The winter holiday season of lights is a fitting time, according to Narragansett Electric officials, to remind customers of Demand Side Management programs that not only help the environment but provide cold, hard savings for businesses facing rising energy costs.
“The best response to high energy prices is conservation,” said Robert G. Seega, vice president and director of public affairs at Narragansett Electric, remembering price shocks and shortages after the oil embargo of the 1970s that caused energy costs to skyrocket and prompted drivers to switch from gas guzzlers to foreign economy cars.
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With energy costs volatile and supply in many cases short, a similar situation is happening now, Seega said. And “in view of what we think is going to happen, these [DSM] programs become more important, to us and to our customers.”
Narragansett Electric offers more than a dozen DSM services for businesses, many with rebates and special interest-free financing as well as technical experts who will work with a customer’s own design team to analyze cost-effective efficiency options.
Whether it’s customized or standard, “we’ve got tons and tons of programs for everybody,” Seega said, adding that in Rhode Island, most of the major industrial customers have taken advantage of some form of DSM.
While they have a DSM program to fit every customer class, one of its largest is Design 2000 Plus, which offers financial incentives for incorporating energy efficiency into the design of new projects and renovations. The program also provides technical assistance and incentives that cover 75 to 90 percent of the incremental cost between standard and premium equipment and systems.
Energy Initiative is another program for large commercial and industrial customers that helps retrofit existing facilities with efficient electrical equipment and provides pre-calculated rebates that typically cover about 50 percent of equipment and labor though incentives that “buy down” through a two-year customer payback.
Timothy F. Horan, vice president of business services at Narragansett Electric, said they were among the first companies in the country to develop DSM programs, starting back in the late 1980s.
With the high rebates and prospects for reducing energy costs, DSM programs have often helped business owners who didn’t think they had it in them to invest and grow, because they were no longer wasting money maintaining old equipment, Horan said. “Before, they couldn’t even think of expanding.”
Now, DSM and reducing energy use could be more critical than ever, as a growing economy and increased use of computers and other electric devices has caused electricity use to rise by about 2 percent a year without a comparable increase in generation, according to industry officials.
In 1999, about 38,000 Narragansett Electric customers signed on for some kind of DSM program, out of a total customer base of 450,000, and Narragansett Electric officials expect numbers to be even higher for 2000.
Since 1992, about 175,000 customers have participated in DSM, requiring a total financial input from Narragansett Electric of about $84 million, which according to state deregulation laws is financed through a 2 mils per kilowatt charge on every customer’s electric bill.
Between 1992 and 1999, Rhode Island customers have cumulatively saved 247 million-kilowatt hours of power that did not have to be generated, Seega said, at an average cost of 9 cents per kilowatt-hour or a savings for customers of about $22 million a year.
DSM programs are all approved by the R.I. Public Utilities Commission, which also requires Narragansett Electric to prove its commitment to saving energy. This year the company must save more than 26 million-kilowatt hours, Horan said, and “we have to reach 45 percent of that target before we earn an incentive.”
Don’t forget to TIP
Narragansett Electric also pays customers to have their power turned off during times of heavy usage, in an automatic Temporary Interruptible Program known as TIP.
About 201 industrial and commercial customers in Rhode Island are signed up with TIP, representing a load amount of about 52.9 megawatts, Seega said.
To be eligible, businesses must have a demand of 200 kilowatts or greater and be equipped with hourly metering. These businesses must be able to curtail a minimum of 100 kilowatts of load within one hour of being requested to interrupt, although the warning could be less in emergency conditions.
Narragansett started TIP this past June after the summer of 1999, when several New England power plants went off line for regularly scheduled maintenance during a period in early June when temperatures were pushing 100 degrees.
Rhode Island was “very close to having brownouts,” Seega said, and ISO(Independent System Operator) New England, the organization that manages New England’s electric bulk power generation and transmission systems, did during this time involuntarily require utility companies to shed some load, which meant shutting down certain feeders and any customer that was on it.
ISO New England pays Narragansett Electric 50 cents a kilowatt-hour for any power shed, and in TIP, the company passes on that payment to participating customers, with credits applied to a customer’s bill within 60 days of Narragansett Electric getting paid by ISO New England.
During the tight capacity situation in the summer of 1999, ISO New England called interruptible load customers on nine days and other large customers for voluntary load reductions on four days from June through August. The average interruption duration was 7.6 hours for contract and 8.3 hours for voluntary customers.
Generally these interruptions would occur at times of peak demand, from 2 to 10 p.m., for example, Seega said, adding that last summer no TIP customers were asked to shed any load.
There is no penalty for not curtailing load and a customer can withdraw from participation in TIP with five business days notice. “It’s completely voluntary,” Seega said, and while a high technology business probably couldn’t join, for some customers it’s worth it. “It depends on how flexible you are.”
