Oklahoma utility deploys customer demand response program

Utility meters
June 30, 2017

Individual consumers can have a bigger impact on the electricity system than you might think – especially when working together. For example, on hot summer days when everyone cranks up the A/C, utilities have to provide a lot more power than usual. By the same token, if a group of customers turn off their A/C or other appliances during this time, the electricity demand can stay closer to normal. Because utilities are required to prepare for the highest-demand times (“peak demand”), getting customers to shift their energy consumption to lower demand times can reduce the need for utilities to build new power plants. Programs that facilitate this are called demand response.

Demand response has been around for more than thirty years, but is gaining popularity as more states work to improve grid-level efficiency, reduce costs, and transition to a more participatory energy system. The Public Service Company of Oklahoma, offers a good example of how a utility can deploy demand response.  It is in the third year of a program, PowerHours, that incentivizes its customers to play a more active role in how they use electricity.

PowerHours is a collection of four separate programs that enable customers to alter their energy use in return for lower electric bills.  The first is the Direct Load Control Program. It makes use of the utility’s smart meters and wifi-connected thermostats to remotely manage customer’s electricity usage. This remote control enables PSO to better manage electricity demand across the grid.

By participating in the program, PSO customers allow the utility to raise their thermostats by up to four degrees during peak demand hours. Depending upon electricity demand that particular day, the utility may instead decide to cycle participants’ air conditioners on and off instead. PSO considers peak hours to be weekdays between 2 p.m. and 7 p.m. In return, customers receive a $2.50 credit on their bill. PSO has set 16 times per year when they will do this, meaning if customers participate each time, they can earn up to $40. Customers can opt-out by manually re-adjusting their thermostat. If they opt out, they do not receive the $2.50 credit for that event. PSO developed the $2.50 credit figure based upon credits offered by similar programs developed by other utilities.

PSO also offers a two variable rate pricing programs that encourage customers to shift their load usage away from peak hours by varying the rate customers pay for electricity depending upon the time of day. One pricing program offers two pricing tiers and the other offers three. The fourth, and most subscribed PowerHours program, combines load control with the two-tiered rate-pricing program.

In total, more than 14,000 PSO customers are enrolled in one of the PowerHours programs. The utility hopes to enroll an additional 10,000 customers by the end of the year. There are more than 560,000 PSO customers in total.

Customer feedback from the program has been positive said Stephanie Johnson, a PSO Community Affairs Manager. “We did a focus group in February to gauge customers experience,” Johnson said. “Feedback was that people who signed up are saving money. The participating customers were thankful that PSO was helping them manage their bill.”

PSO developed PowerHours in response to a mandate from the Oklahoma Corporation Commission (OCC) to all of the utilities in its jurisdiction. The OCC’s goal is three-fold. It wants utilities to lower the cost of utility service, reduce the need for building additional generation and transmission capacity, and enable customers to use electricity efficiently.

Technologies, like the ones deployed in the PowerHours program, are transforming the way our electricity system works. In the traditional model, central generators distribute electricity to customers. A host of advancements, from remote monitoring to customer-owned solar to battery storage, are changing this model.

Programs like PowerHours demonstrate there are significant steps that both utilities and customers can take to create a more responsive electric system. But this system can only happen if utility customers continue to engage in how their electricity is generated. This is true both in their homes and before bodies like public service commissions. Public engagement encourages these bodies to require the utilities they are responsible for regulating to develop programs that benefit and empower customers.

“As an employee, I’ve worked here for 31 years.” Johnson said. “This is the first time I’ve seen us as a utility offer customers something more than a bill. I like being able to engage with our customers and manage their bills and provide them tools rather than saying here’s your bill sorry it’s so high.”