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Demand Response Webcast Video (Text Version)

Below is a text version of the Demand Response Webcast presented on July 31, 2008. The Webcast focuses on current issues driving the development of demand response across the United States including energy cost and reliability, sustainability, measurement and verification requirements, and developing a facility as a demand resource. Speakers were Sandy Glatt of the U.S. Department of Energy's Industrial Technologies Program; Laurie Weigand-Jackson, President of North America Power Partners; Candice DoEpp, Regional Sales Manager for North America Power Partners; and Emily Kirksey of Project Performance Corporation.

First Slide: Demand Response

Sandy Glatt:
Just a remark, email Emily if you do run into any problems. For those of you, and I don't know what — whether we'll all seeing the same screen, if you do have the bar on the side — on the right hand side — that gives a lot of logistic information, you can click on the little arrow that's sort of sticking off to the left there. There's an arrow pointing to the right, a square box, and then another box, that arrow will minimize that and then you can bring it out again if you need to type in q's and a's. My name is Sandy Glatt. I'm with the U. S. Department of Energy's Office of Industrial Technologies. We're bringing you this webcast on behalf of our sort of new outreach to the utility sector and the topic that we think is an emerging topic is interest for a lot of the industrial facilities that participate in our assessments or in our training or in other elements of our program. I know the presenters have invited some of their customers, but we have widely invited a lot of our experts and school centers that do industrial assessments, as well as a lot of facilities that have participated in assessments as an additional piece of information that you may find of value in terms of saving money and, in our case, saving energy. The concept of being able to do technical improvements, which is where we provide information at the Department of Energy, in partnership with some of the other kinds of opportunities; in this case, you know, financial or demand response specifically, kind of giving you the full portfolio of opportunities available in the market. So, the process here is there will be a presentation. You're free to, because of the quantity of people, if we didn't mute folks, I can guarantee that it would be distractive, so we've made that decision. We have 200 or more folks who are actually registered, which is why we've taken that — made that decision. Please feel free to type in questions. Hopefully, Candice and Laurie will give their contact information at the end, if you have further follow-up. And finally, through Emily and myself, more follow-up as well and this webcast is being recorded and will be posted on our website as well as their company's website following the webcast. So, I'm gonna sign off here from the audio and let Candice and Laurie introduce themselves and take it away.

Candice DoEpp:
Okay, thank you, Sandy. I appreciate that. Good afternoon to everybody — or good morning to those of you on the west — or on the east — west coast. Thank you for joining us. My name is Candice DoEpp. I am a regional sales manager for North America Power Partners. We both wanna thank the Department of Energy for inviting us to deliver this webcast. As some of you know, demand response truly is the energy voice of the future and this webinar is meant to educate end users across the United States and Canada on exactly what demand response is, what it can do for your company, as well as the environmental benefits. While attendees are joining us, but just to reinforce what she said, there is a Q & A slide with over 200 people registered to attend, it would some mass mayhem if everybody started talking at once, so you are muted, but at the end of the broadcast, we are going to take questions and answers that come in. We — there won't be any verbal communication, but Laurie will answer them verbally, as many as time will allow, and if time runs out, we intend to send written replies as soon as possible in an email and as soon as possible or within 5 business days, so we will respond to everybody with their question.

Next Slide: Introducing the Speaker: Laurie Wiegand-Jackon

And now I'd like to introduce our speaker today, Laurie Wiegand- Jackson. Laurie Wiegand-Jackson is an expert when it comes to energy. She's President of North America Power Partners. North America Power Partners is a demand response provider operating across the United States and Canada. Laurie is founder of CWEEL, which is the Council on Women in Energy and Environmental Leadership. Just this year, Laurie was honored as Executive Woman of New Jersey in a salute to the policymakers. She is past President of the International Association of Energy Engineers. So, if any of you in attendance belong to that organization, she was your President in 2007. Laurie speaks across the nation on demand response. Most recently, she spoke at the Demand Response Town Hall Meeting in Washington, DC. She also speaks internationally, most recently in December at a Global Sustainability Conference in Hong Kong. And with all that said, let me introduce Laurie Wiegand Jackson.

Next Slide: Presentation Overview

Laurie Wiegand-Jackson:
Candice, thank you very much and I want to thank Sandy, Emily and all of you at the Department of Energy that have helped to bring this presentation to your team. We think that demand response is one of the most valuable tools for you to have in your tool kit as you are working with your industrial or commercial contacts; and for those of you that are actual industrial commercial end users, this is something that will be extremely valuable to you on a forward basis as these markets continue to develop and emerge. So, I wanna thank you again for this opportunity. We'd like to really educate you and that was the purpose of this presentation.

We will go through information about the market; we will discuss what we're finding on a regional basis with regard to demand response opportunities; we'll define demand response and how commercial and industrial end users can participate in these types of programs; and then talk about the environmental benefits of demand response.

In terms of an overview of the energy market, and many of you, if not all of you, are well aware of this, the Department of Energy has indicated that adopting a strategic approach to energy management can lower energy bills by 30% or more. In the focusing on that, government agencies themselves have set energy efficiency goals trying to improve efficiency by 10% by 2015 and reducing greenhouse gas emissions by 18% by 2012; and what we've seen in trending, is for private entities and non-profits and, for example, higher education sectors as well, to be following that lead, or in some cases, actually stepping ahead of that in setting their own goals with regard to energy efficiency and greenhouse gas emission reduction.

Next Slide: How Energy Costs Impact Business

The kind of strategies that are being utilized, they're the more traditional strategies of rate analysis, energy purchasing strategies, renewable energy, energy efficiency, and these are all things that you have had in your tool kit for quite some time. So, what we're going to be talking about is how demand response should be added in as a component in that creative energy cost management strategies that you're employing. And one thing that we did wanna focus on was how the cost of energy is a significant cost for manufacturing, which is a wide share of the people that have enrolled today in this presentation; and so, we wanted to give a slide just demonstrating in particular sectors it's even much more significant in terms of that cost. And as we know, over the span last year — year and a half, that cost for energy has risen even more dramatically and has increased as a percent of sales.

Next Slide: Demand Response

So, demand response is a solution to managing that rising cost of energy and we'll talk specifically about how it does that, in that payments are made — okay, this is not a cost saving initiative in as much as it is a revenue generating initiative. So, payments are made for customers who are available as a resource to be called on to cut back on fees of electricity. Those payments are made typically whether a scalement event is called or not, so it is a recurring revenue stream. The opportunities are available on a regional basis right now and we'll get into very much detail about that, but that is expanding across the United States. The driving force behind that is a very strong support by the Federal Energy Regulatory Commission as well as our legislators to see demand response have an equal footing as a resource in our electric market and with our utilities. Those payments are significant. We've seen them vary from 3 to 20% of total electric spend. Demand response is a sustainable energy resource and towards the end of the presentation, we'll go into much detail about how DR resources create greenhouse gas emission reduction and you can utilize for purposes of demonstrating your commitment to greenhouse gas emission reduction.

Next Slide: How Does it Work? Why is it Important?

And then, facilitating demand response and really bringing this opportunity to the market are curtailment service providers and the acronym — the acronym for that is CSP and I actually wanna talk about that technically, what is demand response and what are the drivers behind demand response initiative? And so, we're gonna talk fundamentally about basic supply and demand principles and what we're seeing at work today in the electric industry. What we're finding is that, ideally, we would like demand and supply to be in balance; in balance in real time, at all times, so that we don't have blackouts.

There's also a planning prospective that we know that our supply is able to keep up with the growing demand for electricity. What's happening is that the demand for electricity is growing steadily; 3 1/2, 4 1/2, in some cases, 5% per year, depending on your region, but the supply system is not keeping up. It's not keeping pace with that growth. Typically new generating units are being built that are gas fired. Those are typically insufficient to meet that growing demand. As a trend, we've seen a number of transmission applications for new transmission lines being denied for approval from regulatory standpoints. We haven't seen any significant, large, central generations test being built in much of the area where this growth is occurring, so we are no longer in a situation where that demand for electricity is in balance with the supply resources that are available.

The impact on this is that the margin between those 2 is getting smaller and smaller, and in some cases, has hit the point where there isn't even enough supply resources available to meet demand for electricity; and so, in that environment, the Federal Energy Regulatory Commission, certain regional regulators, independent system operators of electric grids and utility companies, have all seen the significant issue and identified that demand response is a key solution to meeting this growing need in the environment that we're in right now with regard to supply resources; and so, that's the driving force behind demand response, so we talk now, technically, about what demand response is.

So, by definition, demand response is the reduction in the use of electricity by an end user in response to really one of two things; a high price signal, which is an economic decision. If the price is high enough for me to cut back, I'll cut back; the other is the response to an emergency event or call event that's related specifically to maintaining the reliability of the electric grid. So, you can basically define demand response as reduction in electricity as by an end user response to one of two events. What it does is it creates a new resource, a reliable resource, for regional electric grid operators. They are known as — typically, as Independent System Operators or ISOs, and that's an acronym that we'll be using, and it helps those grid operators or ISOs to alleviate the transmission congestion, peak demand or offset the loss of a major generating unit that's putting power into the grid that suddenly has a mechanical failure.

It's also, from an energy standpoint, a new resource coming into the market and with basic supply and demand principles in play, it is technically a resource that could put downward pressure on the rising cost of electricity; and, in terms of its value to end users, it's a means of earning a new revenue stream, while at the same time doing their part to help maintain the reliability of the electric grid.

Next Slide: The New Demand Response: Old Business Model vs. New

Now, this is conceptually not necessarily something new and, in fact, the utility companies have, for a long time, focused on these kinds of issues related to their distribution systems and have designed rates around managing demand. In the traditional demand management bottle, which we're highlighting here on the left of the screen, we have our utility based program; air conditioner cycling is typically a program, for many decades, that utility companies have used to manage demand during peak periods. There are interruptible tariffs, time of use pricing and, for the utility companies, they can't say these programs help them to forego or do like capital improvements on the distribution system, help them to actually optimize the value of their current distribution assets by being able to utilize them more fully, in essence, improving their system load factor.

And in the case of time of use pricing, or even we're seeing now hourly rate pricing, allowing the utility to pass on some market price directly to customers. The value proposition in those days to the customer is, typically, reduced rates in the form of a reduced peak demand charge or a discounted usage/utilization rate. In this new realm of demand response, these resources are ... differently, so they are typically managed as wholesale market resources and I will talk later on about how they are managed as utility resources as well, but for now, I'm gonna focus on them as wholesale market entities, because this is really the new trend that has evolved in terms of demand response.

The regional electric grid operator, so we're going beyond the utility, up to the wholesale market level. These regional electric grid operations, or ISOs as we call them, started to develop their own program and pilot programmed this idea of having peak flowed reduction, participate as a capacity resource in the wholesale electric market. That's really where it started and where it's evolved to is where we are today with permanent aerospace resource models that allow full participation, ultimately in all wholesale electric markets, not just the capacity market; and the value proposition to the grid operator is similar in a sense or analogous to the way it was for the utility operator, but they're looking at it on a transmission level, regional basis, alleviating peak transmissions and just in reducing peak demand and offsetting the loss of a major generating unit in terms of reserved resources; and the value proposition to the customer isn't a reduced utility rate or savings there, it's actually the ability to earn a revenue stream and a wholesale market resource, so this is to extract value out of that wholesale market in the form of payments and to ensure the reliability of the grid and to be able to demonstrate greenhouse gas emission reduction compared to traditional wholesale market resources.

Next Slide: Demand Response Program: The Role of the Gride Operator (ISO)

In talking about that grid operator, their role, to give you an understanding of how this market is constructed, is really developed the 2 main functions; one about maintaining reliability, so — and this is putting simply — the grid operator is, on a day ahead basis, responsible for planning. They're looking at projected demands of the day and the resources that are required to meet that demand. They're making certain decisions on a dispatched basis and on a bid acceptance basis with regard to what resources they will need in order to meet the requirements for that day; then during the real time, they're looking at power flow and actual demand and supply and maintaining that balance; and this is especially difficult because we do not have a storage capability for electricity that we do, for example, in, say, a natural gas or other type of energy commodity, so everything is really happening on a day of in real time in terms of maintaining that balance between supply and demand, because if it goes out of balance, then what results is a blackout. So, on a reliability basis, simplifying it for purposes of the presentation, that's one of the major roles of the grid operator.

On the other side, we're looking at them as the wholesale market manager, so they are not just focusing on power flow and reliability, but they are managing this wholesale market, which is a market in which people are bidding in and those markets may be managed as an hourly market, as a monthly market, as an annual market, they are managing that market construct and on a day ahead basis, this acts as resources on an economic dispatch basis. In other words, working with the lowest cost resource and moving up the path until they've met their obligation for whatever period of time they're dispatching for. And then on a real time basis, also dispatching on call resources as needed to insure that that balance is maintained. So demand response, now, is included in this process that the ISOs are under billing as a resource to help them maintain reliability and as a resource that's participating in the wholesale market; and this program has been endorsed and actually put forth by the Federal Energy Regulatory Commission.

Now, on the next line, we have a demonstration of the electric grid coordination and this grid shows that there is an entity that participates to facilitate an end user as a demand response resource and they're really the gateway into these wholesale electric markets. So, if you looked at this particular graphic, they're showing. . . [inaudible]

Candice DoEpp:
Laurie, we did not get that graphic. We're still on the previous line. There we go.

Laurie Wiegand-Jackson:
Do you have it?

Candice DoEpp:
Yep.

Next Slide: Electric Grid Regional Coordination

Laurie Wiegand-Jackson:
Okay, thank you. In this particular graphic, we see different regional ISOs that are actively managing demand response initiatives. We have the New England ISO, the New York ISO. We have PJM, which is the largest electric grid in the country spanning from parts of Illinois to New Jersey and down south as far as Virginia, West Virginia, parts of Kentucky and Tennessee. These markets, PJM, New York, New England, have really been active in allowing demand response resources to participate. The Midwest ISO is beginning a demand response initiative in their reserve markets in the fall of 2008 and that's coming up. In California, the market is undergoing a restructuring and we expect — and there are existing limited opportunities for demand response currently and we're expecting to see those expand and I'll talk more about those; and as well as Texas also having the opportunity for demand response resources on a limited basis for their larger industrials and those programs currently evolving and so we'll talk about those as an emerging market. But, all of these ISOs, these regional electric grids, are managed as I had described previously and customers, whether they're commercial facilities, power — large industrial plants, universities, they all can participate as wholesale market resources through a CSP gateway or Curtailment Service Provider as the gateway into those markets.

Now, the role of the Curtailment Service Provider is to manage end users. As they are enrolled in these ISO programs, they provide notification to customers of how the programs work, how the markets work and when an event is actually called to reduce, they're the intermediary between the ISO and the customer. In essence, the Curtailment Service Provider is an energy aggregator or market aggregator for these ISO programs and payments are issued from the ISO to the Curtailment Service Provider, which then releases those or shares those, typically, with the end user. Now, there are some utility based programs and we'll talk about those again later on. Right now, we're fully focusing on the wholesale electric market price of demand response initiative.

Next Slide: Role of Curtailment Service Providers

And to get into some more detail about that Curtailment Service Provider, what they're doing, they are a link between your facility and the different wholesale electric market, but we start on this side by looking on the left hand side, we see — on the facility side, developing your demand response strategies, helping to estimate what the KW level of reduction is. If it's available, it helps me to determine what your demand response commitment could be and then, really, looking at your actual demand reduction and helping to track that and report that back to you as an end user. So, in talking about that, the facility on the left side, I talked about the DRS — Demand Response Strategy — helping to determine what that — different ways a customer can participate as a demand response resource. Estimating that CW, level of potential response, helps the customer come up with what their demand response commitment level of KW reduction is; and then looking at the actual KW — what is really being reduced when the customer is doing whatever those strategies are, then can identify it. So, that's part of the facility piece — looking at the types of equipment. We'll get into this later — the actual strategies.

On the metering side, there is information that needs to be pulled regarding actual usage and demand and from that metered data, baselines are calculated to determine what the customer's baseline level of performance is and that that is utilized, if you see the arrow pointing to the right, relating to transactions of data management. But, before I move over there, another thing on meters — there's also a maintenance function, so there is an installation of metering equipment and a maintenance portion that's occurring there as part of the role, typically as a Curtailment Service Provider.

There are analyses of the ISO systems, these regional grids. Looking at pricing information, which is typically zonal, looking at system typology and finding out, you know, where the constraints are in the grid; looking at available resources in terms of what power plants are available and are outbound for maintenance. In looking in real time, I think, like power flows and demand, so there is that part on the ISO system of looking at how the system is operating.

So then, looking at that CSP link, but just over to the far right, and talk about the market. The capacity market, the energy market and the reserve market are a thinning market or a synchronized reserves market, you may hear it called. Those are typically 3 of the wholesale electric market which demand response is being able to participate and we'll go into more detail because not all regions fully allow participation in all of these markets, so we're certainly encouraging and advocate for that to happen.

Starting with the capacity market, that capacity market is about peak day — day requirements and that is either an annual bidding or a monthly biddings type of program and your CSP should be participating in those biddings and tracking the prices and what's cleared and so they're looking at that capacity market. In the energy market, we're talking about being analogous to generating plant that's putting power into the grid and those are typically, again, hourly bids — hourly bid markets and the CSP has looked at those, placing those hourly bids, tracking different prices and looking at what's cleared. In the reserve market, again, we'll get into more details and definitions of all these, but the Curtailment Service Provider is looking at placing bids on weekly, daily, hourly, different ways of fitting into those markets, tracking constraints, what the issues are and what the clearing prices are and volumes are in those markets. So, the CSP is tracking and participating in the wholesale electric market. So, truly the CSP or Curtailment Service Provider is that link, 'cause that's a lot for an end use customer to do on their own and truly these electric grids are not designed for thousands of retail customers trying to understand these markets, so the Curtailment Service Provider plays that role, both from a planning standpoint and strategically helping end users to determine how they can most fully participate in the resource in those markets; looking at their facilities, tracking their extra data, understanding the market and pulling those together and then there's another role of the Curtailment Service Provider instances of transaction and data management. They're responsible for providing notification, so they're providing alerts to end users of times where crisis may be high and there's good opportunities or when they need to curtail in response to a call event. They're confirming with the customer their availability; they're placing those bids in the wholesale market and from a settlement standpoint, there's certain information that needs to be provided to the ISO to demonstrate performance.

Next Slide: Electric Grid Operators (ISO) Accept Demand Response Resources in the Markets

It goes back right back to that metered data where they're establishing baselines and demonstrating, actually showing with metered data, the actual reductions and that's required to be put into a certain amount and processed in settlement with the ISO and developing that into an invoice so that ultimately the Curtailment Service Provider is paid for that customer's participation and then that's shared as a revenue stream with the end use customer, typically.

And so, we find ourselves really with 3 markets that the electric grid operators are accepting demand resource into and in the case of the reserve or the spinning or synchronized reserve market, that market is a market that is available as an on call resource, so when we went back to that definition of demand response at the beginning, we talked about some are responding to high prices, while others are related to reliability and are available on call. That reserves market operates as an on call resource and they — the idea there is for a customer to be able to reduce their load or shift their load onto their own generators at a time when a power plant that is putting power into the group, it suddenly trips out or has a failure. So, this is an on call resource. We gave an example there in PJM. That resource, on an annual basis, might be required 40 to 60 times per year, but that may actually be limited by working through the Curtailment Service Provider, where they can strategically manage that customer as a resource and, perhaps, even lower that to as few as, you know, once a month or maybe even less than once a month. The thing about those calls and what makes this an interesting program for the end user, is that they're very short in duration; they're a maximum of 30 minutes in length, although sometimes and, even typically, they're 10, 15 or less in duration, so they're very short in duration, which, for those of you who are doing technical assessments on this, you know that the wheels start to turn in terms of hey, what kind of equipment could I reduce for 10 minutes or 15 minutes to be able to supply in reserves market?

But, the other critical piece for that is the short notice; and we talked about the basis for why these calls are made. You know, a power plant tripped out on the grid, suddenly there's a loss of supply, so the notice for this program is very short — 10 minute notice. Okay? It is a stop gap measure to maintain enough balance between supply and demand so that there is not a power failure. So, those are the key elements of that type of a resource. The Curtailment Service Providers offer programs around this market in terms of whether it's voluntarily or mandatory in terms of performance related specifically to are there penalties for performance — or rather, for non-performance? Or how is that non-performance handled? So, you wanna take a look at that in terms of the difference between various Curtailment Service Providers and their programs.

The Independent System Operator does, in different ways, penalize for non-performance and so, part of that is a rich management function on behalf of the ... and the way that they're managing resources.

Next, we have capacity and those capacity resources are dependent on call resource, so these are resources that are, you know, basically available when needed to cut back on the use of electricity and, in this case, if a resources is gonna be called on, relevant to peak demand, so these types of resources are really essential to be called at peak times, not necessarily always in the summer, although in many regions, these are just summer resources and the periods of time defined as summer can vary; you know, on the west coast, it may be a May through October; on the east coast, it may be a June through September; in certain regions where electric heating is utilized, it may be a year round , but typically hottest summer days, coldest winter days, type of resource.

And then we have the energy market and that market is really analogous to just generators that are putting power into the grid hour by hour, day by day and participating the same as that kind of a generator. So, those, typically there are 2 markets and a real time or a day ahead energy market and these can be set up as either dispatched, dispatched by the grid operator or the Curtailment Service Provider; in other words, the customer can establish a price point and make it available or, potentially, in some markets, they can actually be on schedule; and so, customers can look at things like changing the timing of their plant shutdown. Maybe they originally did plant shut downs in April and they say, you know what? If we shift that plant shutdown to July, we can get some money because we're not reducing our usage at a time where the grid is really in need. And the same with schedule of maintenance. Those are the kind of things that can be implemented as well more traditional peak demand shifting by substrategies for periods where prices are expected to be high; and a little star there where it says, "Monthly payments are made whether or not an event is called" really applies to the reserve and the capacity program. This graphic is really designed to help you understand, again, this critical role that demand response resource is playing, how they're fitting in as a resource in the wholesale market.

Next Slide: Equal Payment to Standby Generators or Electric Users

So, if you start by looking at the upper left hand corner of that slide, we have generator — this is really how — and, again, a simplification of how the grid is operating. It's about power plants generating power. They're being — that electricity is being placed into transmission lines. You have voltage reduction that is occurring along the way, until that electricity is brought to your facility through the metering and processing and have your own substation on site, and that's specifically how the electric grid works.

Now, looking at the lower bottom portion, you see a power plant there. That's a power plant running as a standby generator. Okay, it's not exactly putting power into the grid and it is available as a standby resource to either put more power in the grid, if it is connected or dozens of standbys open up the gate, if for some reason, they needed more power from them because of a mechanical failure on the grid. So, and to give you some background knowledge, this was really implemented about 30 years ago — this idea of having these reserves, these generating units that are available to put power into the grid on short notice — coming out of the blackout in New York City that we had, you know, back in the 60s where, basically, it was a hot, summer day. You know, all the power plants that were available were putting power into the grid and a power plant failed and they just could not get, you know, it was a tremendous blackout that lasted for quite a period, there were lots of problems from a crime standpoint, and, you know, they just had a lot of difficulties getting that system back up and operating. So, since then, it's been a federal regulation to require a certain amount of generation to be available, in a reserve, so that if there is a mechanical failure on the grid, there's resources available to take its place on short notice. So, these power plants are running and they're running around the clock, hour by hour, and they're being paid to run as a standby unit and they're running because you can't just push a button and get, you know, like your car to start. You can't get a big power plant to start up that fast, so they have to be in an idling mode in order to be able to put that power into the grid on short notice. So, they're operating, they're polluting, they're getting paid off the grid, whilst the irony of demand response is that demand resources can play that same role. In other words, on short notice, those demand resources can be called upon to reduce their use of electricity and, in essence, maintain that balance, so where you see the — on the right side, there's standby demand response minus 10,000 KW or standby generators plus 10,000 KW. If you are following me, the idea is the system needs 10,000 or 10 megawatts, but either demand resources can reduce that amount or standby generators can put that much amount into the grid. That's the concept here of how, specifically reserve units work, but just in general, how demand response participates in wholesale market. It's essentially taking the place of a traditional wholesale market resource and the key here is that in these markets and the way that it's been constructed, these resources are being paid, whether it's a capacity resource, a reserve resource or an energy resource. They're getting paid equal to what that traditional resource is paid — the power plant or the transmission owner or the reserve unit.

And the importance of that is, going all the way back to the first slide where we talked about that balance or imbalance between the growing demand for electricity and the supply resources or transmission resources being able to keep up and why it is that our federal government and our legislators have seen, and are really promoting demand response conceptually?

Next Slide: CSP Response: Provide Lead Reduction on Strategies to Bid in ISO

Because it is the fastest way to bring on these new resources into the marketplace and be able to meet that growing demand effectively and maintain the reliability of our electric systems across the country. So, in the Next Slide, we look at what has the response been in terms of what are the strategies that customers can employ, that end users can employ to become, in essence, a virtual power plant or a transmission line? And, so the things that you all get are, for example, looking at their building automation systems or energy management systems. What kind of control do these facilities already have in place that would allow them to turn on and turn off certain pieces of equipment in response to a signal; and when I say signal now, I'm talking about synchronizing those systems. Synchronizing them so when a call is made by the grid operator, when your Curtailment Service Provider managing that as a resource and tying in to that building on a maintenance system or energy management system.

Candice DoEpp:
... at peak savings practices. Things that you are already doing as an end user to reduce that peak demand for electricity. Many of those same practices can be utilized at other times and be managed as a demand resource

Laurie Wiegand-Jackson:
Looking at, and at this point, most specifically to the manufacturing in looking at those processes and practices that you have in place and seeing where is the flexibility there? Could you reduce for 15 minutes and what impact would that have on your processes? Or reduce for 1/2 an hour or 4 hours or 5 hours? You know, how far can you go and what impact does it have? Ideally, what the goal is is to find only those strategies that are cost effective for you to actually change the way that you're doing business or, even more importantly, find ways through the systems of control and automation to have this synchronized reduction occurring and have no physical impact on your operations.

The other resource that — to look at is around the area of on site generation. There are some limitations to this regionally, but in many cases, backed up generation or co-generation, those generating events that you have on site, your own facilities, they can be utilized if you're able to shift those from your facility onto that equipment while the grid is still operating. So, in essence, you're removing your demand from the grid and you're putting that demand onto your generating equipment, so that's another strategy that you can utilize.

And here is another example in the realm of heating and cooling, the idea of thermal storage. Looking at a building's ability and saying can I keep cool or preheat that building to be able to have a period when the grid needs it, while not using as much electricity and use more early on and use less when the grid really needs me to be using less? Those are some of the strategies that end users can use. It's just to get to the ideas and get you thinking about the different things that you could be doing to get those payments and, again, to see as much as 3 to 25% of your electric bill.

So, I wanna go through the different markets and PJM — I'm gonna go through all the different ISO regions. I'm gonna move through these pretty quickly because the different markets operate in different ways and in an hour and half, it's difficult to go through all those details, but I wanna at least put enough in front of you to give you a basic understanding. In PJM, again, that grid that you can see the graphic from Illinois to New Jersey, down to West Virginia, Virginia and so on, they have 3 available programs.

Next Slide: PJM Market

A peak day program that's related to the capacity market; that short notice on call program related to the reserves market; and then, an energy program that allows you to basically self schedule or to be dispatched into the energy market.

To give you examples about PJM and the capacity market, we wanna look at the key business rules around that and I'll be doing this with a different ISO market. Key rules for the TMJ capacity market, looking on the left side, interruptible up to 10 times during a planning period, with mandatory performance from 2 to 1 through September 30th, so that's that activity period for capacity in PJM. It's really about those peak summer days.

Next Slide: Peak Day "On Call" Program: PJM Capacity Market

The potential interruptions is — were up to 6 consecutive hours between noon and 8:00 p.m. on non-holiday weekdays only, so this resource will never get called on Saturday and Sunday; it won't get called at night and in the morning; it is noon to 8:00 p.m., non-holiday weekdays, Monday through Friday; and so, the — and the other aspect of it is, in terms of the timing. The notification on that is a 2 hour notification. Now, okay, on the service providers, may provide some additional notifications or things in addition to that, but these are the key rules around that resource.

And so, on the right side, we're looking at just a comparison because these rates do change year to year. It's an annual price that's set and you can see the difference in different regions of PJM. For example, in TECO zone and the New Jersey utility companies, in 2007 a megawatt of demand reduction resource in this program was worth about $65,000.00; in 2008, that resource is worth about $52,000.00, in total from the grid operator. In CG&E or Pesco it's different and the rest of PJM, interestingly, you look at 2007, $15,000.00 a year — very low, relatively speaking, in terms of the value of that resource, but look at 2008, up $41,000.00 per megawatt per year. So, these are market based prices and they will vary year to year and so it's important to just understand basically that about the capacity market in PJM.

A reserved market — again, this is the one where I talked about how you are taking the place of that standby generator, so there's key rules and we have one year interruptible for up to 12 times during the calendar year. That actually varies, but the market itself — it could be 30, 40, 50 times that that call could be made in a year.

Next Slide: PJM Short Notice "On Call" Program: PJM Reserves Market

You wanna be looking for different Curtailment Service Provider capabilities to manage that; to help reduce that to something, perhaps, less than the 30, 40 or 50 calls a year.

The other key elements, and we just talked about this earlier, the maximum 30 minutes in duration, but physically less than 15 and a key element as well is being able to implement within 10 minutes notice, so those are the rules. Pricing wise, you know, there's been a lot of fluctuation. This is an hourly price market, so it's not like capacity where once a year the price is set and we saw averages around $35,000.00 per megawatt per year 2007, estimating $35-50,000.00 in 2008. There have actually been issues around that and we found it's actually being less than the 2007 figures, maybe close to $15, 20, 25,000.00 per megawatt for 2008.

Next Slide: Self Schedule Program: PJM Energy Market

In the energy market, there are opportunities for customers to participate on a self scheduled basis or a dispatch basis and those key rules are having to have a certain amount of notice to be able to bid into the market. Obviously, if it's a day ahead resource, you have to be able to give ample notice in advance of that day ahead resource. If it's the day of resource, you have to give notice in advance of the actual hour of reduction. You can't suddenly reduce and say, "Okay, excuse me, we're ready to bid into the market." You have to provide advance notice and that's really important because the way that this program works, you need to be absolutely performing at demand reduction as with demand response resource. The goal here is not to pay people for something that they already would have been doing. That's an important point to make and the baseline calculation, 'cause we don't have time to get into the details of that, but just overall say that it looks at a 10 day circle period, looking at the 5 highest hour in that 10 day history and averaging those hours, come up with a baseline against which the actual hour participation is compared; and these baseline calculations vary from region to region, so this is one of the complexities of the market in terms of managing resources across various regions.

These prices vary hour to hour; they can be zero at certain times. I like a city, they can't give it away, but it's being produced. At other times, there can be, you know, 2, 20 cents, 5 cents, 50 cents a kilowatt hour or $500.00 a megawatt hour. In certain regions, there are price caps on those values, so what you'd be looking at is, typically, the hot summer days, getting high price alerts sent out to you by your Curtailment Service Provider or having a such bigger price established, where you'd say, "Listen, if the market gets over 25 cents, I want to be in." Those are the kinds of ways to manage participation in the energy market.

Candice DoEpp:
Laurie, before we move ahead, there's a quick question came in you might wanna answer. It's from a Robert DiCero and it says, "For an individual industrial site, what is the minimum reduction required to participate?"

Laurie Wiegand-Jackson:
That's an excellent question and it varies by market. It varies by Curtailment Service Provider, so you may find, in some cases, that a megawatt is the minimum required; in other cases, it may be as well as 100 KWs, so it'll vary by region, it'll vary my market, it'll vary by Curtailment Service Provider, so that's something that, you know, you'll need to look at based on those 3 variables.

Next Slide: NY ISO Market

Moving to New York's highest sell market, they have a capacity program, an energy program and on the reserves, they're in the development stages of that and we'll talk a bit about NYSERDA funds that are available to help promote participation in demand response. And, again, we're gonna go to the business rules and this is very high level, trying to get through a lot of material in a short time.

Next Slide: Peak Day "On Call" Program: NY ISO ICAP SCR Capacity Market

Key business rules — interruptible for up to 8 consecutive hours, okay? The advisory — day ahead, so there'll be a heads up notice, a day ahead advisory that goes out the day before, and then a confirmation, typically 2 hour prior notification that, yes, this is an event and you're being called. In this case, there are monthly commitment or enrollment period. In essence, it's what we call analogous to a spot market for capacity. There are seasonal trips or a seasonal market, winter and summer, so there are different ways to be managed as a resource in the capacity markets in New York. In this case, New York's standby generators are eligible and so, that's another factor to consider. And the pricing really varies by zone, so we show in this picture here the different control area or lowest in New York and, obviously, the areas that have the highest pricing are gonna be New York, and New York City and Long Island and these are just sort of general pricing that we've seen over the years in the market and those do vary, you know, month to month or season by season. I'm gonna skip through this one and go into the day ahead sitting program.

Next Slide: Self Schedule Program: NY ISO Day Ahead Bidding

The energy market is a day ahead market, ... in and, again, this is an hourly market so the ... varies by zone. It'll vary hour to hour and it'll vary by season and you would be able to just buy the dates, the times, the durations and provide that information on a self determined basis, but, in this case, unlike that capacity program where you're getting paid whether events are called or not, in this case, you only get paid if you are called upon. So, you may go in and say, "Yes, tomorrow I'm available." I'm gonna, you know, reduce my demand from noon to 3:00 p.m., but unless they say, "Yes, we need you", you're not getting paid.

And then in the real time market, there is like an emergency program. Again, it's an hourly price, but it is still dispatched and, again, you only get paid if you're dispatched.

Candice, have you got a question?

Candice DoEpp:
No.

Next Slide: New York ISO — Emergency Program: Real Time

Laurie Wiegand-Jackson:
Okay. So, you only get paid if you're dispatched. In that case, you are getting notice. There's a minimum 4 hour duration required, so you start to understand that every region has very specific rules associated with their markets and how they manage them.

And, probably, one of the most important points in New York is to really look at the disparities between — you have the New York City zone and the upstate New York and, again, hour by hour, it is always the case, but specifically, you're gonna find much higher value in terms of the frequency of high pricing than you will in the upstate zone. So, these particular graphics are demonstrating that. The frequency of pricing being at $100.00 per megawatt or more and, again, you'll see there's much greater opportunity for participation in New York City than in upstate.

Next Slide: New York ISO — Energy Markets

There are NYSERDA programs and NYSERDA provides grants and rebates to incent energy efficiency and, you know, those types of programs for anyone in New York. I'm sure you're fully familiar with NYSERDA. They work really well, hand in hand, with the New York ISO and the market participants and they have several programs and incentives that are available. This is just for New York, so it would be important to get any New York resources to look at these different programs for both permanent demand reduction; so, taking demands permanently off the grid through energy efficiency, through renewable energy, qualifies through NYSERDA programs for incentives.

Next Slide: NYSERDA Programs

There are load curtailment or load shifting incentives that relate to non-permanent demand reduction as well and being able to implement reductions from controls, automations, things like that; and then, there's a separate permanent generation program, the latest in generation that we talk about is generation's being qualified for capacity payment through a New York ISO.

Next Slide: ISO New England Market

In New England, we have a capacity program, we have an energy program and a reserve program on a pilot basis, so not fully available, across their entire region.

Next Slide: Peak Day "On Call" Program: New England ICAP Capacity Market

What we have are, in the capacity market, showing you the key rules. Here, it's a year round resource and the difference there is in that the New England market is one where you have a winter electric demand, as well as a summer electric demand; and that winter electric demand plays a role in the capacity market as much as it does in other regions for the summer before. So, it's important to identify that in New England, we're talking about a year round reform.

The capacity commitment is one that can change monthly, so in the other markets, the ...and the PJM market, you're commitment stands firm for a year; in New York, your commitment is either a monthly commitment or a seasonal commitment; and in New England, your commitment is a monthly commitment. It can change month to month. You have an M & B plan that you'll be submitting in association with that as to how you're gonna measure and verify that reduction, interruptible for up to 6 consecutive hours from noon to 8:00 p.m., non-holiday weekdays, so that's the similarity there with other programs; and stay ahead notice — that's similar day ahead notice. So, those are the key business rules around the capacity market and from a pricing standpoint, you'll be able to see that there are increases in pricing over time there from '08 to '09 to 2010 resources. This is an annual price point for that market.

Next Slide: Day Ahead & Real Time Energy Programs: New England

In terms of energy, there's a day ahead in real time energy market, so there's a similarity there. You're bidding in. There prize again, here you get paid if your price is accepted and that all occurs on the day before or the day ahead market and that baseline calculation looks at the 5 day hourly average minus dispatch days, so it's a similar — similar to like a PJM type of baseline calculation and in real time, and you're only paid in real time if you're dispatched. So, if you're committing into the day ahead market and your bid is accepted, you're getting paid and you're performing. In real time, you could actually bid in, but if you're not dispatched, you're not getting paid. It's similar to the New York market.

NEST SLIDE: California Market

In the California market, what we have right now are, and also this is where I'll talk a little bit about utility based programs. The ISO — the California ISO is in the process of completing a market transition and so California is restructuring. It's anticipated that that will be completed by the end of this year and that there'll be an increase in demand response participation through the California ISO coming within 12 months of that completion of the market transition. So, that's exciting news for California. In the meantime, there are really 2 opportunities; 1 is for a larger industrial to participate as a reserved resource in the California ISO and then for everyone else, there are these utility based programs. PG&E, SBG&E in Southern California and ... and they're typically in these 4 categories; a capacity bidding program, a critical peak pricing program, a demand bidding program, and then they may actually have special contracts with select Curtailment Service Providers.

We're just kind of briefly go through these.

Next Slide: Utility Based Programs

Utility based programs, since that's what available in California, we have, you know, identified the business rules and we pulled these from Southern California Edison, but they are similar in the other regions. And the capacity bidding program is similar to a capacity resource in the ISO market and so, the program or planning period is May to October and Edison's basically go through a forecasting to determine when they need customers, when they make those calls. The credit can vary once a month and there are penalties for non-performance. You can spend that directly or a Curtailment Service Provider can work to manage you as an aggregator and the benefit of aggregation is really around that area of penalty because they allow for the resources to be seen as a pool of resources under that Curtailment Service Provider.

The critical peak pricing program is one that really provides discounts and it's more along the lines of those traditional utility programs and are designed to manage demands and are priced like that, but peak periods are priced so high that it gives you a — I should say disincentive to use during critical periods or you could look at that as an incentive to not use during critical periods. But, the key there is to — it's about paying more money during those critical times if you use power. That's how that program is designed. One of the unique things in that program is that there is something called bill protection and so, if you opt into that program, and you find that you ended up paying more there, at least while it's available, there is a bill protection option that, for the first year of participation, they would basically make you whole on that. That's critical peak pricing.

The demand bidding program is more analogous to kind of like an energy type of program being called on a day ahead basis and incentives are there for day ahead and day of load reduction. And then, there are capacity bidding products — contracts that vary and, depending on the Curtailment Service Provider, they have anywhere from, say, roughly $75-100,000.00 per megawatt per year in capacity payments, so there's a handful of these that are out in special markets with the — for example, Southern California Edison and, typically, the call events are 4 hours, a maximum of 4 events per month, all at the utility company's discretion. There may be additional payments for call events and, again, penalties for non-performance, depending on the Curtailment Service Provider and how they're managing that — that grid.

Next Slide: California Technology Rebates

In California, similar to New York, there are technology incentives, so that's some exciting news too, that if you're located in California, they have what they call technical assistance and technology incentives. In this case, up to $100.00 per kilowatt of load reduction for technical assessments, up to $450.00 per kilowatt of load reduction for actual installed technology. You can tack on an extra $50.00 if you're going to automate that demand response. So, there are a variety of incentives. There are some fee factors in terms of having to be able to achieve a threshold amount of loaded up ... in order to qualify for these, so you need to have a couple hundred CWs of low reduction stability just to qualify. And just to step back on that in California, the utility companies have recently filed their programs for the upcoming, I believe it's a 3 year period. Those are currently — I think they've been posted. They're subject to comments and going through the standard regulatory process for what's going to happen after the end of 2008, so I just wanna caveat that in terms of all of these facility programs. There is a current filing for 2009 forward.

So, that brought us through New York, New England, PJM, California. We do have in Texas, and I know this brought this line up about metering, but typically to talk about Texas, they had a program — have a program — where our load acting as resource program. This program actually saved the day not too long ago, a couple of months ago, when there was a significant shortage of supplies, a sudden drop of supply resources and that load acting and resource came in and that program, though it's bombed over time, it's really for the largest industrials.

Next Slide: Example of CSP Reporting Tool

It does require dispatch capability, like actually controlled dispatch capability from the ISO. It's what we found over time, for really large industrials wanted to really participate in that, but that market is evolving and so we're seeing now trends in utility companies putting forth new, you know, developing new programs, as well as the ISO and we consider that to be an emerging market where there's ample opportunity that is just evolving similar to, in essence, the Midwest ISO, that also is expanding to a reserves market that will allow demand resources to participate as reserves and that's opening up in September; and then there are a handful of utility companies outside of that or authorities, so you would look at some, like dependent public power authorities that are kind of following that California utility model of looking to put forth their own demand response initiative, so there's a role to be played here in keeping track and communicating, and then really advocating with individual municipal authorities, regional municipal authorities, to say, "Look, this is working regionally with these ISOs across the country. Let's get something up and running here." And so, while this may not be a perfect ..., we targeted the largest regions and said, "This is what's happening now."

Understand that individually, at these smaller levels, at these authorities, there are actions underway. So, this again, is an emerging market. We're seeing things happening this year that weren't even on the table last year.

I wanted to just spend a little bit of time going over the tools. We're about to wrap up here. Metering plays a critical role here. You have to have the data to be able to see what your load is, how it fluctuates as you're doing business, and then what happens when you actually change an operation, reduce a piece of equipment. So, there's a key piece here and typically your Curtailment Service Provider will play a role in dragging this information from your facility, actually come in, stall any equipment, and then providing that information back to you through a reporting capability, so that you can see your actual performance and do things to be more effective as a demand resource. So, this is a critical component that you will have and, in this case, what you're looking at is an example where multiple facilities are being viewed simultaneously. These could be facilities all over the country, all being viewed through the same application. Different facilities may be getting calls on to curtail whether others are not, but being able to grab and view all of that, those are the kinds of tools that you're going to be looking for to facilitate and maximize your performance as a demand resource.

Next Slide: Automation and Controls Can Enable Demand Response Opportunities — Facility Equipment

Another area is an area of automation and controls and we could do a whole hour and a half session on automation and controls and metering. But, it's an important thing to identify because the key here is to develop long term, dependable, reliable demand resources and to expand that market capability of different types of end users being able to participate as demand resource. And so, control plays a key — automation and control plays a key element there in being able to bring about, for example, that tying into building automation system or energy management system that you may already have or your customer may already have, and allowing that to be programmed to have demand reduction protocol that ties in with the business rules that that Curtailment Service Provider, as I defined for you in that particular region that you're located in. And so, developing those protocols is one step to be able to reduce. For example, if you see equipment filler is refrigeration, they're able to be dried and so on, even lighting circuitry and having that reduced and then ramped back up for a calls event.

The other side of that is around control — remote control, having wireless controls that would allow a Curtailment Service Provider, to actually remotely control that activity and the key there is if that's going to happen, wanting to be sure there's notifications so you know what's going on at the end user and that it's not having a negative impact on comfort levels; you know, patient comfort, student comfort, productivity, etc. So, there's a role here for automation and controls and there's an amount of engineering that has to go into assessing how they tie in and bring value to a customer as a demand resource.

The internet now, they ... so communications vary, is based and cost effective and the cost of these components has come down considerably. So, whereas, even stupidly years ago, this may have been cost prohibitive, today there are solutions that are very cost effective. So, this is a very cost effective, so this is a very exciting area that Curtailment Service Providers, as well as the industry itself, you know, the automation and controls industry is focusing in on to achieve that goal of developing that consumable demand resource and really maximizing value of your revenue stream.

Next Slide: Automation and Controls — Generator Equipment

And then there's generations to admit. And there's more that's being done there. I have to just touch on it because, in certain regions, there is a proclivity to not allow generators to participate. When I talk about a generator participating it's real important to know, that's not a generator putting electricity into the grid; it's you using a generator to take your load off and put it on your generator. So, in that case, the issue really is around emissions and so what we're looking at our strategies around managing those greenhouse gas emissions in a way where the local environmental authorities are supportive of that. And in some regions, they've already gotten over that hurdle and in New York, this is a non-issue; in certain regions in a non-issue, but in others it is. So, I just wanted to throw that out there about generator equipment and indicate that that's a possibility, but it really needs to analyze that the key issue there being one of environmental issues.

Next Slide: Demand Response Contributes to a Better Environment

And our last focus is on the environmental benefits of demand response. What you should find is that your demand reduction participation has a carbon emission reduction associated with it and that Curtailment Service Providers that are proactive should be tracking and recording that information so customers can see the carbon emission reductions associated with their performance.

We don't have time, really, to go through the basis of this. Most of you understand the importance of carbon emission reduction; carbon dioxide and greenhouse gas.

Next Slide: Why is "Carbon" Important?

There are federal and state mandates to reduce greenhouse gas emissions, so we're seeing a greater focus on carbon footprinting. There's either a carbon tax or a cap and trade system likely on the horizon and so, demand response, in addition to that revenue produced production, has a role to play in greenhouse gas emissions reduction.

Next Slide: Carbon Reduction Values for PJM from EPA eGRID2006 Data

And so, what you'll find and we're showing here in the ETA is that they do track, through their eGRID, and the most recent date, that is for eGRID 2006, looking at the data associated with emissions not brought in C0₂, that's ..., and they showed us on a regional basis, but these days eGRID also shows it on state by state basis. There are ways we're actually quantifying that value of that emission reduction associated with demand response resources.

Next Slide: Demand Response Programs: Summary

I know we're just wrapping up, so in summary, what I'd like to say is that demand response resources are critical to maintaining the grid reliability and they do that through alleviating ... transmission congestion, offsetting the loss of major generation units and basically maintain the balance of supply and demand on a real time basis, so they're our critical resource in various ways and they're a green energy resource, so it's a path for customers to earn new revenue streams, while at the same time, reducing greenhouse emissions and that's wraps the program and then we talked about doing a Q & A at the end.

Next Slide: Questions?

I think what we'll do is just talk briefly with our time, to answer a few questions and, as Candice said, we will have written answers to all questions that have been submitted.

Candice DoEpp:
Emily, their question is to you. Are we out of time or can we take a couple of questions?

Emily Kirksey:
No, we have — we have this for what? Two hours I thought.

Candice DoEpp:
Yes, and the webinar, it'll keep running, so we have some air time.

Emily Kirksey:
So, go ahead and answer and then people will get 'em back in written format as well if they've had to drop off.

Candice DoEpp:
Laurie, are you ready for a couple of questions?

Laurie Wiegand-Jackson:
I am absolutely ready.

Candice DoEpp:
Okay, there's a person, David Schwamm, he's asking in Northeast Ohio, specifically Cleveland, is that covered by an ISO?

Laurie Wiegand-Jackson:
Yes, Cleveland, Ohio is covered by an ISO and, Jennifer, you can help me out here. These are the PJM ISO or the Midwest ISO?

Jennifer:
I was hoping you knew that. It is in one of the ISOs. Did you wanna talk about the PJM in MISO, Laurie?

Laurie Wiegand-Jackson:
Yeah, so we can get that answer to you. We'll email that off to you, but Ohio is split and so the AEP portions of Ohio are a part of PJM; the other portions of Ohio are a part of MISO, so it depends on who your utility provider is and then there's the municipal utilities, and so that'll very with those as well. PJM is the one where, you know, through those programs, ISO is just starting to open for a reserves program, so, again, it depends on who your utility company is, that's how you'll know which of those 2 — if it's Midwest ISO or PJM ISO.

Candice DoEpp:
We also have several people asking about programs and they're asking regarding Arkansas, Tennessee and Florida.

Laurie Wiegand-Jackson:
Okay.

Candice DoEpp:
Will there be some programs coming soon?

Laurie Wiegand-Jackson:
Tennessee, we can touch on briefly. There's a small section of Tennessee that it is a part of PJM, so in that region, the PJM program applies and, again, if you're able to indicated to us, you know, the actual like town or — and the utility company's even better, then we'd be able to say okay, it's MISO, it's PJM ISO or it's PDA, because that's really what you're looking at with Tennessee in terms of the different regions that are operating within that state. But, in any case, we are seeing opportunities there throughout Tennessee.

As far as Arkansas, again, that's a good question as far as their participation as a MISO state and we talked about MISO briefly in terms of the reserves opening up.

And then Florida — actually it's a really good question in terms of the Florida state — I know that different utility companies have put forth utility based type initiatives and they're really starting to emerge in the southeast region. I think the reason that we haven't seen them quite so significantly does play into the fact that the regions that are most green are where you're going to see demand response happening faster and on a more fully integrated basis, so it makes sense. But, we thought starting in the northeast, in California and it's starting to sort of migrate around to the rest of the country and so, with Florida, you know, I expect to see as well as, you know, the rest of that southeast region, things coming out more from the utility companies in terms of demand response program.

Candice DoEpp:
Okay, and there is a good question. It says, "Are Curtailment Service Providers demand response programs expected to replace utility demand response programs?"

Laurie Wiegand-Jackson:
That's an excellent question and I would say that that is not the case. And now, this is my opinion at this point talking, but that there are 2 roles that, you know, the grid operator plays a critical role and the utility has a different function, so the idea of those 2 programs not operating simultaneously, to me, doesn't really make sense. I would envision that the utility companies, it's managing its distribution system, has some unique reason for wanting to manage its resources and the grid operator in a wholesale market has different reasons for managing those resources; and, in fact, you will find that if you are already in, for example, as an interruptible rate customer with the utility company, that you can also participate as a demand resource in wholesale electric market, but you cannot give, because you cannot, in essence, what they call double dip; which means, for the same event, you don't get paid twice, but if, for example, your utility doesn't need you, but the grid does, which could happen frequently, there shouldn't — you shouldn't be prevented from being able to provide value into the wholesale market and get paid for it, so. . .but, at the same time, your distribution company has other reasons why they want you, so, yeah, I hope that gives a good explanation to why I think that those 2 things will not, you know, one will not replace the other.

Candice DoEpp:
Right. There is a question, "For different regions, where supplemental on site generation is being considered, are ISO entities considering the impact of diesel and other dirty generation?"

Emily Kirksey:
And that question may have come before that later slide. The issue of dirty, you know, diesel and older generations, is really important. The idea here is that we are finally, as a country, moving forward, recognizing the impact of greenhouse gas emissions on our environment and we can't put forth a policy of demand response that promotes the use of dirty generation as a solution. What we need to look at is overall, what are the emissions associated with our traditional resources and what are the emissions associated with the on site, you know, the distributed generation resources and see if, in certain cases, it makes sense to utilize those, but on a more proactive basis, be looking at either retrofitting or replacing those units with cleaner technology. I mean, the end game being that if you've got, you know, older oil-fired generators operating as reserve units, and you're saying, "I don't want a diesel generator to run because of the pollution", well, we need to look at what's polluting more. In making that decision, number 1, you really look at how do we do it better across the board? And so, you know, we strongly advocate the idea of putting in cleaner burning generation on a distributed basis as a solution from a demand response resource standpoint; and we would, you know, we encourage customers, we encourage the industry, expert, engineers to advocate on this matter of wanting to see policies and fee based incentives that incent the replacement or retrofit of that on site generation, which is a great resource. You've got tons of these generators out there and people have to have them for various reasons, that we would see a proliferation of that and utilize the demand response dollars to help offset this cost as well.

Candice DoEpp:
Okay. We have another question. And we do have Norm Campbell in New York and his thought is that, while he has 15 sites with aggregates 1 megawatt and he's wondering if he can get into the program when they're in different zones?

Laurie Wiegand-Jackson:
You know, it really depends on the — yeah. I would say that that's a question that we can answer, get a little bit more knowledge information about their capabilities to be able to participate. You know, what kind of facilities are they? You know, how reliable is their load reduction and then, absolutely, they should be able to participate on an aggregated basis as long as they really do qualify as demand resources.

Candice DoEpp:
Okay. And we have one question from California from Louise. It says, "In the case of California, for large industrials, do the utilities offer better incentives or does the COC have also incentives?"

Laurie Wiegand-Jackson:
That's really gonna vary. The utility companies programs, you know, I would love to be able to say across the board one answer. Unfortunately, that's not the case so, in some cases, the COC's program will be a better program than the utility has to offer; in some cases, not. So, it really requires an assessment to see what is in the best interest of each individual customer.

Candice DoEpp:
Okay, and here's Josh Powers wants to know, "Do demand response payments offset the fuel cost if you use diesel in your generators to reduce load?"

Laurie Wiegand-Jackson:
I'm sorry, Candice. Can you repeat that question?

Candice DoEpp:
Yeah, he's saying that he's using diesel in his engines for his generators. Will the demand response payment offset the fuel costs?

Laurie Wiegand-Jackson:
Okay, so with diesel generators, and we talked a bit about generation. In certain cases, you can identify a threshold cost associated with your ability to be a demand resource and in some regions, that cost can be compensated for; in other markets, in other regions, that's not the case, so some of it will do with where you're located. And again, as a diesel generator resource, in some regions, you will just flat out be prohibited from participating in some markets. So, you know, what you really need to do is look at either finding a Curtailment Service Provider to work with or an engineering firm that you get, and understand these business rules and work through that to determine, number one, does that resource qualify demand resource and then, if it does, will, in that region, your cost for this generation be considered as a component of the cost that needs to be offset before you're dispatched as a resource.

Candice DoEpp:
Right. Right. And now Randy Sherman has a question on carbon reduction. He wanted to know if, "Can carbon reduction be used for carbon credits that can be sold on the Chicago climate exchange or other exchanges?"

Laurie Wiegand-Jackson:
That's an excellent question too. The certification of emissions reduction from demand response is really in the early development stages, so while it's being tracked, I know, in fact, our company and others, are working towards a certification process that will allow them to qualify for purposes of that reduction. So, the key here is certification and, you know, carbon itself is an emerging — you know, it's tracking itself as an emerging market, so — because a role — an advocacy role that we're taking and really working towards having that done. So, I think the answer at face, probably not, and in the future, absolutely.

Candice DoEpp:
Right. And we're actually getting close to the end of questions, Laurie. Steven Schultz wanted to know if there is a list of CSPs?

Laurie Wiegand-Jackson:
Yes and see, typically, you can find, for all of the ISO regions, they will have on their website a list of every one who's been approved as a Curtailment Service Provider or demand response provider. That list tends to be an extremely long list and some of those people are not active. You have to kind of paw through that list. It's similar to — I don't know if you've ever gone to any of the regulatory websites for third party suppliers — and they might list 30 suppliers, but you know there's only maybe 5 or 6 really active in that market. The same is true of these CSP list. But, that's the place to go to get a list of CSPs. In the case of California, look at the utilities website and they'll have a list for your Curtailment Service Provider.

Candice DoEpp:
Okay and here's a good question from Purcatch Rhaoul. He said,
"Why would someone participate in only capacity and not both energy and capacity?"

Laurie Wiegand-Jackson:
Typically, you find people participating in energy and capacity and the other market that is a question is really around the reserve; and so, if the question is more of capacity and reserve as opposed to capacity and energy, absolutely, you would see them participating in both capacity and energy.

Candice DoEpp:
Right. There really is no reason not to participate in both.

Laurie Wiegand-Jackson:
Exactly.

Okay, I think we really hit on most of the key questions and answered quite a few during it. Emily, were there any questions from the DOEE on the subject?

Sandy Glatt:
No, but I, what would be nice, I know, either Carolyn or Emily, several people, and I know you guys responded, but just generically for the folks who are left here, the slides — will you send those slides to the respondents are is just a matter of fact that they'll be posted on the website? How are you answering that question?

Laurie Wiegand-Jackson:
But, I think we'll need to post it.

Sandy Glatt:
Okay, so the answer is is that we will post it on the DOE ITP website under the sort of Save Energy Now category and that will be — we'll post both the slides and when we post 'em, we will post 'em with Laurie's — let me ask this question. Can you guys, when you respond back to everybody who attended, to their email addresses with the PowerPoint presentation?

Laurie Wiegand-Jackson:
Yes, I can do that.

Sandy Glatt:
So, for the few that are left, not bad for you, but the half or so that are still left online, we will — they will respond and we'll put 'em on — I'd like Laurie and Candice, if it's okay, to put a contact information on your — the last page of your presentation so that they can at least get back to you guys by email.

Laurie Wiegand-Jackson:
Okay.

Sandy Glatt:
And then it'll also be posted, I just — the only reason I'm saying is because we — they may not want their contact information posted. We will also post the slides, along with, hopefully, the audio of the presentation on the Save Energy Now website. That'll just take a little bit longer. There were also some questions about will we redo this? And if we have interest and the interest is communicated to us, we can certainly redo this or we can do a more in depth on any of the topics, if that's of interest to folks, but they just need to let us know.

Laurie Wiegand-Jackson:
So, I think that's pretty much. . .

Candice DoEpp:
I'm hoping. . .

Laurie Wiegand-Jackson:
Go ahead. Hello?

Did we just lose Candice?

Sandy Glatt:
We probably did.

Laurie Wiegand-Jackson:
Okay. I'd just like to add in that we covered an awful lot of material in a, I know it was a full hour and a half, but there's a lot happening in demand response and we'd be very interested again, as Sandy said, if there's an area that you think you'd want more detail in from an education standpoint, you know, email that in and we'll work towards trying to put something together that maybe has more than plants. One of the things we thought of was, even regionally, if you wanna see something focused on the northeast and something focused on the Midwest, maybe we could manage it that way as well.

Sandy Glatt:
Yeah, and I just, can the folks who are still on the line communicate that back to us at DOE and we'll — we can work through that. Also, for the folks that are left on the line, and Emily will include this in her email that she sends back to folks with the slide, we will not share the participation list. That's — we don't ask people in advance for that approval, so just so everybody knows that that information is not going to be used. The participation list is not shared, nor are your emails. The folks who control this, with the contracts, is the only ones that have it and the only purpose that they'll use it for is to send out the slide information. So, I think that's — unless there's anything else, I think that's it and I wanna thank everybody for your participation and, you know, please don't hesitate to contact us if there's more information you need. So, bye.

Laurie Wiegand-Jackson:
Thank you. Thank you, all. Bye-bye.

[End of Audio]