Integrated Demand-Side Management: The Procurement Planner and Customer Perspectives

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1 Integrated Demand-Side Management: The Procurement Planner and Customer Perspectives Norm Stone Principal Regulatory Analyst Demand-Side Resources Energy Procurement March

2 IDSM: What is it? IDSM is commonly understood to be the process of integrating demand-side preferred resources, including: Conservation Energy Efficiency Demand Response Rate Options Smart Technologies Renewables March

3 IDSM: Why do it? Increase energy savings and market penetration Reduce costs Minimize lost opportunities Increase customer satisfaction March

4 IDSM: Procurement Planner The California Energy Action Plan Adopted by the CA Public Utilities Commission, Energy Commission and Power Authority in Spring 2003 Emphasizes energy conservation and resource efficiency as a first priority for CA s energy policy Recognizes that energy efficiency programs are among the most important tools in meeting CA s energy needs Expects energy efficiency to capture approximately 6 of the 11GWs in demand growth over next decade March

5 IDSM: Procurement Planner Conservation and demand response are at the top of the loading order for new energy resources under procurement plans filed by the California IOUs... the agencies want to optimize all strategies for increasing conservation and energy efficiency to minimize increases in electricity and natural gas demand. (p. 4) March

6 IDSM: Procurement Planner A New Era for Resource Planning Utilities now have a menu of options for new resources ownership, purchases, renewables, energy efficiency and demand response The Demand Side now fully integrated with the Supply Side in utility resource plans Utilities are required to consider all cost-effective energy efficiency in their procurement plans The CPUC has authorized additional energy efficiency expenditures over legislatively capped public goods charge levels March

7 IDSM: Procurement Planner In California, the loading order prioritizes the types of resources utilities and other load serving entities must secure: 1. Energy Efficiency 2. Demand Reduction 3. Renewables 4. Distributed Generation 5. Efficient, Clean Fossil-fueled Central-station Generation 6. Transmission March

8 IDSM: Procurement Planner PG&E will meet its resource requirements by implementing the preferred loading order of the state s Energy Action Plan with cost-effective: Energy Efficiency Programs: ~$2.3 billion over 10 years Demand Response Programs: 5% of peak demand by 2007 Renewables: 20% by 2010 Distributed Generation: 60, ,000 MWH/year March

9 IDSM: Procurement Planner PG&E s Energy Efficiency Program Portfolio Design Portfolio will be cost-effective and achieve savings targets set forth in the long-term plan Non-savings programs will continue to be funded Information - Emerging Technologies Codes & Standards Bid 20% of 2006 funds for non-pg&e programs Lowest cost programs will be selected consistent with threshold requirements and technical feasibility March

10 IDSM: Customer Integrated program design & delivery: Offerings designed to complement one another & integrated across programs Moves away from a la carte program marketing to a more strategic approach: Assesses each customer s needs Presents only the best mix of our programs Helps the customer optimize his/her energy management plan March

11 Integrated DSM Model IDSM: Customer March

12 IDSM: Customer PG&E s energy efficiency portfolio will focus on reducing demand during peak periods: Residential More efficient new air conditioners Advanced window systems Improved efficiency of existing air conditioning systems through better maintenance Commercial and Industrial New lighting systems Chillers, motors, maintenance New Construction Improved insulation and air-flow systems Automatic daylighting systems March

13 IDSM: Customer PG&E s Energy Efficiency Funding & Goals Year Current Budget ($ Millions) MWs GWhs Therms (MMTh/yr) 2006 $ $ $ , TOTAL $ , March

14 IDSM: Customer Price-based Demand Response Vision All California electric consumers should have the ability to increase the value of their electric expenditures by choosing to adjust usage in response to price signals, by no later than 2007 CPUC Principles New advanced metering systems Real-time or near real-time access to usage data New rate and program options Reliable peak demand reductions March

15 IDSM: Customer Demand Response Program Goals Provide capacity, super peak energy CPUC established stretch targets: MW MW MW MW MW PG&E offers several demand response tariffs, plus the California Power Authority Demand Reserves Partnership Program March

16 IDSM: Customer Demand-Side Program Funding Breakdown ($s Million) Public Goods Charge/ Natural Gas Public Purpose Surcharge/ Procurement Total CEE $ CEC: R&D/Renewables Low Income Energy Efficiency Demand Response Total $ ,552 Approximately $160 million per year is from the Public Goods Charge and the Natural Gas Public Purpose Surcharge. The difference is from the Procurement Balancing Account. The CEC administers the R&D and public purpose funded renewables. The Self-Generation Incentive Program (SGIP) budget is (2005) $60 million and could be as much as $206 million in 2006 (decision pending) with subsequent amounts to be determined. March

17 What the Future Holds Increasing reliance on Customer Energy Efficiency/Demand Response to manage supply & demand More Customer Energy Efficiency/Demand Response offerings to a broader market through a variety of delivery channels Advanced Metering Infrastructure (AMI) March

18 Conclusion Achieving the true potential of Integrated Resource Planning and Demand-Side Management requires: Pursuing a diversified portfolio of cost-effective demand-side resources, such as energy efficiency and demand response programs, renewables, and a mix of utility-owned generation and long- and medium-term contracts A portfolio approach to marketing DSM programs Customers to increasingly view energy management as an integral part of their business plan Acknowledge and integrate interaction of DSM elements in program design Regulatory buy-in to integration Flexible & nimble approach to implementation Active support throughout the utility March