Real-time Pricing for Illinois Consumers Anthony Star Community Energy Cooperative Demand Response Coordinating Committee Webinar December 15, 2006

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Energy-Smart Pricing Plan ( ) Key Details 1,500 participants representing a wide range of demographics Utility Role –ComEd remains the supplier and bills the participant –Interval meters, read by traditional meter readers –Consumers pay hourly, market based prices (pass through of PJM hourly price) Cooperative Role –The Cooperative provides an intermediary role providing outreach, consumer education, high price notifications, etc.

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Helping Consumers Manage Prices Information about hourly energy prices –Education about general price shapes by season, –Access to each day’s prices via a website or phone call-in number. Notification of high price days of over 13 cents/kWh –By telephone or , issued the previous evening Access to web-based tools to view charts and graphs of energy use, price and cost down to the hourly level Online and printed summaries of energy use, costs and comparable flat rate bills Educational materials on energy efficiency and how to reduce usage during peak times

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL ESPP Has Seen A Variety of Prices and Weather Average Energy Price (¢/kWh) Summer Maximum Price (¢/kWh) Cooling Degree Days (Avg. is 799) Summer Days with High Price Notifications , (to date)

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Average Energy Prices Paid

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Bill Impacts YearAverage Bill Average Monthly kWh SavingsPercent Renewing 2003 $ % 99% 2004 $ % 99% 2005 $ % 87% 2006 (to date) $ % Consistently high retention rate, even in 2005, despite a very hot summer, and high power prices driven by natural gas costs (Does not include participants who moved during the year)

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Its Not Hard to Do: Participating In ESPP Has Been…

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL How do Customers Respond to Price Signals? Evaluations by Summit Blue and our own internal research have demonstrated price response measured in several different ways: –Elasticity of demand across summer hours –Peak demand reductions –Conservation and energy efficiency awareness and actions

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Evaluation: Elasticity of Demand Elasticities have ranged from.042 to.08. –Impacted by weather and price each year –Central Air Conditioner cycling increased elasticity by as much as 50% –We found elasticities on all summer days, not just high priced ones – this goes beyond just cutting peak and implies load shapes improving –Success in notifying participants of next day’s price improves their response

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Evaluation: Conservation and Energy Awareness ESPP participants’ overall monthly summer energy (kWh) usage suggests a conservation effect –Reduction in usage of 3% to 4%, relative to what their usage was estimated to be had they not received hourly electricity prices. Participants report buying ENERGY STAR rated appliances at a high rate and feel more “energy aware”

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Initial Results August heat wave led to 35¢/kWh peak prices Elasticities still being calculated, but preliminary observations: –Higher than in 2005 –Air conditioner cycling cut demand by an additional 0.7 kW –Price spikes were short lived and did not significantly change overall summer savings PriceLight pilot program tests new notification method –Participants love it –Preliminary results are that it increases elasticity of demand

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Expanding the Energy-Smart Pricing Plan Beyond the Pilot In 2007 and beyond, Illinois retail prices will be determined by a New Jersey-style auction –RTP default service for large C&I –All customers have an option to take RTP 1997 deregulation framework did not envision the information, education and programmatic support needed to make RTP work for residential customers Legislation enacted spring, 2006: –Creates a residential RTP program and specifies roles for the utility and others –Creates a framework for justifying including costs in overall rate base

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Political and Policy Climate for Expansion Like other states, legislators concerned about the failure of a competitive (or any) retail market for small customers to emerge ComEd flat rates to increase 22-26%, Ameren rates by 40-50% in 2007 Experience of the ESPP pilot program showed savings for participants and benefits to the system through demand response Legislators, consumer advocates and other public interveners have given support to RTP as a rate option to provide consumer choice and reduced costs Criteria for the success of residential RTP is to document projected system benefits

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Assessing The Potential Benefits of RTP Illinois legislation required assessment of net benefits to consumers from program, including consideration of: –Improvements to system reliability and power quality –Reduction in wholesale market prices and price volatility –Electric utility cost avoidance and reductions –Market power mitigation, and –Other benefits Citizens Utility Board filed testimony by Bernie Neenan (Utilipoint) and Lynne Kiesling (Northwestern University) to support this finding

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Annual Benefits (ComEd).047 Elasticity Assumes 10% of residential customers participate. Program cost approximately $16 million per year (including metering using today’s technologies and costs) [Adapted from CUB/City of Chicago Exhibit 3.5, Testimony of Bernie Neenan in ICC Docket ] $0 $10 $20 $30 $40 $50 $60 $70 $80 Base CaseMid CaseHigh CaseWeighted Average (Millions per Year) C&I Customer Benefits Other Residential Benefits RTP Participants 3% increase over base case 121% increase over base case 178% increase over mid case 112% increase over mid case 239% increase over base case 85% increase over mid case

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL The Impact of Improving Response (ComEd) Non Participant benefits rise more than participant benefits! [Adapted from CUB/City of Chicago Exhibit 3.6, Testimony of Bernie Neenan in ICC Docket ]

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Gauging Customer Interest in Real-time Pricing 0% 5% 10% 15% 20% 25% 30% 35% definitely probably possibly ComEd Ameren definitely probably possibly Fixed RateVariable Rate [Summer 2006 Survey. 282 ComEd, 399 Ameren households] Would You Be Interested In A Fixed Or Variable Rate Plan?

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL Illinois Next Steps Full evaluation of 2006 pilot program will be available in early 2007 Final Order in ComEd and Ameren rate cases will set details for expanded program Goal is to enroll 110,000 participants ComEd and at least 20,000 in Ameren over the next four years Illinois will lead the way in moving beyond a pilot to full implementation of residential RTP

Community Energy Cooperative at the Center for Neighborhood Technology 2125 West North Avenue, Chicago, IL For More Information Community Energy Cooperative 2125 W North Ave Chicago, IL /