Demand Response Using Advanced Power Meters

Presented to:

“Electricity 2006”

November 15-17, 2006

Eilat, Israel

By: Tom D. Tamarkin, CEO USCL Corporation 2433 Garfield Avenue Carmichael, CA 95608 USA +1-916-482-2000

Issue:

As human requirements for critical natural resources threaten to exceed available production capacities, global security can be best served by an energy strategy that includes conservation as well as fuel diversity. The prudent use of utility commodities such as electricity, natural gas, LPG, fuel oil, and water can be greatly enhanced through consumer education. The importance of conservation thus becomes a part of a society’s value system.

The reaction of consumers toward the conditions of supply is termed Demand Response. Since availability conditions vary constantly, a rational response is predicated on real-time information that includes current rate, accumulated use and ongoing real-time consumption in monetary terms.

In the United States, the Domenici-Barton Energy Policy Act of 2005 has created obligations for both the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) regarding Demand Response policy and action plans. There is an opportunity to create conditions that will stimulate private sector innovation leading to the commercial availability of a myriad of new products and services, thereby allowing consumers to manage their use of energy more proficiently. A kilowatt saved has greater benefit than a kilowatt generated.

Background:

Demand Response (DR) may be accomplished in a variety of ways. For residential and small business consumers, DR is often instituted on a voluntary basis. Consumers respond to various real-time price and usage signals and then reduce their load. DR can also be evoked through a utility in conjunction with local control equipment and the use of data telemetry Wide Area Network (WAN) infrastructures. Voluntary Demand Response can take several forms. Consumers may, as an example, replace older less efficient appliances with new highly efficient ones. Consumers can also modulate their energy loads by shifting the time of day that certain

1 loads are used and by generally being more conscious of wasteful use. The latter requires a combination of enabling technology, real-time information, and economic incentives.

It is a well established fact that the process of providing feedback on consumption motivates consumers to save energy through the reduced use of electricity, gas, water, and the like. However, the body of evidence testifying to this is rarely acted upon in any systematic way. Professor Sarah Darby, Environmental Change Institute, University of Oxford, England, points out the fact that there are three types of feedback to domestic consumers. 1. real-time direct feedback within the consumers premise, 2. indirect feedback via billing (and perhaps Internet archive and presentation on a 24 hour basis), and 3. inadvertent feedback as a by-product of technical, household or social changes.

Studies of the use of feedback over the past 25 years indicate that feedback has a significant role to play in raising energy awareness and reducing consumption of the order of 10% to 20% depending upon prevailing conditions. As Dr. Darby points out, “the highest savings – in the region of 20% - were achieved by using a table-top interactive cost – and power consumption – display unit; a smart card meter for prepayment of electricity and an indicator showing cumulative cost of operating electric loads...”

Over the last several years, electronic interfaces have been developed using color LCD displays and associated touch keypads to provide consumer information and feedback on real-time cost, consumption, rate, and accumulated cost per period time. Typically, such devices operate in conjunction with the power kWh meter using some type of bi-directional communications. Wireless communication strategies at radio frequencies are preferred. In essence, a Local Area Network (LAN) is formed which allows the display device to communicate with the power meter, thereby providing access to real-time consumption information. Moreover, to the extent that the power meter is a component in a utility Advanced Metering Infrastructure (AMI,) a LAN to WAN interface is effectively provided which couples the supply and demand side, essentially in real time. Thus, the consumer is provided with access to current rate cost information that may involve a large number of varying tariffs including, but not limited to, time of use, peak demand, class of service, dynamic or real-time pricing.

Other devices may also communicate over the consumer premises LAN. These can include programmable communicating thermostats, as well as gas, fuel tank, and water meters. This capability prompts the development and implementation of time or event dependent rate structures in the natural gas and water utility sectors. Further, low-cost “appliance modules” can monitor the individual use of power by higher load devices, provide this information to the consumer, and control these loads either through consumer intervention and involvement or automatically as a function of programmable hierarchies and limits at the display and control location. As standards are implemented and consumers develop an awareness of this emerging technology and its availability, appliance manufactures will be compelled by the marketplace to include appropriate communication technologies into all of their new products.

It starts with the meter:

Effective Demand Response starts with the utility meter. In order to manage demand, the energy load must be monitored and measured. Traditionally, this has been accomplished with an electro-mechanical kWh (kilowatt-hour) meter, which measure the cumulative number of kilowatt hours consumed by the ratepayer. These meters were designed and commercialized when the electrical generation and distribution system emerged 75 years ago and have

2 changed little since then. While they have served the utilities well, today’s requirements for information and control by both the utility and ratepayers vastly exceed their technical capabilities.

Today’s meter must be capable of data communications with both the utility and the ratepayer. Data exchange between the meter and the utility should take place over a real-time bi- directional wide area network (WAN.) Communications between the meter and the ratepayer as well as various in-premise control and measuring devices must take place over a local area network (LAN.) The WAN and LAN should interface to allow for communications to take place between the utility and the ratepayer and various control devices located within the ratepayer’s premises. This interface may be thought of as a gateway within the meter.

Thus, the ratepayer is transformed into a customer having real-time current usage information in monetary terms as well as accumulated usage information and current real-time rate information.

Of equal importance is the access gained by the utility to any level of information it deems appropriate throughout the distributed network of customers which may be integrated with SCADA and Distribution Automation systems contributing greatly to reliability.

Such a meter must possess the following capabilities in order to fulfill the requirements imposed by an increasing number of North American utilities:

 Time of Use (TOU) rate structures. A minimum of 15-minute time interval data must be processed and stored in the meter with 45 day archival within the meter.

 Peak Demand or Class of Service rate structures. The meter must determine and record the maximum peak demand of its load in each of the interval “bin” periods, and store these values with 45 day archival within the meter. The meter must be capable of “ratcheting down” the amount of power the meter will pass and require consumer interaction to reset it if a maximum allowed load is exceeded.

 Dynamic or Real Time Pricing. The meter must be capable of receiving real time cost of power information through the Wide Area Network data telecommunications network and transferring this information to the customer via an in-home information display device. Further, the meter should be capable of performing the billing calculations internally based on the current billing determinants which include the real time cost as well as TOU and Peak Demand load information. This reduces network congestion, back office processing and software complexity, and allows the implementation of Subscriber Side Billing.

 Critical Peak Pricing. Critical Peak Pricing and the various schemes associated with advanced customer notification become a sub-set of the real time pricing methodologies described above.

 Wide Area Network Data Telecommunications. The meter must contain internal electronic circuitry to interface with a data Wide Area Network to allow for the bi- directional transfer of data to and from the meter and utility back-office. Although an effective AMI system may well employ multiple means of data back-haul including, but not limited to, radio frequency, power line carrier, telephone, wide band cable, and

3 cellular telephonics, the practical limitations imposed by the United States distribution system involving limited numbers of customers per transformer and lack of a neutral or Earth ground connection to the meter, dictate that the principal data interface to the meter must be RF. This becomes increasingly important as the amount of information transferred between the meter and utility increases as a result of incorporating new revenue producing value added products and services.

The AMI data Wide Area Network should be structured to allow for the transfer of customer service messaging, emergency notification and homeland security messaging, emergency disconnect of electric, gas, and water services in the event of natural or man made disasters, and service personnel data base and report transmittal.  Service Outage Reporting. Each meter should have sufficient non-interruptible power to allow for the transmittal of service outage conditions including time stamping and meter ID number to the utility.

 Service Restoration Reporting. Upon service restoration, each meter should transmit a time-stamped notification of the service restoration event along with the meter ID number to the utility.

 Theft of Power Reporting. Revenue diversion events and activities such as the shunting, bypassing, or tampering of the meter should be time stamped and transmitted to the utility.

 Remote Service Connect & Disconnect. Each meter should support the optional internal mounting and connection of a 2-pole 100-ampere relay or contactor. The meter should include an integrated electronic interface to the relay and embedded firmware to allow the relay to be switched from state to state by the utility through communications over the data Wide Area Network. The associated electronics and control firmware should be designed to support various prepayment options including on site Smart Card and over- the-network activation, as well as class of service or maximum load thresholds before automatic shutoff of service. Additionally, an external control button must be provided for final account activation by the customer prior to power restoration by the relay as a safety precaution. This control may be mounted on the meter with external access, or it may be incorporated in the in-home display unit.

 Over Voltage and Under Voltage Reporting. Each meter should automatically record and archive for 45 days the maximum and minimum voltage over a 500-millisecond period in each interval time “bin.” Furthermore, the embedded firmware should trigger the transmittal of a time-stamped notification to the utility in the event of a sustained over voltage or under voltage in excess of a programmable threshold for a programmable period. Ideally, the meter should monitor each leg of the incoming circuit with respect to neutral as a function of the sinusoidal waveform phase relationship and distortion monitoring.

 Power Factor Monitoring and Reporting. Each meter should be capable of monitoring the power factor or quality of each of the circuit lines with respect to the zero cross point and recording statistically relevant deviations for each interval time bin and generate a time-stamped transmittal of power factor data in the event programmable thresholds of uncorrected power factor conditions occur. Through digital signature analysis, the meter

4 should be capable of differentiating between distribution system related load factors creating power factor changes and customer load conditions creating power factor changes. The first set of information is of use to the utility for distribution system performance monitoring and optimization, and the second set of data is of relevance to the customer for preventative maintenance. The data may further be used as billing determinates in Class of Service rate structures in which power factor is included.

 Reverse Power (Net Metering) Measurement. The meter must be designed to measure reverse power with the same degree of accuracy and parameters as in the forward direction and to accumulate the Net Metering information for customer presentation and billing determination.

 Local Area Network Gateway. The meter must be designed as the principal node or gateway in a wireless customer Local Area Network that can receive data from and transmit data to other utility meters such as water, and natural or propane gas. Sufficient data logging and processing hardware and embedded firmware should be included to allow for the implementation of the same type of variable rate structures defined above for electrical service with gas and water service. This need may not be obvious at first glance, since the technology has not been available in the past to support variable rate implementation such as TOU, peak demand, day of use, etc., for gas and water service except in the case of large commercial and industrial users. Implementation of such variable rate structures for water and gas service offers manifold benefits to consumers, the respective utilities and most of all, the electrical utility, as both gas and water require enormous amounts of electricity to pump the commodity through their distribution systems and this use of electricity typically runs parallel to the critical peak demand. Further, the cost of both water and gas is escalating and many areas face peak demand limitations of both commodities. Additionally, the customer's Local Area Network gateway is the interface to an in-home information display panel as well as an in-home appliance and load monitoring and control network.  Remote Programmability. The meter must be capable of being remotely programmed and future updates of the embedded firmware comprising the real-time run system must be capable of being downloaded over the Wide Area Network to insure that future enhancements and upgrades may be cost effectively implemented without sending field personnel to a customer's site.

 Subscriber-Side Billing. The meter must contain ample memory and arithmetic computational ability to calculate a consumer’s bill using all available tariffs including time and event dependent tariffs within the meter. This greatly reduces wide area network congestion and utility back-office processing requirements. In this instance, only a minimal amount of data must be sent to and from the mater and utility in order for the utility to generate bills based on complex rate structures.

 Product Life Cycle, MTBF, and Environmental Considerations. The meter should be designed to ensure a 20-year life cycle, a MTBF consistent with traditional electro- mechanical meters, and continuous operation at -40/+85 degree C temperatures. The electronic and mechanical design must allow for long-term operation in sea coast areas with high concentrations of sodium chloride and other salts in the air, while being

5 generally immune from transient power events consistent with ANSI C-12.11 and other relevant specifications.

 Prepayment of Service. The meter must support pre-payment of service through the use of a remotely programmed “Smart Card” as well as over the network.

 In-home Information Display. A wireless in-home Graphic User Interface or information display and control device must be provided with each Advanced Integrated Metrology unit in order to enable the use of most of the above features. Communications between the display and the Watt-hour meter must be wireless as opposed to power line carrier in order to allow for the portability of the display and hence its use as an audit and conservation management tool. The display must be reasonably large and in full color to capture the attention of the customer. The screen displays must be nested in complexity to allow for the device’s use by a wide spectrum of customers with different social economic backgrounds, interests, and levels of patience. Screens could, for example, consist of a simple blank screen varying in color to indicate either cost information or usage information. They could otherwise be extremely complex to provide enormous amounts of information to interested consumers. The screen design might be entertaining or educational, depending on the focus group.

Discussion:

The Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) have been assigned key responsibilities under the Federal Energy Policy Act of 2005. These include the development of a Demand Response policy as well as regional cooperation with states to insure that local utility commissions and utilities take the proper steps to make enabling technologies available to all consumers who desire the economic and societal benefits provided by the various products and programs.

The management of any resource, including utility commodities and energy, requires measurement and information. The key to effective consumer management of energy use and conservation on a voluntary basis is energy use measurement, real-time feedback, rate, and cost information.

The Federal Energy Policy Act requires that all utilities, irrespective of the jurisdiction of a state commission, shall offer time-of-use pricing and the equipment necessary for implementation to all customers of all classes who request it. The Act specifies time-of-use pricing. This is a convenience, not a standard, that is based on previous technology deployed in the industry for the last 30 years. Today, state-of-the-art technologies and emerging capabilities will expand the type of rate tariffs that can be implemented significantly. New tariffs based on peak demand, critical peak pricing, class of service, dynamic and real time pricing, as examples, can be easily implemented for all classes of service. The DOE and FERC have been charged with the tasks of determining what the technical possibilities are today, and the emerging trends that must be compatible with any deployed system infrastructure for the next several decades.

A consumer owned or leased energy management system must be capable of communicating bi-directionally with any power meter a utility may own or operate. Such a system could provide the consumer with “power profiling information.” As an example, the in-premise display and control device can measure the efficiency of the in-premise load devices and compare that

6 consumption and cost with the cost of more energy efficient devices based on the user’s (or family’s) routine. From this “power profile” for the house or office, the individual appliance annual cost can be compared with the amount of power and cost were the consumer to replace inefficient devices with efficient ones. The cost of new devices could be used to calculate the cost of replacement and the length of time to payback. The monthly and annual cost of each appliance can also be compared with the same use pattern, as well as the cost, if a “peak load avoidance” algorithm is used to schedule certain appliance use, (e.g. air conditioner, washing machine, clothes dryer, spa, pool pumps, etc.)

The private sector industry can grasp federal and state government initiatives to develop and commercialize new products and services that can be sold by utilities and private contractors and have significant impact of the reduction of peak demand and overall demand. However, industry must be assured that the availability of this data and information to the consumer will be guaranteed. The minimum requirement is that any advanced electricity meter installed under the provision of the Energy Policy Act must contain a universal LAN to WAN interface. This provision will provide the consumer the option to install a remote display in his residence or place of business, either at the time the new meter is installed or in the future. Such installation must be wireless and “plug & play.” This interface must comply with a set of open standards and protocols. A useful analogy for this requirement is the adoption and promulgation of radio spectrum allocation and modulation standards in the early days of radio by the Federal Communications Commission. The appropriate procedure will stimulate the greatest degree of innovation in the private sector for the commercialization of constantly evolving, more powerful, and less expensive consumer tools.

Action Required:

 Accelerated Depreciation by utilities should be granted for all advanced metering and demand response programs. These were initially included in the Barton-Domenici Energy Policy act but were dropped as part of efforts to reduce the overall cost of implementation. Inclusion of this provision would provide significant increased energy savings.  Develop national standards of advanced meter functionality and interoperability.  Direct the DOE Energy Star group to provide a certification on a new class of product; notably in-premise energy monitoring and management products.  Encourage private industry, appliance manufacturers, metering companies, wide area telecommunication network operators and data base management firms to cooperate with Advanced Metering Infrastructure development and deployment.  Develop suggested cost recovery methods based on:  Customer “opt-in” purchase with long term payment.  Ratebase increase predicated on predefined operational and cost of power benefits.

Summary:

As a matter of fundamental public policy based on available technology at the beginning of the modern electric era and going back almost 100 years, ratepayers simply do not know how much electricity they are buying, how much it is costing to operate various combinations of loads in real time, and how much they have purchased to date from a beginning bill cycle, until they are billed at the end of the billing cycle. This relates to the fact that the power meter device indicates only accumulated energy use in engineering units not generally understood. The

7 situation is further exacerbated by the fact that the meters are typically located in locations separated from the living space. A primary goal of Federal and State regulators should be the provision of tools to ratepayers that effectively transform the ratepayer into a decision-making customer. Electricity, gas, water, and the like are the only commodities that consumers purchase with absolutely no knowledge of real-time usage, accumulated cost, and related pricing information. Abundant comparisons may be made to point-of-sale terminals at retail store check-out counters that display quantity and price. Today’s gas stations provide electronic displays showing the price of the selected fuel, the amount pumped up to the second, and the total accumulated cost. Utility ratepayers do not have this information.

Energy conservation will become increasingly important in the years to come. The cost of fossil fuel resources can and will necessarily rise as countries outside the United States step up their demand. It must be stressed that fossil fuel reserves are finite, while industry experts generally concur that we are decades away from any full-scale migration from fossil fuel to alternative energy sources. Consideration must be paid not only to the reserves of low-sulfur coal, but also to the cost of mining and transporting coal to utility generation stations using diesel fuel. The introduction of real-time feedback to consumers through interactive displays can provide practical management tools while creating the presence and awareness necessary to evoke a cultural shift to environmentally friendly, conservation-oriented value systems. Although the public expectation of politicians is to take immediate short-term steps to lower fuel and energy costs, the continued use of fossil fuels inexorably enhances worldwide competition for finite resources.

Government commissions need not be concerned with the specific technologies employed but only with the basic functionality of the provision of this advanced meter technology and the local to wide area interface. Generally speaking, this means a bi-directional or two-way data flow from each individual power meter to an in-premise device that by definition constitutes a LAN. From the standpoint of cost, this capability will have only a marginal impact on the overall meter price. A further objective should be the provision of an open set of data structures and communication protocols, such as those being proposed by the OpenAMI task force in California. This will insure that the consumer will be able to purchase displays and energy management products either from the utility, or alternatively from home improvement centers, consumer electronics stores, and the like.