Time-of-Use Plan Benefiting PSE and its Customers

By Roxane Richter

The Costs and Benefits of Customer Care

Still nascent in its development, demand-side management is hard at work at utilities like Puget Sound Energy (PSE) through its Personal Energy Management (PEM) program.

Exactly one year ago, Washington state regulators approved a networked energy-conservation plan from PSE (the utility subsidiary of Puget Energy) that compensates customers for using less electricity and shifting their power use to low-demand times of the day. Endorsed by the Washington Utilities and Transportation Commission, the pilot marked the first-ever large-scale networked time-of-day plan in the United States.

Already, some of the program’s results are in: From June through December 2001, the 300,000 PSE customers paying time-of-use electric rates used about 100,000 megawatt-hours less energy than in the same months of 2000-that’s enough banked electricity to serve approximately 14,000 homes. But besides cutting their overall usage, PEM customers also shifted about 35,000 megawatt-hours (over a six-month period) of power use away from the expensive, high-demand times of day to the less expensive, off-peak hours.

Jennifer Tada, Puget Sound Energy’s director of business development, explained that there is not a real-time rate for power through PEM, but a “time-of-use rate in buckets,” which gives close to real-time information. With seasonal fluctuations in price, the rates are economy (off-peak) now priced at 4.07 cents; morning and evening rate from 6 a.m. to 10 a.m. and 5 p.m. to 9 p.m. (peak) priced at 6.25 cents; and mid-day rates from 10 a.m. to 5 p.m. at 5.36 cents. These rates will vary by season, according to the utility.

Under PSE’s PEM program, customers will pay about 15 percent less than the flat, fixed rate for off-peak power (off-peak is 9 p.m. to 6 a.m. Monday through Saturday, all day Sunday and holidays). But the energy company assures customers they will see little variance either way, as current customers use nearly half their electricity during the inexpensive, off-peak period anyway.

“We see this as the beginning of a new era in energy conservation,” said Gary Swofford, PSE vice president & COO. “For the first time anywhere, two-way, Internet-based technology is being used to inform a large block of customers about when they consume their power, the variable cost of providing that power, and how they can save money through time-sensitive usage.”

The Utility’s Story

As for the utility’s side of demand-side management, Tada said PEM does help with load profile planning and also has provided useful information to settle issues like bill resolution.

“Plus, through the pilot, we’ve been able to cross-market energy efficiency programs, and we’ve witnessed a heightened awareness of new initiatives,” she added.

To aid consumers in upping their energy I.Q., PEM clients can log on to the company’s Web site and learn what their energy consumption was the previous day, how much they paid for energy at different times during the day, modify their consumption habits and take advantage of lower electricity costs.

“We aren’t charging customers anything,” explained a PSE spokesperson. And as for the company’s out-of-pocket cost: “The system accomplishes a lot of operational things for us, including outage restoration, customer call center and others, so we haven’t separated out the cost for the system.”

Now Puget’s customers can save money by setting the dishwasher and clothes dryer to run in the wee hours of the evening or by raising the thermostat a few degrees. And, after doing so, the consumer can log onto the Web site the next day and see how their choices affected their energy consumption, billable rates and concluding bill total.

Behind the Scenes

What Puget customers won’t see is the massive wireless real-time relay of data to the utility on the nation’s largest and fastest network meter reading system.

SchlumbergerSema is providing the backbone for the delivery of the consumers’ energy usage data via a wireless fixed network. The technology remotely captures high volumes of real-time consumption information, which is used to provide timely online feedback of energy usage patterns to Puget customers via its PEM program.

To round out the network, PSE uses Alliance Data Systems’ ConsumerLinX product (which was originally developed by PSE’s ConneXt subsidiary) as the back-office customer information system in the program.

Leading the Way to Load Curtailment

Currently, utilities pay anywhere from 60 to 85 cents on a per-meter/per-month read, according to a recent CERA study. Yet manual meter reading costs can quickly add up when meter reads run $1.50, $2.50, $4.50, even hundreds of dollars per read in sparsely populated and out-of-the-way, remote regions. And with estimates of about 125 million electric meters and half that for gas meters, the costs paid for expensive, time-consuming manual meter reads can multiply in a flash.

“We charge on a per-read, per-point fee,” said Jamie Arrison, SchlumbergerSema’s PEM Web site project manager. “With the time-of-use program, we’re taking reads five, six, sometimes 10 times more often than the regular monthly read.”

Arrison went on to say that utilities won’t usually buy into similar project deployments (which generally run a two-year sales and financing cycle), without a return on investment (ROI) under three to four years. “With a five- or seven-year ROI, they won’t buy in,” he concluded.

The partnership between Puget Sound and SchlumbergerSema will hopefully lead to load curtailment becoming a mutually beneficial collaboration toward solving the need for lowering on-peak energy consumption. But mining the considerable value from real-time and Web-enabled metering requires far-reaching vision and deep-pocket implementation efforts by megabuck players.

Since Puget’s much-lauded success with PEM, the Minnesota Public Utility Commission, Philadelphia Electric (PECO) and the California Consumer Power and Financing Authority now are at various stages of viewing, advocating and implementing comparable time-of-use energy programs.

Currently, Puget is rounding up all the relevant statistics from the PEM pilot and readying a comprehensive report for the state’s PUC. According to Puget, the report, to be released in May of 2002, will publish many of the quantifiable results from the preliminary program.

In the end, if there’s any possibility of changing on-peak demand cycles, consumers need to have the technology, knowledge and tools to effectively self-manage their power costs, and utilities must invest in demand-side management program infrastructure and share real-time market information with the end user.

A veteran energy journalist with more than a decade of reporting experience, Roxane Richter specializes in covering trading, risk, digital exchanges and IT systems. She can be reached at roxrich@flash.net

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