20100301FlexPeak Program Report.pdf

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I?IDA~PO.
An IDACORP company
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Darlene Nemnich
Senior Pricing Analyst
Pricing & Regulatory Services
[phone]
FAX [phone]
E-MAIL dnemnich~idahopower.com
February 26,2010 J:pc- E.-õ?-o~
Ms. Jean D. Jewell, Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise, 1083720-0074
RE: FlexPeak Management Demand Response Program Report
Dear Ms. Jewell:
Enclosed please find a copy of the FlexPeak Management 2009 Preliminary
Report. In accordance with the provision in Idaho Public Utilities Commission Order No.
30805, this report addresses the Commission's request for a preliminary evaluation of the
program prior to making a request for a Commission determination of the prudency of the
Company's expenditures for the FlexPeak Management Program. In light of the fact that
the program has been in effect for only one season, a full scale evaluation is premature.
The Company will report further on the Program in the 2010 DSM Annual Report to be
filed March 15, 2010, and intends to request a prudency determination for 2009
expenditures for the FlexPeak Program subsequent to the March 15,2010, filing.
If you have any questions regarding this report, feel free to contact Bille McWinn at
208-388-5871 or myself at 208-388-2505.
Sincerely,~
Darlene Nemnich
cc: Randy Lobb
Lynn Anderson
P.O. Box 70 (83707)
1221 W.ldaho St.
Boise. 10 83702
DUPØ$An lØOI co
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FlexPeak Management
2009 Preliminary Report
February 24, 2010
Idaho Power
Table of Contents
Program Summar .. ......... .................... ...... .......... ......... .... .......... .... ..... ............. ... ............... ................. ..3
2009 Demand Reduction Event Results................................................................................................4
Marketing and Public Relations.............................................................................................................4
Customer Recruitment ...........................................................................................................................5
Metering.................................................................................................................................................6
Event Intiation...................................................................................................................... .................7
Event Monitorig........................................................................................................................ ...........7
Customer Satisfaction. .... ............ .................................. ..... .................. ......... ............ ............ ... ..............9
Payment Reconciliation................................................................................................................. ......10
Cost-Effectiveness ...............................................................................................................................11
Conclusion ...........................................................................................................................................12
FlexPeak Management 2009 Preliminary Report Page 2
Idaho Power
Program Summary
F1exPeak Management is a voluntar demand response program targeting Idaho Power's industral and
large commercial customers that are capable of reducing their electrcal energy loads for short periods
durng summer peak days. The program became available to the company's Idaho customers in May
2009. The program objective is to reduce the demand on Idaho Power's system durng peak times
through customers' voluntar electrical use reduction. The program is active June 1 to August 31,
between the hours of2:00 p.m. to 8:00 p.m. on non-holiday weekdays. Customers receive notification of
a demand reduction event two hours prior to the star of the event, and events wi1last anywhere
between two to four hours, with a maximum of 60 hours per season.
In November 2008, Idaho Power selected EnerNOC, Inc. through a competitive Request for Proposal
(RFP) process, to implement the program. Idaho Power entered into a five-year agreement with
EnerNOC in Februar 2009, pending the Idaho Public Utilities Commission (IPUC) approval. In May
2009, the IPUC approved the contract in Order No. 30805 and requested that Idaho Power submit a
preliminar report.
EnerNOC is responsible for developing and implementing all marketing plans, securng all paricipants,
installng and maintainng all equipment behid Idaho Power's meter used to reduce demand, tracking
paricipation, and reporting results to Idaho Power. Idaho Power intiates demand response events by
notifyng EnerNOC, who then supplies the requested load reduction to the Idaho Power system.
EnerNOC meets with prospective customers to identify their potential to reduce electrcal energy load
during active program hours without negative impact to their business operations. Customers enroll in
the program by entering into a contract with EnerNOC. EnerNOC then installs energy monitorig
equipment at the customer site, simulates a demand response event to ensure customer satisfaction and
performance, and offcially enrolls the facilty in the program.
Contractually, EnerNOC has agreed to a target anual demand reduction amount for the five year
contract length. Each week, EnerNOC commts a demand reduction level in megawatts (Ms) to Idaho
Power that EnerNOC is obligated to meet in a demand reduction event. When Idaho Power anticipates
the need for capacity, it schedules the date and time of the event and notifies EnerNOC.
Idaho Power has access to an EnerNOC web site that shows near real-time energy usage data of the
aggregated load, and can continually monitor the success of the demand reduction event. Customers can
also continuously monitor their demand reduction performance using their individual near real-time
energy usage data available to them through the EnerNOC web site.
FlexPeak Management 2009 Preliminary Report Page 3
Idaho Power
2009 Demand Reduction Event Results
During 2009, the first customers enrolled in the program in May and EnerNOC committed their intial
reduction amount of 0.30 MW to Idaho Power by the second week of June. The target reduction for the
season was 2 MW. By the end of the season, EnerNOC had enolled 22 participants across 33 facility
sites and had committed to a maximum weekly reduction of 15.2 MW. In July, paricipants achieved an
actual reduction of 17.1 MW, surassing the program target reduction by more than eight times.
Idaho Power intiated eight demand response events in July. In each case EnerNOC exceeded the
commtted MW reduction by the percentages shown in the table below.
FlexPeak 200
Demand Reduction Percent Penormances
173%
l!
I
1st 2nd 3rd 4th 5th 6th 7th 8th
Event
~1 Committed Capacity (MW) II Avg Actual Reduction IMW)
Marketing and Public Relations
EnerNOC was responsible for the development of all marketing collateraL. Idaho Power worked with
EnerNOC to co-brand marketing materials, and reviewed and edited materials such as a "Frequently
Asked Questions" Sheet and press releases. Idaho Power continues to work with EnerNOC on the
development of a Utility Case Study, which wi1 discuss the program development and rapid ramp-up
process.
FlexPeak Management 2009 Preliminary Report Page 4
Idaho Power
Customer Recruitment
EnerNOC began the recruitment process by engaging customers with a demand of 500 kW and above.
Idaho Power Customer Representatives contacted most of these customers prior to contact from
EnerNOC in order to inform them of the program. EnerNOC employees reached out to customers first
by phone, and then set up on-site meetings to determine a customer's potential for demand reduction.
Idaho Power Customer Representatives often attended the on-site meetings.
EnerNOC worked with each paricipant to develop a demand reduction plan that could be implemented
at the site without negatively impacting the paricipant's business. Customers then were invited to sign
a contract with EnerNOC to enroll in the program.
A breakdown of MW reduction committed by customer segment for 2009 is shown below.
FlexPeak 2009
Committed MW Reduction by Customer Segment
Primary !Seçondary
SChool
1%
Water & Wastewater
Treatment Fadlity
2%
CompostngRecyding
aste Removal
2%
College/Universty
Other lìght Industrial 4%
4%
FlexPeak Management 2009 Preliminary Report Page 5
Idaho Power
Metering
Once customers enrolled in the program by signng a contract with EnerNOC, EnerNOC submitted
requests to Idaho Power to enable the customers' electrc meters to transmit KYZ-pulse outputs. Some
customer's meters were already enabled for pulse outputs. For each customer not receiving pulse
outputs, Idaho Power metering techncians enabled the meters to transmit these outputs, and EnerNOC
reimbursed Idaho Power for the associated costs. EnerNOC then installed monitoring equipment to
obtain and transmit the pulse output to their servers. By using EnerNOC's proprietar softare,
PowerTrak, customers could then monitor their near real-time energy use on a continual basis. Below
are examples of information paricipants can access at all times through the EnerNOC web site using
their unque login and password. In these examples the reduction in energy use occurs on a Satuday
and Sunday.
FlexPeak Management 2009 Preliminary Report Page 6
Idaho Power
Event Initiation
Idaho Power's Power Supply group monitored system demand forecasts and evaluated up to date
conditions in order to determine when demand reduction events would be initiated to reduce an expected
peak on the system. Idaho Power sent e-mails to EnerNOC to intiate each event, and EnernOC in
tu, notified customers two hours prior to the event. In 2009, all of the demand reduction was achieved
manually by the paricipants at their sites, with EnerNOC retaining no automatic control of the reduction
processes.
Idaho Power initiated a test event on July 7, 2009 in order to test the dispatch process and monitoring
capabilities. To the paricipants, this event was treated as a normal demand reduction event. The next
seven events in July were initiated in response to system demand needs.
Event Monitoring
EnerNOC submitted weekly reduction commitments to Idaho Power by the Friday proceeding the event
week. Durig each event, paricipants had access to near real-time electrc use data, which displayed
their baselines and reduction commitments through EnerNOC's web site. Below is an example of what
a customer might see during a demand reduction event.
FlexPeak Management 2009 Preliminary Report Page 7
Idaho Power
Dung each event Idaho Power had access to aggregate performance as shown below. The graph
displays the curent near real-time event performance, as well as the average performance throughout
the event.
FlexPeak Management 2009 Preliminary Report Page 8
Idaho Power
Customer Satisfaction
EnerNOC conducted a post-event customer satisfaction surey after the July 7tl test event, and while
only a few customers were enrolled in the program at that time, results were positive. Six customers
were enrolled across lO sites for this event. Of the 19 contacts made, 4 responded to the surey, for a
response rate of 2l %. On a scale of 1 to 10, 10 being the most prepared, the average level of
preparedness was 8.5. On a scale of 1 to 10, LO being the most satisfied, the average level of overall
satisfaction was 8.5. On a scale of 1 to 10, 10 being the most likely to recommend, all four customers
were at a 10. Results are shown below.
Post-Event Survey Results
July 7, 2009 Event
10
7
II Overall Satisfaction
II likely to Recommend
II Level of preparation
9
8
6
5
4
3
2
1
o
Customer "A"Customer "S"Customer "e"Customer "0"
Three of the four customers said the level of diffculty in the reduction plan was about what they
expected, and the fourh said it was easier than expected. One general comment was submitted,
requesting more advanced notice.
EnerNOC plans to conduct a 2009 post-season surey withi the first quarer of2010. Results of the
survey wi1 be made available to Idaho Power.
All 22 customers who enrolled and paricipated in the 2009 season are enrolled to paricipate in 2010.
FlexPeak Management 2009 Preliminary Report Page 9
Idaho Power
Payment Reconciliation
EnerNOC invoiced Idaho Power on a monthy basis. Invoices consist of both a capacity payment
component, based on the amount of reduction available durg active program times, and an energy
payment component, based on measured reductions durg each event. In June and August, there were
no demand reduction events, so charges were based on a simple capacity payment calculation using
EnerNOC weekly reduction commtments. Dug the month of July, in which eight demand reduction
events were called, biled amounts had an energy component and a capacity component which were both
based on actual paricipant reductions.
The overall demand reduction was determned by totaling the demand reduction of each paricipating
facility. The demand reduction of each paricipating facility was determned by subtracting their actual
use from a calculated baseline. The. baseline in a demand reduction program is used to measure
response and establish appropriate compensation for program participants. It estimates what would have
happened on an event day, absent the demand reduction event, which then allows Idaho Power to
determine how much load was reduced as a result of the program. Specifically, a baseline is calculated
by selecting the thee highest load days of the preceding ten non-event business days. A "day-of-
adjustment" is then applied to the baseline to shift or scale the baseline based on electrcity usage in the
hours prior to an event so that electrcity usage predicted by the baseline most closely matches actual
electricity usage on the day of an event (absent any demand reduction program response). These
adjustments are used to account for the impact that temperatue has on a participant's expected load.
Without this adjustment, the baseline could underestimate expected electrcity usage on the event day.
EnerNOC provided customer baseline and reduction data to Idaho Power with the July invoice, and
Idaho Power worked in parallel, using the actual five minute interval data received from EnerNOC to
determine baselines and reductions independently. Where there were discrepancies, the two companes
worked together to determine the cause and correct any mistakes. Discrepancies were due to a
misinterpretation of the day-of-adjustment calculation and a misunderstanding as to whether or not past
event days would be included in the baseline. At the end of the reconciliation process, both companes
agreed upon the individual reductions and composite reductions for each event.
FlexPeak Management 2009 Preliminary Report Page 10
Idaho Power
Cost..Effectiveness
In the intial cost-effectiveness analysis, Idaho Power estimated that the commercial demand response
program would be cost-effective, both from the Utility Cost (UC) and Total Resource Cost (TRC)
perspectives, beginng in year two (2010). Year one of the program was viewed as a ramp up year. It
was projected that the TRC benefit-cost (b/c) ratio in year one would fall below 1.0, but that building the
program foundation would contrbute to a cost-effective program in ensuing years.
EnerNOC's initial goal was to achieve 2 MW of demand reduction, and the cost-effectiveness analysis
indicated that under normal circumstances the program must reach 15 MW for the value in demand
savings to be greater than program costs and for the program to be cost-effective.
However, after determing actual expenses and MW demand reductions achieved in 2009, the program
was cost-effective in its first year. Lower expenses and higher demand reduction contrbuted to the
program's cost-effectiveness in year one. Following are some of the reasons:
· Program adminstration costs were one-thrd of what was originally projected.
· Despite the late star, EnerNOC experienced a higher paricipation rate than what was originally
expected. Ths resulted in higher demand reductions than were assumed in the original cost-
effectiveness analysis.
· Most notably, the assumption in the cost-effectiveness analysis was that EnerNOC would
achieve the exact MW demand reduction they committed to provide to Idaho Power. In
actuality, EnerNOC achieved a much greater reduction than the commtted MW reduction.
The actual TRC b/c ratio in 2009 was 1.60, and not the O.5L originally predicted, as shown below.
2009Fl P kM C Effexeaanaf!ement ost ectiveness
MW Reduction TRC Ratio
Proiected 2 0.51
Actual 11.1 1.60
The actual cost of the program in 2009 was $528,681. In the remainig years of the contract, the
program is expected to be cost-effective with a projected contract life b/c ratio of 1.11 from the TRC
perspective.
FlexPeak Management 2009 Preliminary Report Page 11
Idaho Power
Conclusion
Given the speed with which FlexPeak Management was implemented and given demand reduction
results that far exceeded expectations, Idaho Power considers 2009 to be an extremely successful year.
Not only was the company able to offer customers a quality program with multiple benefits, but
FlexPeak Management's contrbution to Idaho Power's system peak reduction was more than eight
times the original forecast capacity of the program. Going forward, Idaho Power wil continue to
evaluate the best use of the program in order to meet the program objectives. Results wi1 be reported
anually in the Demand Side Management Anual Report.
FlexPeak Management 2009 Preliminary Report Page 12