summer afternoons regardless of system load,

system condition, or wholesale price

11

• Load Management Tools Are Increasingly Cost-Effective– Interval Meters and Communication– Price Responsive Thermostats– Lighting Controls– Other Process Modifications

• Hourly Electric Rates Are Still in Pilot Stage– For load with new meters (> 200 kW), CPUC requires TOU rates

and offers emergency load management incentives– But has yet to combine these into an hourly tariff– In other jurisdictions, hourly rates have

• reduced the cost to serve load and• enabled firms to reduce their costs of operation

Demand Response to Time-Dependent Prices

12

Critical Peak Pricing (CPP) -- My Visionbased on Gulf Power tariff

CPP varies empirically to reduce demand at critical locations and times

0

5

10

15

20

25

30

35

Pric

e (c

ents

/kW

h)

Standard TOUCritical Peak PriceStandard Rate

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Curtailment Signal

Variable CPP

13

Gulf Power GoodCents Select Tariff

• Reduces need during critical or near critical periods (emergencies -- present or expected --, very high prices)– Summer Peak Load Reductions of 2.1 kW per house (1st hour)– Winter Peak Load Reduction of 2.7 kW per house (1st hour)

• 4-hour reduction roughly 1 kW• 96% Customer Satisfaction Rating

– Cost savings, greater control and better information• Improves competitive position of Gulf Power in wholesale

markets

14

Critical Peak Pricing (CPP)e.g. Gulf Power residential GoodCents Select tariff

0

5

10

15

20

25

30

35

Pric

e (c

ents

/kW

h)

Standard TOUCritical Peak PriceStandard Rate

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Curtailment Signal

15

Proposed System for Demand Response in New Homes & Small Commercial Buildings

Load Data1

Price/Proxy/

Curtailment Signal1

Interval Meter Δ$=$1001

Communicating Thermostat

Δ$=$502

Cost of Avoided Load: $100-200 per kW

1. Utility responsible for signal, communications, meter, and load data.2. Builder responsible for communicating thermostat.

16

Georgia Power’s Voluntary 2-part RTP Program

• Customer bill = Part 1 + Part 2– Part 1 based on historical load profile– Part 2 based on price responsive departures from load profile

• Historical load profile is from previous year– Called Customer Baseline Load (CBL)

• a list of hourly loads for entire year• Part 1 is the CBL x TOU tariff

– What you expect to pay if you don’t respond to real-time price• Part 2 is the hourly departures from CBL

– Enables customer to buy additional kWh when prices are low– And sell back kWh when prices are high

• Saves 17% at ~$1/kWh on hot afternoons

17

A High-Tech Firm and Real Time Prices

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

17,000

18,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24hour of the day

KW

load

0

10

20

30

40

50

60

70

80

90

100

Rea

l Tim

e Pr

ice

(cen

ts p

er K

Wh)

Actual KW

Baseline KW

TOUTOU

RTP

18

Summary of Time-of-Use (TOU), Critical Peak Pricing(CPP), and Real-Time (RTP) Prices

• Time-of-Use (TOU) is typically 3 time blocks published in advance for entire season– Peak, Shoulder, Off-Peak– Can’t foresee weather or equipment failures

• Critical Peak Pricing (CPP) is a high price imposed for a few days a year when system conditions are critical or near critical– A discount is given during off peak hours– Customer pays the critical peak price when invoked by the utility

• a day ahead forecast of CPP offers additional time for response

• Real-Time Pricing (RTP) is hourly real-time marginal cost of a kWh– Reflects hot weather, scarcity, or equipment failure

• a day ahead forecast of RTP offers additional time for response

19

Load Management with Time-Dependent (Dynamic) Pricing

• MICRO-Economic Benefits– Leads to lower costs– Lowers risk of market power– Treats supply and demand symmetrically– Independent of regulated, deregulated, or hybrid industry structure

• Issues– Understanding how loads will respond– Additional study regarding voluntary vs. mandatory

• Impact on customers– Stable industry structure; credit-worthy participants– Clear, consistent government regulation

20

My Vision of Tariff Options

• Residential and Small Commercial– Default = CPP– Hedge = TOU

• Industrial and Large Commercial– Default = CPP– Hedge = TOU– Option = RTP (voluntary)

21

4o F Thermostat Rise for a 10-ton Rooftop A/C

4-hour average saves one-third of A/C, ~1W/sq. ft.

22

59th Street Building - Hourly Averaged LoadsAll A/C Loads - 11 Tons

Curtailment = Setpoint + 4 Deg. (1 to 5 PM)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hour

Load

(kW

/100

0 Sq

uare

Fee

t)

Curtailment Day kW Baseline Day kW

IMPACTS / 1000 sf:Avg. kW (1-5PM) = 1.0

Average Hourly Data -- All AC units

From: Ed Hamzawi, SMUD, Oct. 20, 2000

SMUD

23

59th. St. Building - 5 Minute Interval LoadsSecond Floor Lights

Curtailment = 30% Reduction In Lighting Level (1 to 5 PM)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

11:0

0

11:1

5

11:3

0

11:4

5

12:0

0

12:1

5

12:3

0

12:4

5

1:00

1:15

1:30

1:45

2:00

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3:00

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4:30

4:45

5:00

5:15

5:30

5:45

6:00

Time

Loa

d (k

W)

Curtailment Day kW Baseline Day kW

5- Minute Data (Lights)

From: Ed Hamzawi, SMUD, Oct. 20, 2000

SMUD

24

E-20 T Average Load per CustomerMay to August 2000 and 2001

0

1,000

2,000

3,000

4,000

5,000

6,000

5/15 5/22 5/29 6/5 6/12 6/19 6/26 7/3 7/10 7/17 7/24 7/31 8/7 8/14 8/21

kWh

2000

2001