Download - ERCOT Settlements and the Smart Grid
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The Texas Smart Meter Revolution
How Can Your Company Benefit?
Opportunities to Take Advantage Of Right Now!
May 25, 2010
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Agenda
· Introduction· Latest Progress On Smart Meter Texas Initiatives· Market Opportunities
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Mark Burlingame, CPASenior Director, UtiliPoint Analytics,UtiliPoint International, Inc.
Mr. Burlingame is an international utility expert with 19 years in the utility industry including research and development, business case modeling, financial resource budgeting, business planning, system development, pricing administration, market forecasting and marketing. Prior to entering the utility industry, he was a Senior Management Consultant with Coopers & Lybrand. Mr. Burlingame's hands-on experience in several jurisdictions and markets includes the UK, Massachusetts, Pennsylvania, California, Washington, Florida, Texas and Oklahoma.
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Turning Knowledge into Action4
Agenda
· Introduction· Latest Progress On Smart Meter Texas Initiatives· Market Opportunities
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The Texas Market
• Deregulated January 1, 2002• The Electric Reliability Council of Texas
(ERCOT) operates the electric grid and manages the deregulated market for 75 percent of the state.
• 6.5 million customers have choice of electric suppliers
• 1,130 kWh/mo. average residential usage
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Texas and ERCOT
· Generating units: 566
· Installed capacity: 80,076 megawatts
· High-voltage transmission monitored: 40,327 miles
· 828 entities generate, move, buy, or sell electricity
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Some Texas Terms
There are 4 Transmission and Distribution Service Providers (TDSPs)
There are over 40 Retail Electric Providers (REPs)
QSE is a Qualified Scheduling Entity responsible for submitting REPs’ next day’s schedule of expected power requirements.
Load Serving Entity (LSE) is an organization serving end-use customers. For our purposes today, this is usually a REP.
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Source: http://www.puc.state.tx.us/electric/projects/34610/AMITMtg0909/AMITBoardMtg0909.pdf
Texas Meter Conversion
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Almost 3 Petabytes of Storage Needed by 2014
0.76 2.21 3.68 5.16 6.30
303
884
1,474
2,063
2,520
-
500
1,000
1,500
2,000
2,500
3,000
-
1.000
2.000
3.000
4.000
5.000
6.000
7.000
2010 2011 2012 2013 2014
TB o
f Sto
rage
Met
er C
ount
s (m
illio
n)
Texas Electric "Smart Meter" Forecast and Corresponding Data Growth
Cumulative Smart Electric Meters Installed (million) Estimated TB Storage
Source: UtiliPoint proprietary database
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www.SmartMeterTexas.com· Website launched on March 23, 2010 that gives Texas LSEs & electric
customers (with smart meters) online access to the information.
· 1,034,711 AMS meters
· 1,985 residential users have created accounts
· 31 REP entities created and registered successfully on SMT portal3
TDSP entities created and registered successfully on SMT portal
· 61 TDSP users created
· 71 HAN devices successfully provisioned Source: http://www.puc.state.tx.us/electric/projects/34610/AMITMtg022410/SMT-AMIT-Status-FTPS-Integration_022410.pdf
Smart Meter Texas (SMT) Facts
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Retailer
Enrollment
Enrollment
Customer
Meter Read
Invoicing
Remittance
Historical Consumption
Wire Charges / Payments
Meter Reads
QSE
TDSP
Settlement Transactions
Texas Meter Data Flow
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TDSP
Retailer
Customer
QSE
Enrollment
Invoicing
Remittance
Pricing
Enrollment
Historical Consumption
Wire Charges / Payments
Meter Reads
Settlement Transactions
Fuel Cells
PHEV
Solar / Dist. Gen
HAN
Load Control
HAN ServicesCustomer Account Data
15 min Interval Meter Reads
Texas Portal & Data Repository
HAN Events
Account Data
Texas Smart Meter Data Flow
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The Value Chain
Supply Manufacturing Distribution Retail
TransportFuel Generation TransmissionDistribution(DISCO or
LDC)
ConsumersIndustrial
CommercialResidential
© 2010 Pariveda Solutions, Inc.
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The Retail Challenges
• Customer Adoption and Education• Consumer Behavior• Disruptive Technology• New Competition• Systems Portfolio and Integration
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Turning Knowledge into Action15
Agenda
· Housekeeping· Introductions· Latest Progress On Smart Meter Texas Initiatives· Market Opportunities· Systems Impact
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Current Retail Market• Month to month• Term –plus 6, 12, 18, 24
month• Signing Incentives• Single price ($/kWh) with or
without monthly base charge• Seasonal• Price guarantee • Limited Prepay and TOU Plans• MCPE plus mark up• Heat Rate plus NYMEX gas• Indexed plans
After Smart Meters
All Current Products and:• More robust Prepay and
TOU plans• Contract-for-differences
(RTP using MCPE and prearranged block or load shape
• Creative “Fixed Bill” plans• Interruptible/curtailable
plans
Pricing Product Differentiation
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Fixed Bill -simple and secure - a fixed monthly billFixed price – secure and simple TOU - secure, some choice and control, and customized bundled service optionsCFD - control and access to wholesale prices
CFD TOU Fixed & IndexedFixed Bill
Price Risk
Price Security
Choice (Value Added)
Simple
Size of Subscriber Load
# Subscribers
Point of Sale Support
Value of Branding
Pricing Plan Value Positioning
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Pri
ce V
aria
bil
ity
Low High
Low
HighCFD
FixedPlans
TOUSeasonBlocks
Lower risks on high volumes, hedging value
Sales volume certainty
High margin potential
Degree of Involvement
Access to a big, but reluctant to change, market share
Match Product to Value
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Low HighLow
High
CFD
FixedPlans
TOUSeasonBlocks
I don’t like the current market price
outlook
Some years are easier to predict than others
I’d like to give load management a try
Customer Portfolio of Choices
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TOU Pricing Plans
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• Why Offer TOU?– Commodity costs vary with time of day and season– Consumers will change behavior if properly incented– Consumer response to prices offers an offset to
expanded usage by other customers on other programs
– Improve earnings by better managing risk
TOU Benefits
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• Selling program based on peak load reduction or bill savings alone
• Many programs aren’t “marketed” to customers
• Poor design (ratio of on/off-peak price, length of on-peak window)
Solutions:
1. Achieve success by selling TOU to customers premised on access to lower prices during low cost times.
2. Design product with customer behavior in mind
TOU Failures
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Features that Improve Customer Acceptance– Shorter Peak Period– Limited Peak Season– Better Prices
• High Peak to Off-Peak Price Ratio (Shifters)• Lower relative Off-Peak Prices (Growers)
– Demonstrable Savings– Term Flexibility– Choice and Control
A Better TOU Product
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• Fixed TOU Plan – prices and time periods fixed for term
• Flex TOU plan – a platform of plans with varying price levels and peak period duration
• Variable Peak Period Price – would use Nodal Day ahead market MCPE to establish next day peak price level
• TOU combined with price overcall plan – TOU and Critical Peak Price
Type of TOU Plans
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Flex Choice TOU Service Plans
Peak 3:00 - 7:00
PricesPeak $.34Off $.11
Peak 3:00 - 7:00
PricesPeak $.36 Off $. 10
Peak 1:00 - 9:00
PricesPeak $.34Off $.095
PricesPeak $.36 Off $.09
Choices
Peak 1:00 - 9:00
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• Fixed off peak price• On peak price based on Day Ahead Market
MCPE averaged for the peak duration• Fixed On Peak duration (2 PM – 7 PM)
Variable Peak Price TOU
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• A high fixed price used in place of the standard TOU peak period price
• Limited number of days and hours CPP events can be called
• Day ahead or 4 hour advance notice of CPP event• CPP event can be called for any day of the week • An option to allow customers to participate if CPP
events are called in the off peak season• Incentive For Participation – either a reduced peak
period price or in the form of a payment for performance
Critical Peak Pricing Features
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Prepaid Plans
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• Term – month to month but may require activation fee that requires 6 month service
• No credit check• No deposit• No I.D. check• Monthly Service charge
plus high fixed rate • Problems determining
when prepaid limit reached – turn off complaints
• Term – month to month and may include discount for staying longer than one month
• No deposit, credit check or I.D.• Might include a monthly service
charge and a fixed rate• Smart Meter can provide daily
usage, turnoff meter when prepaid limit reached
• Greater customer satisfaction as they have greater control over managing usage –daily info provided by email or phone
• An in-house monitor might be installed to provide near real time usage and bill amount to date
Current Retail Market After Smart Meters
Prepaid Plans
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Contract for Differences Plans
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 240
2
4
6
8
10
12
14
16
18 Contract for Differences
Profile
LoadLOAD
Charged at MCPE Plus
Credited at MCPE
Contract for Differences
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Fixed Bill Plans
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· To differentiate yourself in the market place
· To increase Brand presence – even customers that do not sign up will talk to others about your offering
· To increase profits from the residential and small commercial customer markets - Customers are willing to pay a premium for convenience and stability
Why offer Fixed Bill?
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“Make me an offer.”
MAYBILL
Adjust for Price Response
Weather Adjustment Historical kWh
ESTIMATED kWh
JUN 1,007JUL 1,234AUG 1,333SEP 999OCT 888NOV 650
DEC
ADJUSTED kWh
JUN 1,177JUL 1,345AUG 1,444SEP 1,100OCT 959NOV 770
DEC
ApplyForward Price Curve
Add Risk Premium
$%
Fixed BILLMake Offer
Target Market
YES
Calculate monthly FB amount
Add Base
Charge
Fixed Bill Process
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Remember: Smart Meters should unlock access to niche
markets that increase your bottom line!
Pricing Plans After Smart Meters
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· Launch something - don’t stand on the sideline
· Market, Market, Market! Promotion is key!
· Allow for process improvement– Don’t expect to get it perfect the first time – Don’t quit on the concept if there are problems
· Address back office requirements – IT needs for billing, risk management, price development, sales and recruitment
· Rewards: properly designed programs can– Increase earnings and market share– Reduce costs– Mitigate risks
· Smart Meters should allow for opening niche market segments
Points to Consider
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· Achieving Program Success – What to do with what the Pricing guys gave you…?
· Metering, Billing, Risk Management, Customer Accounting, and Product Accounting are all necessary for program success.
Offers
Risk Management
CISReports
Sales
Prices
Subscription
Billing
Pricing Plans System Interface
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Contact Information
6000 Uptown Blvd. NESuite 314Albuquerque, NM 87110
Direct:214.821.8099Cell:214.684.6888
www.utilipoint.com
Mark Burlingame, CPASenior Director, UtiliPoint Analytics