Direct Testimony of Thomas M. Hildebrand - Consumer Advocate ...

1 INTRODUCTION
The Commonwealth of Virginia currently ranks near the bottoiii of all states in expenditures on demandside
nianagement (DSM)'- comprising more efficient uses of energ (energy efficiency) and the abiliq.
of a consumer to respond to scarcity and high costs (demand response) - according to the American
Council for an Energ)--Efficient Economy (ACEEE) and the Alliance to Saye Energ- (ASE).' This
creates a unique opportunity for the Conimonn.ealth to leverage key lessons learned and best practices
identified in other jurisdictions to develop efficiently and implement a cost-effecti7.e portfolio of DSM
program offerings.: Such a portfolio could rely on proven DSM tecluiologies and strategies to achieve
significant energy savings and peak demand reduction over a relatively short timefranie (i.e.. ivitliin moto-three
j-ears). as well as over the longer term. In addition. such a portfolio would generate additional
benefits by protecting ratepayers against future increases in energ! costs. proyiding system reliability
benefits. offering customers the abilic to better manage their energ costs. and maintaining a competitii e
regional economy as businesses increasingly look for locations with robust. diJ.erse energ supplies from
demand-side and supply-side resources.
' For the purposes of this report, DSM refers to energy efficiency. demand respnse. and iiino~ativ electric rates designed TCJ
shift energy use from peak demand periods. DSM coT:ers the panoply of activiries custoiners can take to nianaee their energ! iise
on their side of the meter. The 2Vnfiontrl .Irfion Plan for Energ?, Eflcienq defines energy efficienc!. a5 "Using less energ! to
provide the same or improved le.;el of service to the energy consumer in an economically efiicient way The teriii energ!'
efficiency as used here includes using less energy at any time." The US DOE defines demand response as "Chaiiges in eiectnc
usage by end-use customers from their normal consumption patterns in response to changes in the price of electriciv over tline.
or to incenti1.e payments designed to induce lower eIectrici6 use at times of high \\holesale market prices or nhen s!'stem
relinbilip is jeopardized." '4s specified in the report Een&ts of Demnd Respume hi Elecrncir?, .Lfarkers mid Recommei?n'nho?ls
for Achieving Them. the US DOE identifies two primq tspes of demand response: (1) Price-based demand response slrcll as
real-time pricing (RTP). critical-peak pricing (CPP) and time-of-use (TOU) tariffs. give customers time-vFing rates that reflect
the \due and cost of electricit\i in different time periods. h e d with this infonnation customers tend to use less electricit\ at
times \\hen electricitl; prices are high mid (2) 1ncenti.c-e-based demand response program pa! participating custoniers to reduce
their loads at times requested b!' the program sponsor. triggered either by a grid reliabilih. problem or high electricin prices.
Dan York Rr Martin Kushler. American Council for an Enerav-Efficient Econornv. .iCEEE's 3rd .\irtiontr/ Scoreborrrd oil
' Numerous sources exist compiling DSM best practices including the US DOE and US EPA. 3'afioml rlcrion Plan for Etrerg,
Eficiency. (July 2006); US EPA. Clean Energy-Emironmefit Guide to .-1ctio~7. Policies. Be57 Practices. mid .4ciiotz Steps for
Smtes. (April 2006): and California Best Practices Project Advisory Committee. .Yafional Energy&ficzenq~ Besr Pracrices Siz~d,
(Dec. 20043. http: I wwn..eebestpractices.coin
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