Strategic Planning and Marketing for Demand-Side Management: Selected Semin

Transcription

1 Strategic Planning and Marketing for Demand-Side Management: Selected Semin Papers EA-4308 Research Project Proceedings, November 1985 Dallas, Texas June 21-22, 1984 New Orleans, Louisiana September 26-28, 1984 Prepared by BATTELLE MEMORIAL INSTITUTE Columbus Laboratories 505 King Avenue Columbus, Ohio Seminar Chairmen Dallas D E Jones BATTELLE R H Males ELECTRIC POWER RESEARCH INSTITUTE New Orleans A Faruqui ELECTRIC POWER RESEARCH INSTITUTE D E Jones BATTELLE Prepared for Electric Power Research Institute 3412 Hillview Avenue Palo Alto, California EPRI Project Manager A Faruqui Demand and Conservation Program Energy Analysis and Environment Division

2 CONTENTS Section 1 DEMAND-SIDE MANAGEMENT 1-1 David E. Jones, Battelle-Columbus Division Introduction 1-1 Demand-Side Management 1-1 EPRI Project RP Seminars and Conferences Planned 1-8 Management Approach to RP Summary VALUE OF DEMAND-SIDE MANAGEMENT: A CASE STUDY 2-1 Ahmad Faruqui and Clark Gellings, Electric Power Research Institute, and Rajat Deb, Lotus Consulting Group Introduction 2-1 Methodology Simulation Results 2-9 Peak Clipping (PC) 2-9 Valley Filling Annual (VF-A) 2-9 Valley Filling-Seasonal (VF-S) 2-11 Load Shifting (LS) 2-11 Strategic Conservation (SC) 2-11 Strategic Load Growth (SLG) 2-11 Summary of Simulations 2-14 Conclusions 2-17 References 3 THE FINANCIAL IMPLICATIONS OF DEMAND-SIDE MANAGEMENT 3-1 Leonard S. Hyman, Merrill Lynch Capital Markets Background Attractions of Demand-Side Management 3-2 Conclusion UTILITY MARKETING: THE END OF THE GUESSING GAME 4-1 J. C. Collier Jr., Florida Power & Light Company v

3 Section IOWA POWER MARKETING PHILOSOPHY 5-1 Eugene E. Young, Iowa Power & Light Company DEMAND-SIDE MANAGEMENT THROUGH MARKETING 6-1 Kyle E. Wilcutt, Southern Company Services, Inc. The Opportunity 6-1 The Questions 6-2 The First Answer 6-2 Demand/Supply Perspective 6-3 The Second Answer 6-3 Short- and Long-Range Benefits 6-4 The Third Answer 6-4 Marketing Perspective 6-5 SETTING DEMAND-SIDE MANAGEMENT OBJECTIVES 7-1 W. W. Smith, Carolina Power & Light Company Introduction 7-1 New Corporate Strategy 7-1 Strategy Review Management System 7-3 Strategy Review Methodology 7-5 Conclusion 7-7 DEMAND-SIDE MANAGEMENT: TECHNOLOGY ALTERNATIVES 8-1 RESIDENTIAL END USES Orin Zimmerman, Electric Power Research Institute Residential End Uses 8-1 Space Heating 8-2 Space Cooling 8-2 Domestic Water Heating 8-3 Lighting 8-4 Refrigeration 8-4 Cooking 8-4 Clothes Washing and Dishwashing 8-5 Swimming Pool Heating and Filtration 8-5 Other Uses 8-6 Residential Cost Control Options 8-6 Building Envelope Options 8-7 Efficient Equipment Appliance Options 8-7 vi

4 Section Thermal Storage Equipment Options 8-8 Energy and Demand Control Options MARKET ACCEPTANCE CASE STUDY STRATEGIC LOAD 9-1 GROWTH AT DELMARVA POWER William R. Latham III, Delmarva Power Introduction 9-1 Identification of Demand-Side Objectives 9-2 Selection of Strategies 9-4 Designing and Implementing a Market Acceptance Program 9-6 Introduction of LMSTM Alters DSM Strategies 9-9 Exploring Alternative Market Acceptance Scenarios with LMSTM 9-13 Conclusion ASSESSING LOAD SHAPE IMPACTS FROM TECHNOLOGY OPTIONS 10-1 John H. Broehl, Battelle-Columbus Division Introduction 10-1 Importance of Load Shapes 10-2 Factors Influencing Load Shape 10-2 Importance of Detail 10-4 Methods for Estimating Technology Load Shape Impacts 10-4 Informed Judgment 10-5 Engineering Simulation 10-6 Direct Metering 10-8 Transfer of Results 10-9 Applicability of Approaches Conclusion LOAD SHAPES IMPACTS: MARKETING AND RATES ALTERNATIVES 11-1 Douglas W. Caves and Joseph A. Herriges, Laurits R. Christensen Associates, Inc. Programs to Modify Load Shapes 11-1 Alternative Pricing Programs 11-2 Non-TOU Rates 11-3 TOU Energy Pricing 11-5 TOU Demand-Charges 11-9 Alternative Service Rates Non-Rate Alternatives Concluding Remarks References vii

5 Section 12 DEMAND-SIDE MANAGEMENT: A CASE IN POINT 12-1 Robert D. Obeiter and Mary H. Smith, New England Power Service Company Introduction 12-1 Description of the Narragansett Electric Company 12-1 Description of Rhode Island Forging Steel, Inc 12-2 Supply Considerations 12-2 Demand-Side Management 12-2 Rate Development 12-5 Implementation and Progress ELECTRIC UTILITY MARKETING CASE STUDY 13-1 Johnny Ervin, Mississippi Power & Light Company Introduction 13-1 Market Planning Fundamentals 13-1 Profitability and Competitive Analysis 13-2 Market Resource Allocation Model 13-5 Marketing Credits 13-6 Conclusion SHOULD DEMAND-SIDE MANAGEMENT BE A "TOP-DOWN" OR 14-1 "BOTTOM-UP" PROCESS? Clark W. Gel lings and Ahmad Faruqui, Electric Power Research Institute Definition 14-1 Why Demand-Side Management? 14-1 The DSM Process 14-2 Objectives 14-3 Alternatives 14-6 Design of the DSM Plan 14-7 Customer Acceptance and Response Program Implementation Monitoring Organizational Considerations Conclusion NO SUBSTITUTE FOR EFFECTIVE ORGANIZATION 15-1 John S. Monroe Jr., Carolina Power & Light Company Introduction 15-1 New Conservation and Load Management Program 15-1 vi i i

6 Section Questions and Resistance 15-3 Marketing Plan Developed 15-4 New Questions and Attitudes 15-6 Conclusion THE UTILITY CUSTOMER'S INFLUENCE ON EPRI R&D. Clark W. Gel lings, Electric Power Research Institute 16-1 Utility Interest in the Demand Side 16-1 The Marketplace 16-1 Current Projects 16-2 The Changing Fabric 16-2 Present Plans 16-7 Customer Research Methods 16-9 Pricing for Demand-Side Management 16-9 Monitoring and Evaluations of Promotional Practices Acceptance of New Technologies Promotional Practices for Implementing Demand-Side Management Future Possibilities Summary References APPENDIX A BIOSKETCHES A-l APPENDIX B SEMINAR REGISTRATION LIST B-l IX

7 ILLUSTRATIONS Figure 1-1 Traditional Utility Planning Framework Utility Planning Framework Including Demand-Side Management Demand-Side Management (DSM) Decision-Making Process Estimated 1992 Peak Demand Reduction Based on Data 2-2 from 25 Utilities with Conservation and Management-Type DSM Programs 2-2 Generic Load Shape Scenarios Load Factor Across DSM Scenarios Impact of Demand-Side Management Peak Clipping Scenario Impact of Demand-Side Management-Valley Filling Scenario Impact of Demand-Side Management-Valley Filling Scenario 2-12 (seasonal) 2-7 Impact of Demand-Side Management Load Shifting Scenario Impact of Demand-Side Management Strategic Conservation 2-13 Scenario 2-9 Impact of Demand-Side Management Load Growth Scenario Impact of Demand-Side Management on Electricity Cost Impact of Demand-Side Management on Revenue Requirements Impact of Demand-Side Management on Net Income Demand-Side Management Benefit Elasticities Florida Power & Light Service Area Percentages of FPL's Customer Base Summer and Winter Peak Days Comparison of Load Forecasts Summer Peak Demand Per Customer 4-12 xi

8 1 Conservation and Load Management Department CLM Planning Systems Dynamic Process Definition of Demand-Side Management Delmarva Power's Service Territory Delmarva Power's Load and Capacity Forecast (Spring 1984) The Demand-Side Management Decision-Making Process Matrix of Objectives and End Uses Other Utilities' Heat Pump Promotion Programs Heat Pumps and Electric Heat in New Homes in Delmarva's 9-8 Territory 8 Forecasts of Summer and Winter Peak Loads (Spring 1984) Intended Modification of Delmarva's Load Curve Forecast Modification of Delmarva1s Load Curve 9-11 (Spring 1984) 11 Forecast Modifications of Delmarva1s Load Curve in 9-11 Percentage of Annual Peak Terms (Spring 1984) 12 Forecasts of Summer and Winter Peak Loads (Fall 1984) Alternative Forecasts of Market Acceptance of Heat Pumps Alternative Annual Penetration Rates for Heat Pumps Alternative Forecasts of Market Shares Alternative Forecasts of Annual Peaks Alternative Forecasts of Annual Sales Alternative Forecasts of Annual Gross Revenues Alternative Forecasts of Annual Load Durations in 9-17 Percentage Terms 20 Organization for Demand-Side Management Organization for Integrating Demand-Side Management 9-19 into Corporatewide Planning 1 Weekday Load Shapes for Electrical Machinery Industry 10-1 xi i

9 re 2 Weekly System Load Shape (per Unit of Weekly Peak) Relationships Among Load Shape Influencing Factors COP Variation as a Function of Temperature for High 10-5 Efficiency Heat Pump 5 Electric Space Heating Use Matrix (weekday) Applicability of Techniques Residential Customer Response to Alternative Pricing: 11-6 TOU Energy Rates 2 Large Nonresidential Customer Response to Alternative 11-8 Pricing: TOU Energy Rates 3 Commercial Customers Response to Alternative Pricing: TOU Energy Rates 4 Effect of Communication on Response to Non-Rates Marketing: TOU Rates 1 Load Factor Improvement Profitability and Competitive Analysis for Residential 13-4 Heat Pump 2 Profitability and Competitive Analysis for Residential 13-5 Water Heating 3 Profitability and Competitive Analysis for Commercial 13-6 Cooking 4 Market Resource Allocation Model Demand-Side Management Systematic Decision-Making Process Three Tiers of Objectives that Need to be Specified Demand-Side Management Embraces Several Load Shape Objectives Matrices for Selecting DSM Alternatives Employment as a Percentage of the Total Labor Force Impact of Residential Conservation Programs on Average 16-4 Household 3 Average Household Income REEPS Analysis of Residential Electricity Demand 16-6 ( ) 5 Women in the Labor Force by Age (1982) 16-6 xin

10 Figure 16-6 Scope Research History of Rates for 20 Years Depiction of Least-Cost Strategy Depiction of Customer Satisfaction and Financial Wealth with Increased Value Typical Outage Costs Image Segments Overall Opinion of Edison by Image Segment xiv

11 TABLES Table 2-1 Main Features of the Power System (1990) Main Features of the Power System (2005) Impact of Fuel and Capital Costs (2005) Operating Statistics for Delmarva Power Behavioral Program Categories Sources of Energy Price Responses For Alternative 11-3 Pricing: Non-TOU Rates 11-3 OWN Price Elasticities for Alternative Pricing: 11-4 Non-TOU Rates 11-4 Sources of Load Shape Changes for Alternative 11-5 Pricing: TOU Energy Rates 11-5 Sources of Information for Alternative Pricing: TOU Demand Charges 11-6 Sources of Information for Non-Rates Marketing Residential Customer Response to Non-Rates Marketing Markets Analyzed Marketing Credit Values 13-8 xv