1. 1 Demand-Side Management Influence on Reliability NERC Demand-Side Management Task Force (DSMTF) Rick Voytas, Chair November 2007 Presented To The U.S. Demand Response Coordinating Committeee National Town Hall Meeting Washington, D.C. June 3, 2008

2. 2 DSMTF Initial Charter Review Current Data Collection methods. Review Energy Efficiency influence on reliability Evaluate existing DSM reliability performance metrics. Discussion and summary of the above tasks integrated into a White Paper for review by the 1.Resource Issues Subcommittee 2.Operating & Planning Committee at their December 3-4, 2007 NOTE:Subsequent NERC task force formed to delve into data collection metrics

3. 3 DSM & NERCs Data Collection Demand Side Management (DSM) Demand ResponseEnergy Efficiency DispatchableNon-Dispatchable ControllableEconomic Energy-Price CapacityAncillary Energy- Voluntary Direct Load Control Interruptible Demand Critical Peak Pricing w/Control Load as a Capacity Resource Spinning Reserves Non-Spin Reserves Regulation Emergency Demand Bidding & Buyback Time-Sensitive Pricing Time-of-Use Critical Peak Pricing Real Time Pricing System Peak Response Transmission Tariff Phase 1 Areas of Interest Phase 2 Areas of Interest NERC Currently Collects Data

4. 4 NERC Definition Of Reliability

5. 5 Reliability Discussion Continued - Avoided Capacity Concept

6. 6 Avoided Capacity What is Capacity Equivalence (CE)? Capacity Equivalence is the true capacity value of a program (DSM, DR, wind, hydro, etc) Bottom line: 1 MW of DSM 1 MW of Gas 1 MW of Coal Generation Why? The calculation of the amount of reserve MW at time of system peak may not provide an indication of the capacity, or load relief, that will be available throughout the entire year to meet customer requirements. Two important properties: Determined at system level with adjustments for reserve margin and distribution losses Varies according to the pattern of load relief afforded by the potential program Capacity Equivalence

7. 7 Avoided Capacity Capacity Equivalence short capacity! Example using a DSM program that relies on AC reduction: short reserves!

8. 8 Avoided Capacity History of Reserve Margin Earlier years of utility, percentage reserve evolved as the means for communicating the reliability of a utility system Percentage reserve at system peak established an amount of capacity in MW that would be available to the system at peak and throughout the year Problem: The amount of capacity actually available at any point in time would be reduced due to random forced outages and scheduled maintenance In 1978, many reliability councils adopt Loss Of Load Probability (LOLP) methodology Most reliability councils adopted the industry standard of.1 day per year (LOLP =.1).1 day/year = 1 day in 10 years = one day in 2500 workdays Using a LOLP =.1, minimum reserve margins can be calculated Reserve Margin

9. 9 NERC Historical On-Going Metrics and Data Requirements