CEMIG (Companhia Energetica de Minas Gerais), the Minas Gerias state energy company, is implementing a demand side management (DSM) program in one of the areas within its concession to improve load distribution and voltage levels. CEMIG is an integrated enterprise that generates, transmits and distributes electricity throughout the state of Minas Gerais, which is in southeastern Brazil.

CEMIG's electricity market is largely industrial, which corresponds to 60% of the company's energy sales. However, in recent years the utilities market profile has changed as a result of the stabilization of the currency and the reduction of inflation. These factors have increased the demand for electricity in both the residential and commercial sectors.

The stabilization of the Brazilian economy has led to increased purchasing power in the community and has also stimulated the commercial sector. For example, last year electricity consumption within CEMIG's residential market underwent a 13.6% increase while the expansion this year is close to 10%, mainly because of the adoption of new consumption habits and the increased purchase and use of household electrical appliances.

The DSM program is a reliable option to solve local difficulties. For example, in areas where the distribution system requires investment for reinforcement, DSM could be widely practiced, thereby postponing investments in the distribution system and with only a small loss in revenue.

The first integrated DSM project was started in 1991, following the identification of serious problems within the electrical system that supplies one of the state's poorest regions, namely the Jequitinhonha Valley. This region is situated in northeastern Minas Gerais. To service this region, investments valued at US$25 million would be needed to increase the capacity of transmission lines and to expand substations.

Analysis of the transmission and sub-transmission load curves, in comparison with the results of surveys on the use of household electrical appliances and consumers' consumption habits, have provided economic justification for implementing a DSM program within that region.

A pilot region comprising the cities of Arauai and Virgem da Lapa, which is served by six transformers that supply mainly residences, was initially chosen because the load curve resembled that of the transmission line between the municipalities of Teofilo Otoni and Padre Paraiso. This is the trunk line that supplies the Jequitinhonha Valley region.

Following the identification of the consumers connected to those transformers, CEMIG conducted a survey into their electricity usage habits and the use of household electrical appliances. As a result of the survey, CEMIG decided to: - Replace incandescent lamps with compact fluorescent lamps. - Adopt the Yellow Tariff with price differing at peak hours and at non-peak hours. - Use other methods for heating domestic water as an alternative to the electric shower units. - Install load manager devices to control the consumption of electricity during peak demand hours.

A further expansion of the program included the donation of up to two compact fluorescent lamps to consumers of up to 50 kWh per month. The Yellow Tariff was offered to those who consumed over 200 kWh per month. During the peak period, the tariff for this group of consumers is, on average, five times greater than at other times. However, since this measure did not provide an adequate load adjustment, it was not expanded upon.

The load management device was offered to those consumers within the 100 to 200 kWh per month range and a discount of 20% of the consumed value was given to those who opted for installation of this device.

The device used for the management of the energy load was developed by CEMIG in partnership with a private company. Basically, it comprises a central supervision unit installed close to the secondary output of the transformer plus receptor modules installed at the consumer's metering units, which are responsible for the opening and closing of the circuit breakers, in accordance with the programming and commands sent from the supervision center. IBM was the systems integrator for this project.

The negotiation of the use of the "load administrator" is carried out on a one-to-one basis with the consumers. CEMIG employees visit and orient the consumers on the use and installation of the equipment and provide explanations regarding changes in electricity consumption habits.

Results As of October 1996, CEMIG has installed 3000 of these load managers and has replaced 69,000 incandescent lamps. The implementation of these measures yielded satisfactory results.

Because the local system was badly overloaded during the peak demand period, it was not possible to visualize the achieved results concerning the load curve after implementing these measures. Once a diminution of the load occurs during the peak demand period, the electrical conditions are subsequently improved, mainly voltage levels.

Because of the improvement in the voltage level, the consumers' electrical appliances operate better. For example, a TV set which previously only partially filled its screen, then opened fully, and lamps began to operate at their normal potential. Also noteworthy is that with the improvement in the electrical conditions of the system, that new demands appeared. In other words, there previously existed a repressed demand.

Therefore, in order to analyze the benefits obtained in the Jequitinhonha Valley region it was necessary to carry out an overall analysis of the transmission line load curve. The values of the load factors prior to and following the measures were: peak period--73.63%, 77.5%; overall 47.05%, 48.01% respectively.

It must be noted that while the demand increase outside of the peak period was 21.77%, it was 14.27% during the peak period.

Subsequent to the overall completion of the pilot program, CEMIG hopes that the load during the peak demand period will be close to the 86% mark, while the overall load factor should be close to 52%.

Economic Evaluations The costs per kW consumed at the peak demand period have a lower value than the kW cost if the system was to be expanded (approximately US$1000 per kW within the local system). It must also be stated that if the cost associated with the electrical system, encompassing generation, transmission and distribution, was to be considered, then the cost would be US$2700 per kW.

It is noteworthy that all the measures that were adopted resulted in economic benefits for the concessionaire and also for the population. For example, the replacement of an incandescent lamp by a compact fluorescent lamp yields a gain of 84 cents for concessionaires and a gain of 22 cents for the public, while the use of the load manager yields a 34 cent gain for the concessionaire and a 17 cent gain for the public.

Future of DSM CEMIG has identified many geographical areas within its electrical system where DSM programs could be implemented on a priority basis. The loading rates of substations in those areas is higher than the admissible limits, which causes a voltage output inferior to admissible levels.

One other parameter that should be evaluated on the local electricity system is the load factor. Low load factors indicate the existence of a higher potential for load curve improvement. In order to select a DSM project region, CEMIG considers essential factors such as: the identification of critical sectors within the electrical system; analysis of substation loads, transmission lines, subtransmission and distribution line supply equipment; market stratification; ownership and use of household electrical appliances and consumer habits; the determination of the consumers' load curves; and the analysis of previously carried out pilot projects.

The experience of carrying out this DSM program in Arauai and Virgem da Lapa has led to the conclusion that for low voltage consumers, it is necessary to use differing tariff bands according to the hour of day and the period of the year. This holds for consumers of medium and high voltage electricity, as well.

Although having carried out the experience with a tariff band for low voltage consumers with differing prices according to consumption, it was not effective in achieving load curve shaping for residential consumers, since the principal cause of the demand at peak hours is use of electric shower units. Even though electric showers have a high demand (4000 W), their participation in the overall residential consumption is only minor.

Therefore, we believe that by signaling prices based on consumption and demand, a reduction in the use of the electric shower units can be achieved. CEMIG is developing a cost structure, based on the marginal costs for the expansion of the system. We believe such a tariff system can be put into operation, on an experimental basis, by the end of the first quarter of 1998.

Jose da Costa Carvalho Neto is distribution director of CEMIG.