Pros and Cons of a Third Party Provider of Energy Efficiency and the Role of the Consumer Advocate

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Pros and Cons of a Third Party Provider of Energy
Efficiency and the Role of the Consumer Advocate

• Steve Sunderhauf
• Manager- Program Evaluation Department
• Regulatory Group
• Pepco Holdings, Inc.
• June 23, 2008
• NASUCA Mid-Year Meeting
• Salt Lake City, Utah

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Pepco Holdings, Inc.
PHI Service Territories

• Electric Distribution Companies
• Atlantic City Electric
• Delmarva Power Light
• Pepco
• 1.8 Million Customers
• 14,000 MW of Zonal Peak Demand
• 4 Regulatory Commissions
• Retail Competition all Mkts.
• All within the PJM Footprint
• Competitive Affiliates
• Pepco Energy Services
• Conectiv Energy

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PHI Utility Blueprint For the Future

• Energy Efficiency/Conservation Programs
• Utility Provided Programs for All Customer
  Segments
• Demand Response Programs
• New Demand Response Programs Using New Technology
  for All Customer Segments
• Advanced Metering Infrastructure
• Improve Distribution System Operation
• Improve Customer Service
• Provide Interval Consumption Data through Remote
  Readings
• Support Demand Response through Dynamic Pricing
  and Direct Load Control Technology Capability
• Support Small Renewable Generation/Plug-In
  Vehicles

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New Demand Side Management Programs are Essential
in the Mid-Atlantic Electricity Market

• Rapidly Increasing Energy Costs
• Customer Ability to Manage Energy Bills
• Electric Market Price Mitigation (Energy and
  Capacity Markets)
• Constrained Regional Transmission Import
  Capability
• Reliability of Future Energy Supply
• Minimal Construction of New Generation in Region
• Announced Transmission Projects into Region
• Growing Environmental Concerns over Power Plant
  Air Emissions
• Regional Green Gas Emission Reduction Initiatives
• Aggressive Renewable Portfolio Standards in PHI
  Jurisdiction
• Legislative and Regulatory Mandates
• EmPOWER Maryland 15 Percent Reduction Goal by
  2015
• NJ Energy Master Plan 20 Percent Reduction Goal
  by 2020
• Legislative Requirements for Utilities to Provide
  Cost-Effective EE and Conservation
• Policy Maker Pressure to Address Higher Prices
  and Supply Constraints

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Mid-Atlantic Transmission Congestion
Source U.S. Department of Energy, 2007
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Rationale for Utility Provision of Demand Side
Management Programs

• PHI Utilities have Exited Generation Market DSM
  Initiatives and Transmission Construction are
  Remaining Utility Options
• for Meeting Supply Requirements
• Experience Providing DSM Programs
• Utility Professional Staff
• Customer Information System
• Monthly Customer Contact
• Customer Brand Awareness
• Financial Accounting System
• Distribution System Planning
• Integration into Resource Planning

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Rationale (continued)

• 24/7 Control Center Operations
• Announced Utility Provided DSM Program Plans in
  Neighboring Jurisdictions (Economies of Scale,
  etc.)
• Regulatory Oversight by Commission
• Active Participation of Consumer Advocate
• Market Stakeholder Participation Process
• Commitment of PHI Senior Leadership
• Motivate Utility Staff
• Improved Customer Ability to Control Energy Bills
  Resulting in Increased Customer Satisfaction
• Fast to Market
• Legislative/Regulatory Mandates

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Third Party Administration of DSM Programs

• Necessary Where Utility is Unable or Unwilling to
  Perform the Work
• Typically Operate Outside of Utility Regulatory
  Framework
• Key Challenges
• Customer Information
• Marketing Restrictions Do Not Call Registry
• Brand Awareness
• Establishment of New Organization
• Skilled Staffing/Accounting Systems, etc.
• Integration into Utility System Planning
• Time to Market
• Oversight Issues