Smart Metering

Section 1251 of the EPAct of 2005, PURPA 111(d) Standard (14) Smart Metering states the following:

In order for SEIEC to make a specific determination as to whether this standard is appropriate to implement, SEIEC reviewed the stated purpose for this new standard as follows:

               (1)       Conservation of energy supplied by electric utilities

               (2)       Optimal efficiency of electric utility facilities and resources

               (3)       Equitable rates for electric consumers

This standard is closely tied to the first two stated purposes shown above.  The goal of the standard is to allow consumers to pay prices that more accurately reflect the cost of providing the service.  If designed appropriately, time based rate schedules provide consumers with price signals so they can make decisions on when and whether to use electricity.  If designed appropriately, time based rate schedules can also reduce SEIEC's peak demand, improve the overall load factor of the system and reduce the price of wholesale power.  Therefore, if designed appropriately, time based rate schedules can achieve the first two stated purposes of PURPA without negatively impacting the third stated purpose.

Smart metering is defined as metering that can register the time at which electrical energy consumption takes place.  SEIEC began mass deployment of an advanced automated meter reading (AMR) technology system in April 2006 and installed approximately 22,600 meters on residential and some small commercial accounts by January 2007.  SEIEC has ordered and is awaiting delivery of the final AMR meters to install on the remaining commercial and industrial accounts by mid 2007.  This AMR system is a power line carrier system known as TWACS (Two Way Automatic Communication System).  SEIEC made the decision to install these meters in an effort to read meters more efficiently thereby reducing the costs to serve our members while adding significant service enhancements such as automated outage reporting, voltage monitoring and blink monitoring to the membership.  The TWACS system requires a meter equipped with a module that registers power usage of the member and transmits the energy usage back to a centralized computer-server system.  This information is then automatically processed and transferred to an automated billing process.

While the TWACS system records metering data in different time intervals for residential and small commercial consumers, the actual solid-state meters that utilities normally deploy are not time-of-use meters and the data that is currently retrieved from those meters is not available in a format for automated billing processes.  There are more expensive, technologically advanced residential and small commercial time-of-use meters available that can be equipped with TWACS modules that would allow the time-of-use metering data to be available for automated billing processes.  For larger commercial and industrial applications with varying meters equipped with the TWACS modules that SEIEC has already ordered, the meters are time-of-use meters and the metering data will be available in a format for automated billing processes. 

SEIEC currently has an AMR system in place that can be utilized to provide time-of-use rates to its members.  The meters that SEIEC will be installing in 2007 for larger commercial and industrial accounts will be time-of-use meters equipped with AMR modules to allow time-of-use metering data to be available.  The meters that are currently installed for residential and small commercial facilities are not time-of-use meters and will require more expensive, technologically advanced meters that utilize the existing AMR technology.

The types of time-based rate schedules that may be offered under this standard include the following:

In order to design an accurate time-of-use rate for members in varying classes, smart metering information is required to completely understand the load profile of each member class, how that profile impacts the overall load profile of the entire system and what costs should be allocated to each class based upon their perspective contribution to the system load profile.  As stated earlier, SEIEC began mass deployment of the AMR "smart meters" in April of 2006 and only has one year of data for the first meters installed and considerably less than one year for all other meters installed.  These meters were installed on residential and some small commercial accounts. 

SEIEC has reviewed the data available for the residential classes and has developed time-of-use rates (See Appendix C - SouthEastern Illinois Electric Cooperative, Inc., Time-Of-Use Rate Schedule, A-TOU) (See Appendix D - SouthEastern Illinois Electric Cooperative, Inc., Time-Of-Use Rate Schedule, AH-TOU) that will be made available in 2007 on a limited basis for the first year to members in these rate classes.  After the first year of availability, SEIEC will review the results achieved by the new time-of-use rates and the accuracy of the rate design.  If the results indicate that the time-of-use rates are meeting the objectives of the PURPA standards, SEIEC will make any necessary changes to the time-of-use rate design prior to making them available to all members in the residential classes. 

Given that SEIEC did not have smart metering installed on the remaining member classes until the year 2007, SEIEC currently does not have sufficient data to design an appropriate or accurate time-of-use rate for the remaining member classes.  SEIEC will be gathering the required data during 2007 and 2008 in an effort to better understand the profiles of each member class and the appropriate costs allocations to each class.  At that time, SEIEC will determine the cost effectiveness of implementing time-of-use rates for the remaining member classes while maintaining the financial stability of the organization.

The term critical peak pricing method is very similar to time-of-use pricing with the exception that this method allows utilities to increase peak prices substantially during a predetermined number of extreme peak hours.  This pricing method is driven by the generation and transmission utilities when customer demands are extreme and utility generation and transmission facilities are in short supply.  Some generation and transmission utilities use what is called a "ratchet demand" to determine the demand rate paid by their distribution entities.  This "ratchet demand" is set during one of the predetermined number of extreme peak hours of a year and then the distribution entity must pay this "ratchet demand" rate for the entire year.  When "ratchet demands" are used by generation and transmission utilities, distribution entities have a significant incentive to reduce the overall demand during these predetermined number of extreme peak hours and therefore lower the overall demand rate.

SEIEC's generation and transmission utility, SIPC, made the decision to not use the "ratchet demand" to determine the demand rate paid by SEIEC.  SEIEC is billed on a monthly, non-coincidental, individual delivery point peak basis by SIPC.  Therefore, SEIEC does not pay its wholesale energy supplier according to a critical peak pricing method and therefore does not have the information necessary or the potential savings to implement critical peak pricing.  SEIEC does not have an economical or practical method to implement critical peak pricing to its members. 

This method allows prices to be provided to customers in real time or near real time.  This method requires members to receive notification of rate changes from one hour to one day prior to use.  This pricing method is also driven by the generation and transmission entities and not by the distribution entities.  As stated above, SEIEC is billed on a monthly, non-coincidental, individual delivery point peak basis by its wholesale supplier, SIPC.  Therefore, SEIEC does not receive real time pricing from its wholesale supplier and therefore, does not have the information necessary or the potential savings to implement real time pricing.  In addition, the smart metering technology that SEIEC has installed currently does not have the ability to send real time pricing messages to its members on a real time basis.

SEIEC, along with is wholesale supplier SIPC, implemented an off-peak service rider in 2006 that meets the requirements of this standard.  (Please see Appendix E - Southern Illinois Power Cooperative, Rider 2, Off-Peak Service).  This rider provides large consumers with economic incentives to consume energy in off-peak periods.