Load Estimation and Reallocation Enables Competition in New England

Load Estimation and Reallocation Enables Competition in New England

By Mark Knight, Logica Inc.

As deregulation of the electric utility industry proceeds across the United States, a broad range of challenges face today`s utilities. The realities of competition are new to formerly regulated businesses and with that reality comes the need to streamline processes and increase operating efficiencies. Gone are the days when rate increases were practically pro forma and could be structured to cover new projects and new technologies. The need for information is paramount–especially information about power usage and demand at the micro level, by individual user.

The majority of residential power consumers in the United States are not yet equipped with the new generation of meters, which can supply hourly usage data. But utilities in the age of deregulation need better information than manual meter systems can provide. New electricity markets will use new pricing mechanisms and utilities need to be able to offer varying power prices for different times of day, using supply and demand to drive those prices. Current usage information is critical in establishing these new price schedules. One answer is load estimation and reallocation, a system being used successfully in New England.

NEES Establishes ISO

The New England Electric System (NEES) consists of Massachusetts Electric Co. and Nantucket Electric Co. in Massachusetts, Narragansett Electric Co. in Rhode Island and Granite State Electric Co. in New Hampshire. Together, the NEES member companies serve 1.3 million electric customers across a diverse geographic area. Full-scale retail electricity competition began in Rhode Island last summer and in Massachusetts at the beginning of this year. A multi-state Independent System Operator (ISO) has been established in the region. Each state retains a separate Public Utility Commission.

NEES`s deregulation plan calls for it to sell off its power generation business and concentrate on delivering electricity, becoming a distribution company. NEES`s internal information system was designed to deal with power generation, transport and electricity distribution within its geographic area and billing. Under the new NEES business model, this IS infrastructure will have to measure consumption and predict demand to guide power buying decisions.

NEES contracted Logica Inc. to provide system integration and information processing services that support the competitive need for daily load estimation and monthly energy reconciliation for all 1.3 million NEES customers.

Logica was selected after NEES officials visited the United Kingdom, where Logica has developed and implemented settlement systems in the competitive electricity markets. Currently, Logica is deeply involved in the final phase of retail electricity competition in the United Kingdom. “Our extensive pilot programs have impressed upon us the need to partner with the most experienced firms worldwide to ensure that the new electricity market coming to Massachusetts in 1998 can be operated smoothly and in ways that allow our customers to enjoy the full benefits of supply competition,” said Lawrence Reilly, Massachusetts Electric Co.`s president and CEO, when the decision was made in 1997.

Load estimation information developed under this contract is provided to the New England ISO. Logica is also offering the same service and contract arrangements to any other utility within the six New England states, believing that these new market support processes will work best and most cost-effectively as a centralized service in which all or most New England utilities participate. This will ensure that computer software and key input data, such as customer load profiles, can be standardized.

“New England is well ahead of the national learning curve in its approach to implementing retail electricity competition and can serve as a model for other regions of the country,” said Wayne Pettit, Logica`s energy and utilities division executive vice president. “The job of the New England ISO in market settlement will be greatly simplified by the existence of a centralized service which is available to consolidate the reporting of daily supplier loads by many different electric utilities.”

Load Estimation and Reallocation Service

Logica`s approach is to measure and estimate retail customer electricity usage with a single system–the Load Estimation and Reallocation Service (LERS). LERS can both process interval meter data and facilitate estimating through load profiles. Each customer is assigned a 24-hour load profile, which is used to allocate consumption based on time of day, customer class, seasonal adjustments and other factors.

Daily consumption figures are aggregated for each energy service provider (ESP). Hourly loads are reported to the ISO and the ESPs on behalf of distribution companies (Figures 1 and 2). Reallocation reports are sent after actual electricity consumption data is available. In the system design, as interval metering is installed, accuracy improves, but LERS gives utilities a way to more accurately predict load and usage before interval metering is installed in a service area.

Technology Considerations

The technology strategy employed involves six major considerations. First is database design. LERS designers created a completely new core data model that supports the management of revenue data as a market entity. The system supports the simultaneous translation of the data definitions set by distribution companies into a common set of references for consistent market level processing.

In terms of data management, the system is designed to support large volume revenue data processing and not just pure load estimation. For example, most databases manage data in its most current form. Updates are written over the last information received. But in a complex energy supply market, no data values can be lost–it`s important to be able to recreate any point in time with the values in play at that time.

The next consideration was data integration. LERS simultaneously supports the management of all revenue data. The system can effect a seamless transition from processing estimated load to actual interval data points, moving from the load estimation requirements of today to the load measurement requirements of tomorrow without a costly system overhaul.

Next, data volumes were considered. LERS uses a distributed architecture, so that the processing requirements are expanded through the addition of hardware rather than duplication or rewriting the whole system. This is an important distinction when dealing with the sheer volume of data involved. For example, if New England`s electric consumers were currently all equipped with interval meters, data volumes would be almost 10 terabytes per year. Any solution must be scalable to meet such future requirements.

Technical change management was another important factor. It`s inevitable that changes to the processing logic for this market will occur over both the short and long term. Change always has a price tag, but the LERS system is designed to support implementing change at the lowest possible cost.

Finally, capabilities expansion was important in the LERS system design. When the United Kingdom deregulated electricity, additional requirements emerged as the process unfolded. That`s likely to be the case in the United States as well. LERS was designed with a number of potential scenarios in mind, including the potential for metering to be unbundled from distribution companies, as was the case in the United Kingdom. LERS supports regional solutions that can be tailored to differing regional needs.

LERS Process

The LERS process starts with daily estimation and allocation (Figure 3). Load isolation zones (LIZ) are established within a service area. Delivered load data for each zone is used to select the closest matching LIZ load profile from historical data. The date on the selected profile becomes the proxy date for the zone. Class average load profiles and individual load profiles for that proxy date are extracted from historical records. Interval data for each consumer are calculated either by using data from interval meters where installed, or using the load profile data and usage factors. Daily summaries are prepared and stored. Preliminary estimates of load for each zone are determined by aggregating daily usage data, then these estimates are compared to the delivered load figures for each zone. These figures are then reconciled to account for all of the power delivered into an area.

Load is allocated to each company supplying power to the distribution company. Transmission loss factors are then applied to the reconciled estimates to produce hourly load figures for each supplier by day. This information is provided to the ISO for financial settlement purposes.

Daily processes triggered by the receipt of a file include customer usage, IDR readings and consumption point data. Consumption point updates are received as needed, for example, when a consumer changes suppliers.

Reallocation and adjustment activities take place monthly, using actual consumption data. This process begins no less than 45 days after the end of the selected month.

IT Outsourcing Options

The complexity of the system described above is the most compelling reason utilities look to third party technology suppliers. The business model shift that electric utilities are now experiencing is driving new information processes and technology requirements very rapidly. Pressures on information technology resources have never been greater.

Outsourcing the needed new information systems can be a cost-effective strategy for several reasons. When the business function or process in question involves an industry-wide problem, an industry-wide solution is called for. The cost to benefit ratio of in-house development, operation and maintenance frequently does not justify the enormous commitment of resources such an internal effort would require. The useful life of a technology system can be dramatically shortened by industry changes outside the control of an individual company. Outsourcing technology infrastructure needs frees up valuable utility resources, both human and financial, to focus on key operational needs.

In addition to the four NEES companies, two other New England utilities are now using the LERS system. As more regional utilities are added, the ISO`s role as a central clearinghouse for energy information is enhanced. Logica managers also foresee a future role for similar systems in gas utilities.

In summary, deregulation and the introduction of competition in the electric marketplace has created an enormous information processing need, a need that may be best met through outsourcing. This is particularly true in a situation like the current one in New England, where a regional ISO exists. As more and more individual utilities participate in the system, feeding information to the ISO and using collected data to structure competitive pricing and value-added services, all participants benefit: the energy suppliers, the distribution companies and the consumers. Logica predicts that the New England experience will serve as a model to other regions and states that are just beginning the deregulation process.

Author Bio

Mark Knight, is Director of Service Delivery for Logica`s Energy Solutions Center located in Lexington, Mass. Formerly Knight worked for Andersen Consulting, SEEBOARD, the National Grid division of the C.E.G.B. and the Central Electricity Research Laboratories in the UK.

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  • The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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