NAESB Measurement and Verification Model Business Practice Retail Electric Demand Response 5/29/09 update

Activities 11 - Conference calls/WebEx Two day meeting in Baltimore One every other week Good participation form group members and industry experts Two day meeting in Baltimore Discuss approach and matrix 1 WEQ Leadership/NAESB Board meeting

Approach for Retail Standard Determine that the RTO draft recommendation could apply to the retail draft recommendation with proper wording changes Determine that the RTO draft recommendation provides a framework for the retail draft recommendation, but more detail is necessary Determine that the retail draft recommendation needs to be more prescriptive than the wholesale draft recommendation.

Model Business Practice Measurement and Verification (M&V) standards are intended to facilitate Demand Response in retail electricity markets by providing a common framework for the following: Transparency: accessible and understandable M&V requirements for Demand Response products Accountability: criteria that will enable the Program Administrator to accurately measure performance of Demand Response resources Consistency: standards applicable across retail electricity markets Comprehensive: strives to cover all forms of Demand Response

Applicability Model Business Practices should cover Dispatchable and non-Dispatchable programs Dispatchable Capacity Programs: Direct Load Control Firm Service Level Guaranteed Load Drop Critical Peak Pricing Ancillary Service Programs: Spinning Reserve Non Spinning Reserve Regulation Services Energy Service Programs Dispatched for economic reasons Non Dispatchable – need to define

Coordination Working closely with Wholesale standards group to maintain consistency with current approved standard NERC to insure consistency with reliability standards AEIC as they develop load research standards with regards to M&V Industry groups and Market Participants involved in providing or evaluating demand response programs such as EPRI, EnerNoc, Comverge, GoodCents

Scope Limited to Demand Response programs only: Does not include Measurement and Verification of energy efficiency programs or for permanent load reductions. Confined to the retail markets. If a utility has programs that are bid into and operate in the wholesale markets then the wholesale standard will take precedence. Standards are voluntary across state jurisdictions. They can be adopted by individual state regulators Program Administrator has significant flexibility to adopt more stringent requirements in most areas to meet regional needs.

Product Categories Wholesale group developed model business practice for each of 4 Product types: Energy Services Capacity Services Reserve Services Regulation Services Retail group is developing one model business practice to cover all Demand Resource products in the retail space

NERC Diagram

Performance Evaluation A performance evaluation methodology is used to determine the Demand Reduction Value provided by a Demand Resource. The standards include descriptions of acceptable Baselines and alternative performance measurements. Maximum Base Load Meter Before / Meter After Baseline Metering Generator Output Note: Eliminated the distinction of Type I and Type II for Baseline

Definition of Terms Definition of Terms was developed to clarify specific meanings of terms while providing consistency and conformance where possible to: Wholesale Standard FERC NERC AEIC Currently working through the NAESB glossary committee to adopt definitions – may take several more meetings to complete

Demand Response Event Timing

Key Definitions Demand Resource: A Load or aggregation of Loads capable of measurably and verifiably providing Demand Response. Demand Response: Changes in electric use by demand-side resources from their normal consumption patterns in response to changes in the price of electricity, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.

Key Definitions Program Administrator: An investor owned utility, governmental or cooperative utility or independent aggregator of demand response programs who has responsibility for developing and operating demand response programs identified in this standard. The Program Administrator shall have regulatory reporting responsibility to the utility regulatory body in the jurisdiction of the retail load and reporting responsibility to NERC

Key Definitions Baseline: A method of estimating the electricity that would have been consumed by a Customer or Demand Resource in the absence of a Demand Response Event. It may be calculated using interval metering and/or statistical sampling techniques. The figure below illustrates the concept of Baseline relative to a Demand Response Event.

Baseline Conceptualization

General Characteristics Advance Notification (remote switch vs no switch) Deployment Time Reduction Deadline Ramp Period determined by Program Administrator Release/Recall Normal Operations Demand Resource Availability Measurement Aggregation Transparency of Requirements

After-The-Fact Criteria After-the-Fact Metering Requirement Meter Accuracy Details of Meter/Equipment Standards Meter Data Reporting Deadline Meter Data Reporting Interval Clock / Time Accuracy Validating, Editing & Estimating (VEE) Method On-Site Generation Meter Requirement

Performance Evaluation Methodologies Maximum Base Load Meter Before / Meter After Baseline Metering Generator Output

Maximum Base Load: A performance evaluation methodology based solely on a Demand Resource’s ability to reduce to a specified level of electricity Demand, regardless of its electricity consumption or Demand at Deployment.

Maximum Base Load:

Meter Before / Meter After: A performance evaluation methodology where electricity Demand over a prescribed period of time prior to Deployment is compared to similar readings during the Sustained Response Period.

Meter Before / Meter After:

Baseline: A method of estimating the electricity that would have been consumed by a Customer or Demand Resource in the absence of a Demand Response Event. It may be calculated using interval metering and/or statistical sampling techniques. The figure below illustrates the concept of Baseline relative to a Demand Response Event.

Baseline:

Metering Generator Output: A performance evaluation methodology, used when a generation asset is located behind the Demand Resource’s revenue meter, in which the Demand Reduction Value is based on the output of the generation asset.

Next Steps Complete the glossary committee definition review – estimate 2 meetings Review document for consistency Move information and graphics in definition section to appropriate section in the document Remove any unused definitions Review document flow Plan is to present Model Business Practice at the next NAESB meeting in July