Jenny Edwards explains how Demand Side Management programs benefit ratepayers by keeping costs down overall, allowing customers to save on the energy they do use as well as the energy they don’t.
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Counting the Capacity that Didn't Hatch
1. Counting the Capacity
that Didn’t Hatch:
The Rate Mitigation Effects of DSM Programs
December 12, 2013
Jenny Edwards| Program Manager • CEE Innovation Exchange
2. Requires a better understanding of the system
wide revenue benefits of DSM programs
Page 2
3. Counting the Capacity
that Didn’t Hatch:
The Rate Mitigation Effects of DSM Programs
December 12, 2013
Jenny Edwards| Program Manager
4. Energy Efficiency as a System Resource…
Requires a better understanding of the system
wide revenue benefits of DSM programs
Page 4
5. Energy Efficiency Context
• Efficiency Costs recovered through rates and
“trued up” regularly
• Utilities are incentivized to meet and exceed
targets
• Costs are often more transparent to customers
than traditional capacity additions & incentives
• Savings from avoided costs are less visible
6. Minnesota DSM Case Study
• Analyzed 20-year program data from Xcel Energy
• Conducted a backward-looking scenario analysis
to compare capacity options
• Focused on additional revenue requirements for
two scenarios: DSM and No DSM
• Revenue requirements are distinct from rates
8. Example Utility Bill
Customer Charge
$8/mo
Energy Charge
$0.08/kWh
Demand Charge
$15/kW
Riders
$0.003/kWh
What is cost of itemized
power plant capacity?
19. Scenario: Coal Plant Displacement
Gas
Operatio
n
19%
Coal
Capital
42%
Gas
Capital
18%
Coal
Operatio
n
19%
$4.89 billion
Page 19
Revenue Requirements
(¢/kWh)
Transmiss
ion
2%
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
DSM
Resource
Gas Only
0.78 ¢/kWh
Coal + Gas
25. Summary of Scenario Results
Revenue Requirements (¢/kWh)
0.90
0.78
0.80
0.66
0.70
0.71
0.68
0.60
0.53
0.50
0.40
0.30
0.24
0.20
0.10
0.00
DSM Resource
Page 25
Gas Only
Coal + Gas
New
Transmission
Lines
10-yr Measure 20-yr Measure
Life
Life
26. Summary
• System wide avoided revenue requirements are 34 times higher than DSM program costs
• DSM programs allow customers to save on the
energy they do use, as well as the energy they
don’t
• Includes total DSM costs, but only power plant
costs recovered during the 20-yr time frame
• One specific example, but relevant for other DSM
programs, especially those just beginning.
• Conditions going forward will be different
27. Jennifer Edwards | Program Manager
jedwards@mncee.org
(612) 335-5873
Megan Hoye | Engagement Coordinator
mhoye@mncee.org
(612) 244-2417
www.mncee.org/Innovation-Exchange/Resource-Center