CPS Energy demand response effort featured in New York Times as model for conservation

cps energy logoBy Tracy Idell Hamilton

As deep winter freezes (and future sweltering summer days) continue to strain Texas’ electrical grid, debate over how to increase capacity has become more urgent.

While some say payments to ensure additional reserves will create enough incentive for them to build new power plants to meet demand on those coldest and hottest of days, others argue that capacity concerns are overblown, and costs will be passed on to consumers.

But there’s another option, as the Texas Tribune’s Jim Malewitz wrote in the New York Times last week:

As utility companies and big energy users like manufacturers spar in Austin over how best to encourage the building of new power plants, another important question is getting less public attention: How can Texas curb its energy use?

One answer, Malewitz wrote, could be what’s known as demand response, or asking certain customers to voluntarily reduce consumption at critical times, generally in exchange for free energy-managing equipment, bill credits or rebates. He quotes CPS Energy CEO Doyle Beneby, who said demand response “probably deserves more “focus and attention.”

Beneby has become something of a demand response evangelist. Under his leadership, CPS Energy has greatly expanded demand response programs in recent years, adding functionality to the residential program while broadening the already successful commercial program to include schools and other civic institutions. CPS Energy also launched a pilot allowing the utility to dial back a company’s energy use to an agreed on amount, rather than having the participating company do it manually.

Last fall, six local schools earned more than $330,000 in rebates through demand response: Watch Video

He has talked about the success of those programs at various industry conferences around the country; last year he was invited to speak on the subject at an event hosted by the White House Council on Environmental Quality which brought together leaders from government, the private sector, non-profits and academia to discuss best practices for reducing peak demand.

On Tuesday, Beneby will deliver a keynote at DistribuTECH, a major utility technology conference being held in San Antonio this year, where he’ll touch on demand response as part of CPS Energy’s New Energy Economy initiative.

But perhaps most important for Texas, Beneby has pushed CPS Energy to work with the state’s grid operator and others to create rules that would allow utilities to bid demand response into the wholesale market, much as they do now with natural gas, coal or wind.

CPS Energy reduced demand by 47 megawatts during the polar vortex freeze earlier this month–enough to power 19,975 homes under normal conditions or 8,366 under highest demand.  (NOTE:  The New York Times incorrectly noted in an early version of the story that CPS Energy reduced demand by roughly 77 megawatts during this time, but it was actually 47). That reduction helped the state’s grid operator keep the lights on after two large power plants went dark, leading to the specter of a repeat of the Feb. 2011 rolling blackouts.

Of the total, CPS Energy saved 22 MW through its free Home Manager program, which allows residential customers to control air conditioners, electric water heaters and pool pumps via computer, smart phone or tablet. It also allows CPS Energy to dial those back, usually for a few minutes per hour several times a year when demand is highest.

“You don’t really notice,” customer Adam Leija, told Malewitz. He said he’s seen his energy bills shrink since he started using Home Manager. “It helps us become more energy conscious.”

CPS Energy’s latest effort is piloting an automated demand response program, which allows utility operators to reduce demand remotely and almost instantly, while still offering an option for companies to opt out if necessary. Rackspace is one of the largest companies enrolled in the pilot.

More fully utilizing demand response could mean decreasing energy use by up to 15 percent during critical periods of peak demand, according to a 2012 report by the Brattle Group. That would be enough, experts say, to give the state more breathing room as it decides how to create more capacity.

But obstacles remain to more fully deploying demand response, writes Malewitz:
“… the state’s grid operator does not allow most utilities to participate in the wholesale energy market.
“We need to find a way to bid it into the market,” Colin Meehan, the director of regulatory and market strategy at Comverge, an energy management firm.

CPS Energy is working hard to do just that.

“We’ve been working through the stakeholder process at ERCOT to get rules in place that build a path to the increased utilization of demand response into the market,” said Paul Barham, senior director of energy market operations for CPS Energy.

“We have plans for getting some things in place this summer that would effectively do that.”


Demand Response: a valuable conservation tool that pays

CPS Energy rewards schools for conserving enough energy to power 17,000 homes

Rackspace collaborates with CPS Energy to save money, energy and emissions