Pennsylvania’s Act 129 Impact: Can Utilities Meet The State’s Energy Goals

Posted on February 9th, 2012 by

Kevin R. Evans, Vice President & General Manager of Demand Response Services at Johnson Controls, shares his insights on the state of Pennsylvania’s Act 129 and how Johnson Controls’ EnergyConnect integrated demand-side management services are contributing to help the state meet its overall energy goals.

Full transcript:


Ben Lack: What are PECO’s demand response issues and how is EnergyConnect helping resolve the problem?
Kevin Evans: PECO, along with all the other larger Pennsylvania-based utilities have a mandate under what is called Act 129. The first part of that has a focus on energy efficiency, where they need reduce their baseline by 3 percent this year.The second piece is related to demand response. It requires a 4.5 percent drop during the summer’s 100 hottest hours for the utility by May 31st, 2013. Basically, Johnson Controls is working with Pennsylvania utilities like FirstEnergy’s West Penn Powerand PECO to address a significant portion of that load reduction piece.For PECO, this first-of-its-kind consortiumwill deliver 100 megawatts of load over up to 125 hours throughout the summer time.
Ben Lack: Can you give us some insight into to how you are accomplishing this?
Kevin Evans: We have assembled this unique Johnson Controls-led partnership of curtailment service providers or CSPs to help the utility with the very difficult task of trying to forecast and identify those hundred highest hours, and ensure system reliability during those hours. That is the role we work on together and then inform customers so they can make curtailment decisions around their business and operational constraints. We take that information and leverage our GridConnect platform to pass that information, which includes the economics and the duration of those curtailment requests, to our customers. We give customers full control to schedule themselves into the Act 129 program using the platform, and they are paid based on the reductions they make.
Ben Lack: Can you give us an example of one of the 100 highest demand hours?
Kevin Evans: Certainly. The performance period is from June 1st to September 30th. Moreover, you are going to hone in on the hottest days, and the hottest hours, typically after 2PM in the afternoon.  Clearly, as the summer passes, we will have much better sense of when we will see – and more accurately forecast — those highest hours as we see heat waves that pass across PECO’s service territory.
Ben Lack: The demand response, basically the decisions are done real time and not necessarily for how many you are forecasting when the specific times during that time period.
Kevin Evans: Actually, no. The utility does take on the responsibility of forecasting their load because again it relates to the utilities’ peak days. So, it has to do with their system reliability needs, their customer baseline, and obviously very much driven by weather. They will be forecasting these events, providing us an indication of what they believe will be a top-100 hour at least a “day ahead” of the actual event. With a “day of” confirmatory notification, by say 11 AM the same day, they tell us in fact that these are the actual hours for which they will initiate the Act 129 event. This is the signal for us, and predetermined notifications go out to customers, allowing each of them the opportunity to self-schedule and curtail energy consumption to create the load reductions.
Ben Lack: And GridConnect helps speed this process as well as also providing accuracy, how?
Kevin Evans: A couple of different ways. From the customers’ perspective, what they need is actionable information from the price signals within the context of their operational needs: how much money they will receive, where they are relative to their current load, etc. So it is important that they have a good sense of what their current load is and how much they will need to reduce their load in order to receive compensation. We provide them with real-time information about their load as well as the real-time price, not only of PECO in this case but also provide them wholesale market prices from the PJM Wholesale Market. So together, that customer will receive compensation for the load drop based upon the two components: the compensation under the PA Act 129 program as well the opportunity to also be compensated for that reduction from PJM under their economic demand response programs as well. So our GridConnect platform simplifies DR participation. Users can track their performance and earn payments from both PJM’s Economic program and their utility’s summer Act 129 load reduction program.
Ben Lack: Based from your understanding of the different reductions that they need to make, megawatt hours and demand response standpoint, does 100 megawatts really move the needle?
Kevin Evans: Certainly, 100 megawatts is a pretty big load, with some estimates stating it being enough to power around 42,000 households during peak energy usage. The 4.5% threshold that PECO is targeting represents a total of about 320 megawatts from all programs…energy efficiency, business and residential. So 100 MW is a significant part of their overall load, and it clearly is a big deal to be able to have that kind of resource. The deadline of May 31st, 2013 has more to do with whether they will they continue to use this program or use the output of this program in order to design longer-term initiatives. The Act 129 provisions of the 2008 law specifically focus just on this timeframe and the ability for the utilities with over 100,000 customers to perform by then. And the question will be, beyond that, if they see this as a useful vehicle and to then go ahead and extend the statute.
Ben Lack: Do you feel that the Act 129 law is something that should be passed in other states that will help push demand response projects or is the market starting to or currently realizing that the value of demand response and then the private sector can view this on their own?
Kevin Evans: I applaud the state of Pennsylvania for leadership in this area. I think we’ll learn a lot from it. What we’re focused on is the ability to effectively reduce load over the 100 highest hours. Again, the challenge I would say is that predicting that is hard to do and therefore I think we need to have some flexibility on the mechanics of it all. However, fundamentally what we’re after is exactly the right thing, it’s not just the 10 top hours, but we are really talking about that part of the infrastructure that is dedicated to support the hottest period, the 100 highest hours. Interestingly enough, we’re seeing 100 highest as a threshold that we’re trying to address across the other utilizes and other zones as well. I believe it’s a step in the right direction and I think using loads in order to respond to those hourly activities is an important part of helping to manage down the system peaks.
Ben Lack: Can you talk to us very briefly about the role that these projects play in the overall demand response strategy for Johnson Controls?
Kevin Evans: What’s unique in this news is we are serving as the proven platform not only for our own customers but also providing that platform to what might be referred to as our competitors. Really, I would call them Market Development Partners, all supporting a common cause for grid reliability and sustainability in the future. How do we develop the demand response market while collaborating with those companies?  Hessis a good example of a company that has joined the consortium and will be leveraging the platform as well.This Johnson Controls-led effort creates a platform approach that aggregate three or four kinds of resources from traditional DR providers, as well as some large industrial loads that are themselves registered CSPs. So, I think the platform is creating a tool that works for everyone to be able to pass that information in a transparent manner and allow customers to make better decisions about their energy management.Another piece I think is important is Johnson Controls technology is designed to connect to buildings automatically. I think it’s a critical step towards what we would refer to as Integrated Demand Side Management. So, how can we seamlessly feed buildings with this information so these “smarter” buildings can automatically leverage this intelligence to provide resources for the grid? We are in a position to take this information, whether it be a price signal or situational awareness of grid conditions, and pass that information automatically to the building automation  control systems, many of which Johnson Controls has a part of its overall technology and product offerings.
Ben Lack: Kevin why are you doing what you are doing and why is the industry interest you?
Kevin Evans: It’s a great industry. I was fortunate to enter it in 2003 when I went to work for the Electric Power Research Institute(EPRI). And what I found at EPRI was a real opportunity to match my interests and background in high tech and software with the electricity business. Certainly the outcome of this was to join the EnergyConnect team and grow its demand response business. We are extremely pleased to have ultimately found a good strategic fit with Johnson Controls to further enhance our customers’ triple bottom line of financial, social and environmental benefits. We have made tremendous progress in developing vital tools and technologies that shifts the focus towards the customer in the electricity business, empowering them with the essential balance of control and information to make sound decisions.I think the industry is ripe for the opportunity to really bring these pieces together, and a company like Johnson Controls has the breadth and depth of expertise needed to make it happen.

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