January 13, 2010

An automated ancillary-service pilot last summer with three commercial customers showed PG&E it can bid into the wholesale market without unduly burdening customers, a staffer there told us yesterday.  The pilot augmented a separate DR trial with 2,000 residential customers that did not take part in the ancillary-services market (SGT, Jan-11).

          Both of PG&E's ancillary-service automated-DR pilots, as well as similar pilots by Southern California Edison and San Diego Gas & Electric, were performed in response to a request by California's PUC and an order from FERC, John Goodin, DR lead for the California ISO (CAISO), told us last week.

          The PUC in February 2008 began ongoing proceedings to set DR goals for IOUs.  FERC, in Order 719 (SGT, Jul-14), required ISO/RTOs to conduct pilot projects to test DR as an ancillary service, Goodin said.

          Until its commercial-customer trial, PG&E “obviously hadn't been exposed to that level of integration with the wholesale market,” John Hernandez, PG&E senior program manager, told us Monday.  The PUC decided which utility would pilot which segment of the market and large C&I customers fell to PG&E.

          The pilot began in July 2009 and lasted four months.  Details are set out in a 135-page report issued at the end of last month.

          PG&E recruited three 200+ kw commercial participants: a commercial bakery, a retailer and a local-government office.  Each received payment for reserving power to be shed plus further payment for power it actually shed -- in total, $10,000.

          After recruiting the participants, PG&E's first challenge was to satisfy CAISO rules that it be able to learn the power demand of each participant at any instant, within four seconds of being asked to do so.  It used equipment from Metrum Technologies, of Waco, Texas, for that task.

          “Before this pilot, we did not have anything that would provide us with real-time demand meter data.  Without it, we never would have been able to do the pilot,” Hernandez said.

          PG&E also used automated-DR communications created by Lawrence Berkeley National Lab, Hernandez said.  The automated-DR system let CAISO interact with each participant's energy-management system, with PG&E in the middle.

          “There was no human intervention anywhere,” Hernandez said, though an e-mail message was sent to the participants each time a cut was coming or was made.

          Each participant programmed its energy-management system with the curtailments it thought it could withstand without undue hardship.

          The retail store committed to turning off 11 of its 43 RTUs and to changing its zone HVAC setpoints to 76 degrees F between noon and 6 pm.  The local-government office adjusted its thermostats by 4° F -- in one-degree increments from 2-6 pm.  The bakery turned off its pan washer from 3-5 pm.

          All curtailments took place only on weekdays and cut the customers' draw by 10-275 kw.  One or more of the participants curtailed power use on 10 days, each time for over 10 minutes.  The cuts typically lasted about 25 minutes, though one lasted 2.5 hours.

          CAISO allows 10 minutes between the time it issues a call for cuts and the time those cuts have to be implemented.  Due to the linkage among the computerized systems, all participants responded far faster than that -- within a minute, Hernandez said.

          PG&E began bidding into CAISO's ancillary services market July 29 and ended its bidding Oct 31.  The revenue generated by the pilot was “probably minuscule,” Hernandez said.  Settlements are due later this week and PG&E will issue a report on how it fared financially in mid-February, he added.  In any case, the pilot's value lay more in learning whether PG&E can lessen the need to build or buy added generation.

          The participants were “quite delighted” with the pilot, since most of the time, “they didn't even realize they were being curtailed and they made $10,000.” Two reported they were unhappy with the too-frequent yet insufficiently detailed e-mails they got from PG&E about imminent curtailments.

          The pilot showed PG&E that “if we have the right structure, both from a technology and an incentives point of view, this could be the next step toward real-time pricing for us,” Hernandez said.  But the utility is more likely to take part in a demand proxy resource program (SGT, Sep-14) that gives one day's notice before a cut, than in the ancillary services program that makes cuts with only 10 minutes' notice, he added.

          “The fact that the technology has been proven means we can start relating to the wholesale market sooner rather than later,” he said.