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and/or demand charges reflecting their peak use, but that’s too expensive for this
municipal, distribution-only utility with about 360,000 customers. (Although
modest on paper, that profile makes Nashville one of the nation’s top dozen
municipal utilities, by size.)
Shoestring solution
Instead, NES will implement a voltage conservation program on a systemwide
basis to reduce peak demand and, therefore, mitigate the impact of demandbased
wholesale rates on residential customers. The American National
Standards Institute (ANSI) standard calls
for 114 to 126 volts per residential end-user.
We need consistency
During peak load, NES will narrow that range
to about 116-120 volts. It will use smart meters
and predictability of
as “continuous voltage sensors” at key sample
points on every circuit.
revenue and profit
In this manner, NES can reduce its cost for
peak-time energy use without the need to
so we can bill our
install a smart meter at every home in its entire
service territory. Ultimately, the utility would
customers equitably. ”
like to install smart meters on every home
to ensure that every customer’s voltage stays
within the ANSI standard and to achieve the many other benefits that smart
meters provide. TVA and NES are cooperatively involved in this solution, which
should be fully operational by this time next year.
“Over the past 20 years, our retail rates have been what they call ‘end-use rates,’
which means that we paid TVA for wholesale power
in the same way we billed for retail power,” Hatridge
told me. “For example, retail customers paid a flat
rate per kilowatt hour, so we reported to TVA how
many kilowatt hours we sold to retail customers and
paid TVA a flat charge per kilowatt hour for that
power. For those large commercial and industrial
customers that we billed for a demand charge, we
reported that customer’s demand to TVA and paid
TVA for that demand.”
For residential customers, because NES only collected
and passed through costs for energy consumed
in kilowatt hours, NES received a guaranteed margin.
Changing the face of the Tennessee Valley
“What happened to us, as of April 1, is changing the
face of the Tennessee Valley,” Hatridge said. “TVA
is now going back to an old system of charging us
demand charges for the energy we sell to residential customers.
“This puts us at risk because we are billing residential customers at a flat rate
per kilowatt hour but our wholesale cost for that power will vary. If we happen
to have a really hot day near the end of the month, like we did in May 2011, our
wholesale power bill from TVA shoots up much more than what we bill to our
residential customers. We are concerned about how such an unpredictable profit
margin will affect our financial stability.”
In effect, NES will use a smart grid technique—in general, distribution optimization,
in particular, voltage conservation—to manage retail rates to reflect
wholesale rates from TVA.
“We need consistency and predictability
of revenue and profit so we can
bill our customers equitably for what
they use,” Hatridge said.
Cost-effective
win-win solution
These changes may mean that NES
sells less electricity overall, though
ideally it would like to maintain the
amount it sells, just shifting consumption
to off-peak hours.
“On a hot summer day when we’re
trying to conserve power, we can actually
turn down your voltage to, say,
116 volts,” Hatridge said. “This won’t
affect the performance of a customer’s
electrical equipment, but it will reduce
peak load. It will maintain a more
consistent margin for NES and it will
save the customer money because
they will consume slightly less energy.
We’ve prevented a brownout by making
a slight adjustment in voltage that’s
within the acceptable range.
“We think this is a very cost-effective
solution,” Hatridge concluded.
“We can achieve some very significant
reductions in peak energy demand at a
reasonable cost and without requiring
customers to change their energy
usage habits.”
This article first appeared in Intelligent
Utility Daily.