Power Crunch Strategy
Market-driven load management shaves peaks, saves money

December, 2000, Rural Electrification Magazine - During the 1960s and 1970s utilities built 30 percent more generating capacity than was ultimately needed. That led to a 20-year dry spell in construction of nuclear, coal and gas generation plants. Regulators in many states mandated load management programs to put off the need for new power plants.

Then came deregulation. Some observers said let the market take care of power supply. Utilities slashed demand-side management programs and tabled plans for new load-management systems. Their logic was that the market, not the regulators, would drive both the supply side and demand side of the energy business. This summer news stories highlighted problems with deregulation. California's ISO (Independent System Operator) declared 17 Stage Two alerts. Utilities cut power to businesses. San Diego customers saw bills triple and burned their bills in street protests.

Analysis of the past three summer price spikes shows a contributing factor is the lack of the most fundamental concepts of supply and demand in a competitive wholesale market: elasticity. Because electricity cannot be stored, nor its use avoided, consumers will have less choice to react to price signals than with other products. Nonetheless, it is becoming increasingly clear that dusting off those old load-management concepts and using them as the underlying basis of new initiatives can add an element of price signals and needed consumer elasticity.

This latest power crunch has cost many customers and some utilities dearly. In this bet-your-company era, the market will exact terrible penalties on those who don't heed its signals, says William M. Smith, manager of market-driven load management for EPRI. "California's PG&E and Southern California Edison lost $2 billion each," says Smith. "If you sold the companies you'd get $6 billion for PG&E and for Southern California Edison you'd get $3 billion. So about one-third and two-thirds of the sale value of the utilities just went up in smoke this summer."

Smith sees load management as the next new technology with profound effects in a deregulated market. It will involve a free flow of information and transactions between suppliers and purchasers, an "Electrinet"-the electric power equivalent to the Internet. Customers will shape their electric demand patterns. Although this change will likely take 15 years, says Smith, some tools for moving to a real-time, interactive market are already here. The tools are the Internet, paging and wireless technology.

Smith explains: "EPRI's market-driven load management initiative addresses working with the customer under deregulation to help optimize the entire supply/demand balance. It applies to situations that involve capacity excesses as well as capacity constraints, using the customer as a resource to trade 'negawatts,' and facilitating the customer's ability to save or even make money under deregulation using energy management systems. These approaches will help deal with economic aspects, like spiking spot prices in capacity-constrained areas, and economic development in capacity rich areas. The suite of five programs will also help utilities cope with physical constraints like transmission and distribution congestion and generation unavailability, as we did under regulation."

Smith says electric cooperatives shouldn't just look at demand peaks. "You used to look at the system peak load shape. Nowadays you better look at the whole load duration curve and ask how you can more economically use your assets."

Smith said he believes that to make the new load-management programs successful will require enhanced technology usage in areas such as metering and two-way electronic communications via such media as the Internet and paging.

Cannon Technologies is one supplier that still supports older load-management systems, but is moving to an Internet and paging load-control system.

The new system allows a co-op to add to a legacy load-management system or build a new system incrementally, with lots of flexibility, features and, best of all, at a lower cost. By using Cannon Technologies' new LCR 5000 load control receiver, their Web-based application server, called loadcontrol.com, and Motorola's 900 MHz FLEX® paging technology, the installed cost is about $150 per receiver.

"It used to be that the cost of one switch included the cost of the whole master station and the communication infrastructure. That is no longer the case," says Joel Cannon, vice president of Cannon Technologies. In fact, the setup is so easy and the cost so low that Cannon has set up "free samples" as part of recent bid requests, he says.

The LCR 5000 was a new switch design, says Cannon. "The communication port can transfer a message to a serial port so you can implement applications like communicating with a thermostat," Cannon adds. Two frequencies are also available, with one dedicated for a backup pager.

Several co-ops are trying out the new switch and Internet-based load-control option. John Louk, manager of electronic field engineering for Wabash Valley Power Association in Indianapolis, says he is testing 200 LCR 5000 switches and installing them at substations and other locations. Wabash Valley also has a load-management system using Scientific Atlanta equipment and satellite and VHF radio for communication.

Louk says, "The biggest advantage, if we go into a full blown implementation of this, is that we do not have to build an infrastructure-not a single transmitter or tower." They won't have to hassle with the FCC licensing either, he adds.

Wabash Valley controls air conditioners with a 50 percent shed strategy. "Cannon set this up on their server," says Louk. "We go on the Internet, use passwords to get through a firewall, and with a click of the mouse pick a strategy and the time we want it to start and stop. Their server in Minneapolis dials up the paging provider. They send out the proper codes and message to the switch. The switch decodes it and says that message is for me."

He says it all happens in less than a minute.

Louk says that ACES Power Marketing now schedules the load management system for Wabash Valley. "It is all part of the tools you have to use, and you start to treat load management as distributed capacity."

Wabash Valley plans to include commercial and industrial (C&I) customers in the new scheme. "The FLEX technology Cannon uses does have two-way capability, Louk says. "We envision giving our C&I accounts a Web address and their own password so they can look at their load profile. There has to be a synergy there. You really have to be straight with the customer, and they have to trust you."

Roger Rognli, load management coordinator for Great River Energy in Elk River, Minn., says he uses a mix of load-management technology, including Scientific Atlanta and ABB Power T&D Company's EMETCOM system. The load-management network serves 29 distribution cooperatives with more than 120,000 switches.

Rognli is testing 50 of Cannon's new LCR 5000 switches. The Internet aspect is familiar to Rognli. Great River Energy already allows member co-ops to program and override their receivers remotely through the Internet.

"That's not real new to us. What's intriguing about using the pager system is the cheap infrastructure," says Rognli. "It's really built for speed."

Steven Lindenberg, executive director of research and technical services for NRECA, warns, "Co-ops really need to pay attention to the investment they have made in load management as we go through the restructuring process. They want to make sure whatever value they have in the system can be maintained."

Lindenberg's commitment to load management is underscored by his organization, Cooperative Research Network, joining the board of directors of a new Peak Load Management Alliance. Its mission is to foster a better understanding of the new potential of load management in a deregulated environment. Members include TXU Energy Service, Cinergy, EPRI, EEI, E-Source, New York Mercantile Exchange, Cannon Technologies and NRECA.

Reprinted with permission from the December 2000 issue of Rural Electrification Magazine.

For more information contact:
Jim Losleben
Director of Business Development
Cannon Technologies, Inc.
1212 E. Wayzata Blvd.
Wayzata, MN 55391
jim@cannontech.com
651.686.9547