The Demand Response (DR) Pilot Program of the Center for the Commercialization of Electric
Technologies (“CCET”) was a collaboration between three Retail Electric Providers (REPs Direct Energy,
Reliant Energy, and TXU Energy), three Transmission and Distribution Service Providers (TDSPs American
Electric Power, CenterPoint Energy – Houston Electric, and Oncor Electric Delivery), and demand
response-enabling technology providers (Comverge and Corporate Systems Engineering) that began in
early 2007. It was undertaken in order to explore the opportunities and challenges associated with
implementing residential demand response programs in the restructured Electric Reliability Council of
Texas (ERCOT) market. The ERCOT market structure, as well as the use and integration of the latest
technologies for advanced metering, intelligent grid operation, and in-home controls, make this pilot
program unique.
Residents of the Dallas and Houston service areas living within the broadband over power line (BPL)
footprints of Oncor Electric Delivery (OED) and CenterPoint Energy – Houston Electric (CEHE) – the areas
in which BPL communications capacity were in place – were recruited for participation in the pilot by the
REPs from among their existing customers. The Pilot involved the participation of 213 households in the
OED service territory and 133 households in the CEHE service area. In addition to bill rebates or similar
incentives offered by the REPs, customers were given free programmable, communicating thermostats in
exchange for their participation in the program, which involved allowing their air conditioners (and, where
applicable, pool pumps and electric water heaters) to be controlled remotely for a limited number of test
curtailment events. While a number of challenges (from technological and legal holdups to hurricanes)
limited the success of the CCET DR Pilot in terms of measured demand reduction, overall the Pilot
accomplished its objectives of demonstrating the technical and operational feasibility of residential
demand response in Texas’s deregulated market. The major findings of the CCET DR Pilot are
summarized in the following paragraphs.
Proven Technology. It is possible to successfully integrate many of today’s most advanced technologies
for monitoring electricity usage, communicating with thermostats controlling air conditioner operation at
homes, networking devices within homes, and controlling customer appliances through a voluntary
residential demand response program. This pilot program has also demonstrated that demand response
programs may be successfully implemented in an “unbundled” competitive electricity market where
separate organizations are responsible for the various activities that must be coordinated in order to
operate a voluntary demand response program.
kW Impacts. In curtailments called in the late summer and fall of 2008, an average demand reduction of
0.6 kW was estimated for participating homes in Dallas. The demand reduction that was achieved varied
depending upon the curtailment strategy employed and customer-specific factors. Had Hurricane Ike and
some equipment delays not prevented the deployment of the program during the hottest period of the
summer, and had more effective curtailment strategies been employed, we believe that an average
demand reduction closer to 1 kW per home would have been attained.
Settlement Implications. Despite the fact that not all curtailment events for this pilot were timed to
coincide with daily or seasonal demand peaks, comparison of averaged participant load shapes to the
ERCOT load profiles for curtailment events showed that, during modeled curtailment events, participant
energy use averaged between 1 and 2 kWh less than that predicted by the load profile. As load control
and DR programs are brought to scale, the potential savings on marginal purchases on the balancing
energy services market may become significant, particularly when curtailments are timed to coincide with
periods of peak prices.
Demand Response in Off-peak Seasons. Given the importance of timing curtailment to periods of peak
prices, it is important to note that many of the significant price spikes that have occurred in recent years in the ERCOT market have been due to constraints occurring in the fall and spring “shoulder” months.
Because curtailments were called for this project in September and October, including some of the more
successful curtailment events (in terms of estimated load reduction), the findings of this study indicate
that DR programs in Texas could provide additional value if market participants contract with participant
customers not only for a certain number of summer peak hours, but also for additional hours in the
shoulder months. For shoulder month curtailments to be successful, curtailment strategies will need to be
adapted to the ambient conditions (e.g. cycling strategies must be more aggressive on cooler days for
load reduction to occur).
Market Effects. Had a “commercial-scale” demand response program been in effect during spikes in the
price of balancing energy during the summer of 2008, wholesale prices could have been reduced by over
60% during the period of the spikes. This calculation assumes that reduced demand would have enabled
ERCOT to “slide down the bid stack,” thus permitting a much lower supply side offer to set the market
clearing price of balancing energy (MCPE) during those periods. Under some plausible assumptions, the
total value of the reductions in the MCPE during peak periods that could be provided by demand
response is estimated to be $160 million.
While this pilot program demonstrated that the technology works and the necessary coordination is
possible, many of the challenges inherent in reaching a successful program were underestimated when
this pilot was originally designed. Some of the brand-new technologies selected for this pilot had not yet
been fully tested in the field, resulting in significant equipment-related delays. Coordination among all the
entities involved in this project required the negotiation of numerous contracts to address many issues
that had never previously been addressed. Many activities required “manual” efforts, since meter data
management systems and procedures for the sharing of data were still under development at the time
the pilot was undertaken. Fortunately, many of the problems that this pilot experienced are now being
resolved through various projects at the Public Utilities Commission of Texas (PUCT) and the Electric
Reliability Council of Texas (ERCOT), and through implementation of systems at the respective utilities.
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