Demand Response Coalition

1. Demand Response Coalition Presentation to ERCOT PWG Working Group January 30, 2007

2. 0h 8h 16h 24h Clarifying Definitions • Energy Efficiency • Reduce total kWh of loadshape with permanent efficient technologies. • E.g.: CFLs, PE Motors, T8’s, etc.. • Demand Response • Temporary reduction of peak energy usage for a defined duration. • Curtailment “events” triggered by either reliability or high prices. • E.g.: Load-control switch, Thermostats • Load Shifting • “Flattening” the loadshape by using off-peak power in place of on-peak power. • Often permanent shift driven by combining appropriate technology and rates (TOU). • E.g: Thermal Energy Storage Electric Load (kW) Electric Load (kW) Electric Load (kW) Time of Day

3. Characteristics Of Demand Response DR “types” can vary according to many factors, technology, monitoring method, end-use customers, costs and benefits. The key differences include the following operational qualities: • Load Granularity: Large industrial loads may only be available in MW chunks while small loads can be aggregated and finely tuned. • Response Time: The time between sending the signal and actually curtailing the load can vary from sub-seconds to day-ahead. • Control Symmetry: The ability to control loads both "up" and "down". Some industrial loads can be shed in a few minutes, but take hours to return to the grid. Other DR technologies can respond in seconds. • Monitoring: Load changes must be measured and verified, and feedback may be required for the load provider to ensure performance. Settlements can be based on measured or stipulated performance. • Duration and Frequency: How often can the load be curtailed? For how long? How much warning is required?

4. Sample DR Technologies (Residential) • In Home Display • Basic Load Control Switch, Single Load • 1 way communication with no verification • Can control various loads (pool pumps, water heater, A/C, etc…) • Enhanced Load Control Switch • 2 way communication, allows verification • Load shed determined by historical use • Allows emergency low frequency event participation • Remote Controlled Thermostat • 1 way communication, no verification • Web/internet programmable, variable load shed • Controlled equipment: A/C • Home Automation/Energy Management System • 2 way communication available, allows verification • Variable load shed • Controlled equipment: A/C, pool pumps, water heater, appliances, lights

5. Sample DR Technologies (C&I) • Basic Load Control Switches, Single Load • Remote Controlled Thermostats • Energy Management System Interface • 1 way communication with no verification • Must enable a pre-programmed demand response mode • Dimmable Lighting Ballasts • Lights can dim 40% over 15 minutes without complaints • Addressable by circuit or ballast • Great application for combining EE and DR • Energy Management Systems • 2 way communication with verification • EMS must be programmed to operate in “load shed” mode • Specialty Control Device Products • Industrial Gas OEM’s can fill tanks on flexible notice • Various products for remote dispatch of DG assets

6. Current ERCOT Environment • April 17 Rolling Blackouts • First rolling blackouts in over a decade • August 17th of 2006 • Planning reserves were sufficient but actual operating reserves dipped to as low as 4.5 percent • PUCT is concerned about new evaluations of resource adequacy, which showed planning reserve margins dropping below comfort levels as early as the summer of 2007, and almost assuredly by the summer of 2008

7. DR in Energy Only Market • Energy Only-Market needs Demand Response Backstop for Resource Adequacy • Viability of the energy-only market depends on the evolution of demand response • Demand response, a term emerging with competitive markets, refers broadly to both price responsive demand and load management • Demand response in the competitive market includes the ability of retailers to send control signals, or price signals (through time-of-use rates, for example, or critical peak pricing) enabled by the advent of advanced meter-data infrastructure • Demand response capacity is the means to achieve the last increments of demand at system, or local, peak, promises price elasticity in the energy-only market

8. Demand Response Coalition • Demand Response Coalition: Participants • Comverge • Direct Energy • EnerNOC • SiteControls • Trinity Thermal • Demand Response Coalition, Technology Vendors, REPs and other market participants would like to know whether a mechanism for settlement of a demand response program can be implemented by 2008

9. Benefits of Demand Response for ERCOT • Achieve resource adequacy • Offering a potentially cost-effective alternative to capacity payments • Demand response puts downward pressure on price when operating reserves are low • Balances the market power of individual generators • Empowers customers to control their costs • Studies find substantial system value of demand response in general • “Value” depends on perspective and most analysis looks at “system benefits” or net social benefits

10. ERCOT & Settlement • ERCOT DLC Protocol attempted prior to AMI • CNP DLC switches in Houston area have been inactive since deregulation • DLC Protocol (Inactive) PRR 484: Changes for Implementation of Direct Load Control • Allowed for Settlement of Aggregated Load Control • Requires Statistical Sampling During Control Events

11. Making DR Work in ERCOT • Fixed settlement profiles are a major barrier to realizing demand response value in market • Activate formerly designed DLC Profile for DR *OR* determine the next best scenario • Examine the potential for adapting a Time of Use profile for the purposes of demand response • Nodal protocols are currently being developed and it is our understanding that creating a DLC profile will integrate into the process