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In Rate Case, AEP Ohio Seeks New Demand-Side Management Programs With "Return To A More Traditional Utility Role"

Part Of Serving As "Trusted Energy Advisor"

Includes Behavioral, Incentivized Demand Response Program For Residential Customers

AEP Ohio Proposes To Monetize Programs In PJM Market As Available, Keep 20% Of Revenues

June 16, 2020

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Copyright 2010-20
Reporting by Paul Ring •

As part of its current rate case, AEP Ohio has proposed a new suite of demand-side management programs (DSM Plan) which, as stated in testimony from the company, "represents a return to a more traditional utility role of engaging customers to help manage the peak usage of energy along with ways to reduce energy through more efficient technology."

"The Company is seeking approval of its DSM Plan to invest approximately $40 million annually through base rates to provide a diverse suite of programs to cost effectively help customers optimize their peak demand and overall energy use to save money and resources. This DSM Plan supports the AEP Ohio mission to benefit our customers and represents a return to a more traditional utility role in energy efficiency, demand response, low-income programs, pilots, and customer education and awareness for the Company," AEP Ohio said

"These programs support AEP Ohio’s vision of becoming the trusted energy advisor for our customers," AEP Ohio said

Notable among the proposed programs is a Residential Demand Response program which, "lowers peak demand through behavioral coaching and incentivizing demand response (DR) by residential customers."

According to AEP Ohio's Residential Demand Response plan, "Demand response and peak shaving will be provided with combinations of: electric water heating, air conditioning, space heating with smart thermostats, and EV charging control. These DR events will be targeted for reducing the demand during peak periods."

AEP Ohio said that, "Incentives will be provided to the customers who participate in the demand response events. The goal of the program is to initially use incentives and customer communications to shift demand, then educate the benefits of changing behavior, and finally migrate customer to a distribution rate plan that best benefits the customer. Once this successful transition of modifying customer behavior occurs, an incentive will no longer be provided to that customer. Incentives will be used to reach and educate other customers to continue to grow participating customers."

"The demand response program also includes a customer home energy report element targeted to high usage and high demand customers to educate the customer on rate designs, incentives, etc. to influence energy and demand savings over the course of the year," AEP Ohio said

AEP Ohio also proposed a residential Efficient Products program

"This DSM program provides retail incentives for LED specialty lighting and incentives for efficient heating and air conditioning (Energy Star Heat Pumps and Mini Split Heat Pumps), appliances and heat pump water heaters. In addition, incentives for demand control devices are included such as smart thermostats and load controllers," the company said

Most notably, "This program includes a digital marketplace where consumers can compare energy efficient appliances, receive an energy efficiency rating to help them make an informed decision, and shop for efficient products. The program will also explore midstream opportunities for delivering incentives," AEP Ohio said

AEP Ohio also proposed a Business Demand Response program

This Business DSM program has multiple components. "DR events will target 2 components: (1) where control of thermostat/HVAC, electric transportation, managed process, water heating is available, and (2) where control of networked lighting can reduce lighting levels during peak periods. AEP Ohio will call these DR events when the system demand is at its highest. These DR events will be targeted for reducing the demand for PJM critical peaks. While this program is not currently shown to be cost effective, AEP Ohio believes this program still has value and will be piloted in the Innovation and Technology program to determine more cost effective approaches. AEP Ohio will allocate dollars from other business sector programs or pilot funds if cost effectiveness is achieved," AEP Ohio said

AEP Ohio said that it will bid DSM Plan Resources into PJM, as opportunities are available.

AEP Ohio proposed that 80% of PJM revenues received will be utilized to supplement the DSM Plan budget in the years the revenues are realized, with 20% retained by the company. The company will bid eligible resources into base residual auctions, incremental auctions, or both at company discretion to manage risk and optimize revenue.

The cost of the DSM Plan is $36.6 million annually

Case No. 20-586-EL-ATA et al.

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