Jim Parks CEC Load Management Standards Scoping Workshop March 3, 2008

1. Jim ParksCEC Load Management Standards Scoping WorkshopMarch 3, 2008

2. SMUD System Load • Highest 50 hours responsible for 500 MW • System load projected to grow by 15% over next 10 years (including EE) • Resource gap projected in 2012 and beyond due to expiring bilateral and renewable contracts

3. SMUD Customer Policies • Preservation of local decision-making and control are vital to ensure public power systems can provide solutions that best meet the needs of their customers • The District is primarily accountable to its customer-owners • Community citizens have a direct voice in utility decisions • Compact with the Customer―To meet anticipated load growth while balancing environmental and customer service goals, SMUD must implement: • Integrated EE programs which focus on peak • A robust AMI infrastructure • Rates which reflect time-differentiated costs • Strong and active dispatchable LM programs • Construction of clean, renewable plant • Held series of ~40 focus groups around compact with customer concepts with all customer classes August – November 2007

4. AMI Activities • December 2005: Completed initial AMI Business Case • March 2006: Presented AMR drive-by strategy • December 2006: Board approved AMR contract • January 2007: Began converting routes to AMR • January 2007: Board requested AMI Business Case Update • May 2008: Presented AMI Business Case Update • May 2008: SMUD embarked on AMI project

5. AMI Requirements • Two-way communications • Communications protocol agnostic • Robust, secure, and scalable • Interval data and TOU capabilities • Home Area Network agnostic • Enables programmable communicating thermostat control and in home displays • Enables end-to-end system efficiencies―from generator to end use

6. AMI Project Timeline • AMI RFP – 2nd Quarter 2008 • AMI Selection – 4th Quarter 2008 • AMI Acceptance Test – 2nd Quarter 2009 • Full Deployment – 2009 - 2012

7. SMUD Rates Policy • District’s rates will be designed to balance and achieve the following goals: • Reflect the cost of energy when it is used • Reduce use on peak • Encourage energy efficiency and conservation • Minimize “sticker” shock in the transition from one rate design to another • Offer flexibility and options • Be simple and easy to understand • Meet the needs of people with fixed incomes and severe medical conditions • Equitably allocate costs across customer classes

8. Rate Concepts Under Consideration • Large Commercial (1> MW) • Basic TOU – 4-month summer, 3 pricing period TOU rate that is energy only • TOU Demand – Same as Basic TOU with addition of a super-peak demand charge • Critical Peak Pricing – Basic TOU with a risk discount and a critical peak price on call days • Real Time Pricing – Hourly energy prices on a day-ahead basis • Medium Commercial (300 kW – 999 kW) • Basic TOU • TOU Demand • Critical Peak Pricing • Small Commercial (<300 kW) • Basic TOU • Critical Peak Pricing • Residential • 3-Tier Increasing Block – Standard rate with price risk premium • TOU/Tier – Standard tier rate with 3-hour super peak period • Critical Peak Pricing – TOU/Tier with risk discount and critical peak price on call days

9. Focus Group Findings on Rates • General: • Customers readily understood that SMUD’s cost of supplying energy is higher in the summer, especially in very hot weather • Customers understood that they would pay higher rates over fewer summer months and lower rates over more winter months • Most like a narrow (3-hour) super peak period • Commercial: • Customers who find it difficult to shift load and/or have flat load prefer a demand charge, and vice versa • Customers want a minimum of 24-hour notice for CPP • Prefer fewer CPP hours with higher prices vs. more hours with lower prices • Residential: • Customers with flexible lifestyles said they will shift activities off peak • Want energy savings (from TOU vs. Tier) shown on bill • Basically like the idea of having pricing choices

10. Focus Group Findings on LM/DR • General: • Most customers said they would respond to public pleas for energy conservation during periods of peak demand • Customers want the ability to override DR events • Generally more receptive to temperature reset than to AC cycling • Commercial: • Small and medium customers want education on DR—more likely to participate in DR when it was explained to them • Some find it challenging to curtail/shift energy usage during peak periods due to industry type or business situation • Customers were creative in finding ways to adjust their business operations around peak periods • Many want event notification by cell phone or email • Residential: • Households with ill or elderly members said personal control of their AC is critical • Renters find DR challenging because they don’t own the AC or have window AC units • Responses were mixed regarding preference for manual controls vs. “set it and forget it” controls

11. Current LM and DR Programs • Curtailment contracts―14 MW • Temperature-Dependent Rate―8 MW • Demand Bid―5 MW • Used only in emergencies: • Voluntary Emergency Curtailment Program―~45 MW • Peak Corps (residential AC cycling)―97 MW cycling, 135 MW shed • Total dispatchable load = 111 to 149 MW • Using AC cycling, and special curtailment contracts • Total non-dispatchable load = 0 to 58 MW • Using Temperature-Dependent Rate, Demand Bid and VECP

12. Proposed LM and DR Offerings • Currently being evaluated in IRP process • Designed to be used for active LM and DR • Residential Customers • Air conditioning cycling • Air conditioning temperature reset • Choice of time-of-use rates, critical peak pricing • Public appeal to reduce electrical load • Commercial Customers • Air conditioning temperature reset (<300 kW) • Aggregator program (300 kW – 999 kW) • Special curtailable contacts with the largest accounts (1> MW) • Choice of time-of-use rates, critical peak pricing, real time pricing • Technical assistance to evaluate demand response potential • Technology incentives for enabling equipment • Public appeal to reduce electrical load

13. LM/DR Program Redesign Timeline • Develop new program concepts–4th Quarter 2007 • Initial program screening –1st Quarter 2008 • Evaluate programs through resource planning model –3rd Quarter 2008 • Determine LM/DR resource mix and goals for next 10 years –4th Quarter 2008 • Implement programs – 2009 - 2012

14. SMUD Position on PCT Standard • Participation in programs should be voluntary (opt-in and/or opt-out) • Override capability should be offered to participants in cycling and temperature reset programs • SMUD prefers PCT standard because: • Offers customers more energy control options • Reduces costs of SMUD’s t-stat programs • Provides potential for greater participation with temperature reset option • Grows programs faster with opt-out for new construction and dwellings/buildings with existing equipment • Opt-out retention rate of 60%-70% over 3 years • Opt-in growth rate of 1.5%-2.5% annually, total of 5%-8% over 3 years • Reduces price of t-stats with bulk purchase power and lower installation costs in new construction • Increases control functionality and integration through greater sales • Grows DR infrastructure faster