Lowering the Peak
Tornado impact prompts Illinois co-opto expand demand-management program
By Anne Mayberry
USDA Rural Development
Utilities Programs
emand management.
What it’s not: The
latest corporate
leadership trend. What
it is: A way for your
electric utility to better manage power
use.Generally reserved for commercial and industrial customers, Shelby Electric Cooperative in Illinois has taken the demand-management practice to a new level by including small businesses and residential customers in its distributed-generation program.
Shelby’s small business- and residential-demand management program originated in April 2006, after a tornado caused power outages. The cooperative had difficulty restoring electricity to customers served by an investor-owned utility substation. Applying principles of its distributed generation program — created for l a rg e commercial and industrial customers to smaller customers — Shelby delivered a unique program to meet rural needs.
Distributed generation is the practice of electric utilities working with customers interested in installing their own electric power generation units to generate their own power, when necessary. This additional power generation can then be tapped by the utility during outages or periods of peak use.
Incentives established
Shelby’s program includes incentives that encourage residential membercustomers to purchase natural gas and propane-powered generators. If they allow the cooperative to interrupt their service during peak demand, they qualify for a 15-percent reduction in their electric bills.
This ability to interrupt customer service can help utilities better control electric load and increase reliable service during high-demand periods. Shelby uses technology that provides two-way communication to electric meters that provides load control and demand response, in addition to outage detection and automated billing. Generators begin providing power within 30 seconds after an outage. Once service is restored, they automatically turn off.
The advantages for customers are lower electric bills, peace of mind that they will have electricity during power failures and knowledge that they are participating in a program that could reduce carbon dioxide emissions. Advantages for the cooperative include reductions in power costs, increased ability to meet customers’ demands during peak periods of power use and greater system reliability.
As a result of the tornado-caused power outages, “we realized that offering generators to these customers made sense,” says Kevin Bernson, Shelby’s vice president of media and public relations. “We decided to help people with the financing, then created an interruptible-rate program for small businesses and residential customers. We reduce the electric bill by 15 percent for customers who participate in the demand management program.”
The program had an additional advantage when the cooperative was asked to curb power use last summer when hot days increased demand for electric power.
Program pays during ice storm
An unforeseen benefit of the program was realized during an ice storm that hit the co-op’s service area in December 2006.
“The ice storm really created a spike in requests for the generators,” Bernson recalls. “More recently, the eight- to ten-inch snowstorms this winter also triggered calls. One of the biggest advantages of this program for our customers has been peace of mind.”
Another advantage for the cooperative is the revenue for the cooperative’s propane subsidiary, Shelby Energy, Bernson says. Shelby won a 2007 Expanding Excellence Award from CS Week, an electric utility customer service organization, and Electric Light and Power magazine. The award recognizes outstanding contributions, innovations and excellence in utility customer service.
For every 100 generators installed, the cooperative can increase peakdemand control by 1 megawatt (MW). Every MW of controlled demand can result in about $50,000 in annual power cost savings. These savings can be passed on to customers and increase system stability. During a 10-year period, the net benefits are expected to exceed initial project implementation costs, according to the cooperative.
$500,000 annual savings
The cooperative’s goal is to install enough generators to achieve 10 MW of interruptible capacity, which could save more than $500,000 in annual power costs — nearly 5 percent of Shelby’s total power supply costs. Installation of enough generators could reduce the need to turn on peaking units, used when electric power is in high demand.
Bernson noted that Shelby’s farm and residential customer-members who are participating in the demandmanagement program enjoy the benefits of knowing that during power outages, their generators will continue to supply electricity to meet their needs.
“One of our customers, a farmer, told us that now he doesn’t need to worry about making sure he has somebody check his property if he’s away when an outage occurs. He no longer has to mess with generator fuel and fuel storage, or manage generatorsafety concerns, such as extension cords and proper ventilation. He doesn’t need to deal with the elements to get his generator started during outages.
“It’s a safer way to go,” Bernson notes. “Best of all, our members who participate can save money each month and we keep peak load costs down.”
