ERCOT Settlements and the Smart Grid
- 1. The Texas Smart Meter RevolutionHow Can Your Company Benefit?Opportunities to Take Advantage Of Right Now!May 25, 2010
- 3. Latest Progress On Smart Meter Texas Initiatives
- 5. 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. 3
- 7. Latest Progress On Smart Meter Texas Initiatives
- 8. Market OpportunitiesThe Texas MarketDeregulated January 1, 2002
- 9. The Electric Reliability Council of Texas (ERCOT) operates the electric grid and manages the deregulated market for 75 percent of the state.
- 10. 6.5 million customers have choice of electric suppliers
- 11. 1,130 kWh/mo. average residential usage5
- 12. Texas and ERCOTGenerating units: 566
- 13. Installed capacity: 80,076 megawatts
- 14. High-voltage transmission monitored: 40,327 miles
- 15. 828 entities generate, move, buy, or sell electricity6
- 16. Some Texas TermsThere 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.7Load Serving Entity (LSE) is an organization serving end-use customers. For our purposes today, this is usually a REP.
- 17. Texas Meter ConversionSource: http://www.puc.state.tx.us/electric/projects/34610/AMITMtg0909/AMITBoardMtg0909.pdf8
- 18. 9Almost 3 Petabytes of Storage Needed by 2014Source: UtiliPoint proprietary database
- 19. Smart Meter Texas (SMT) Factswww.SmartMeterTexas.comWebsite launched on March 23, 2010 that gives Texas LSEs & electric customers (with smart meters) online access to the information.
- 20. 1,034,711 AMS meters
- 21. 1,985 residential users have created accounts
- 22. 31 REP entities created and registered successfully on SMT portal3 TDSP entities created and registered successfully on SMT portal
- 23. 61 TDSP users created
- 24. 71 HAN devices successfully provisioned Source: http://www.puc.state.tx.us/electric/projects/34610/AMITMtg022410/SMT-AMIT-Status-FTPS-Integration_022410.pdf10
- 25. Texas Meter Data FlowTDSPMeter ReadEnrollmentHistorical ConsumptionMeter ReadsCustomerWire Charges / PaymentsEnrollmentInvoicingSettlement TransactionsRemittanceRetailerQSE11
- 26. Texas Smart Meter Data FlowTDSPLoad Control15 min Interval Meter ReadsHAN EventsHANTexas Portal & Data RepositoryAccount DataEnrollmentFuel CellsCustomerHistorical ConsumptionEnrollmentMeter ReadsPHEVInvoicingWire Charges / PaymentsHAN ServicesRetailerQSERemittanceSettlement TransactionsCustomer Account DataPricingSolar / Dist. Gen12
- 27. The Value Chain© 2010 Pariveda Solutions, Inc. 13
- 28. The Retail ChallengesCustomer Adoption and EducationConsumer BehaviorDisruptive TechnologyNew CompetitionSystems Portfolio and Integration14
- 30. Introductions
- 31. Latest Progress On Smart Meter Texas Initiatives
- 34. Pricing Product DifferentiationCurrent Retail MarketAfter Smart MetersMonth to monthTerm –plus 6, 12, 18, 24 monthSigning IncentivesSingle price ($/kWh) with or without monthly base chargeSeasonalPrice guarantee Limited Prepay and TOU PlansMCPE plus mark upHeat Rate plus NYMEX gasIndexed plansAll Current Products and:More robust Prepay and TOU plansContract-for-differences (RTP using MCPE and prearranged block or load shapeCreative “Fixed Bill” plansInterruptible/curtailable plans16
- 35. Pricing Plan Value PositioningValue of BrandingFixed 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 pricesPoint of Sale Support# SubscribersSize of Subscriber LoadSimpleChoice (Value Added)Price SecurityPrice Risk CFDTOUFixed & IndexedFixed Bill17
- 36. Match Product to ValueSales volume certaintyLower risks on high volumes, hedging valueHighCFDTOUSeasonBlocksPrice VariabilityHigh margin potentialFixedPlansLowAccess to a big, but reluctant to change, market shareLowHighDegree of Involvement18
- 37. Customer Portfolio of ChoicesHighCFDSome years are easier to predict than othersI don’t like the current market price outlookTOUSeasonBlocksFixedPlansLowLowHighI’d like to give load management a try19
- 39. TOU BenefitsWhy Offer TOU?Commodity costs vary with time of day and seasonConsumers will change behavior if properly incentedConsumer response to prices offers an offset to expanded usage by other customers on other programsImprove earnings by better managing risk 21
- 40. TOU FailuresSelling program based on peak load reduction or bill savings aloneMany programs aren’t “marketed” to customersPoor design (ratio of on/off-peak price, length of on-peak window)Solutions: Achieve success by selling TOU to customers premised on access to lower prices during low cost times.Design product with customer behavior in mind22
- 41. A Better TOU ProductFeatures that Improve Customer AcceptanceShorter Peak PeriodLimited Peak SeasonBetter PricesHigh Peak to Off-Peak Price Ratio (Shifters)Lower relative Off-Peak Prices (Growers)Demonstrable SavingsTerm FlexibilityChoice and Control23
- 42. Type of TOU PlansFixed TOU Plan – prices and time periods fixed for termFlex TOU plan – a platform of plans with varying price levels and peak period durationVariable Peak Period Price – would use Nodal Day ahead market MCPE to establish next day peak price levelTOU combined with price overcall plan – TOU and Critical Peak Price 24
- 43. Flex Choice TOU Service PlansPlan 1Plan 2Peak 3:00 - 7:00Peak 3:00 - 7:00PricesPeak $.36 Off $. 10PricesPeak $.34Off $.11ChoicesPlan 4Plan 3Peak 1:00 - 9:00Peak 1:00 - 9:00PricesPeak $.36 Off $.09PricesPeak $.34Off $.09525
- 44. Variable Peak Price TOUFixed off peak price
- 45. On peak price based on Day Ahead Market MCPE averaged for the peak duration
- 46. Fixed On Peak duration (2 PM – 7 PM)26
- 47. Critical Peak Pricing FeaturesA high fixed price used in place of the standard TOU peak period price
- 48. Limited number of days and hours CPP events can be called
- 49. Day ahead or 4 hour advance notice of CPP event
- 50. CPP event can be called for any day of the week
- 51. An option to allow customers to participate if CPP events are called in the off peak season
- 52. Incentive For Participation – either a reduced peak period price or in the form of a payment for performance27
- 53. Prepaid Plans28
- 54. Prepaid PlansCurrent Retail MarketAfter Smart MetersTerm – month to month and may include discount for staying longer than one monthNo deposit, credit check or I.D.Might include a monthly service charge and a fixed rateSmart Meter can provide daily usage, turnoff meter when prepaid limit reachedGreater customer satisfaction as they have greater control over managing usage –daily info provided by email or phoneAn in-house monitor might be installed to provide near real time usage and bill amount to dateTerm – month to month but may require activation fee that requires 6 month serviceNo credit checkNo depositNo I.D. checkMonthly Service charge plus high fixed rate Problems determining when prepaid limit reached – turn off complaints29
- 55. Contract for Differences Plans30
- 58. Why offer Fixed Bill?To differentiate yourself in the market place
- 59. To increase Brand presence – even customers that do not sign up will talk to others about your offering
- 60. To increase profits from the residential and small commercial customer markets - Customers are willing to pay a premium for convenience and stability 33
- 61. Fixed Bill ProcessWeather Adjustment Historical kWhMAYBILLTarget MarketAdjust for Price ResponseESTIMATED kWhJUN 1,007JUL 1,234AUG 1,333SEP 999OCT 888NOV 650DEC Fixed BILL“Make me an offer.”ADJUSTED kWhJUN 1,177JUL 1,345AUG 1,444SEP 1,100OCT 959NOV 770DEC ApplyForward Price Curve YESCalculate monthly FB amountAdd Risk PremiumMake OfferAdd Base Charge$%34
- 62. Pricing Plans After Smart MetersRemember: Smart Meters should unlock access to niche markets that increase your bottom line! 35
- 63. Points to ConsiderLaunch something - don’t stand on the sideline
- 64. Market, Market, Market! Promotion is key!
- 65. Allow for process improvementDon’t expect to get it perfect the first time Don’t quit on the concept if there are problemsAddress back office requirements – IT needs for billing, risk management, price development, sales and recruitment
- 66. Rewards: properly designed programs canIncrease earnings and market shareReduce costsMitigate risks Smart Meters should allow for opening niche market segments36
- 67. Pricing Plans System InterfaceAchieving Program Success – What to do with what the Pricing guys gave you…?
- 68. Metering, Billing, Risk Management, Customer Accounting, and Product Accounting are all necessary for program success. Risk ManagementPricesCISOffersReportsSubscriptionSalesBilling3737
- 69. Contact Information6000 Uptown Blvd. NESuite 314Albuquerque, NM 87110 Direct: 214.821.8099Cell: 214.684.6888mburlingame@utilipoint.comwww.utilipoint.comMark Burlingame, CPASenior Director, UtiliPoint Analytics38
Editor's Notes
- #2: Welcome to The Texas Smart Meter Revolution – a Joint Webinar of UtiliPoint International and Pariveda SolutionsMy name is Mark Burlingame and I’ll be the moderator for today’s webinar.We have almost 150 participants in several countries, so we have made arrangements to facilitate your participation:If you are having problems viewing the presentation or logging to the website, please send an email to jennifer@utilipoint.com and we’ll work with you to resolve any problems.
- #4: I am an international utility professional with experience in multiple jurisdictions in the US and the UK. I have been in the industry for almost 20 years. Before that I was with Coopers & Lybrand’s management consulting practice. I am an experienced project manager and analyst and I am a CPA.
- #6: Before we go any further, a large number of us are from outside Texas, so let’s take a quick look at the Texas marketplace.
- #7: ERCOT system operations area covers most of Texas as shown on this map. (Then go into the stats)
- #8: Qualified Scheduling Entity is responsible for matching generation resources and uses and REPs on a daily basis.
- #9: We want to set the overall stage so as not to assume others are intimately familiar with AMIT or SMTSome Interesting Things to Note About this Timeline:HAN midyear this year. Google and Microsoft among are marketing applications directly to customers who will be able to start using at this point in time!ERCOT’s new market trading rules will take effect at the end of 2011. At this point in time, 2.2 million smart meters will have been installed!Then go the last two dates and talk about the numbers…
- #10: Based Austin Energy’s Phase 1 estimates of data storage. 400 MB per meterTexas will require 2.5 petabytes of storage by the year 2014 Just For Reads. This doesn’t included processing! This is a 10-Fold Increase from This Year!
- #11: The Texas Public Utilities Commission set up “Smart Meter Texas”. This gives customers access to their interval data, so that they can better manage usage, react to prices, Home Depot will be begin offering Home Area Network devices this summer. These devices will access SMT files. ALSO Expect Google and Microsoft to compete using this portal’s data as well!WILL EVENTUALLY LEAD TO BETTER RETAIL PRICE ELASTICITY
- #14: Looking at the value chain of the utility industry … all parts interact with each other, BUTToday we will focus on the retail portion of the industry.
- #15: The Utility Industry Will HAVE To Move Away from our current ways of viewing the customer, the market, wholesale purchasing and much more!Please keep these Issue in Mind as we go forward in the presentation…Customer Adoption and EducationIt’s really all about cost, comfort and simplicity in order for mass adoptionConsumer BehaviorUnlocking a more advanced profile to a consumer such that it creates additional value (new product, service, etc.)Customer segmentation must be changed from residential, commercial, and industrial to something more like consumer segmentation in order to better understand what the customer wants.Disruptive TechnologyWest coast companies aiming to bring in disruptive technologies such as Bloom $3,000 fuel cellNew Competition – gaining an understanding that Retail is an information technology playWal-Mart, Google, MicrosoftSystems Portfolio and IntegrationWith the changing game, Retail needs to keep upNEXT WE WILL BEGIN INVESTIGATING IN MORE DETAIL HOW RETAIL ORGANIZATIONS CAN BENEFIT FROM THE COMING CHANGES