1. CPUC Workshop on Best Practices & Lessons Learned in Time Variant Pricing TVP Load & Bill Impacts, Role of Technology & Operational Consideration Dr. Stephen George Senior Vice President Nexant June 17, 2014

2. SMUD’s SmartPricing Options Pilot Has Produced Very Useful Insights Regarding TVP Three Rate Options Two Recruitment Strategies Impact of IHDs on Customer Acceptance Total enrollment including deferred groups = 12,027; Total # of customers receiving offers (including deferred groups) = 53,798; Total # of customers in SPO including controls = 99,661 1

3. Prices for the Three SPO Pricing Plans n/a 2

4.  Roughly 4 decades of research says yes to peak demand reductions  In the SPO, average load reductions per participant were significant for all pricing plans  CPP impacts were roughly twice as large as TOU impacts on a percentage basis  Opt-in average impacts were roughly twice as large as default average impacts  Energy savings impacts are generally small or non-existent  In the SPO, 3 out of 8 pricing plans showed statistically significant savings in the 1% to 3% range  The snapback effect in the SPO was typically not statistically significant and in one case showed that load reductions continued beyond the peak period 3 Have TVP Rates Led to Reduced Peak Demand and Energy Savings?

5. Average Load Impacts Across the Two SPO Summers Were Significant for Both Opt-in & Default TOU Pricing Plans 4 4

6. Average Load Impacts Across the Two SPO Summers Were Higher for CPP Than for TOU plans 5 5

7. Is There Empirical Evidence Showing Whether Opt-in or Default TVP Produces Larger Aggregate Load Reductions? Although average impacts in the SPO were smaller for default customers compared with opt-in customers, enrollment rates were much larger Default Pricing Plans 6

8. Enrollment Rates for Opt-in Pricing Plans in the SPO Were Roughly 1/5 th as High as for Default Pricing Plans 7 7

9. When Average Impacts and Enrollment Rates Are Combined, Default Enrollment Produces Aggregate Load Impacts 3 Times Larger than Opt-in Enrollment 8 Aggregate Load Reductions Assuming SPO Enrollment and Load Impacts for Pricing Plans Offered to 100,000 Customers 8

10. Is There Data Showing How Different Customer Groups Perform on TVP Rates? 9 For default TOU plans in the SPO, EAPR and non-EAPR customers were equally responsive, but absolute impacts differed because of usage differences 9

11.  Across the two summers of the SPO pilot, there were statistically significant changes in peak period reductions for 2 of the 8 pricing plans after controlling for differences in customer populations due to attrition  One pricing plan showed a modest decrease across the two summers and one, a CPP pricing plan, showed an increase in average impacts  Average impacts have been relatively constant across six years for PG&E’s SmartRate tariff  There has been a significant shift in the population over time so year to year comparisons do not reflect the behavior of the same customers  There is no evidence of a significant drop in load reductions across days for multi-day events from either the SmartRate or SPO studies 10 What is the Persistence of Impacts Over Time?

12.  Most pilot and program evaluations show that combining TVP rates with load control produces larger peak-period reductions than TVP alone  Customers dually enrolled in PG&E’s SmartRate and SmartAC programs have load impacts roughly twice as large as SmartRate only customers  Similar results have been found elsewhere but an apples-to-apples comparison of like households (e.g., all households have air conditioning) suggests that the incremental effect may be closer to 50%  New studies are needed to assess the extent to which the new generation of market driven smart thermostats (e.g., Nest, Ecobee, etc.) generate incremental demand response and energy conservation impacts  The book is definitely still out regarding whether in-home displays produce incremental DR impacts and which IHDs (if any) generate cost-effective energy savings 11 Is There Empirical Evidence that TVP Customers Using In- home Devices Achieve Greater Impacts?

13.  Self installation connection rates for IHDs are low  In the SPO, almost all opt-in customers checked the box at the time of enrollment indicating they wanted to receive a free IHD but only about 1/3 had the device connected at any time during the second summer of the pilot  Less than 25% of default customers, who had to proactively request an IHD, asked to receive one but almost 60% of these customers had the IHD connected in the second summer  Making it too easy for customers to request an IHD could produce low connection rates as these customers are not “invested” enough in the device to try it or to deal with the connection challenges that often exist  Professional installation is expensive and may lead to lower installation rates due to the need for appointments, but sending devices to 3 households to get one connected is also expensive  Before deciding on the best way to deploy IHDs, a more relevant question is whether they should be deployed at all 12 What Are The Most Effective Strategies to Deploy IHDs?

14. For comments or questions, contact: Stephen George Senior Vice President, Utility Services sgeorge@nexant.com Nexant, Inc. 101 Montgomery St., 15 th Floor San Francisco, CA 94104 415-777-0707