Smart Grid: What’s In It for the Customer?

Wharton Energy Conference 2010

Wayne Harbaugh , Vice President, Pricing & Regulatory Services

Increasing demand and rising energy costs in the long term Significant investments needed in new and replacement

infrastructure Resource adequacy and transmission congestion Tougher environmental regulations Ability to accommodate growing levels of intermittent,

renewable energy Emergence of plug-in electric vehicles (EVs) Emergence of Smart Appliances that move energy use from one

period to another

Key Challenges and Opportunities Confronting Our Industry

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Smart Grid addresses each of these challenges …

BGE Load and Energy Costs Vary Dramatically by Hour

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Unrestricted BGE Load Duration Curve Compared to Average LMP in 15 Load BlocksJanuary 2007 to December 2007

AverageLMPMW

Hours

MW LMP

Customers allow “smart cycling” of their air conditioning in exchange for annual bill credits

Choice of “smart” thermostat or outdoor switch Choice of three levels of cycling – 50%, 75%, or 100% --

and up to two over-rides per summer Ability to remotely adjust temperature settings Over 306,000 residential customers enrolled Produces the equivalent capacity of building a large new

power plant at a fraction of the cost Will move to two-way communications via Smart Grid

BGE PeakRewardsSM Program

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Cost Comparison- PeakRewardsSM: $165 per kW- New Peaking Plant: ~$1,000 per kW

A portfolio of initiatives to lower energy bills and increase efficiency: Efficient lighting and appliances Heating and cooling Home energy audits and retrofits New construction Targeted low-income programs Custom solutions for large commercial accounts Significant opportunities to reduce energy waste

Energy Efficiency & Conservation Initiatives

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Cost Comparison:- Cost to reduce consumption: 2-3 cents per kwh- Cost to supply more power: 9-10 cents per kwh

Driving improvements in utility operations and energy delivery

Smart Grid: A Transformational Initiative

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Automation• Distribution• Substation• Autorestoration• Capacitor

Control

Fault Locating• Remote

Indication• OMS

Integration

Outage Management• Outage

Notification• Restoration

Notification

Efficient Delivery• Reduced line

losses through volt / VAR management

• Voltage Conservation Management (VCM)

Equipment Monitoring• Temperature• Load• Voltage

Communications• Robust 2-way

communications network throughout the grid and to every customer’s meter

Supporting new consumer products and pricing structures to enable energy reductions and cost savings

Smart Grid: A Transformational Initiative

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Renewable Energy & Dist. Gen.• Solar• Wind• Micro-Turbines

Electric Vehicles Smart Charging• PHEV• EV• V2G

AMI & Smart Energy Pricing• Rebates earned

for reducing peak demand

• Improved price signals and energy conservation

Energy Storage• Batteries• Flywheels• Ice

Demand Response• Smart

Thermostats• Load Control

Switches for HVAC, hot water heaters

Home Area Network•ZigBee Network•Smart Meters communicate to Smart Thermostats & Appliances

•In-Home Displays and Internet Portals track usage

1,000 customers randomly selected Day-ahead notification of a peak event Rebates offered for energy reductions during

peak periods (2 p.m. to 7 p.m.) Test groups included:

− Price incentive only− Price incentive with in-home display (Orb)− Price incentive with Smart Thermostat and Orb

Advanced meters installed to record customers’ usage on an hourly basis to calculate bill rebates

2008 - 2010 Smart Energy Pricing Pilot: Measuring Customer Response to Price Signals

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Ambient Orb

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0.40

0.60

0.80

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1.20

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Rat

e ($

/kW

h)

Hour of Day

Current RateCritical PeakNew Rate

Dynamic Peak Pricing (aka DPP) Weekdays (excluding Holidays)

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Pilot Pricing All – in Rate*

Critical- $1.30425Peak $0.14425-Off-Peak- $0.09425

* Includes generation, transmission and delivery

$1.30

$0.14

$0.09

A Mirror Image of DPP Rate− Schedule R summer rates are

$0.14 / kWh for all summer hours

− Up to 12 critical peak days will be called by 6 p.m. the prior day

− Customers who use less during the critical period (2–7 p.m.) on any critical peak day will receive a rebate. Two levels being tested:

$1.75/kWh $1.16/kWh

Peak Time Rebate: Weekdays (excluding Holidays)

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Customers respond emphatically to pricing signals, reducing consumption by approximately one-quarter to one-third

Average customer savings was $115 More than 98% reduced their bills

The SEP Pilot Demonstrated Significant Consumer Interest and Willingness to Adjust Consumption

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No Technology With Orb With AC Switch and Orb

0%10%20%30%40%50%

22% - 26% 27% - 31%32% - 37%

Average Peak Load Reduction

SEP Customer Survey Results

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On a scale of 1 to 5, where 1 is "Very Dissatisfied" and 5 is "Very Satisfied", please rate your overall satisfaction with the pilot program. (Select one option)

Over 93% of customers were satisfied with Smart Energy Pricing; 98% - 99% wished to continue participation

Smart Grid Benefits in Multiple Dimensions

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A communicationsnetwork that can be used to provide future smart gridfunctions such as:• Automated, self-healing network• Remote fault indication• 2-way capacitor control• Reduction of system line losses• Voltage optimization and efficiency gains

• Reduced carbon emissions– Lower energy

consumption• Reduced need for power plants

– Peak load reductions• Infrastructure that can support

renewable generation– Wind– Solar

• Infrastructure than can support smart charging of Plug-in Hybrid Electric Vehicles

• Reduced peak load– 500MW through Smart Energy Pricing – 1,700 MW total (~25%)

• Reduced O&M– Eliminates manual meter reading

– Reduces truck rolls for turn on/off of service– Enhanced storm operations

• Better capital planning through improved gas and electric system models

• Avoided Cap-Ex

• Lower customer bills– Bill credits through Smart Energy Pricing– Empowered consumers managing energy use

• Improved reliability– Automated outage reporting / faster restoration

• Improved customer service– Virtually eliminates estimated bills– On-demand meter reads

• Support for In-Home Networking / Displays

– Web Portal– In-Home Displays

Customer Benefits Operational

Benefits

Societal Benefits

Grid Benefits

Smart Grid: Over $2.6 Billion in Consumer Savings

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$661

$580

$452

$408

$204

$117

$104

$61 $49

Capacity Revenues Capacity Price MitigationEnergy Conservation Operational SavingsAvoided Capital Expenditures Avoided Transmission InfrastructureEnergy Price Mitigation Energy RevenuesAvoided Distribution Infrastructure

$'s in millions

Life-cycle savings projected to exceed $2.6 billion – several times greater than deployment cost of $500 million!

Additional downstream savings likely from reduced line losses and voltage optimization, reduced carbon emissions, and integration with PeakRewardssm!

More info on MD PSC Case 9208 (BGE’s Smart Grid Case) available on PSC’s website

http://webapp.psc.state.md.us/Intranet/Casenum/CaseAction_new.cfm?RequestTimeout=500?

Full Case Filing History

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Q&A

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