Tuesday, February 19, :45 p.m. to 3 p.m.

Transcription

1 Workshop K Coincident Peak Management for Transmission & Capacity Cost Mitigation How to Implement the Single Most Important Savings Strategy Available to Electric Customers Tuesday, February 19, :45 p.m. to 3 p.m.

2 Biographical Information Matthew Brakey, President, Brakey Energy 8584 East Washington Street #213, Chagrin Falls, OH Matt Brakey is President of Brakey Energy. Brakey Energy provides commissionfree, comprehensive energy management services to approximately 90 energyintensive businesses and institutions that operate in the state of Ohio. Brakey Energy helps these users lower their energy costs through energy bill audits, electric generation and natural gas procurement, peak demand management, energy efficiency analysis, and managing regulatory issues. Brakey Energy clients include commercial buildings, manufacturers, universities, and institutional users. Representative clients include the Cleveland Cavaliers, the Cleveland Indians, Progressive Casualty Insurance, American Greetings, Sauder Woodworking, Ohio Star Forge, John Carroll University, and the Greater Cleveland Regional Transit Authority. Matt represents Brakey Energy s clients at meetings of the Industrial Energy Users of Ohio (IEU-Ohio). Matt is Secretary of IEU-Ohio, which works with regional, state, and national energy stakeholders with the aim of achieving reliable electricity at reasonable prices. Matt was named a Crain s Cleveland Business s Forty under 40 award winner in 2013 for his professional success and civic contributions. Under Matt s leadership, Brakey Energy was recently twice honored as a winner of Case Western Reserve University s Weatherhead 100 Upstart Award for 2015 and This prestigious award recognizes Northern Ohio businesses that have enjoyed outsized five-year growth. Matt holds a J.D. from the Cleveland-Marshall College of Law at Cleveland State University, having graduated cum laude, and a B.A. from Miami University. He lives in Cleveland Heights, Ohio with Carolyn, his wife, and their toddler twins (born June 9, 2015) Grover and Beatrix. Matt is currently training for the Brakey Energy-sponsored 2019 Rite Aid Cleveland Marathon, which will take place on May 18 and 19. Matt plans to participate in the 5k and half marathon events.

3 Biographical Information Jennifer Lemley, Energy Analyst, Brakey Energy 8584 East Washington St #213, Chagrin Falls, OH Jennifer Lemley is an Energy Analyst at Brakey Energy. Brakey Energy provides commission-free, comprehensive energy management services to approximately 90 energy-intensive businesses and institutions that operate in the state of Ohio. Brakey Energy helps these users lower their energy costs through energy bill audits, electric generation and natural gas procurement, peak demand management, energy efficiency analysis, and managing regulatory issues. Brakey Energy clients include commercial buildings, manufacturers, universities, and institutional users. Representative clients include the Cleveland Cavaliers, the Cleveland Indians, Progressive Casualty Insurance, American Greetings, Sauder Woodworking, Ohio Star Forge, John Carroll University, and the Greater Cleveland Regional Transit Authority. In her role at Brakey Energy, Jennifer is responsible for reporting and communicating bill analyses and regulatory issues that affect the quality and cost of energy. She monitors activity at the Public Utilities Commission of Ohio and state legislature, and then identifies issues that may impact clients energy costs. Jennifer also analyzes customers usage and billing data to ensure accuracy and identify savings opportunities. Prior to joining Brakey Energy in 2011, Jennifer worked for nearly ten years in the field of coal mine reclamation, first as a research assistant at West Virginia University and then as a research technician and program coordinator at the West Virginia Water Research Institute s National Mine Land Reclamation Center in Morgantown, WV. Jennifer has a B.S. in Environmental Protection from West Virginia University. She resides in Parkersburg, West Virginia with her son Jackson and dog Bear. When she is not analyzing energy bills and writing reports, Jennifer enjoys hiking, mountain biking, kayaking, reliving her youth at the local retro arcade, and being a team player - which is why she is currently training to run a 5k at the upcoming Cleveland Marathon. Brakey Energy is a proud sponsor of the 2019 Rite Aid Cleveland Marathon, which takes place the third weekend of May.

4 Coincident Peak Management for Transmission & Capacity Cost Mitigation

5 Workshop Outline 1. Overview of capacity charges 2. Overview of transmission charges 3. Cost mitigation case study 2

6 3 Capacity

7 What is Capacity? Capacity is a market construct within PJM Interconnection (PJM) to ensure adequate generation resources are available to meet demand. Customers within PJM pay for capacity as subcomponent of electric generation charges. Necessary because electricity cannot be costeffectively stored in large quantities. 4

8 Capacity A customer s capacity charges may be: Fixed as part of an all-inclusive generation rate; Passed through and billed as a separate line item on generation bill; or Incorporated into the utility s Standard Service Offer (SSO) rate for customers that do not competitively source electric generation. 5

9 Capacity Prices Capacity prices in PJM are determined by a series of auctions. The Base Residual Auction (BRA) is the primary driver of any given delivery year s price. Delivery years run June 1 through May 31. The BRA is held three years prior to the start of a given delivery year. Three Incremental Auctions (IAs) are also held in the three years leading up to each delivery year. These typically result in very small changes to the BRA price. 6

10 Capacity Clearing Prices 7

11 Peak Load Contribution (PLC) A customer s Peak Load Contribution (PLC) determines its allocation of capacity costs. A PLC is determined by a customer s average demand during five Capacity Coincident Peaks ( Capacity CPs ). A CP is one of the five hours of the year when demand on the PJM electric grid is at its highest. A customer s PLC for a given summer is used to allocate capacity costs for the following delivery year. 8

12 2018 Capacity CPs 9

13 How to Optimize Capacity Savings Customers that contract for a generation product that passes through capacity can reduce capacity costs by minimizing consumption during potential grid peaks by: Shifting operations away from typical CP hours; or Curtailing in response to potential CP events. Typical Capacity CP hours are between 1pm and 6pm summer weekdays. Customers must have some idea of when CPs may occur. Brakey Energy sends out alerts in advance of potential Capacity CP events. 10

14 Example of Brakey Energy Capacity CP Alert 11

15 12 Transmission

16 Transmission Service Transmission is: The service for moving electricity across high voltage lines; Included as a charge in your monthly electric bill; and Regulated by the Federal Energy Regulatory Commission (FERC). PJM oversees operation of transmission systems in Ohio. PJM bills Load Serving Entities (LSEs), such as investor-owned utilities and retail suppliers, for transmission. LSEs pass transmission costs on to customers. 13

17 Transmission Charges Network Integration Transmission Service (NITS) charge is the biggest component of transmission costs. Other transmission-related charges include charges for: Transmission enhancement; Scheduling; System control and dispatch service; and Black start service. 14

18 Transmission Charges for Ohio Investor-Owned Utility Customers EDUs pass on the cost of transmission to customers as a surcharge on monthly electric bills. FirstEnergy Non-Market-Based Services (NMB) Rider Based on monthly billing demand DP&L Transmission Cost Recovery Rider-Nonbypassable (TCRR-N) Monthly billing demand component Monthly kwh usage component Monthly billing reactive demand component (for voltages over secondary) AEP Basic Transmission Cost Rider (BTCR) Monthly billing demand component Monthly kwh usage component Duke Base Transmission Rider (BTR) charge Based on monthly billing demand Regional Transmission Expansion Plan (RTEP) credit Based on kwh usage 15

19 Transmission Charges for FE Customers FE passes on the cost of transmission to customers through a surcharge on monthly electric bills. The surcharge is called the Non-Market Based Services (NMB) Rider. NMB Rider costs are calculated based on monthly billing demand. 16

20 FE s Transmission Investments FE continues to invest in transmission projects. FE s Annual Transmission Revenue Requirements have increased approximately 55% since

21 FE s NMB Rider Rates NMB Rider rates have increased significantly in recent years and will increase again on March 1, 2019 for most FE-Ohio customers. The increases are in response to 0.7% increase in the NITS rate on 1/1/19. Only CEI GT and TE GT customers will see a decrease in NMB rider rates on March 1. 18

22 FE NMB Opt-Out Pilot Program FE s current electric security plan includes a small-scale NMB opt-out pilot program. This is also commonly referred to as the transmission pilot program. The transmission pilot program is available only to a select group of customers. 19

23 Transmission Pilot Program Charges Transmission charges for participating customers are primarily based on PJM s NITS rates and the customer s Transmission CP consumption. Transmission CPs are the five hours out of the year when demand on FE s zonal electric grid peaks. A FE customer s electric demand during the Transmission CPs, scaled up for losses and weather normalization, is its transmission tag. 20

24 FE 2018 Transmission CPs 21

25 FE s Pilot Program Details Program is limited to members of select customer groups (e.g. IEU-Ohio) that submitted requests for eligibility to FE by April 30, Customers may elect to delay opt-out effective date. FE requires customers that wish to actively enroll in the pilot program give notice by December 1. Effective enrollment date is the following March 1 Participants in the pilot program do not pay the NMB rider. A customer s CRES supplier bills for all transmission and related nonmarket-based services. Customers can terminate participation in the pilot and return to NMB rider. Once participation is terminated, customer may not re-enroll in the pilot. 22

26 AEP s Transmission Investments AEP continues to invest in transmission projects. AEP s Annual Transmission Revenue Requirements have increased 48% since

27 AEP s 2019 BTCR Rates BTCR rates are decreasing on April 1, 2019 for all AEP- Ohio customers. The decrease is in spite of a 10% increase in the NITS rate on 1/1/19. The new rates reflect tax savings due to the Tax Cut and Jobs Act of

28 AEP s Transmission Pilot Program Pilot program is included in AEP s Modified ESP III application. Pilot program is available to select interval metered GS-3 and GS-4 customers. Limited number slots allotted for participation. Demand-based BTCR charges for pilot program customers will be based on customer s usage during AEP s one Coincident Peak ( 1CP ). AEP s 1CP is the one hour of the year when demand on AEP s zonal electric grid peaks. A customer s electric usage during the 1CP, scaled up for losses and weather normalization, is its transmission tag. 25

29 AEP 2018 Transmission 1CP 26

30 AEP s Pilot Program AEP s current electric security plan includes a transmission pilot for a select group of customers. Pilot program participants continue to pay for transmission through AEP s BTCR. The difference from the standard BTC rider rates is that the per kw BTCR component is based on customer s transmission tag, not monthly billed demand. Rates are decreasing on April 1,

31 AEP s Pilot Program Details Eligible customers that wish to enroll must provide two notices: A preliminary, nonbinding notice by December 1; and A final, binding notice by February 15. Participation will then become effective April 1. Notices are required for each year that the customer wishes to participate. A customer will remain enrolled until it elects to terminate participation. A customer that elects to not participate for any year will not lose its right to participate in future years. The ability to participate in future years will depend on the availability of open slots in the program. 28

32 DP&L s Transmission Investments DP&L s investments in transmission projects has been fairly consistent over the last several years. The reduction in revenue requirements for 2019 reflects DP&L s tax savings due to the Tax Cuts and Jobs Act of

33 DP&L s TCRR-N Rates DP&L will file updated TCRR-N rates on March 1, which will become effective on June 1,

34 DP&L s Transmission Pilot Program DP&L s current electric security plan includes a small-scale TCRR-N opt-out pilot program. Program allows customers to opt out of TCRR-N rider. Transmission charges for participating customers are primarily based on PJM s NITS rates and customer s 1CP consumption. DP&L s 1CP is the one hour of the year when demand on DP&L s zonal electric grid peaks. A customer s electric usage during the 1CP, scaled up for losses and weather normalization, is its transmission tag. 31

35 DP&L 2018 Transmission 1CP 32

36 DP&L s Pilot Program Details Limited to first 50 non-sso accounts that notified DP&L in writing within 30 days of PUCO approval (10/20/17). May elect to delay opt-out effective date. Otherwise, effective date is next available meter read date following acceptance of enrollment request. Accounts must be served at primary voltage level or above. Participants in the pilot program do not pay TCRR-N rider. Retail electric generation supplier bills customer for all transmission and related nonmarket-based services. Can elect to terminate participation in the pilot program and return to TCRR-N. Once participation is terminated, a customer may not re-enroll in the pilot program at a later date. 33

37 Duke s Transmission Investments Duke continues to invest in transmission projects. Duke s Annual Transmission Revenue Requirements have increased 39% since

38 Duke s BTR and RTEP Rates Duke currently does not have a transmission pilot program available to customers. 35

39 Benefits of Transmission Tag-Based Transmission Charges Customers that operate off-peak or that are not weather-sensitive may have transmission tags that are significantly lower than their monthly billed demands. Customers that can curtail usage in response to potential grid peaks can lower their transmission tags. There is the potential for these types of customers to save significantly on their transmission costs. 36

40 How to Optimize Transmission Savings Customers can minimize load during potential grid peaks by: Shifting operations away from typical CP hours; or Curtailing in response to potential CP events. Typical Transmission CP hours are: In winter, after 7am and before 9am; and In summer, after 1pm and before 7pm. Brakey Energy sends out alerts in advance of potential Transmission CP events. 37

41 Example of Brakey Energy Transmission CP Alert 38

42 Status of Transmission Pilot Programs FE customers had to give notice to FE prior to April 30, 2016 to be included on the pilot program eligibility list. Customers not on the eligibility list can request participation in the pilot program via a Unique Arrangement with FE, subject to PUCO approval. DP&L customers had to give notice to DP&L by November 19, 2017 to be eligible to participate in the transmission pilot program. Customers that did not serve notice can request participation in the pilot program via a Unique Arrangement with DP&L, subject to PUCO approval. AEP allotted a limited number of slots to eligible customers. All slots have been allocated to eligible customers. Customers can request participation in the pilot program via a Unique Arrangement with AEP, subject to PUCO approval. 39

43 40 Case Study

44 Cost Mitigation Case Study The customer is a manufacturing facility located in AEP- Ohio service territory. 41 The main facility consumes approximately 15,822,000 kwh per year and has a average monthly billed demand of 4,538.7 kw. The customer is contracted for an electric generation product that passes through capacity costs. The customer is eligible to participate in AEP s transmission pilot program through its association with Brakey Energy and the Industrial Energy Users of Ohio. The customer notified AEP of its intent to participate in the interim pilot program in the fall of Participation began in January The customer provided preliminary notice to AEP in November 2018 to continue participation in the pilot program in The customer provided binding notice to AEP in February 2019.

45 Coincident Peak Management Strategy Upon receiving alerts of potential CPs, customer employs the following strategies to reduce demand: 1. Customer monitors AEP grid loads on PJM s Data Viewer. 2. Based on alerts provided by Brakey Energy and real time and forecasted grid demand, customer determines when to implement its energy curtailment plan. The energy curtailment plan includes a full plant shutdown: holding furnaces, production lines, core room, plant lighting, etc. are all shut down for the curtailment period. The curtailment lowers normal operating load of 4,200-4,500 kw to kw. 3. Customer then monitors the plant load via real-time metering data provided by its Curtailment Service Provider. 42

46 Impact of Load Management on Capacity CP Loads 43

47 Estimated Capacity Savings for Est PLC = 207 kw Monthly capacity costs = $710 Est. PLC if no curtailment = 3,880 kw This is based on an average of the client s loads at 12pm on CP days (prior to starting their curtailment activities). Monthly capacity costs = $ 13,250 Average savings are approximately $12,540 per month or $150,480 per year Approximately 1.01 cents per kwh 44

48 Impact of Load Management on Transmission CP Loads 45

49 Estimated Transmission Savings for 2019 Default transmission charges Average monthly billed demand = 4,538.7 kw Average monthly Std BTCR amount = $ 20,920 Transmission pilot program charges 2019 transmission tag = kw Estimated 2019 transmission pilot program charges = $ 2,450 Average savings are approximately $18,460 per month or $221,500 per year Approximately 1.42 cents per kwh 46

50 Closing Thoughts and Questions 47

51 Matt Brakey, President Jennifer Lemley, Energy Analyst