Dynamic Pricing: What You Need to Know and Lessons from the Field Jason Cigarran, Direct or, Market ing Communicat ions, It ron AESP NATIONAL CONFERENCE – #AESP18
Industry Trends AESP NATIONAL CONFERENCE – #AESP18
Why Should Electric Utilities Tie Rates to Costs? Incentivize customers to behave in ways that lower system cost Empower customers to manage their energy bill Allocate costs fairly across customers AESP NATIONAL CONFERENCE – #AESP18
What is Price-Based Demand Response? CPP PTR Fixed RTP Charges Cost- Demand TOU Reflective Charges Pricing Charge customers more for actions that lead to higher cost to serve and less for actions that reduce cost to serve. AESP NATIONAL CONFERENCE – #AESP18
Dynamic Pricing Spectrum Flat price per RTP + Coincident Demand Charge TOU + CPP kWh + Fixed Charge Reflective Simple to of Cost Understand Arguments for Simplicity Arguments for Complexity • If opt-in, must convince • Drive action that actually customers to sign up lowers cost • Overly complicated rates • Give customers more may backfire if customers mechanisms to manage bill don’t understand how to • Opt-out programs may respond or become allow for introduction of frustrated more complicated rate structures AESP NATIONAL CONFERENCE – #AESP18
Driving Customer Acceptance of Dynamic Pricing Target the right customers • Use meter data to ID customers most likely to benefit • Segment customers to deliver most effective marketing messages Provide appropriate coaching • Deliver customized tips at the right times to help customers save money Automate price response wherever possible • Target thermostat, water heater, pool pump, or other connected loads • Create flexible, dispatchable, predictable demand response resource AESP NATIONAL CONFERENCE – #AESP18
Benefits of Automation Source: Ryan Hledik, The Brattle Group AESP NATIONAL CONFERENCE – #AESP18
Why Now? Distribu ibuted ed E Ener ergy gy R Resources Conne nnected L d Loads ds AMI MI P Prolif lifer eratio ion Digit itally lly E Engaged C d Cus ustomers AESP NATIONAL CONFERENCE – #AESP18
Gulf Power Energy Select Program Objectives • Reduce generation needs • Better use existing capacity • Enhance customer satisfaction and value AESP NATIONAL CONFERENCE – #AESP18
Energy Select Today Residential WiFi-Enabled Service Tstat & LCRs Variable Price Online Customer’s Programming Secure WIFI Portal Access AESP NATIONAL CONFERENCE – #AESP18
Program Stats • Customers: 19,000+ • Per household reduction • Winter 2.4 kW • S ummer 1.7 kW • Customer S atisfaction • 95% S atisfied • 57% Extremely S atisfied AESP NATIONAL CONFERENCE – #AESP18
Success Factors Make Engage Key Continuously Participation Constituents Innovate Easy AESP NATIONAL CONFERENCE – #AESP18
Staying Relevant ES Maingate ES DirectLink ES Broadband AESP NATIONAL CONFERENCE – #AESP18
Staying Relevant AESP NATIONAL CONFERENCE – #AESP18
Staying Relevant AESP NATIONAL CONFERENCE – #AESP18
Summary » Dynamic pricing is about aligning pricing structure with cost structure » Benefits include: • Reduces system cost • Gives customer control • Ensures fairness in cost allocation » Dynamic pricing toolbox is varied » Engagement and automation help drive success AESP NATIONAL CONFERENCE – #AESP18
THANK YOU FOR ATTENDING! WE’LL SEE YOU AT AESP 2018 SPRING CONFERENCE MAY 21-23 | ATLANTA, GA AESP NATIONAL CONFERENCE – #AESP18
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