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Demand Response Defers Investment in New Power Plants in Oklahoma

March 2013
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case study

As part of its Smart Grid Investment Grant (SGIG) project for the U.S. Department of Energy's (DOE) Office of Electricity Delivery and Energy Reliability (OE), Oklahoma Gas and Electric Company (OG&E) has successfully tested over a two-year period a new time-based rate, which provided about 4,670 participating customers with prices that varied daily in order to induce a change in their patterns of electricity consumption and a reduction in peak demand. According to OG&Es Mike Farrell, "Customers are being provided time-differentiated pricing so that they can choose the appropriate balance between cost and comfort." As a result of the pilots customers response to the time-based rate program and modification of their electricity usage, OG&E is rolling out the rate to about 20% of their customers (120,000) by 2016 with the aim of deferring investment in about 170 MW of power plant capacity. OG&Es SGIG project is multi-faceted and includes activities for automating distribution systems, installing smart meters, and evaluating time-based rates and customer systems such as in-home displays (IHD), programmable communicating thermostats (PCT), and web portals. OG&Es evaluation of time-based rates is part of DOE-OEs SGIG consumer behavior study (CBS) effort. The CBS effort includes nine SGIG projects that, including OG&E, are deploying smart meters, time-based rates, and various forms of customer systems (e.g., IHDs, PCTs, and/or web portals) to achieve demand-side objectives such as peak demand reduction and/or electricity conservation. The nine projects are applying controlled experimental design methods, including random selection and random sampling for treatment and control groups, to help obtain results that have higher levels of statistical precision and validity than those that do not employ such methods. These techniques also allow for a greater ability to extrapolate results to comparable utilities and customer groups in the United States.