In the early 1980s, the Florida Public Service Commission (PSC) mandated that Florida-based utilities implement demand-side management (DSM) programs in response to the energy crisis. As a result, Florida Power & Light Co. (FPL; Miami, Florida, U.S.) developed several conservation programs for customers. In conjunction, FPL evaluated many load-management systems (LMS) to complement the existing DSM conservation measures. The LMS technology was particularly evaluated regarding the communications methods used by each system. The three basic modes of communications, each of which embraces a whole different class of systems, include power-line carrier, telephone and radio.
FPL's Program Development & Management (PDM) department analyzed different load-control technologies and assessed their performance using the following considerations:
- Information rate
- Message reliability
- Noise and EMF immunity
- Environmental effects
- Flexibility and expandability of the system
- Hardware reliability and security
- Regulatory agency acceptance
- Legal authorization and protection of frequencies
- Safety to the general public
- Technical competency required of the utility operating personnel
- Ease of installation, operation and maintenance (O&M)
- Life of equipment.
FPL ultimately selected a two-way power-line communications system. The utility made this decision, even though it had higher capital costs, because it offered significantly lower operations and maintenance (O&M) costs that more than offset the higher capital costs. The O&M savings was particularly important in regards to being able to locate failed equipment. Detection of failures can be performed remotely, which avoids expensive infield “searches” for non-operational equipment. In addition, the selected LMS system has the ability to perform capacitor bank switching.
PDM conducted several other studies to determine the most effective approach required to ensure a successful program:
- Marketing Communications
PDM used several approaches, including a door-to-door campaign, telemarketing and, in some cases, a full-scale media program to encourage participation. Although the effects of each type of marketing were uncertain, it was clear that, in combination, these aggressive efforts would have an impact on the participation level.
- Customer Incentives
PDM evaluated and compared a monthly bill credit to implicit incentives, such as varying rate options, spot pricing and a time-of-use rate. Clearly, cash incentives were the winner because customers jumped at the opportunity to receive a monthly credit on their electric bill.
- Effects of Control
A storage water-heating program, for example, can be controlled unnoticed by the customer most of the time. Other programs, such as cycling off air conditioners, have a more direct impact on customers' service.
- Customers' Attitudes
Based on studies, it was clear that people's attitude toward the utility, energy use and other basic factors strongly influence whether or not they will participate in load management or DSM programs in general.
It is particularly useful to view the electric utility as a business with a market structure in both the production and sales area. The production side of planning is broken down into areas related to capacity and cost alternatives. The sale side of the business can be viewed as based on the regulatory setting, market share and diversification.
Once these parameters are identified and ranked, generic load shape changing objectives are selected. Load shape objectives include: peak clipping, valley filling, load shifting, conservation and freeing peak capacity to permit strategic load growth.
From a utility's point of view, a reliable LMS is required to reduce increased peak capacity. DSM and load control, in particular, allow the utility to obtain an optimum balance of centralized and decentralized energy technologies while integrating them throughout the service territory. It allows the utility to establish a reliable and predictable supply of power to its customers, based on thorough knowledge of their characteristics and needs.
A System that Delivers
Of all the systems considered, FPL selected a power-line frequency system because of the many control strategies and the ability of a two-way communications feature. As a result, FPL installed the largest LMS in the world. This system uses more than 816,000 load-control transponders connecting more than 712,000 users. The LMS uses the Two-Way Automatic Control System (TWACS) from Distribution Control Systems Inc. (DCSI; St. Louis, Missouri, U.S.). Not only does the system provide FPL with an efficient energy management tool, but it also serves as a cost-effective alternative to building generating plants and distribution grids. This system is an attractive economic alternative when compared to the total cost of adding new base-load power-generating equipment, such as combined cycle units.
FPL's regulatory filings with the PSC have consistently shown that the economic costs of building and operating these types of new generating units are at least 20% to 30% higher than the cost of installing and operating the DMS program.
From the operational point of view, FPL's load-management experience has been positive. The load-management program is an effective and reliable tool to reduce peak demand. However, maintaining an infrastructure to support implementation and handle customer inquiries is essential. Having load-control support groups in customer service and the field area has proved to be valuable as well as required.
Once the LMS field equipment is installed in the customer's home, about 1.5% of these customers generate calls. These calls can be as simple as adding additional appliances to the load-control program or eliminating the customers' perception that their participating appliances failed because of the installed LMS equipment. Employees who are trained regarding LMS — including a basic electrical knowledge of air-conditioning, water heaters and pool pump operation/wiring — help reduce customer dropouts and ensure continued customer participation.
Putting the Program into Action
Historically, FPL has only implemented load control when the system load was anticipated to dip into the capacity reserve margin, which is generally unusual. Currently, load control is implemented on average about three to four times a year — two times in the summer and approximately twice in the winter. It took about five years to develop and implement the use of the LMS as it operates today, recognizing the benefits of having additional power generation during peak demand periods. Over the years, FPL learned that through the spring and fall shoulder months, the LMS system serves as a valuable tool during power-plant maintenance or in situations caused by force majeure.
FPL believes it is vital to establish a smart balance of when to initiate load control to successfully manage a program that is beneficial to both the utility and the customer. Additionally, because a load-management program involves customers, use of the system is influenced by behavioral as well as technological considerations. Making the system as invisible as possible to customers is key. To achieve this, FPL generally avoids using load management to curtail air-conditioning loads. Rather, it primarily controls water heaters and pool pumps, unless capacity needs are critical. However, on a monthly basis, the LMS performs a 15-minute control on water heaters and pool pumps year-round. This maintains a balance between every business unit involved during an actual load-control event. Communication of the load-control event also is tested via the LMS by pager, e-mail and cell phone activation.
Using a portfolio of DSM programs, including interruptible rates for large power customers and a predominantly residential load-control program, FPL and its customers have successfully reduced demand for energy by 3463 MW. This reduction has allowed FPL to avoid building approximately 10 new 400-MW power plants. Of that total, 1000 MW of peak demand savings can be directly attributed to FPL's LMS. This not only has prevented blackouts, but it also allowed FPL to sell energy to other utilities within Florida when they needed additional power to meet their capacity needs.
The application of load management requires that customers give the utility permission to control their appliances. FPL pays residential customers incentives of $6 for controlling air conditioning and $3.50 for water heaters per month. Incentives are a major contributor to the ongoing cost of load-control programs. Currently, FPL is evaluating a reduction in the incentives it pays to customers to increase the long-term cost-effectiveness of the program.
Although it is important for electric utilities to adopt DSM programs, the need to evaluate program costs and benefits is an ongoing consideration. Long-term cost savings can only be met through careful planning and efficient testing, as well as prompt implementation of studies and the evaluation of resulting data. For FPL, it must evaluate the cost savings annually and submit its report to the PSC. Therefore, the process is designed to assess both short- and long-term goals.
Reaping the Rewards
Overall, FPL's customers have benefited from the load-control program because of its contribution in allowing FPL to maintain a quality, reliable and predictable supply of power generation during peak demand periods. In addition, saving customers money through lower electric rates by not building additional power plants combined with the benefits obtained by the utility, FPL's load-control program continues to be a premier offering for its customers.
Michael Andreolas, program manager of Florida Power & Light Co.'s load control program, has been working with FPL for 28 years. During program development, he designed the first set of installation and monitoring specifications for the load control equipment installed in customer homes. Currently, he is responsible for the purchase and installation of transponders/substation equipment, sales lead generation, contractor/inspector training, and field activities/support. Through his efforts, FPL has successfully launched load-control programs in both the residential and commercial sectors that have more than 700,000 active participants. Andreolas, who holds a BS degree in engineering technology from Florida International University, also has experience in residential and commercial field areas, distribution services, and in the Energy Conservation Department (DSM).